Renting equipment is a full business model for a variety of industries. This website is quite specifically related to the landscape construction space, but the equipment rental business model can apply to a wide variety of industries seeking to get started. If you are looking for a place to get started in your rental equipment business and a solution to help with the backend including booking and servicing clients, we provide all of this in more.
Starting an Equipment Rental Business
If you have ever thought about starting a rental business for equipment, this should help you get started from identifying your market, industry, setting a business plan, and getting started with an online space to help you streamline processes in your business in booking and to attract clients. This article provides numerous points on each of these aspects of starting an equipment rental business and provides a website and software solution at the end to help you get started along the way.
Equipment Rental Business Model
The rental business model is fairly straight forward. Have inventory that you rent out for profit. However, knowing how to build a business and what to charge is the difficult aspects of this model that we will cover through this.
There are a variety of factors and expenses that need to be considered when starting your rental business. Where are you going to store your equipment, what insurance are you going to have on your equipment, who is going to service your equipment, how are you going to manage your equipment rentals so there are no overlapping clients booking the same one, and so on. There are no shortage of things to consider.
Then there are a variety of pricing factors that need to be considered including the market, your costs, whether you charge an additional insurance to clients, delivery pricing and pick up pricing, is fuel covered by the client and is there an additional charge if the equipment comes back empty, what if the equipment is lost or stolen, what if the keys are lost or stolen, and so on.
It is extremely beneficial to consult with a lawyer to create a contract to have clients sign every time they take equipment and an accountant to help you with your numbers.
Equipment Rental Business Plan
The rental business plan involves identifying an industry, seeking clients, and acquiring those clients. There are numerous industries that you can focus in on as you build your rental fleet. Some pieces of equipment also service several industries which can be useful when deciding which pieces of equipment to focus on building your inventory.
Additionally you need to think about your market and what equipment is suitable to your market. For example, a large city typically has large buildings or very tight access houses to the backyard. In those cases, you likely are not renting out large pieces of equipment. These locations would require smaller equipment unless you get into the outskirts of those markets. The equipment you purchase for your inventory requires you to think about these factors to know which ones to invest in.
Seek out recurring clients. These would likely be contractors for your equipment rental business. Especially if you currently have no equipment to rent out, you may want to survey surrounding contractors in a specific industry to see what equipment they would need to rent so you know which equipment to stock. It can also help you narrow down on a specific industry to start. By doing so, it will be easy to then know exactly what client you are looking for. This is called creating a client avatar. When you know exactly who your client is, you can find exactly where they are online and offline and market to those clients.
Non-recurring clients such as homeowners doing a DIY project can also be helpful in renting equipment and can help you build your business further. Though you need to think of your customers in terms of lifetime value. A non-recurring client will have a smaller lifetime value than a recurring client. In that sense, building your network of contractors that you are renting equipment out to should be the priority. That does not mean that you do not also attract those DIY customers as well.
Additionally, they can help in building reviews to your online spaces. This will help your search engine optimization which also plays into your website. Create a website and a Google My Business Page. Your website should include pages for different types of equipment that you rent out as well as your serviceable areas. This allows your website to show up high in the search rankings when someone searches for that specific equipment to rent in their area. Having a Google My Business Page allows you to seek out reviews from happy customers so that it also shows up first in your area for rental equipment. Having these in place will help in your rental business acquire leads without having to spend any money. However, this will take time and requires persistence when asking clients for reviews.
Equipment Rental Business Profitability
An equipment rental business can be very profitable when operated properly. That being said, business is difficult. You need to be able to price yourself according to your market to remain competitive, provide excellent service, and be able to seek out clients that will be recurring for your business if possible.
Knowing what to charge for your rentals depends on your costs and your market. Your costs you can control, but your market you cannot. Wherever you are starting your business will dictate your market. You should get as much information as possible on competitors in that market to decide on a starting price for your rentals while also seeing where you can improve on their service to improve your business. Your costs you can control, so you need to factor your overhead costs, labor, profit, and inventory into your pricing.
