Companies must decide whether its best to buy their equipment or rent it

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If you walk through an old factory the first thing you are struck by is the amount of equipment, machinery and tools in the place.

Some of the equipment might be redundant a reminder of technology or markets of a bygone era. Other equipment is on standby waiting for the next order or a change in the economy.

Whichever way it is, a yard full of gear is a yard full of money for any organisation. Even worse, if the yard is owned by the company there is more capital locked up in an asset that might be going nowhere.

This is where the phrases sale and leaseback and equipment financing came into being. By companies and contractors renting gear when they need it, and building the cost into their quotes, they have become more efficient with their use of capital.

It also means that businesses that hold the gear and rent it out have flourished here and around the world.

The decision about making any capital investment is to work out the return you will generate on it in the short term and long term.

If a piece of equipment is used for a single job but will not be used again in the foreseeable future, then the strategy of hiring comes into its own.

But if the equipment is likely to be used in an ongoing basis depending on the depth of capital of the business it can make sense to buy the equipment (even with finance) and eventually own it outright.

The sense will come down to the mathematics of how long you hold onto the equipment and how much revenue it will generate, or not.

The other advantage of leasing equipment is that you have the ability to keep the equipment that you use up to date while at the same time avoiding costly maintenance and repairs.

One problem for many companies in a world of fast-changing technology is that faster and more flexible organisations can hold their costs and their quotes lower than the competition.

LITTLE RIPPER OF A STRIPPER

FOR some, business skills are in the blood. They can keep a family business moving forward for generations.

In the case of the Kennards best-known for Kennards Hire son Rory took a different path, but one entirely parallel with the interests of the family.

Rory Kennard is an inventor a bit like his grandfather. Oddly, he didnt learn this about himself until he was at university and working in a packaging machine development company to make ends meet.

He started to look, and think: There must be a better way to do this.

As he says: I think in my innate nature, inefficiency frustrates me: maybe because Im impatient, or just want to get things done faster.

From there, he started helping out people with ideas to make machines work better. His break came when somebody complained that a vinyl stripping machine was unreliable.

He built a better one ... and today, more than 10 years later, the Makinex floor stripper remains one of his core products, along with mini-dumpers, mixing stations, jackhammers, infra-red heaters and high pressure washers.

Rory is doing something his father Andy has not done. He is building his business around the world, with the aim: 20 products in 20 countries in 10 years. Already Makinex is selling into North America, Japan, the UK, Europe and New Zealand. Our focus is on the big chains, like the US-based Home Depot and Sun Belt Rentals. As well as Speedy Hire in the UK, he said.