High-growth companies make mission-critical decisions all the time.
They know that over-leveraging resources in the wrong area is risky — and when it comes to renting equipment or buying equipment, the wrong decision can hurt the bottom line.
Robert Preville is a serial entrepreneur, investor, and strategic growth expert who has led several high-growth companies in the B2B arena. In 2014, he founded an innovative equipment rental marketplace, KWIPPED, Inc.
When it comes to sourcing specialized equipment for agile companies, Robert has seen it all — and he knows what will give a company the best chance at long-term success.
Read on to discover the 7 most important things you need to know before embarking on the process of sourcing equipment.
What you need to know about buying equipment
Unlike companies experiencing slow and steady growth, “fast-growing companies cannot make accurate long-term growth and revenue projections,” Robert explains. “Most high-growth companies I’ve worked with have a very small window for anticipating the future. There is a 90-day window for agile companies.”
As a result, growth-oriented companies need to preserve capital, and purchasing expensive equipment can make it difficult to do so.
Of course, the more you use an asset, the more it makes sense to own it. Still, factors beyond use also motivate a decision to buy:
1. The cost of ownership extends beyond the cost of the equipment alone
There is also maintenance, upkeep, and consumables. Consider storage and the accessibility of parts for large or specialised equipment. These elements can be costly and need to be factored into a purchase budget.
2. Owning equipment and understanding how to operate it are two different things
Make sure you have access to local expertise, or the expertise of the vendor you’re renting from.
“People solve problems, but equipment performs a function.” Robert says. “You’re building a house, not digging a hole.” If you don’t have the precise domain expertise for operating the equipment, you need to have someone who does on speed dial. What happens if you break the equipment? What if it malfunctions? Line up a solution before it happens. After could be too late.
What you didn’t know about renting equipment
“There are several reasons why renting should be an option,” Robert says. “Typically high-growth companies aren’t able to forecast production levels — and that can be scary. There is also an opportunity cost in spending 100k on equipment instead of directing it toward something like a marketing initiative.”
Here are a few of the reasons he says renting equipment can pay off:
3. You’re testing out production methods
When you’re creating something you’ve never created before, a little R&D is necessary. A lot of the equipment is very technical, and often there is more than one way to accomplish your task. To make sure you have the best solution for your application it’s wise to try before you buy.
4. You need to preserve capital
Robert shares an example: “We rent a lot of equipment in the medical industry. When a drug company hires a CRO to engage in a clinical trial, there is brevity involved in the project. So instead of buying, they will rent the equipment needed for the trial. By renting, you can often pass the expense off to your customers. You can’t do that when you buy.”
5. You can lean on your vendor for maintenance and support
Select a vendor who can maintain, repair, and calibrate equipment…even troubleshoot when something goes wrong. “When you’re renting street cones it’s not a big deal, but when you’re renting an endoscopic tower, you need to consider support and maintenance services offerings from the vendor,” Robert says.
6. Time is of the essence
One thing most companies can’t afford is a long and cumbersome sourcing process. “One of the reasons we started Kwipped was because we realized early on is that there was a lot go confusion around renting equipment,” Robert says. “The idea with Kwipped was to bring the process into a place of consistency no matter what you’re renting — whether a street cone or a defibrillator.
Leverage the sharing economy during periods of high growth
Ultimately, the growing equipment rental marketplace is a great example of what the sharing economy can do for industry.
“When I grew up, my mother told me, ‘Don’t get in the car with strangers and don’t go into a stranger’s house,’” Robert recalls. However, there has been a shift in this mindset with innovative companies like Uber and Airbnb. “The sharing economy is not new,” Robert says, “[but] the idea of sharing with strangers is new. It inherently makes people uncomfortable.”
However, in B2C scenarios, the stakes aren’t high: “If Uber doesn’t come, you get a taxi. If Airbnb falls through you can always find a hotel.”
To make the concept of the sharing economy viable in the B2B world when revenue, growth, and even lives are on the line, you need a responsible party to ensure functionality. Kwipped seeks to take the risk out of that process.
7. It pays to do your research
“Don’t assume the equipment you need cannot be rented,” Robert says. “There may not be a mass spectrometer rental store,” he says, “but there are a number of organizations that rent specialized equipment.”
You may be surprised by what your organization is able to source before committing to a large, make-it-or-break-it capital investment.
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