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Deciding between buying or subleasing equipment

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The decision to buy equipment or continue to sublease is often made on a per item basis. Before buying, ask yourself:

  • Do I have the storage space for this item?
  • Is there an ongoing market for it?
  • How many times will I need to rent it out to make a profit?

“I generally do not purchase even smaller equipment unless I have had requests for that item several times and I know I have a use for it,” says Kathy Schaefer of Glawe Tent and Awning. “There have been instances where something was such a good deal that it made sense to add it to the inventory and begin to rent it.”

For Rusty Paar at AV Party Rentals, the cost involved in subleasing versus buying is paramount to a smaller company such as his. “We analyze exactly what it’s going to cost us [to sublease equipment] and what type of profit margin we will see on the job,” Paar says.

Schaefer recently had a job with a request for a floor and carpeting and did get a quote for subcontracting these items. “We knew that with this expense we wouldn’t have much room for a markup,” she says. “Our usual subcontractor actually suggested a way that we could use this rental as an opportunity to acquire the inventory ourselves. Although a large markup was still not possible, we acquired the equipment and now have it available for future rentals.”

Maura Keller is a Minneapolis-based writer and editor.

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