If you are considering starting a demolition company, your biggest investment will be in the heavy equipment that you need. You probably want to start small and limit your financial exposure. Renting some of your equipment instead of buying it outright may be a better choice for you, especially in the early stages of your business.

Flexibility

Unless you plan to limit your business to only certain types of projects, your need for certain machinery will come and go. Any piece of machinery that will not be continually needed would work better as a rental than a purchase. For instance, your need for a double front-work machine may be limited to one or two big jobs that require careful recycling and lots of power. Having it sit around and depreciate after the job is done hurts your bottom-line. Renting it instead of needlessly carrying it makes more financial sense. Reselling it may not recoup enough of your initial financial outlay to cover your investment.

Also, if your money is not tied up in equipment payments, you have more borrowing power with the banks because your rented equipment does not count as a liability. If you need to raise capital quickly, this positive asset to liability ratio will help you. 

Financing

As you start your business, you will need to acquire a few pieces of standard demolition equipment, including a caterpillar and an excavator. A good heavy construction equipment company can advise you on what other pieces you may need and give you an estimate of the rental price. The cost of renting basic equipment for five days can cost around $12,000. As a result, you may consider buying equipment that you will need for most of your jobs as soon as it is financially feasible. Remember, owning machinery means you also have maintenance costs, insurance premiums, and other fees to cover. However, over the long term, owning some machinery may pay off and offers some tax advantages.

When you start your demolition business, you need to analyze how best to acquire the equipment you need. In the beginning, renting equipment may make the most economic sense. Once you can afford to finance some machinery, buying a few necessary pieces will probably work for you. Specialty equipment or other pieces that you will not be using on a regular basis are best rented to minimize your financial exposure. Any equipment that is not working for you is definitely working against your success in the demolition business. Contact a local rental company, like Rentals And More Inc, for more information.