From Geoff’s Desk: Rent or Buy?

I live in the foothills of the Sierra Nevada Mountains near the Morrison headquarters in Chico, California. The winters here get chilly but are nothing like other areas of the country; still, if my family is going to be warm during the winter, I need to prepare.

Each fall I gather wood and rent a log splitter from the local equipment rental shop. It costs about a $100 to rent one for a day. Recently I was at the home center and noticed all the bright shiny log splitters out in front of the store. They were priced between $1,500 and $2,000. I had two thoughts: first, since I would only have to use the splitter 15-20 times to breakeven on my investment, I should buy. Second, since I only need the splitter one day a year it would take me 15-20 years to reach my breakeven point, I should rent. I needed a tie breaker.

As I walked around the home center I thought about the “total cost of ownership”. If I purchased the log splitter I would have to also pay well over a $100 in sales tax, fuel it whenever I use it (the rental place always provides a full tank of gas), do routine maintenance (a tune-up would certainly cost over a $100), and store it throughout the year. Buying didn’t seem so attractive anymore.

Now maybe you don’t have three cords of un-split firewood sitting in your driveway, but you may have some gaps in your finance and accounting team that need to be addressed. You have the same two options – rent or buy. If your need is full-time temporarily or part-time for the long-term, you may want to consider “renting” that interim CFO or Controller to serve your organization’s needs.

Finance outsourcing (or “renting”) as a solution to filling your interim CFO or Controller needs, is one way to keep your focus on your businesses operations rather than administration. There are many versions of “renting” when it comes to filling a gap in your accounting or finance department. For example, Morrison has assisted clients on full-time, multi-year long engagements, managing their entire finance and accounting department through periods of significant growth. With other clients, we work one to two days a month closing the books and preparing the reporting package, and with others, we’ve established their accounting systems and controls and are “on-call” whenever the need arises.

When assessing your options and determining what makes the most sense for your organization, think about the “total cost of ownership” when making your decision: Rent or Buy?

About the Author

+Geoff Chinnock is a principal with Morrison, providing business valuations, business planning (including budgeting, cash flow forecasting, strategic planning), feasibility studies, interim executive CFO services, competitive grant writing and special projects that don't fit into any conventional category. You can contact Geoff directly at gchinnock@morrisonco.netor via telephone at 530-893-4764 ext. 204.

image description

Questions?

We’ve worked with a wide variety of clients on a broad range of projects and are happy to discuss solutions that can best fit your needs.

Get in Touch