How To Start An Equipment Rental Business: Your Guide to Success
In this article, we discuss how to start an equipment rental business, what to consider when planning to start your business, and offer proven tips and insights to help your business thrive.
An equipment rental business start-up can be an extremely lucrative and effective form of business or income that you can grow to a (relatively) passive income stream. In order to keep your business viable and profitable, there are several key considerations that you should think about when it comes to administrative functions, hiring out equipment and other elements of your business operations.
Is an equipment rental business profitable?
Before beginning your business, it is important for you to consider if the model will suit your current needs. One of the key ways to do this is to consider a simple question: “Is an equipment rental business profitable?” Equipment rental business profitability can vary greatly depending on your connections, location, ability to procure top-quality equipment in the industry, and more. Because of this, you may begin to find new and best ways to boost your equipment rental business profitability.
Learning how to make your tool rental business profitable comes down to determining what barriers you have to overcome in order to reach success. It is possible to make a rental business profitable and to reinvest that profit to continue gaining additional benefits. However, you must start off with a significant investment in industry-leading tools and equipment to make your business competitive against other competitors.
There is no true limit to the amount of profit that your rental business can make. This is due to the fact that these businesses are easy to delegate, leaving you more opportunity to expand your reach and start new sectors in more profitable areas. Your first rental business will ultimately be a learning experience and can serve as a framework for additional businesses if you feel so inclined.
Most profitable rental equipment
Before you make your equipment investment, you’re likely working to evaluate which investments will get you the most profitable rental equipment. If you plan to serve a certain subsect of the industry, that is vital to take into account. However, if you’re looking to serve the general event and performance space, there are certain timeless pieces that you can begin with, and continue to expand upon over time. Consider conducting micro surveys of individuals in your space through services such as OnePulse or other e-services, allowing you to get real-time data based on current trends. You can also conduct a competitor analysis to determine which offerings are most appropriate for your current phase of business.
How much money do you need to start a rental business?
An equipment rental business can be a significant upfront investment as you purchase your gear, and can continue to offer additional instances of cost for one-time or recurring events — such as repairs or travel and shipment costs. You can also factor a variety of different factors into account, such as:
- Business licensing fees
- Incorporation costs
- Recouperation costs
- Location rent fees or monthly costs
- Other operating costs, such as employee payroll
These elements are important to consider when you’re creating your budget for starting a rental budget of any type. While the cost up front may seem significant, you can easily obtain a small business loan from banking institutions in the form of credit or a lump sum. You can also consider private loans or financing as well.
No matter how you choose to fund your business, you may consider putting together a detailed financial plan and budget for your equipment rental business to show investors exactly what you plan to do with their cost, and how you plan to recoup the amount and pay it back in full. Being as detailed and as up front as possible can help to increase your chances of securing financing on the first few rounds of attempts, and can speed your process to launch.
Equipment rental business model
A business plan can serve as a guiding framework for your business, and acts as your roadmap to success. Your business plan should have all considerations of your business listed, explained, and planned for, ranging from logistical needs to overall short and long-term goals. While there is no explicit equipment rental business model, you will be following a B2C framework if you are dealing in rentals only. Using this, you can craft a thorough business plan for your tool rental business. Below, we’ve listed everything that you should include in your small equipment rental business plan:
Conducting a market analysis is valuable, and shows investors and stakeholders that you have considered the needs of your target market. This should be toward the front of your business plan, and can illustrate how your business can best meet the needs of your ideal customer. When conducting market analysis, consider including a form of a customer profile timeline, highlighting their journey through your marketing funnel. This isn’t just advantageous to your marketing team and salespeople, this can help you to identify any points of weakness before presenting your business plan, helping you to make it as strong as possible before pitching to investors.
When creating your market analysis, micro-surveys may be helpful, as well as any spec sheets that highlight your specific product features or offerings that can directly address customer needs. You can connect with this concept more by creating customer profiles, otherwise known as personas or avatars. In this part of your analysis, you’ll be identifying core demographic and defining characteristics of your audience, and demonstrating how your products can help each sub-class of your potential customers. Illustrating these concepts with as many visualizations as possible can help you to accurately organize your information in a digestible way. Always be sure to cite your sources, and verify all data points and statistics that you choose to use to protect your credibility.