Your overhead costs include anything and everything that comes out of your bank account in your business including your owner’s salary. Your labor includes delivery drivers and maintenance employees. Your inventory is your cost of equipment. And profit is what your business is left with at the end. You should forecast how much you will make in terms of renting a single piece of equipment out, how long the equipment will last before it needs to be sold, its purchase price minus its resale value, the maintenance that goes into the equipment during the time, your labor to do those repairs, and your profit to figure out what you should be charging each time it is rented out. But once again, you need to be competitive in your market.
As an equipment rental business, your product is the inventory that you are renting out. So finding a way to acquire that equipment is crucial to the business profitability. There are several ways that you can find equipment.
One way would be to purchase the equipment brand new. You may be able to apply to a specific manufacturer to do business with them as a rental agency to get a discounted rate. You could also become a dealer for specific manufacturers and not only rent but also sell equipment. This is a viable option and reduces the amount of maintenance and repairs that need to be done. This reduces downtime for that equipment which will bring in more money. The trade-off is that the equipment costs more upfront. You can also seek out equipment auctions to find new equipment at a cheaper cost, but you need to factor in the auction commission fees and transportation.
You can also find used equipment at these auctions or online marketplaces if you prefer to pay less for equipment. The obvious trade-off here is that the equipment is more susceptible to breaking down which increases downtime that you would not be renting it out and requires more labor to repair.
Whether you purchase new or used, you will have an asset at the end of its lifespan that you can then sell and recoup the costs from the purchase price of the equipment. As you grow your business, you will be able to keep track of certain equipment and their lifespan in terms of hours or years of use you get out of the equipment before maintenance and repairs become so much that it is better to just sell it and invest back into a new item. Keeping track of this will help increase your profitability as you dial in your numbers further.
Construction Equipment Rental Software
When looking for the right software to operate your equipment rental business, you want to ensure that it includes the features necessary to your rental business. You also want to make sure that this software is going to grow with your business and that it is fairly priced to reduce the overhead that your business will incur on an ongoing basis.
The features that you want to look for include:
- Product Catalog
- Inventory Management
- Visibility and Scheduling
- Buffer Times
- Booking and Payments
- Local Pickup and Delivery
- Rental Options
The ability to create multiple different products with variations of those products is an obvious must when starting your equipment rental business.
Keep those products organized with a system of organization and in stock items while also implementing a barcode scanner system in your fleet.
Be able to approve new equipment and make them visible at certain times.
Create times when equipment will need to be serviced immediately after an expected return so there is no conflict in the booking system.
Having the ability to have reports on rental inventory and statistics on a product’s lifecycle will especially help you in refining your pricing over time.
You want the booking process to be as easy as possible and for clients to be able to pay online as soon as they book.
You want to provide clients the ability to choose local pickup or delivery when they book a rental online while also being able to manage your delivery schedules to make sure those deliveries are on time.
Much like booking, you want the returning process to be seamless.
Having the ability to provide pricing on short-term rentals and discounted pricing on longer-term rentals is a must in the equipment rental industry. Having additional options such as renting to buy is an added benefit at the end of an equipment’s life as well to help liquidate that asset.
There are no shortage of software services that claim they are the best software for rental businesses. However, it is best that you choose an option that will remain yours rather than paying monthly to rent a software as a service for your business. Do not get it wrong, there are some excellent and powerful software services on the market that may be a good fit.
There are better solutions such as building a website on WordPress which is fairly straightforward and user-friendly. Not to mention, it is inexpensive and it belongs to you. The only thing that you need to do is pay for your domain name and hosting for your website. Then you can use a WordPress plugin that will take care of your rental business. Plugins give added functionality to your website. Though some plugins will cost money, they will live in your website rather than renting space that a software would. This gives you more control of your greatest asset in acquiring and closing leads.
The best plugin for a rental business to use on WordPress is Rentle. It has a FREE plan to get you started and plans that allow you to scale your business as it grows. This plugin will cover the features described above and help you through your growth in business especially if you open more than one location.
If you want more information on this service or want to inquire about a web building service for your rental business website, contact us and we can help you get started.