- Inventory Management
- Booking & Scheduling
- Invoicing and Payments
- Rental Website Builder
- Quickbooks Online Integration
- Service and Repair
- SEO & Online Marketing
- POS & Checkout Software
- General Tool
- Construction & Heavy Equipment
The next generation of equipment rental software is finally here. Let us show you.
That's how much we've grown in a year
Orders processed and counting. Fast.
- Marketing & Growth Guides
- General Equipment Guides
Check out our equipment rental software comparison guide. Happy shopping.
How Does a Rental Business Model Work?
Rental businesses are thriving across many industries, with new opportunities emerging every day. However, anyone looking into starting a rental business needs to understand the importance of having an effective rental business model in place.
What Is a Rental Model?
A rental business model is different in many ways from other types of businesses. The conventional business model will be based around the sale of either goods or services. A retail store might purchase goods from a supplier and then sell them physically in-store to customers.
This can also be applied online or in other ways, but the fundamental core of the business model is buying goods and selling them at a higher price.
Services, whether from an electrician, a doctor, a painter, a lawyer, or anything in between, use a different model. Service businesses perform specific tasks, relying on the time of skilled professionals to generate revenue. While there are material costs as well, that’s the basics of service business models.
Rental business models are different. These businesses purchase equipment, from construction equipment to watercraft , depending on their niche, and rent that equipment out to customers. These customers pay a certain price per hour, day, or week, and that’s where the rental business gets its revenue.
The rental business needs to ensure that its business model will generate higher revenues than the cost of purchasing and maintaining equipment. There are other factors like utilities, rent, and so on, but the most important point is whether a purchased piece of equipment will generate more in rental revenue than its cost for purchase and maintenance.
Are There Different Types of Rental Models?
The core of every rental business model is based on generating revenue from rentals, but there is a wide variety of ways that businesses can achieve that. These are just some of the various rental business models that you could choose.
Many rental businesses are based in physical locations and derive most of their revenue from walk-in customers. This has been the conventional rental agreement model for a long time before technology allowed for other possibilities.
These types of businesses have to either own or rent a physical location to serve as their storefront and a place to keep all of their equipment. Since most rental businesses need space to keep inventory anyway, having a physical storefront makes sense.
This type of rental business model refers to a hybrid online and physical business. This can mean a few different things in practice. Depending on the type of rental equipment, customers could order online and have it shipped. It could also mean that the business uses an online reservation system to facilitate business with its customers.
Given that rental businesses in almost any industry need an online presence to succeed, it only makes sense to add some real functionality and derive value from online resources in your rental agreement model.
In many ways, peer-to-peer rental business models are more about developing a platform than renting equipment. These businesses allow individuals to rent items to other individuals, using the business as a kind of marketplace.
This kind of revenue-sharing rental model can work in many industries but comes with challenges as well.
A revenue-sharing rental model is a big departure from classic rental business models and might not be right for individuals unfamiliar with more complex business practices.
What Is the Best Rental Model for My Business?
There isn’t any clear-cut answer as to which rental business model is best. They all have their own benefits and drawbacks, with many being suited towards renting certain types of equipment. However, there are some key points you can keep in mind when making your decision.
The first is the nature of the specific items you’re renting out. If your equipment is restricted to distribution in the local area, then having a physical presence where customers can pick up and drop off equipment would be sensible.
Rental business owners should make sure not to discount the value that a hybrid model can bring to their business, no matter what industry they’re in. Construction equipment, wedding rentals, vehicle rentals, and more can all be presented to your customers more effectively with rental business management software.
Having your stock accessible online will have more customers finding what they need and reserving a rental with your company. Many consumers out there prefer online booking versus calling a business, so giving them that option makes you that much more likely to make the sale.
How to Price Your Rentals?
Pricing is a critical factor for any rental business model. It can be a challenging task to determine your rental product pricing because there are many factors at play.
The prices that rental businesses can set are dictated by market forces. These are complicated but basically come down to the fact that customers won’t rent from you if they can rent elsewhere cheaper.
