5-Part Guide for Hiring vs Buying Small Plant Construction Equipment

Your unbiased guide to whether and when hiring vs buying equipment is right for your business.

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1. Get Trusted Advice
2. When Hiring Makes Sense
3. When Buying Makes Sense
4. When The Hybrid Model Makes Sense
5. Depend on Wenbro
6. FAQs

1. Get Trusted Advice

Not every individual, company or project needs the same solution.

There are many companies that only sell equipment and many more companies that only offer equipment for hire, but very few companies that offer both hire and sales.

Because Wenbro’s core four pillars are Hire, Sales, Repair and Manufacture, we are uniquely suited to give you unbiased advice because we have no incentive to push you towards choosing between hiring or buying. Because we specialise in both, we only want what’s best for you and your bottom line.

This guide will help you decide what’s best for you, whether you’re hiring, buying or a combination of both and ensure you get the support you need no matter your decision. Save or bookmark this article for future reference and if you need advice right now, you can give our professionals a call and get tailored advice with zero obligation.

📍Pretoria:
Branch: 012 941 1888
Branch Manager (Ellie): 068 108 9883

📍Polokwane:
Branch: 015 297 2470
Branch Manager (Adrienne): 067 933 5352

2. When Hiring Makes Sense

Financial Considerations:

• Avoid upfront costs: Good equipment can be costly, so for companies or individuals who don’t have the need or perhaps cashflow to cover the capital expenditure, hiring makes the most sense until the need arises to buy or you’re in a more secure cashflow situation.
• Easier bookkeeping: Hiring simplifies your finances. Shifting from buying (Capital Expenditure or CapEx) to hiring (Operating Expenses or OpEx) means your business expenses are consistent and deducted from your taxes immediately rather than being spread out over several years. You are also spared the hassle of keeping a Fixed Asset Register and tracking asset value and depreciation over time.
• Better credit: Not needing to take out large loans to procure your own equipment eases pressure on cashflow and helps free up your credit lines and working capital for other business needs, providing you the opportunity to build strong, easily accessible credit to take advantage of unexpected opportunities, which may have been lost if your credit was maxed out on CapEx on equipment. You also avoid long-term debt and repayment obligations putting your company in a more favourable liquidity position and making it easier to sell you company should the opportunity or need arise.

Operational Considerations:

• Adaptability: Any DIYer will tell you that they never have enough tools. The same can be said for individuals, companies and their construction equipment. For example, you might own a Petrol-Powered Water Pump that’s suited for most of your projects, but you have a business opportunity that requires continuous operations, so a Diesel or Electric Unit would be better suited. Instead of buying new pumps, you can just hire out what you need for that project.
• Storage & Maintenance: Even “small” Construction Equipment can take up a lot of space and lead storage issues. Not only must you have space to securely store every machine you own, but they must be maintained and serviced regularly. When you hire out equipment, all those burdens are on the company you’re hiring from, sparing you the headaches that come with ownership.
• Ageing technology: Future-proof your business and stay ahead of your competitors by hiring out the latest technology immediately, instead of having to sell outdated and obsolete equipment and buy new, updated models (with all the research, quoting and back-and-forth that comes with it).
• Scalability: Not every job needs all your equipment and there will be times you need much more or far fewer, depending on the season, your clients and active projects. Hiring offers you the flexibility to scale your fleet according to your needs in real time.

Risk & Compliance Considerations

• Minimise regulatory risk: Certain companies or projects will require strict adherence to safety regulations where compliance, certification and inspections are critical and can take a lot of time and become complicated to do on your own, with possible penalties or other consequences if something goes wrong. Let the hiring company deal with the admin and get peace of mind knowing you can focus on getting the job done instead of worrying about paperwork.
• Avoid project pauses: Breakdowns can be expected on-site. If it’s your own machine or equipment that breaks down, you can expect delays which may become costly while your team attempts to repair the breakdown or replace the unit. When hiring equipment, a good, reliable rental partner will be able to provide real-time assistance and replacements, reducing your delay from potential days to hours.

3. When Buying Makes Sense

Financial Considerations

• Long-term savings: If you know that you’re going to use a machine or set of equipment frequently, like a Demolition Breaker, Plate Compactor and Bitumen Sprayer if you specialise in pothole repairs, buying equipment will probably make more financial sense in the long run.
• Builds equity: The more equipment you own, the higher your business’s net worth becomes. A strong asset base makes your Balance Sheet more appealing to credit providers or future investors.
• Reduce taxable income: Buying your own equipment can have the additional benefit of a tax write-off because purchasing business assets may provide ongoing tax benefits through annual depreciation deductions.
• Recouped expenses: Unlike the money spent on hiring out equipment, which cannot be recouped, selling equipment (even old, broken equipment for scraps) allows you to get back some of the money you spent on buying the equipment.

Operational Considerations:

• Always available: With a fleet of your own equipment, you’re ready to roll at a moment’s notice. You avoid delays and lead times by not waiting for bookings or equipment to be delivered or having to go collect it yourself.
• Custom solutions: When you own your own equipment, you’re free to modify and customise your machines based on your needs (within regulations). You can therefore improve your team’s efficiency by, for example, you can weld, cut, add or remove components as it suits you. Just keep in mind that alterations may void warranties and might reduce resale value.
• Equipment expertise: Because your staff will be using the same machines every time, your operators will become highly familiar and efficient with them, which cannot be guaranteed with hired units.
• Consider margins vs costs: An important aspect to consider on long-term projects is your profit margin vs the cost of hiring equipment. Equipment hire costs increase with duration while purchasing equipment is a once-off fixed cost. You need to balance the duration of the project with how often the equipment will be utilised. If your project requires a machine to run for most of the project duration, buying might make more sense, but if you won’t be using the machine frequently, hiring might be the better choice. This can depend from company to company and from project to project.

