Are you thinking about starting a rental business? Get off to a great start with these tips!
It doesn’t matter whether you want to rent out bikes, luxury cars, party supplies, … Our advice will help you make your rental business a success.
1. Study your market
Starting the exact same business in two locations mere miles apart can lead to radically different results. A bike rental downtown will have different customers than one by the beach, and they will have different needs. So before you get started make sure that you know what your customers are looking for!
The best way to do this is quite simple – talk to them. If you want to rent out construction equipment, talk to local construction companies. Kayaks and canoes, talk to tourists, etc. Some questions you can ask:
- What kind of equipment are you looking for? Basic or high-end? Which brands or specific items are most and least popular?
- How much are you willing to pay? Instead of pulling a number out of a hat, get at least a rough estimate of how much your customers are able and willing to pay.
- Do you need more than rentals? Are there other services you can offer to become a one-stop shop for your customers?
Professional market research can quickly become expensive, but you can do a lot yourself!
2. Don’t buy more, buy smarter
By knowing your customers and what they are looking for you can make smarter decisions about the equipment that you buy. Avoid idle inventory at all costs – it only takes up space and money that you could use to grow your business!
Don’t overspend on equipment at the start: buy your minimum viable inventory based on your market research. Once you get started, buy more of the equipment that is most popular and lucrative.
It is cheaper and easier to buy more equipment later than to get rid of excess unwanted equipment.
3. Find the best deal for your equipment
Unless you’re starting a rental business because you won the lottery and got bored, you’ll want to make the most of every cent or penny you spend.
Your equipment is likely to be one of your biggest investments so make sure that you invest your money wisely. Instead of blowing all of your money on the newest and best equipment you can find, consider your alternatives.
- What are your customers looking for? Will they will be twice as happy if you spend twice as much? Don’t buy high-end if they are looking for budget rentals.
- Can you buy used equipment? This can save you a massive amount of money, allowing you to buy more equipment or invest in other areas.
Interested in more advice on buying equipment? Check out our previous article on buying & financing your equipment.
4. Get your paperwork in order
Not the sexiest of topics, but an important one! The work you need to do depends on where you are based (here is an overview for starting a new business in the US)
Besides the formalities of starting any business, a rental business has extra insurance liabilities. Your entire business depends on non-employees interacting with your equipment.
So while you want to make sure you have good insurance for your equipment, your customers are your biggest risk. Even with no-liability waivers, make sure you have the right insurance. You don’t want one big hospital bill to jeopardize your entire business!
5. Stake your claim online
The good news first: you don’t need to invest a massive amount of time, money and effort into creating your website.
It is vital however that you have an online presence and that when people visit your site you create a good impression. The first thing your potential customers will do is search for information online. That is why you need:
- A professional-looking website that shows you can be trusted
- With the information customers need – what and how can they rent from you?
- That is easy to find online – even the best website is useless without visitors!
Looking for more information about setting up your own website? This article provides a more comprehensive overview.
Creating a presence on social media is important as well. If you rent to other businesses they are less likely to check Facebook for options, but they might look on LinkedIn. Here is some advice on using social media for your small business.
Even with social media, your own website is your most important online property – it is your home online, that is fully under your control. So make sure it reflects well on you!
6. Create partnerships
Start by asking yourself ‘What other products or services are my customers looking for?’
If you are starting a bike rental shop, your customers might also need:
- Places to stay – hotels, bed & breakfasts, …
- Places to visit- nature parks, museums, …
- Things to do – amusement parks, shopping malls, restaurants, …
Contact these companies or organizations and ask them if they would be interested in a referral partnership: if someone asks for a bike rental, they refer them to you. And if someone asks you for a place to stay, eat, visit, … you refer them to your partners.
By referring customers to each other, you create a win-win-win situation.
- You and your partners get more customers
- Your customers quickly and easily get the products or services they need
The referrals you make reflect back on you – so only make recommendations that you feel confident about! The last thing you want is customers complaining about advice you gave them.
This advice is valid for other industries as well – e.g. if you are starting an AV or party rental business your customers probably need catering and a venue.
7. Find the right tools for your business
As a small business owner you need to take care of more than just renting equipment. Accounting, communication with (potential) customers, managing employees, …
As luck would have it, we have created a list of business applications that we recommend.
8. Treat your equipment right
Your business depends on your equipment – no equipment, no rentals!
That is why it is so important that you take good care of your equipment inventory:
- Regular maintenance – spot & fix potential problems before your customers do!
- Prompt and thorough repairs – fix any issues quickly and thoroughly so they don’t cause you more trouble in the future
- Cosmetic fixes – your equipment shouldn’t just work like new, it should look like new as well! Make sure you create a good impression for (potential) customers
Take care of your equipment and it will take care of you!
9. Treat your customers right
Rentals are a repeat business – your customers only rent your equipment for a period of time, so if they need it again in the future they have to rent again.
Make sure that when they rent again, they come to you!
- Be more than just a place to rent – make your customers feel welcome and give them relevant advice and guidance alongside friendly service
- Create a hassle-free experience – don’t overwhelm your customers with procedures and paperwork
- Don’t wring out every last cent – would you rather make another $2 once or have your customers return and keep spending their money?
At the same time, don’t neglect general customer service. Here are some good tips to deliver a great customer experience.
10. Create a waterproof agreement
Do you think customers enjoy arguing with you? And do you enjoy arguing with them?
The answer to the first question is ‘no’, and ‘no’ should be your answer for the second question as well. But what can you do to avoid arguments?
Make sure you and your customers are on the same page.
- How should the rental equipment be treated – what is acceptable wear and tear?
- When and where does the rental end and start?
- What should the customer do if something goes wrong?
- What are the penalties for damage, loss, theft, late returns, … ?
Clearly communicate the answers to these questions up front to avoid confusion and conflict later on.
Have these terms in writing as well, signed by both you and the customer. Be thorough & complete and don’t ‘hide’ anything in the small print. If you make something hard to read, don’t be surprised if your customers don’t read it!
The final step: bring everything together
If you’ve followed all of this advice you should have a pretty good idea by now about what you should do to make your new rental business a stunning success.
But don’t just keep it in your head! Bring it together in a business plan for your rental business – a rental business plan.
A business plan is essential for the success of your business. Remember the old proverb – failing to plan is planning to fail.
These are our tips for starting your own equipment rental business. We hope that this guide has been useful for you!
Do you have any questions or is there something we forgot? You can always let us know at firstname.lastname@example.org.