This sets an effective maximum for rental prices on any specific piece of equipment. The other factor to consider is the minimum.
You need to determine what rental price will allow you to not only recoup the purchase cost of the equipment but to turn a profit as well. Your rentals will also have to supply revenue to offset utilities, rent, wages, and more.
If the minimum rate that you determine for pricing certain equipment is higher than the maximum rate dictated by the market, then that specific piece of equipment isn’t viable. Instead, your business will have to find other options that have viable price points to keep your business running.
What Is the Best Rental Business Management Software?
Managing a hybrid rental business model can be a significant challenge. This is particularly true if you’re trying to manually balance online and in-person reservations. Instead, you can streamline the process with rental business management software .
Quipli provides versatile rental business software that makes inventory management and reservations incredibly easy. You can reach out to Quipli today to find out more about what our solution has to offer.
START YOUR RENTAL BUSINESS WITH QUIPLI’S RENTAL BUSINESS SOFTWARE
Learn about Quipli’s rental software
About the author
Kyle Clements is the Founder & CEO of Quipli, a provider of modern software for independent equipment rental companies. Kyle has a decade of software startup experience and has been part of several successful ventures that have become publicly traded or been privately acquired, such as Uber and Clutch Technologies. In the past few years, Kyle has completed thousands of customer interviews understanding needs and trends in the growing equipment rental market. Kyle brings a unique perspective to the equipment rental industry and is passionate about partnering with independent equipment rental companies to run their operations more effectively and assist them in creating an impactful experience for their customers.
Posts from this author
Share with the world
How You Can Start Your Own Golf Cart Rental Business
How to Track Your Rental Inventory with Excel or Google Sheets (With Free Spreadsheet Template)
How to Start a Generator Rental Business: A Complete Guide
Renting equipment is about to get a whole lot easier.
I. Answer a few quick questions on your business. It takes 2 minutes, tops.
II. Our team will reach out immediately to take you through a demo of Quipli.
III. Once you’re up and running with Quipli you’ll wonder how you ever managed without it.
March Spring Special! $500 Boostpoint Coupon.
Gain insight into how to grow your company, maintain healthy business-customer relationships, and time-saving tools and equipment.
5 Things to Include in Your Equipment Rental Business Plan
Whether you're just starting an equipment rental company or looking for ways to improve how you do business this year, it's crucial to create and constantly monitor the business plan that works best for achieving your specific goals.
There are multiple aspects to an equipment rental business plan. It should cover how you plan to make your business successful. Just a few of these include working through revenue sources, aligning with business legalities, identifying what innovative equipment you plan to offer, and more.
Starting and growing a business is hard work, and it's important to have a solid foundation. Here are a few must-haves to incorporate into your equipment rental business plan in order to rise to success.
1. Revenue sources
Identifying revenue sources is one of the most important parts of building your business plan–it's what's going to make or break it. In what ways are you going to generate income for your heavy equipment rental business? Here are just two options.
Obviously, you need a place to house the equipment you plan to rent out to contractors. If you're not sure where to set up shop, research the customer base in a particular area. Check out your competitors, as well. Will you have enough of business there to be able to grow?
Because of the constant rise in technology, you'll want to include having an online platform in your equipment rental business plan, or you'll be left in the dust. Create a plan for how you'll succeed digitally.
One thing to do is to start a website. Whether you opt for online transactions or you just want to showcase your wide array of equipment, getting onto the World Wide Web is likely to increase your bottom line. Make sure to include these major items on your website:
- Available equipment
- Contact info
- Business hours
Don't forget to optimize for Local SEO. This is a crucial part of your online presence considering your customers will most likely all be local. Learn more about Local SEO here .
2. Business legalities
You can't create an equipment rental business plan without including your plans regarding legalities, taxes, and insurance.
There are several business types you could check out. Limited liability can be a good fit when starting a small rental company. However, make sure you talk to a business mentor or accountant before making a decision.