Now that you know your ideal customer, you will want to analyze your competition. Honesty is vital here, and can more accurately enable you to see what your competitors do well, and what they can improve on. Taking this information and creating strategies that apply to your equipment rental business can help to easily cement your place in the market and elevate you to a viable choice for your ideal customer.
When conducting your competitor analysis, it’s important to leave no stone unturned. Review everything that you can find, including their social media presence across all platforms, customer reviews, website content and ads, as well as their offerings and price points. Be as thorough as possible, as all of this information can inform your own lucrative business and marketing strategy, which we’ll cover next.
Before you launch your business, it’s important to solidify an initial marketing strategy that you will use to begin to reach your ideal customers. Taking a diverse, multi-channel approach to outreach can significantly boost your opportunity to convert your prospects within a shorter timeframe, especially if you rely on your previously created avatars or personas. Taking information learned from your competitor analysis and creating outreach around their gaps can be a great place to start, and you can continue to refine your messaging over time as you determine what “works” for your ideal audience and business.
Your marketing strategy should be dynamic and reach across a wide variety of channels. Beyond doing online ads, you may consider the following social media channels to use when building your presence:
Additionally, there are other avenues of marketing you can use as well, which we’ve summarized below:
- Content Marketing: Content marketing is done through your website and blogs, using organic content and optimizing it to have certain keyword density that is attractive to search engine algorithms. This is usually under the umbrella of SEO, otherwise known as search engine optimization. You can hire a skilled copywriter to assist you in creating your content and optimizing it for Google’s processes.
- Social Media Ads: Beyond simply posting on social media, you can also create ads that are designed to speak to your ideal customers. There are a variety of ads that you can use, most commonly centered around lead generation or retargeted. Every platform has different preferences, so you may consider bringing on an ads specialist or hiring an AI-based service to help you dial in your campaigns.
- Search Engine Marketing: SEM, otherwise known as Search Engine Marketing, is helpful and can place your ads directly on the search page. This is great for brand recognition, especially if your site is built and optimized for people to land on when they click into the ad. An SEO or SEM specialist will be helpful to help you create and launch your campaigns in the search engine.
- Community Outreach: There is still a lot to be said for simple community outreach. You will make a splash with local customers by showing up where they are and building brand awareness — such as farmer’s markets or performances.
This is the framework budget that you will include to show investors exactly how you will spend your money. You can use your budget that you created when determining if your business will be profitable, and highlight the key figures that you will need to get there. You can make this component of your business plan as effective as possible by using graphics, statistics, and visual mediums to convey your needs easily to key stakeholders that could invest in your business.
Proven tips to start an equipment rental business
Now that you’ve taken the leap to start your own equipment rental business, it’s time to optimize. Below, we’ve compiled a list of the top proven tips to help you through the launch process:
Create a plan for routine servicing and preventative maintenance
Taking the time to create a plan for routine and preventative maintenance for your rental tools is important not only for your team, but also for your investors. This can show that you have anticipated the needs required in order to keep the equipment profitable and protected, offering insight into your plan for longevity and user safety. This can also reduce the amount of customer service complaints and risk. Sharing this plan as part of your business plan is ideal.
Get legal help for your contract drafts
Never launch without a legally binding contract. Hiring on a lawyer to help you draft initial copy for your contracts is a great idea to protect your investments and to keep the interests of all parties as protected as possible.
Invest in an equipment management software system
Investing in a centralized equipment management system can help you to easily navigate equipment location, maintenance needs, team management, and more. Housing this in one simple software can help you to easily access and complete reporting, management tasks, and more. This is one investment that you won’t want to miss.
Launching your equipment rental business has never been easier
A tool rental business is a great business opportunity for 2022, especially as customers are more reliant on tech than ever before. This article offers key insights that you can use to successfully create, launch, and manage your equipment rental business.