The fitness industry has grown over recent years because people have developed the need to keep fit. The majority of people want to fight obesity and lifestyle diseases. Fitness centers have mushroomed, and some are too small and can only afford fitness equipment hire. Although some exercise forms do not require equipment such as aerobics, it is important for a fitness center to have the equipment for all-round exercises. Therefore this paper will evaluate whether it is wise to hire or purchase a piece of fitness equipment.
Advantages of Hiring
It is not easy for a person to start up a fitness center because it is capital intensive. Therefore, fitness equipment hire can be an option for a start-up firm. The owner does not have to commit a large amount of money to purchase the equipment. The business will still have resources to run other affairs such as paying rent and utility bills. The business does not get into debt because they have to purchase the equipment upfront.
Additionally, hiring equipment allows the fitness center to get updated equipment. Technology is very fluid, and also the interests of the clients seeking services from the fitness center keep on changing. Therefore getting into a lease agreement for equipment helps the business remain relevant amid the changing environment.
The business leases new equipment as demanded by the clientele, and this helps the business remain competitive. The owner terminates the hiring contract for the old machine and gets into a contract for updated equipment. The clients will enjoy using machines that function effectively without having downtime. Some leasing companies offer services such as maintenance during the hiring process, and the business center does not have to incur the cost.
Disadvantages of Hiring
Some companies leasing out the equipment require the business owner to put in a deposit before using the equipment. Therefore cumulatively, the owner can incur a lot compared to purchasing the equipment upfront. The fitness instructor can also not obtain a capital allowance where the equipment is for lease below five years. The business also incurs expenses for a long period because the contract terms are rigid and extend for a long period. The entrepreneur can only purchase the equipment after the lease period’s expiry, which can prove expensive, especially when the agreement fails to consider the lease fee during purchase. Leasing the equipment for a long time puts the business in jeopardy because it has to keep on incurring the lease fee. The business does not own the equipment, making it hard for the business to use it as they want because it is subject to some conditions.
Advantages of Purchasing
Purchasing the equipment allows the entrepreneur to claim ownership. The ownership means that the business has an asset that increases the value of the business. When the person decides to walk out of the fitness industry, they can sell the business plus the assets.
Additionally, after using the equipment, the entrepreneur can sell it and use the money to purchase updated equipment. Therefore the business does not suffer because the owner can sell the asset before it becomes obsolete. Owning a machine means that the entrepreneur can customize the machine as they deem fit. They can change the paint to fit with the color theme of the center. Additionally, purchasing the equipment provides the entrepreneur with an opportunity to incur a one-time expense; therefore, the business suffers once.
The thought of hiring equipment emanates from realizing that the entrepreneur does not have enough money to purchase it upfront. A business person can also opt to hire because they do not want to incur additional costs, such as transport and maintenance fees. Further, a business can hire a piece of equipment, especially if it wants to change equipment before becoming obsolete.
Besides, the business can lease a piece of equipment because they do not want to take out a loan to purchase it. On the other hand, purchasing the equipment provides the business with an asset. The asset improves the value of the business, even at the point of sale. Also, purchasing allows the owner to customize the equipment in all aspects because they have possession and ownership.