Insurance is necessary to avoid having your business shut down by a customer who's suing you for injury or damage. The following are a few types of insurance to consider including in your plan:
- General liability
- Property insurance
- Commercial vehicle insurance
- Workers' compensation
3. Equipment maintenance
Your business plan should include an efficient maintenance and repair process that you can implement after receiving equipment back from your customers.
There may be some cases in which contractors bring back your equipment damaged or missing parts. And don't forget to plan a preventive maintenance schedule to make sure your equipment continues functioning to its full potential.
If you're just starting out and you're familiar with the equipment, performing the maintenance yourself can help you cut corners and save money. You could also consider supporting a local shop that specializes in equipment repairs, or you could hire an in-house mechanic. Keep in mind in-house mechanics may be more efficient for your business in the long run.
BONUS TIP : Be sure to keep up-to-date photos in your equipment maintenance records. Take photos before and after a piece of equipment is examined and repaired (if necessary) upon its return. This will help you determine how the machine was treated in a particular customer's care.
4. Marketing strategy
A marketing strategy is important for the growth of a company, and a brief outline of your strategy should be included in your rental equipment business plan. Here are two aspects to consider:
- Social Media Social media platforms like Facebook and Instagram can help increase brand awareness. From there, you can post and share photos, customer stories, and blog posts you've published. This builds connection and trust with potential and current customers.
- Advertising If you want to advertise your business, consider digital ads on Facebook and Google and print ads in trade magazines. If you're not sure where to get started with Facebook advertising, Boostpoint , a SaaS company associated with Equipter, can help!
5. Innovative multipurpose equipment
Don't play guessing games when it comes to buying equipment for your business. Potential investors in your business want to know that you've done your research and plan to serve your community to the best of your ability. To find out what equipment you should purchase, scope out your competition and learn what your potential customers need.
After finding out what's important to them, make sure to stress that you'll focus on quality equipment rather than quantity. It's better to have a few pieces of equipment of superior quality than a large fleet of unreliable and easily damaged machinery.
The Equipter RB4000 is a low-maintenance, innovative piece of equipment that serves contractors in roofing, general construction, and restoration across the US and in lower parts of Canada. Click the link below to find out how it can enhance how your equipment rental company does business.
Business plans for equipment rental companies are essential for attracting investors to get a kickstart on your next venture . Be sure to do your research to get a big picture view of how to create a plan unique to your vision.
Business Model Of Equipment Rental Industry
by Rentcubo | Apr 25, 2022 | Equipment Rental Software | 0 comments
An equipment rental business strategy has several components. It should include information on how you intend to make your company successful. Working through revenue streams, aligning with business regulations, establishing what new equipment you aim to offer, and more are just a few of them.
It takes a lot of effort to start and expand a business, therefore it’s critical to establish a strong foundation. In order to succeed, there are a few must-haves to include in your equipment rental business plan. With the ever-increasing demand for equipment rental businesses, it is very important for business entrepreneurs to know the business model of the equipment rental business as well as the industry.
RentCubo , one of the best equipment rental software development companies, brings you an exclusive blog that describes the business model of the equipment rental industry. So read along and build the best equipment rental business and grow yourself in the equipment rental industry.
About the Equipment Rental Industry
Cranes, earthmovers, bulldozers, lifters, excavators, diggers, and other small rental equipment are provided by the equipment rental sector for a variety of applications including construction, transportation, mining, oil and gas machinery, and forestry machinery. It also handles light and heavy equipment logistics and warehousing. Other industry operations include providing contractors with machinery operators, as well as equipment repair and maintenance.
With current revenues of $37.43 billion in 2020-21 and expected revenues of $42.6 billion in 2024, the equipment rental industry is a substantial contributor to the US economy. This estimate includes short-term rental and leasing initiatives, showing that overall equipment rental activities are expected to rise.
Business Model of Equipment Rental Business
Identifying revenue sources is one of the most crucial aspects of developing a company strategy–it will make or break your plan. What are your plans for generating revenue for your heavy equipment rental company? There are just two alternatives available.