Brand & Business Considerations:

• Controllable quality: Purchasing means you choose exactly which brand, make and model you want without compromise. Hiring equipment can sometimes mean you don’t always get that freedom of choice.
• Signals stability: Having your own fleet of machines shows potential clients you mean business and intend to be around for a long time, so their projects are safe in your hands.
• After-Sales Service: Whether you’re hiring or purchasing, you need to consider the back-up you’ll get from your supplier once the deal is “done”. Purchasing items from the right supplier means your machine is covered by warranties you can trust and spares availability you can depend on.

4. When the Hybrid Model Makes Sense

Like most things, the answer you’re looking for could likely be a combination of both hiring and buying. Knowing when to do which is critical.

Get the Best of Both Worlds:

• Save up: Most new businesses often lack the cash flow for large CapEx. Businesses may need to set aside money to save for the products they plan to purchase. Keep in mind that maintenance, insurance, storage and repairs are all costs that need to be considered before buying.
• Experiment: When hiring, keep note of what equipment you need for every project and how frequently it’s used. You can use this data to help yourself or your company prioritise which equipment to purchase first.
• Keep fluctuations in mind: Demand can spike but not be sustainable. Figuring out a baseline is key to ensuring you don’t overcommit capital. Own enough equipment that your smallest projects will always be covered and hire out equipment when demand spikes. As the size of your smallest projects grow, buying more equipment becomes justified.
• Try before you buy: When possible, like with Wenbro, you can hire out the same machine you’re looking to buy to test it’s what your team needs and ensure the product is to your satisfaction. Want to buy a Plate Compactor but can’t decide between the Standard and Reversible models? Instead of taking the chance, hire out both for a couple of days and decide which one’s best for you through experience.

Do the Break-Even Analysis

• Break-even rule: You need to weigh up whether your daily hire rate will exceed the total purchase price over the item’s useful lifetime. If so, it’s time to consider buying.
• Add “hidden” costs: Owning comes with additional costs you might not have considered upfront that are important to keep in mind, which can increase the cost of equipment ownership by 1.5 to 2 times. After factoring in additional costs, update your break-even total. Some additional costs could include:
  • + Maintenance & Repairs (15-20% of the item value per annum)
  • + Storage & Security (do you have the space and is it secured?)
  • + Transport
  • + Insurance
  • + Opportunity cost of capital

5. Depend on Wenbro

Wenbro’s Core-4 business model (Hire, Sales, Repairs & Manufacture) allows your company to unlock the benefits of the Hybrid Equipment Model, allowing your projects to run smoothly and your equity to grow over time.

Hire

• Massive Range: Whether you’re compacting, cutting, drilling, grinding, welding, pumping, generating power, landscaping, surveying, concreting, road building, surface preparing, or transporting equipment, Wenbro has over 150 machines, tools and site solutions ready for the job.
• Payment Solutions that Suit Your Cash Flow: Whether you’re looking for simple Cash-on-Delivery terms or prefer to pay on credit using our Current or 30-Day Accounts, you can pay your way.
• Serviced Machines: Wenbro conducts thorough inspections and testing of all equipment before and after every hire, ensuring maintenance schedules and repairs are strictly carried out, minimising the risk of possible breakdowns.
• On-Demand Support: In the rare case of a breakdown, we do our best to help you troubleshoot over the phone. For serious matters or mechanical fixes, our support staff will be on-site as soon as possible to repair or replace your machine, so your project doesn’t need to pause.
• Peace of Mind: Suddenly need more equipment? Wenbro has multiple machines for hire, so you can scale easily. We also handle the certifications and compliance (all our trailers are certified roadworthy).
• Readily Expandable Hire Fleet: When we need to strengthen or expand our hire fleet, Wenbro has the ability to quickly respond to equipment demand. Because we sell equipment as well as hire it out, moving machines from our inventory to our hire fleet is a quick and simple process. This gives us a level of responsiveness and flexibility that hire-only companies typically cannot match.

Buy

• Competitive Pricing: Wenbro takes pride in offering high-quality equipment at competitive prices.
• 12-Month Warranty: All purchased items come with a 1-year limited warranty.
• Shop Online: Buying construction equipment from your couch has never been this easy. Shop online and get it delivered right to your door or job site.
• Lay-by Available: Wenbro offers a 3-month lay-by payment solution to ease your cash flow.
• Delivery Africa-Wide: Don’t live in South Africa? We deliver not only to any address in South Africa, but across Africa too, right to your door or site.
• Custom Solutions: Need something built to your unique spec? Contact us.
• Maintenance & Repairs: Wenbro ensures parts availability for every machine in our product lineup. We also offer maintenance and repair services. Trust us to keep your equipment performing at its peak.

Find Out More

• Our Hire Fleet: https://www.wenbrohire.co.za/hire
• Buy Online: https://www.wenbrohire.co.za/buy

Get in Touch

• Send us a WhatsApp: 087 073 7777
• Call or Visit the Gauteng Branch:
  📍Pretoria:
  Branch: 012 941 1888
  Branch Manager (Ellie): 068 108 9883
• Call or Visit the Limpopo Branch
  📍Polokwane:
  Branch: 015 297 2470
  Branch Manager (Adrienne): 067 933 5352

FAQs

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*This information is provided for general guidance only and does not constitute tax, accounting, financial, or legal advice. Tax treatment depends on your specific circumstances and may change over time. Always consult a qualified accountant, tax practitioner, or financial adviser before making business decisions. The information above is based on South African tax principles and SARS regulations; tax laws and accounting practices may differ in other countries.