How to Improve Your Tool Business Profitability
Are construction equipment rentals a profitable business? Well, they certainly can be. The key is to make sure that you have an effective rental business plan in place for improving the profitability of your business. With these actionable steps, you can start your new company off right or revolutionize how you run your established business.
1. Study Your Equipment Rentals Target Market
Among the most important aspects of starting any business is defining who your target market is. You need to know who you’re going to be renting to so that you can get the right inventory and apply the right marketing strategies.
For some of the top equipment rentals, this mostly revolves around the scale of the equipment you’re renting out. Are you going to be renting excavators to contractors or tile saws to homeowners? Keeping your inventory focused on a specific niche can help make your business more profitable.
2. Know How to Price Your Tools to Be Profitable
Pricing is one of the most challenging tasks when it comes to establishing your tool rental business. For the most part, you’re going to have to make sure your prices are in line with your competitors’. If you’re charging more, your customers will likely go elsewhere.
However, make sure that the tools you invest in can be profitable at the rental rates you can charge. You can use our equipment rental calculator when developing your tool rental business plan PDF to get a more accurate view of your potential profitability.
3. Develop an Effective Tool Rental Business Website
Your tool rental business model should include having an effective website in place for your business. Many people today prefer to seek out information about companies online. Having a good website makes you easier to find, especially if you take the time to focus on improving your search engine rankings.
If you don’t have a website, you should get one now. Find a good website builder that has the eCommerce functionality you need. Quipli provides a website builder along with our integrated inventory and reservation software, making it easy for your customers to reserve rentals online.
4. Grow and Scale Your Tool Rental Business Through Digital Marketing
Digital marketing is among the most effective tools for how to grow an equipment rental business. While most rental companies can still benefit from conventional marketing like billboards, newspaper ads, and radio ads, digital marketing isn’t optional anymore. It’s a necessary part of your marketing strategy and can focus on areas like:
Search Engine Optimization (SEO)
Your website doesn’t just cater to customers but to search engines, as well. Using the right keywords and metadata can increase your rankings and get you more visitors.
Along with organic growth, search engines and social media give you the option to pay for advertisements. Google, Facebook, and other platforms have a simple model where you pay based on how many users click on your ads.
Facebook, Instagram, YouTube, Twitter, and more are simple ways to get information about your business to your customers. Each one serves as one more potential entry point for customers to find your website.
Many strategies can be used to improve your digital marketing. It’s important to keep track of the analytics that advertising and social media platforms provide. That way, you can find out what works and what doesn’t when it comes to driving customers to your business.
5. Keep Investing in New or Used Equipment
You can make your tool rental business profitable by scaling up your inventory. With more equipment to offer, you’ll be making more money while some costs stay constant. That translates to more profit at the end of the year.
Both new and used equipment can be great ways to reinvest money into your business. Determining whether new or used is the best deal varies between specific types of equipment. Keep in mind when investing in new equipment that your existing equipment will need to be replaced at some point.
6. Maintain Quality Working Construction Tools
Like in any other business, the quality of the goods or services you provide for your customers is paramount. You need to ensure that every customer is receiving working, well-maintained equipment.
This will help drive more business based on your reputation. Keeping up with maintenance also makes your equipment last longer, reducing replacement equipment acquisition costs and improving margins.
7. Have Proper Tool Insurance and Liability Waivers
Not having the right insurance and liability waivers can cut into your tool rental profitability when you end up having to pay for damages that would have been otherwise covered. Damages can extend beyond the cost of replacing tools, so you need to make sure that your business is thoroughly protected.
Insurance is one area you want to have clearly defined in your tool rental business plan. The prices you’ll pay will vary depending on whether you’re renting full-scale construction equipment or smaller home-improvement or landscaping tools. Typical rates range from $500 to $1,500 annually per $1,000,000 in liability protection.
8. Focus on Customer Service and Repeat Business
Customer acquisition costs can be steep and are a major factor in answering the question, “Are tool rentals a profitable business?” You want to maximize the value from each customer, and that means doing everything you can to drive repeat business.
You can improve customer retention by:
- Having clear communication to avoid disappointment
- Offering customer-loyalty discounts for high-volume clients
- Making sure your tools are provided in great condition
The value of repeat customers shouldn’t be underestimated, so you can always do a bit more to make sure they’re coming back.
9. Invest in Tool Rental Software
No matter what kind of business you run, you need the right tools for the job. When it comes to equipment rentals, you need the right software to manage your inventory and reservations. This lets you stay organized and provides you with clear and accurate data so you can understand how your business is doing.
Quipli has the rental business software you need to improve your profitability. With a fully integrated reservation and inventory system, you can rest easy knowing that your rentals are properly managed. You can contact Quipli today to book a demo and find out more.