- Physical store – Clearly, you’ll need somewhere to store the equipment you’ll be renting out to contractors. If you’re not sure where to open a store, look into the demographics of the neighborhood. Also, have a look at your competitors. Will there be enough business there for you to expand?
- Virtual online presence – You’ll want to include an internet platform in your equipment rental company plan because of the ongoing advancement of technology, or you’ll be left behind. Make a strategy for how you’ll succeed online. One option is to create a website. Getting on the Internet will almost certainly enhance your bottom line, whether you use it for online transactions or simply to show off your extensive inventory. Remember to optimize for local SEO as well. Given that your consumers are almost certainly all local, this is an important aspect of your web presence.
Legalities of the Business:
You can’t write an equipment rental company plan without mentioning your legal, tax, and insurance preparations. You could look at a variety of company types. When creating a small rental firm, limited liability may be a good fit. However, before making a decision, consult with a business mentor or accountant.
Insurance is required to keep your business open if a consumer sues you for injury or property damage. A few types of insurance to think about having in your plan are: General liability insurance, workers’ compensation, property insurance, and commercial vehicle insurance
Maintenance of Equipment:
After receiving equipment back from your clients, your company plan should include an efficient maintenance and repair method that you can implement. Contractors may return your equipment with damaged or missing parts in specific instances. Don’t forget to set up a preventive maintenance routine to ensure that your equipment keeps working at its best.
If you’re just getting started and know your way around the equipment, doing your own maintenance can save you time and money. You might either hire an in-house mechanic or support a local firm that specializes in equipment repairs. Keep in mind that in-house mechanics may be more cost-effective in the long run.
A marketing strategy is critical for a company’s growth, and your rental equipment business plan should include a brief summary of your marketing approach. Here are two things to think about:
- Social media platforms – Brand recognition may be increased using social media sites such as Facebook and Instagram. You can then upload and share images, customer tales, and blog pieces that you’ve written. This fosters a sense of connection and trust among new and existing clients.
- Advertisement – Consider digital ads on Facebook and Google, as well as print ads in trade magazines, to promote your company. If you’re unsure where to begin with Facebook advertising or even in-app advertising, we can help.
Get Multipurpose Equipment:
When it comes to purchasing equipment for your business, don’t make educated guesses. Potential investors in your company want to know that you’ve done your homework and are committed to providing the greatest service possible to your neighborhood. Examine your competition and learn what your potential clients require to determine what equipment you should get.
After you’ve figured out what’s important to them, make it clear that you’ll be focusing on quality rather than quantity. It’s preferable to have a small fleet of high-quality equipment than a huge fleet of unreliable and easily broken machines.
If you’ve followed this advice to the letter, you should have a decent notion of what you need to do to make your new rental business a huge success. But don’t let it all go to your head! Put everything together in a rental business plan — a rental business strategy. A business strategy is necessary for your company’s success.
Submit a Comment Cancel reply
Your email address will not be published. Required fields are marked *
- Smart And Secure: Navigating The Future Of Self-Storage With Advanced Software Solutions
- The Road To Efficient Parking: How Parking Management Software Works
- Navigating The Coworking Landscape: The Role Of Software
- Car Rental Software Trends: A Look into the Future of Rental Services
- Protecting Your Assets: The Robust Security Features of Self-Storage Management Software
- Airbnb Clone
- boat business
- Boat Party Rental Business
- Boat Rental Software
- Bus Party Rental Business
- Car Parking
- Car rental business ideas
- car rental software
- Equipment Rental Software
- Parking app
- Parking Industry
- Parking Management
- Preparation Tips
- Property Management
- Rental business ideas
- rental business plan
- Rental Management Software
- Self Storage Management Software
- Sharing Economy
- Storage business
- Success Story
- Vacation rental industry
Evolving Models In Equipment Rental Business
The rising cost of equipment and space constraints of businesses has led to the evolution of equipment rental businesses. Clients who need heavy machinery can rent from equipment rental companies, and the equipment sharing companies are responsible for transporting the equipment. Once the task is complete, heavy machinery can be handed over. The equipment rental company will take care of the logistics. The increasing demand for equipment enables rental companies to develop new business models in equipment rental to ensure that the equipment doesn't sit idle. Sharing platforms connect contractors with equipment dealers to match demands with supplies.
