In order to keep a logging business financially on track, an owner must keep enough working capital in hand to cover unforeseen hardships and expenses. Leasing logging equipment can help maintain working capital.
The forest product industry is a multi-billion dollar industry, and there are a wide range of opportunities for entrepreneurs who are willing to enter it. However, it requires substantial investment to break into the logging industry. Startups require multiple pieces of large equipment, and more equipment produces greater profits. For example, if a company is able to perform whole-tree processing, it is able to earn greater profits through the sale of wood chips rather than only the delimbed logs. This requires more equipment.
Purchasing new skidders, track hoes, and log loaders is rarely a wise decision for a start-up or established company. The capital required does not pencil out to an increase in profits because equipment must still be maintained, and an old logger works as well as a new. Used logging equipment is less of a financial burden, but it still costs a significant amount of money which may require bank loans. None of this is necessary with leased equipment.
Advantages of leasing
Lessees of logging equipment don’t need to be saddled with loans, and they can rely on consistent business expenses in the form of a lease payment. Furthermore, there is often the option to lease to own the equipment, so payments are not without long-term gain. One of the biggest advantages is maintenance, which is included in lease agreements. The only worry about equipment breakdown becomes the time lost in getting a replacement, but there’s more working capital to cover that loss.
For startups, a huge advantage to leasing equipment is financial statement appearance, which does not have a huge loan attached to it. If a startup eventually needs a loan, they will appear more stable with the extra working capital. It is a financially smart decision, and banks respond fondly to working capital that reduces their risk in a loan.
Equipment to consider leasing
- Feller buncher
- Stroke delimber
- Shovel logger
- Log loader
- Track hoe
- Log splitters
- Wood chippers
Leasing equipment offers opportunities for large and small logging companies, from industrial logging to firewood chopping. It allows companies to have quality log splitters and technologically advanced wood chippers. Leasing ultimately gives logging companies new and old the chance to run their business with less risk and more profit.