While some of us are better at sharing than others, the sharing economy seems to be here to stay. The sharing economy is simple: assets or services are shared by private parties or individuals often using the internet. The best known examples of this in action are Uber and Airbnb.
The trend began with a focus on the “greater good” as sustainability concerns came to the forefront. Although this trend has been disrupting industries, it is offering consumers new alternatives and has now started to reach the construction industry.
So what does this mean for those in the construction industry?
As an owner of construction equipment, you can use the sharing economy to your benefit. How? Rental intermediaries are now available so you can rent out your equipment when it is idle. The intermediary (i.e. the construction equivalent of Uber) joins renters with equipment owners and does the necessary due diligence to make sure the deal is secure and the equipment is safe.
The benefit? Your equipment generates revenue for your company at times it would normally sit idle. This allows you to match cash outflows for your equipment financing and maintenance; and could mean getting the new machine you have been eyeing quicker than expected. So just like you would hire a part-time staff member when you don’t need someone full-time, you can use the sharing economy to purchase equipment for use part-time while generating revenue full-time!
The good news is not just for those who have the newest and best construction equipment! Those who need a specialized piece of equipment for a job can also benefit by having low cost access to the best equipment, potentially even with an experienced operator. So rather than needing to secure financing to buy a piece of equipment for one project, you can rent it from another company in the industry. The ability to rent specialized equipment is instrumental to the growth of small construction companies. By renting as growth occurs, the company is better able to afford or obtain financing to purchase equipment in the future when it is needed more regularly.
The sharing economy in the construction industry seems pretty win-win. Of course traditional equipment rental companies will not necessarily agree, but much like Uber and Airbnb, the added competition can lead to improvements in more traditional offerings. By embracing this trend, everyone can benefit from access to better products and services at a competitive price. So get sharing for the good of the planet and your bottom line!
Written by Kimberly Aitken, CPA, CA, Co-Leader of RLB LLP’s Construction Team. Contact her at 519-822-9933 or visit www.rlb.ca.