Trends in business model
Instead of fixing a rental price for the equipment, rental businesses have to fix a price for the service so that the clients get the service they want, and equipment rental companies can take care of moving equipment and offering the service. This service-based model was popularised by Rolls Royce when it started selling engine uptime instead of the engine. Servitization of the rental equipment business also enables clients to use the equipment more efficiently, reducing the repair risks in equipment. It helps greatly in improving loyalty.
Peer to Peer (P2P) equipment sharing
This business model also focuses on providing customer service but connects different dealers and manufacturers to provide the services together. Any rental business-owning machinery will always have huge machines sitting idle for some time. Equipment dealers can earn profits by sharing the assets with other dealers to meet customer requirements as their machines won't be sitting idle. As long as the cost of moving is justified, the equipment need not sit without generating revenues. Many service providers make this interconnection possible.
How should technology be used for equipment rental business models?
Equipment rental solutions offer a comprehensive management software suite to connect rental equipment and maximize its usage. This technology for equipment rental allows the rental companies to keep track of their equipment, usage, machinery condition, logistics, maintenance, etc. Essentially, renting out construction machinery can be managed as easily as car rentals with the right use of technology.
Improved customer service
Your customers don't have to wait to talk to representatives to get the information they want. They can book their equipment, upload necessary documents, get invoices, make rental and lease payments, and get important notifications using their computers or mobile devices. It greatly reduces stress on your customer support team because the software encourages self-service for customers. Customers will get real-time information on any equipment like mining machinery availability and pricing, making the process transparent for both sides.
Improved visibility of assets
The software solution makes equipment renta l planning easier. Sensors and device tracking mechanisms enable the management to view the current status of equipment rented out. It also helps with warehouse management because the availability of assets is always calculated in real-time. With detailed utilization metrics of equipment available, you can predict future demands, analyze most needed equipment, purchase additional machinery which may be needed in the future and even sell the old assets that are not frequently used.
The promise of uptime guarantees
The real-time tracking of assets using Internet of Things (IoT) technology enables your rental business to have complete control of equipment utilization. You can monitor machinery compliance with operating conditions using advanced real-time tracking sensors. When there is a violation, the customer can be notified immediately, and further actions can be taken. By monitoring equipment conditions continuously, you can predict damages and perform proactive maintenance. Your rental business can promise uptime guarantees when the equipment's current condition information is always available.
Better equipment movement logistics
GPS position tracking allows you to manage equipment movement logistics. It will also ensure that your equipment is not handed over to any third party without your permission. GPS technology allows you to keep track of every connected piece of equipment, preventing theft and misuse. It can help you to manage equipment movement efficiently.
With up-to-date information on the location and condition of your heavy equipment, you can provide timely deliveries to your customers. Your customers have huge dependencies on rental equipment, and providing timely delivery is important. Better logistics management will help you avoid delays by choosing the shortest route irrespective of where the industrial machinery has to be moved.
On-the-go assets maintenance
Equipment rental solutions enable real-time data entry regarding the status and usage of your assets. All the information can be uploaded using mobile devices, eliminating productivity loss. You can monitor expensive equipment, anticipate breakdowns, plan proactive maintenance, schedule inspections, repair breakdowns quickly, find replacements for repair, plan procurement, and do much more with software solutions.
Hiring equipment for a fixed amount of time is about to become obsolete. Services are becoming lead differentiators for manufacturers or dealers. Whether your equipment rental business is a P2P model, outcome-based billing business or any customer-based service, the way technology is incorporated into the business model is crucial. Online rental portals actively connect contractors with equipment dealers and manufacturers, which increases the scope of equipment rental businesses that are willing to adopt technology sooner rather than later.
Don't forget to share this post!
Growth Strategies for People-Centric Businesses
How Enterprise Resource Planning Can Boost Your Business
Automate Business Processes: Transform Your Business with Robust ERP Software
Contact Us for ERP Software
All Rights Reserved. © Copyright 2023. Ramco Systems.
