Rent Or Purchase? Which Is Better?

When you are starting a company or a business of any sort, there are a lot of decisions which need to be made. From the scope of the products or services you are offering to the actual investments necessary and funds to run the business. The location, the infrastructure and the people to run it follow suit. In a field where we know nothing, other than the gut feel that we have that something just might work, it is weighing the pros and cons which give us an idea of what might be better than something else. Thus, within this article, we will discuss the pros and cons related to renting and purchasing of goods, especially in terms of a new company.

The Pros of Purchase

Obviously, if you have all the money in the world to run the business, go purchase it all. Outright purchase means that you have the item with to do as you please and compared to a lease for commercial kitchen equipment hire in Melbourne, which takes into account the depreciation of the product and currency, you will end up paying a larger amount in the long term compared to outright purchase. However, most of us do not have that kind of money and when starting a business, are made to choose and make compromises in what we want to buy or rent or not have at all.

The pros of renting

This is when renting becomes more lucrative. While outright purchase is very expensive and you will end up with one freezer only for the money you have. For the same price you can have a freezer hire and cooking equipment hired for your new restaurant instead because of the lower initial payment needed. In the long term however, you will have to set aside a certain amount every month or quarterly which would come to a final amount which is more than the initial purchase price of the equipment. However, for a new company, having that excess funds to spend or stay afloat is a lot more essential to owning the equipment and thus, renting seems the better option.

Another aspect of renting or purchasing of equipment, is the disposal of them. Assuming you need to move buildings, close shop or simply want to get a newer version of the same machine, selling out the old model would be tough. Usually old used machines are sold at very low prices for scrap metal rather than as machinery. The new machine will require the same form of initial payment. However, with renting, it is only the incremental amount for the new machine which you will need to pay as the old machine can be returned and replaced with a new without the hassle of disposal.