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To Rent or Purchase Your Recycling Equipment: Determining What is Best for Your Business

Waste Harmonics

To rent or to buy. It is a predicament we often find ourselves faced with for a variety of personal situations, like deciding whether to rent an apartment versus purchasing a home or choosing between leasing and owning a vehicle. In both situations, you would likely weigh the various pros and cons before making an informed decision that aligns most closely with your goals, lifestyle, and financial circumstances.

When it comes to making strategic business decisions tied to operations like waste management and recycling, a common question we often hear as a managed waste services provider is “Should we rent or buy our recycling equipment?” Since no waste or recycling program is identical, the answer may not always be straightforward. It is important to examine several different factors that are integral to your business’ operations, growth, waste streams, and more to help inform your decision and garner the most valuable return on your investment. Let’s explore a few common questions and considerations to determine whether renting or purchasing your recycling equipment is right for your business.

Back to Basics: Evaluating Your Waste Streams

To try and find peace of mind with the recycling equipment you are using from the outset, first evaluate scale. Regardless of whether your business is considered a small, medium, or large-scale operation, start with a waste audit to identify the overall volume of waste your business is generating day-to-day, including evaluating waste-to-recycling ratios based on practices currently in place or purchasing volume of raw materials. An audit will provide a more holistic picture of the waste you are generating most frequently and whether those types of materials, coupled with overall volume, warrant specific equipment.

From balers and densifiers to shredders and compactors, these equipment options all serve different purposes to properly dispose of waste and recycling materials. And depending on the size of your facility, you may need to customize your program a bit further or set up specific machinery in designated areas to process specific materials or total volume. There can be a significant price difference depending on these factors, so it is important to first match the machinery to your waste output and operations to minimize cost and maximize operational efficiencies.

In the marketplace today, I continue to see new advancements in recycling machinery as new manufacturers emerge or existing suppliers make improvements to their line of equipment offerings and features. Working with a managed waste services provider can help take the hassle out of this process by understanding which equipment is right for your business model and then leveraging trusted relationships with those manufacturers to negotiate a fair leasing or purchasing agreement.

Go with the Flow as you Grow
Reviewing your company’s growth projections is another valuable step in the process of determining which route to take. For example, think through some of the following questions to better understand how your business may evolve in the short- and long-term:
• Do you anticipate any changes to your current business model?
• Are you planning to open new locations or take on new clients?
• Do you predict your sales revenue to grow moderately or exponentially (e.g., from $20 million to $100 million)?

Where you see your business going within the next five to 10 years should factor into your decision to either rent or buy your equipment, especially for retailers. As you grow, your waste streams and processing volumes will also change, furthering the need for new or different equipment that can handle increased recycling output at your facilities. If you anticipate high growth rates, renting your equipment may be more advantageous than buying, as there tends to be more flexibility to adjust your equipment and specifications rather than making a capital investment worth thousands of dollars in specific machinery that may not be suitable to your long-term waste and recycling program specifications.

Fine Tune your Financials
Recycling equipment is not inexpensive; however, there are approaches to ruling out which financial strategy makes the most economic sense. When identifying your waste streams and potential growth projections, an equally important consideration is understanding how you will finance the equipment and how that capital investment, whether renting or purchasing, will impact your business’ bottom line.

The most strategic benefit to purchasing your equipment outright is inevitably reducing or eliminating recurring payments altogether. This goes back to the analogy of deciding whether to lease or buy a vehicle. For example, do you invest more capital upfront against your operating expenses with the mindset that you will eventually no longer have to pay for that piece of equipment? Or do you consider financing recurring payments that will allow you to make changes down the line or trade in for something new?

If purchasing seems like the right path for your business, just ensure you have a true understanding of what equipment you will need to support your waste and recycling program before signing on the dotted line. While eliminating ongoing costs may end up saving money in the long run, purchasing the wrong type of equipment will not bolster your revenue or operational efficiencies if it ends up unused, collecting dust in your warehouse. Whereas, if you decide to rent your equipment, even though you will have a recurring monthly or yearly payment, you may be able to adjust or upgrade your equipment more easily if needed or desired.

Preventive maintenance costs and fees should also be factored into any renting or purchasing decision for your recycling equipment. Get an understanding of whether preventive maintenance, machine servicing or repairs are included in your rental or purchasing agreement. In most cases, if you purchase your equipment outright, maintenance fees will not be included. Therefore, if your machinery breaks down or requires maintenance of any kind, you may need to seek out a third-party supplier for potentially costly repairs. Whereas, for most rental agreements, suppliers will commonly tack on those preventive maintenance fees within your fixed monthly total to account for and address any fixes should that scenario arise.

Enlisting the Experts
If you have closely evaluated and considered these elements but still are not certain which path may be most advantageous for your business, consider consulting with a professional managed waste services provider. A team of experts with access to firsthand knowledge of equipment options, advancements, and a network of diversified suppliers can help you evaluate the various pros and cons and tailor a path forward that maximizes your return on investment.

This article was originally published in Waste Advantage Magazine