Rental businesses of all kinds serve an essential purpose in markets everywhere, providing access to essential equipment and other goods for people who need them for their business to function, but do not have the storage facilities or funds to buy them outright. However, there’s a lot to consider when looking into starting a rental business.
What Is a Rental Business?
A rental business is quite simply a business that provides rentals. This concept can cover a wide range of different areas, renting everything from jet skis to jackhammers. While that’s the view from the outside, the business model has a bit more complexity to it than you may realize.
When starting a rental business from scratch, a business owner must acquire equipment to be rented out. This purchasing represents the initial investment needed to start the business. Ideally, the money brought in from rentals will grow over time to be more than the initial purchase cost of the equipment.
Because the rentals are the only revenue stream for the business, they also need to cover all of the other costs like maintenance and utilities. This amount may sound like a lot, but rental businesses can thrive by having the right inventory for the market they’re in.
Are Rentals Right for My Business?
If you’re looking into starting a business, there are many different options out there for you to consider. So why exactly is starting a rental company the right move for you? Well, it might not be. You need to consider how well the model meshes with you, your resources, and your market.
One point to consider is that the rental industry does have considerable profit margins. In the end, this means that there’s the potential to make significant income from your business and to continue to expand and build wealth over time.
You should also consider what running the business is actually going to entail. At its core, the rental business is heavily focused on customer interactions. You’ll have to be able to inform your customers and provide excellent service every time. If that sounds like something you can do, then a rental business may be right for you.
What Are the Costs of Starting a Rental Business?
Cost is an essential factor to consider when looking into how to build a rental business. Like essentially any other business idea, starting an equipment rental business is going to require money to get started. Because you can rent many different things, the cost can vary widely.
You’re going to need inventory to get started, and that means buying equipment to rent out. Established businesses aren’t buying equipment all at once but instead, rely on incoming revenue to replace and update equipment from time to time. This approach isn’t an option at the start, so you need another way.
Many small business owners seek out financing to get their business off the ground. Whether through your own networking or a financial institution, this capital can help you establish your inventory. Of course, you’re going to need a well-thought-out and developed business plan to convince investors.
How Can I Identify a Rental Niche?
Determining what specific kind of equipment you’re going to rent is essential to how to start a rental business. There are so many things to consider here such as:
- What market you’re in
- What’s the competition like
- Is a niche underserved in your market
- What you resources are
- Do you have any contacts or connections that may help you in a specific niche
- What just seems like the right fit for you
Ideally, you should be choosing something that you are interested in and know something about. This strategy gives you an upper hand when learning how to run a rental business and will make running it that much more enjoyable.
Rental business ideas can range from bounce house rentals to snowblowers, so there’s an incredibly wide range to consider. Always make sure that the area you’re choosing is something that’s going to have a reliable and steady market in your specific region.
How to Choose the Right Products to Rent?
Once you’ve secured financing and made your choice as to what kind of rental business you’re looking to start, you need to go about acquiring your equipment and products. What’s important here is to focus not on building the largest inventory but on building the most effective inventory in your niche and region.
You don’t want idle inventory – equipment that sits there and is never rented out. Instead of trying to cover all of the bases, focus on having enough of the fundamentals within your niche to meet demand. You can always broaden your inventory later.
So – ask yourself, what are the essential products my niche needs throughout the year? Are there certain jobs that require only a specific set of product rentals that I can easily supply?
In fact, take a look at some of other rental businesses in your niche and see what products they offer. If they seem to be broadcasting certain products more than others, those may be some of their best sellers.
If you are having a hard time, reach out to businesses in other regions that match your target customer and ask what equipment they rent most often. You may not always get an answer, but any feedback you get will be gold. Plus, since you are reaching out to other regions, you do not lose any credibility with potential customers.
Getting a good deal on equipment purchases is also essential. You should get to know how high-end and low-end purchases really matter for specific types of equipment. If low-cost equipment is just as good, that’s what you should be getting. Keep an eye out for used equipment for sale as well if you’re able to reliably judge its condition.
Will I Need My Own Facility?
You need somewhere to keep the equipment you rent out, somewhere for customers to pick it up and drop it off, and somewhere to do business in general. For some types of rental businesses, you might not need more than a small storefront rental on a busy street in town to make the most of it.
However, if you’re renting out larger equipment, or even vehicles, you might want to consider purchasing or building your own facility. Whether to purchase or rent commercial properties for any business is always a hot-button issue, so it will likely come down to the needs of your specific business.
How Can I Handle Maintenance?
Maintenance is incredibly important for rental businesses. Your equipment makes up the value of your business from which you derive revenue. If you don’t take care of that equipment, you’ll see replacement costs grow to exceed rental income and eventually start losing money.
The most important thing is to establish a maintenance schedule and follow it. Different types of equipment will have different maintenance needs, and you should take the time to find out what these are and plan well in advance. You’ll also need to make sure you’re actively monitoring this schedule to ensure it’s really getting done.
What do I need to know about an Inventory and Reservation System?
Any rental business needs an effective inventory and reservation system to compete in the modern retail landscape. You can’t afford to go without reliable tracking and accounting of your inventory. Ideally, your website should be fully integrated with your inventory system to ensure it’s always accurate and available to customers.
The systems you use should make it easy to add and manage inventory, along with enabling online reservations. Making the entire process easier for your customers will lead to more rentals and a thriving business.
It also makes everything easier on the backend, as inventory management is one of the key challenges of running a rental business.
There are several different types of software solutions available for inventory and reservation management, however some can get away with using Excel and Google Sheets – it just takes a lot of time. Tools like Quipli bundle your inventory, reservations, payments and website experience into one and can simplify this entire process of your business.
How do I start getting customers?
Creating a marketing plan for your business will require you to exercise your creativity and knowledge of your customers and niche. Some of the most essential ways to get customers interested in your business are:
- Start a website. The first essential step is to have a basic website – however the better suited for handling orders, reservations, and accepting payment, the better your business will run in the long run.
- Use digital marketing strategies to build visibility for your website. This can include SEO, paid search ads, social media advertising
- Call your customers directly. Going direct to your potential customers – whether in person, telephone or over email, and telling them about your business and what you offer is a great way to get the momentum going when starting out from scratch
- Purchase ads in local newspapers, magazines, or radio stations.
Quipli Provides an All-in-One Solution for Rental Businesses
If you’re starting an equipment rental business, you should consider Quipli for all of your website, inventory management, and reservation needs. Our fully integrated platform makes it easy to manage your inventory and have all changes follow through immediately on your website.
By running your website through Quipli, you’ll have the same tools and features as major companies. The sleek and intuitive presentation lets customers access your inventory 24/7 and drives more of them to make reservations with your business.
Reach out to Quipli today to book a demo and see what we can do for your new business.