Hire business start uo

[Gunners]

Not sure if this is right.....
So let's say a new machine and sell in 3 years when warranty is up and taking advantage of a 0% finance

Bobcat E10 no idea what they are new now but let's say 15k spread over 3 years is £420 a month if you can keep it on hire every week for £150 that's £180 a month profit. End of the 3 year term £6480 plus the sale price of the machine £10k if your lucky so not far off so a total of hire and sale of £16.5k

Seen a price for a e26 at not far off 32k based on the same pay over 3 years and sell off your looking at £890 a month and considering you can hire a 3t for £220 a week If you managed to keep it out every week for the year that's a £120 loss so for the 3 years a loss of £360 and then if your lucky £25k for the machine so a total loss of £7360. Ok you could spread the machine to 5 years, which takes the monthly to £535 so £345 a month profit, so £12420 for the 3 years plus the 25k is £37420 then minus the £12.8k remaining in the finance for a total of £24620

Of course the machines won't be out all year and you can get a premium for single and two day hires, but you still need insurances, delivery vehicle, repairs that won't be under warranty, yard/storage, even finance rates if couldn't get 0%

The only way they seem to make money on paper is when the machine is sold, unless of course the machines completely paid off after a few years, then the E10 would be 7.2k a year and the e26 10.5k

I don't think it works when you have to use finance. I think its more along the lines of if you had £1m in the bank returning 5% thats £50k/ year.
Put 500k into machines, bought 20% or more below retail value (might even be more than this?) But say you went mad and bought
10no Micros @ £12k = £120k
10no 1.5t machines @ £16k = £160k
10no 3t machines @ 28k = £280k
....... ok I'm already over budget and I've not bought the obligatory set of OX tools for the shop yet... Ok budget increased to £800k
5no track barrows @ £8k = £40k
5no 1t dumpers @ £14k = £70k
5no 3t dumpers @ £18k = £90k
5no 5m telehandlers @ £50k = £250k
2no Lorries to run it all around.... Stump grinders, Wacker plates, staff wages, a yard, insurance.... Ok £1m isnt going to get you anywhere in this game.

But the principle remains, £1m in the bank earns £50k/year. Put that into plant, gaining minimal running costs because everything is new and under warranty (assuming damage is paid for by customers!) run it for 3 years, most machines will have 1000-1500hrs on them, sell them for not much less than what you paid having earned hire out of them at the same time. Or better still, sell nearly new machines to people at inflated prices because you have them and they cant get hold of them for a year - it goes on... Probably returning you north of 20% in margin which is why it works for cash rich people.

Is there money to be made in plant hire - yes. But as others have said, not at the small end of the scale unless you go with something very specialist where you can charge well, the kit wont get so abused but it will have a lot more standing time not earning.
Not sure I'll be starting Gunns Plant Hire anytime soon judging by my maths above

 

[Regy53]

I did a business plan in 2016 with somebody who wanted to do hire and asked if I would come in on it. Using premises etc we needed something like 30 machines to make a real living for one.

We recently bought two machines. We paid 10500 and in the paperwork was the original invoice from 2017 for 14.5 k. So 5 years to make 4 k………. Machines had done 2 k hours

I’m sure they were profitable

 

[Canal Navvy]

That makes sense, one of our local hire companies runs tidy kit and fully checks & photographs on collection. I'm certain that their used kit would command a good residual.
The local builders seemed to be put off by the expectation of looking after kit and go elsewhere
One local small scale hirer was shocked to see a hirer write off a brand new grading bucket in one hire

 

[Brendan]

What happened to the guy on about starting welfare hire business up? If he on here still did they ever get started?
I sold one of mine a d will probably be seeking the other one as have an extension on the go. Did a little advert for it but never pushed it too hard and only got a couple of leads although one was for a charity day. Mine is really for my own use and the work we do for one of the clients, they have to provide them depending on number of days in oriject, so may as well be getting paid for mine to sit there

 

[GazCro]

I did a business plan in 2016 with somebody who wanted to do hire and asked if I would come in on it. Using premises etc we needed something like 30 machines to make a real living for one.

We recently bought two machines. We paid 10500 and in the paperwork was the original invoice from 2017 for 14.5 k. So 5 years to make 4 k………. Machines had done 2 k hours

I’m sure they were profitable

How much were the new replacement machines though, that could have eaten into the 4k.
There's too many variables to give a definitive answer tbh. If someone is going blind into the hire job with nothing else to offer and no experience it'll likely just be an exercise in wasting money. It depends on area as well, if there are no big hire companies nearby you could have a captive market which in time you could get to know who's who and and pick and choose the hires to keep running costs to a minimum but you'd likely have to be in an area with a fairly small number of potential hirers. It's never going to make much money unless you've a lot of gear out or offer something else as well.

 

[GazCro]

I don't think it works when you have to use finance. I think its more along the lines of if you had £1m in the bank returning 5% thats £50k/ year.
Put 500k into machines, bought 20% or more below retail value (might even be more than this?) But say you went mad and bought
10no Micros @ £12k = £120k
10no 1.5t machines @ £16k = £160k
10no 3t machines @ 28k = £280k
....... ok I'm already over budget and I've not bought the obligatory set of OX tools for the shop yet... Ok budget increased to £800k
5no track barrows @ £8k = £40k
5no 1t dumpers @ £14k = £70k
5no 3t dumpers @ £18k = £90k
5no 5m telehandlers @ £50k = £250k
2no Lorries to run it all around.... Stump grinders, Wacker plates, staff wages, a yard, insurance.... Ok £1m isnt going to get you anywhere in this game.

But the principle remains, £1m in the bank earns £50k/year. Put that into plant, gaining minimal running costs because everything is new and under warranty (assuming damage is paid for by customers!) run it for 3 years, most machines will have 1000-1500hrs on them, sell them for not much less than what you paid having earned hire out of them at the same time. Or better still, sell nearly new machines to people at inflated prices because you have them and they cant get hold of them for a year - it goes on... Probably returning you north of 20% in margin which is why it works for cash rich people.

Is there money to be made in plant hire - yes. But as others have said, not at the small end of the scale unless you go with something very specialist where you can charge well, the kit wont get so abused but it will have a lot more standing time not earning.
Not sure I'll be starting Gunns Plant Hire anytime soon judging by my maths above

Don't forget finance helps cashflow and also can have tax benefits. It's a very nice thing not to need it but you can also use it to your advantage.

 

[Gunners]

Don't forget finance helps cashflow and also can have tax benefits. It's a very nice thing not to need it but you can also use it to your advantage.

I completely agree. But its worth understanding that finance costs money and therefore will take a slice of the margin. Its also difficult to get the best prices on kit if you are going the finance route (bobcats 0% for example). But certainly has advantages too

 

[JD450A]

What happened to the guy on about starting welfare hire business up? If he on here still did they ever get started?

He started and can no longer afford internet to post on here and is now living in a welfare unit on the side of the A12.