Deciding to start a rental business can seem intimidating. Maybe you want to make some money on the side, or perhaps you have bigger plans and want to go all-in. Luckily, you’re...
Deciding to start a rental business can seem intimidating. Maybe you want to make some money on the side, or perhaps you have bigger plans and want to go all-in. Luckily, you’re not alone. Plenty of entrepreneurs have done it before, and you can learn from their successes and mistakes to make the start of your own rental company a success.
These 8 steps on how to start a rental business—whether you want to rent out bikes, camera gear, party supplies, equipment, or anything else—will guide you through everything from starting up to eventually launching your rental business.
Finding a business idea is something many aspiring entrepreneurs tend to overcomplicate. No matter if you’re looking for a low-investment side-hustle or want to be your own boss, there are several approaches you can take.
You might think that validating your business idea is hard. But it’s really just a matter of testing whether there is a demand before investing too much time and money. You don’t want to sink your entire savings into a concept that looks promising on paper. The goal is to validate your assumptions.
When creating your business plan, location is a crucial factor to consider. Location matters unless you’re shipping items to the customer. That’s because starting the same business type in two different places can yield very different results.
For example, a bike rental business close to a popular tourist attraction will have a higher volume of walk-in customers than on the outskirts of town. The location will define the customer base and can also affect the way you receive bookings.
So before you start your rental business, know what your customers want and go from there. Here are some useful questions to answer:
Once you know more about your target customer, you can make better decisions about the inventory you buy.
Most new companies start by renting out just one or a few products. If you have a ton of different items, you might run into situations where you don’t have enough stock, no availability insights, or not enough staff. When your processes aren’t ready for the number of bookings coming in, running a rental business becomes stressful quickly.
By taking baby steps, you get to know the process of renting before you get overwhelmed. It keeps your initial investment low, minimizes risk, and allows you to build a strong foundation from which you can slowly expand your business.
In the early stages, you don’t need too big of an investment. You’re still gauging interest and verifying whether you’re on the right track. Once you get the ball rolling, you can start buying more stock based on your products’ popularity and profit margins.
Pro-tip: From a financial perspective, it’s also advisable to purchase extra stock later. It’s harder (and more expensive) to sell excess items or to have idle inventory in your warehouse. For more inventory management tips, check out this article.
The inventory you own is the core of your rental business. No products, no customers. How your customers receive the items also matters.
Just imagine you’re renting a camera, and suddenly the battery dies during the shoot. Or the bike you’re renting has a broken chain. Nothing is worse than equipment breaking down during a rental or receiving damaged goods.
Use these practical tips to make sure your inventory stays in tip-top condition and keep your brand reputation in check:
Consumers today love convenience. They want to browse and book when, where, and how they want in the most efficient way possible. People are increasingly digitally savvy and don’t shy away from going online to rent equipment. Just look at the impact Airbnb and other rental platforms had on the vacation rental industry.
For equipment rentals, online bookings have many advantages too:
For many entrepreneurs, one of the scary parts of starting a rental business is building a website. Luckily, creating one has gotten more accessible. You no longer need a technical background or deep pockets. Website builders such as WordPress, Squarespace, and Shopify are very user-friendly and offer beautiful templates.
Note: If you’re building a website with WordPress, spend some time choosing a good theme, e.g. a WordPress template by TemplateMonster. They have the biggest collection of themes made by a creative designers community.
Consider allowing your customers to book or request a quote online to streamline the rental process. People expect the convenience of booking online without speaking to someone, and it reduces your time spent answering emails and phone calls.
Rental business owners wear many hats. They’re doing more than just renting out equipment: preparing orders, managing employees, conducting maintenance, serving customers, accounting, communicating… you get the point.
Recognizing the value of good software is essential when you’re starting a rental business. One of the best ways to reduce the complexity of renting and prepare yourself for future success is choosing software that streamlines the things you do on a daily basis.
Often, you’ll need to spend some time setting up and learning new software. But once you’re up and running, there is very little work required to keep things going. Consider looking into dedicated rental software that supports the following:
Rental agreements are documents that outline the arrangement between the rental business and the customer. These documents make sure you and your customers are on the same page and protect your business by defining your terms.
Once signed, the contract is considered legally and mutually binding. Here are some good topics to include in your rental agreement:
Having these terms and conditions in writing, signed by the customer, avoids confusion and arguments down the road.
Depending on the type of rental business you start, rentals can be repeat business. Customers rent your products for a short period and might come back in the future to rent similar items again.
By giving your customers a satisfying experience, you make sure they come to you the next time they need rental equipment.
At this point, you know some practical tips and tricks for successfully starting your own rental business.
Starting a rental business isn’t easy, but it also doesn’t have to be intimidating. So whether you want to start a business from home to bring in some extra money every month or want to be self-employed, these steps will help you hit the ground running.
Don’t keep the idea in your head. With the right preparation, you can build a strong foundation and start getting familiar with the process of renting. Now that you know how to launch your own rental business, it’s time to get to work.