Setting up an Equipment Rental Business
All you need to know about starting and running your business.
In this article
What is an Equipment Rental Business?
By the end of 2023, the equipment rental industry in the UK is expected to be worth more than £5.8 billion, showing a marked increase from previous years.
An equipment rental business, sometimes known as a plant hire business, operates within the service industry and provides machinery, equipment and tools of different types, shapes and sizes and with different uses. The equipment is rented to the customer for a set time period before being returned to the business.
Equipment rental can refer to tools, appliances, recreational items, machinery, furniture, office items, industrial equipment and vehicles. The rental business will purchase the equipment and then rent it to the customer for a set fee (usually a per day, per week or per month fee). The cost of the rental will be suitably high to allow the rental business to recuperate the initial cost of the equipment and then begin generating a profit.
Many different types of equipment can be rented out that target a wide range of customers and industries. You may choose to specialise in a particular type of equipment or a specific industry or provide a wide range of options.
The most frequently rented out equipment includes:
Construction machines and equipment
This type of equipment is primarily rented to construction firms, contractors and people working within the construction industry. Some of the equipment you could rent out includes excavators, earth-moving equipment, forklifts, working platforms and construction lifts. Construction equipment rental is the most popular and most lucrative of all equipment rentals.
Traffic safety equipment
Many local councils and construction companies choose to rent traffic control and safety equipment rather than purchase it. This ensures they always have access to the equipment they need. It can save significant storage space (think of how many traffic cones are required from one stretch of road) and it can save them money. Traffic equipment can include traffic signs, barriers, LED message boards and traffic cones.
Party and event supplies
People who are hosting or organising an event, such as a wedding, a party or a corporate event, will likely not want to purchase the equipment they require, particularly because the equipment can be expensive and the event is usually a one-off. Although some event venues supply equipment and accessories, many do not, particularly event spaces such as barns, hotels and outdoor events. Some of the equipment you could rent includes a dancefloor, chairs, tables, sound systems, decorations and staging.
This usually encompasses smaller pieces of construction and DIY equipment that are typically rented out by individuals rather than businesses. For example, people who are renovating or decorating their home or garden and do not want to purchase equipment. Some of the equipment you can rent out includes power tools, jet washers, sanders, concrete mixers and small excavators.
Vehicles and transportation
As well as a regular car rental business, you could choose to offer transportation equipment such as luxury cars (e.g. for weddings), scooters, bicycles and ATVs (all-terrain vehicles). These could be used for recreational purposes, for transportation purposes and for special events.
You could rent sports equipment, such as golfing equipment, scuba diving equipment and boating equipment. You could also rent out sports equipment to schools and colleges and for organised events. Depending on your location, you could also rent out sports equipment on a day-by-day basis, for example, renting out snorkelling equipment, paddle boards and fishing equipment if you are located near the coast.
For people who are still learning about photography or don’t get many opportunities to pursue their hobby, renting camera and lens equipment can make more financial sense. By renting instead of purchasing, they will have access to the newest technology and the most updated lenses. Camera equipment may also be rented by people who need it for a one-off event, such as businesses that need to take photographs of their products or students who can’t afford to purchase their own equipment.
Sanitary facilities such as portable toilets and sinks are essential on building sites. They are also frequently rented when renovation work is being completed in homes, businesses and public spaces and at outdoor events, such as festivals and fairs.
If you are thinking of starting up an equipment rental business, you will first need to decide the type of equipment you will specialise in and your target customer base. Consider why the customer would choose to rent the equipment rather than buy it and how you can encourage them to rent from your company.
There are many different reasons why companies and individuals choose to rent equipment rather than buy it, including:
Renting equipment rather than purchasing it helps to reduce a company’s start-up costs or fixed costs. It also helps to reduce the financial risks associated with running a business and reduces the costs associated with storing, maintaining, repairing and replacing equipment. For new businesses, growing businesses and companies operating in up-and-coming industries or in uncertain financial times, renting equipment represents a low-risk way of running a business.
