Leasing calculator - will allow you to calculate the cost of your
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Leasing Calculator
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Step 1. Analysis
Of course, first of all you need to perform market analysis and find potential clients.
You need to pay attention to the following factors:
А) Regional trends in national economy – which activities prevail in your region: road building or mining, construction of utility facilities or logistics and transport infrastructure facilities, housing and public utilities, industrial or agricultural enterprises, townhouse villages, residential houses etc.
Б) Economic programs implemented by regional and municipal authorities, in order to take part in a project, where special machines are be necessary.
В) Local climate and specific features of your region. They also may predetermine need for particular equipment. In some regions there may be necessary machines for roads clearing (for example, snow removal), in some regions – machines for regular hydraulic engineering activities, in some regions – machines for geological or mining activities, for forestry industry or agriculture, for arrangement of gardens and parks, for sports infrastructure or golf courses etc. In this context it is especially profitable to use leased equipment rather than own, because in this case you have space to manoeuvre depending on season and demand.
Г) Find potential clients. Make calls to companies – first of all private companies, and then, when you have experience, you can take part in tenders organized by state and municipal authorities. It is highly likely that utility companies or road building companies will have needs that may be met by you only.
Д) Maybe statistical data will be also inspiring. More than 27 thousand or special machines, apart from truck cranes, dump trucks etc., are currently registered with the Ministry of Agriculture of the Republic of Kazakhstan. About 65-70% of the special machines were manufactured more than 7 years ago.
Step 2. Business plan
It is necessary to prepare appropriate business plan based on analytical data with project implementation steps, thorough calculation of costs and, which is especially important – assessment of risks. Most probably you will need professional assistance at this step. It would be better to engage a specialist to the project – in this case he will perform calculations with more responsible attitude.
Step 3. Search for parking lot
It is necessary to find a place for parking lot, where your special machines will be placed. It is recommended to have covered parking area and convenient traffic interchanges. This is a good option, but in this case you will have to take rental payments into account when calculating monthly expenses. However, many entrepreneurs place front loaders and other machines in the yards of their owners.
Step 4. Selection of business model
А) Purchase of special machines for leasing.
Б) Lease for performing works independently.
В) Sublease of leased equipment.
It is clear that purchase of equipment is more cost intensive option, however it is more reliable as to search for work orders. In this case you need to calculate profits thoroughly. There are many types of special machines and you may not always purchase exactly the type of equipment that is in the highest demand.
Lease is more flexible option. It is task specific and always depends on demand: whether it is necessary to use large backhoe loader or the work may be performed with a mini-excavator, whether grader or pavement roller are necessary etc.
Sublease of leased equipment is an especially useful option for construction companies, when certain equipment is not in use.
Step 5. Registration of business and special machines
Special machines. Nowadays you can register special vehicles and special machines in the RoK within 3 hours instead of 15 days, like it was a couple of years ago. Services are provided based on one-stop-shop approach — documents are reviewed in the same place where special equipment is examined. Special machines are registered by the regional agricultural departments and specialized citizens service centers (Specialized CSC’s). As well as for ordinary vehicles, it is necessary to pay state duty and transport tax.
As to insurance, the law does not require compulsory vehicle owners' civil liability insurance. There are certain restrictions on voluntary insurance, one of them –special machines may not be manufactured more than 13 years ago.
Business. As to registration of business (LLP or Individual Entrepreneur), it is necessary to assess thoroughly pros and cons of each type. Registration of LLP is a bit more “ bureaucratic”: in particular it requires charter of LLP (in two languages: Kazakh and Russian).
Individual entrepreneurs pay smaller amounts of taxes than LLP. If they work under patent, they are allowed not to use cash registers and not to maintain accounting books. I.e. they can save money, that otherwise would be paid to accountant. This option is not available to LLP. Administrative liability (penalties) imposed on individual entrepreneurs is less severe than that imposed on LLP. However, as to collection of debts – personal property of the owner of individual enterprise may be seized, meanwhile in case with LLP debt will paid by company, rather than its founder.
But with simplified taxation system LLP has more advantages: maximum amount of quarterly income allowed by the law with this system is 10 million KZT only, meanwhile amount for LLP is 25 million KZT.
Therefore it is necessary to choose variant suitable for you taking into account expected income and work conditions. In order to have possibility to switch between modes of activities it is better to choose and register several codes according to Common Classifier of Economic Activity.
Step 6. Selection of equipment
The most popular and marketable currently:
Experienced owners and lessors recommend to use foreign special machines. The following manufacturers of special machines and equipment for various purposes traditionally hold the leading positions:
Caterpillar® (Cat® brand, USA). The company manufactures (and leases) backhoe loaders, mini-loaders, telescopic handlers, excavators, bulldozers, motor graders, front loaders, asphalt pavers, rotary hoes, pavement rollers, recyclers (machines for road pavement recovery), hydraulic excavators for mining operations.
Komatsu (Komatsu Ltd, Japan). The company manufactures construction and mining equipment: excavators, bulldozers, pipe handlers, rigid dump trucks, articulated dump trucks, wheel loaders, backhoe loaders, skid steer loaders, motor graders, mobile crushers, wheel dozers, warehouse equipment, diesel loaders, petrol powered loaders, electric loaders, tyre handlers.
Hitachi (Hitachi Ltd, Japan). The company manufactures mini-excavators, medium-sized and large excavators, mining excavators, wheel excavators, special equipment (special models with equipment for certain types of works), wheel loaders, dump trucks, HSC cranes.
These three brands manufacture half of special machines in the world. However there are certain market niches where they do not work, and you can refer to other reliable manufacturers. For example: Volvo (Volvo Group, Sweden), South Korean Doosan (Doosan Group), among other equipment – amphibious excavator etc.
Step 7. Information about you
In order to receive orders, you need to advertise your services. Find special Internet sites where you can publish information about your services by yourself. Another effective method – calls to companies to offer your services and distribution of information about you via your friends and other people you know.
If you have money for commercial advertising, it is effective to advertise special equipment using images: Internet banners, advertising pages and at specific web-sites.
It is unpractical to create your own web site at the initial stage: you will have to spend much time for promotion, that is why it is just waste of time to sit and wait for calls after its launch.
It would be useful to visit industry-specific exhibitions, conferences, forums, where you can find customers or useful contacts.
And the main thing – employees. You need highly qualified specialists for work with special machines. This work is difficult and demanding, a person without experience and skills can ruin your business. Therefore, expenses on excavator driver and other workers who have qualification necessary to operate special equipment should be planned immediately at the market level so as not to be at a loss and not to get bogged down in lawsuits.
Let’s summarize. Of course, there is competition, untimely payments and other hidden pitfalls in this business sphere. But we can see amazing examples of successful work everywhere. They confirm that it is not difficult to make money from special machines, any practical person can do it. You need only to have desire and be active. There are all necessary conditions in the Republic of Kazakhstan for purchase of reliable special machines Caterpillar and their maintenance.