With many types of equipment and technology constantly being updated and invented, renting equipment allows businesses and individuals to have access to new equipment and a comprehensive range of options without constantly needing to update their inventory and make new purchases. By renting the equipment instead of purchasing it, the responsibility of ensuring the equipment is maintained, safe to use and complies with regulations and health and safety requirements largely falls to the rental company. Renting equipment also gives operational flexibility, as the customer will have the option to rent on a short-term or long-term basis.
With many people now being more environmentally conscious and many businesses wanting to operate more sustainably, renting equipment can be more environmentally friendly. The equipment not being solely owned by one person usually results in the equipment being used more efficiently. Efficient use can lead to significant reductions in the total carbon footprint. The rental company is also more likely to implement regular maintenance and inspection procedures and repair any faulty equipment, rather than replacing it.
There are many different responsibilities associated with running an equipment rental business. Although your responsibilities can vary, depending on the type of equipment business you set up and the equipment you offer, some of the typical responsibilities you can expect to be in control of include:
- Communicating with customers to understand their equipment needs and making appropriate suggestions and recommendations based on their needs and your knowledge.
- Negotiating the volume of the order and the price.
- Obtaining all necessary customer information and creating detailed and accurate records.
- Sourcing and ordering equipment.
- Creating rental contracts, including rental dates, rental rates and equipment return information.
- Arranging deliveries and collections.
- Managing inventory and stock.
- Loading and unloading equipment.
- Performing equipment maintenance and safety checks.
- Answering phone calls and dealing with customer enquiries.
- Checking licences, training and qualifications (if necessary for a certain piece of equipment).
- Cleaning, maintaining, repairing and replacing equipment as necessary.
- Making a record of any existing damage or issues.
- Defining business drivers and metrics and creating annual budget forecasts and customer profitability analysis.
- Regularly evaluating the market and the industry to assess new requirements, keeping up to date with any changes or new equipment releases and identifying opportunities for growth.
- Ensuring high levels of customer satisfaction.
- Analysing the prospective financial return of purchasing new equipment.
- Ensuring your business complies with all health and safety regulations and legal guidelines.
- Marketing and advertising.
- Completing business and administrative tasks.
Starting up an equipment rental business can be financially lucrative. As well as a strong business plan and a commitment to making your business succeed, certain personal qualities can be beneficial to running an equipment rental business, including detailed knowledge of the type of equipment and industry you specialise in, experience using, purchasing or renting the equipment, and a comprehensive knowledge of the needs of different businesses and individuals. You will also need strong communication skills and strong negotiation skills.
Types of Customers
The types of customers that rent equipment can be wide-ranging and can include individuals, small businesses and large companies.
Some examples of the types of customers you can expect include:
- Individuals and families.
- Party planners and hospitality businesses (e.g. wedding venues and hotels).
- Businesses operating in the construction industry.
- Local councils.
- Schools, nurseries, colleges and universities.
- People starting a new hobby or pursuing a passion.
- Newly operating businesses.
- Individuals and businesses operating in the technology industry.
Although the type of customers that rent equipment can be extremely varied, defining your target market more precisely makes it easier to focus on the specific customers who are most likely to use the services of your business and determine exactly where and how to market your business.
Some of the factors that can determine your typical customer base include:
The type of equipment you specialise in
This will be the most significant factor in determining your typical customer base. Because of the sheer amount of equipment available within each industry, you will likely specialise in a particular type of equipment (e.g. scuba diving equipment) or a particular industry (e.g. the construction industry). When trying to identify your typical customer base, consider the type of equipment rental you are specialising in and who is most likely to rent this type of equipment.
The locations you operate in and deliver to
To maximise your customer reach, you may choose to offer your equipment in a range of locations or offer a delivery service to different areas of the country. If you only operate in one specific area, consider the people who live, work and visit that area and the businesses that operate in the area to determine your typical customer base.
Although your pricing strategy will be heavily determined by the type and specification of the equipment you are renting, your pricing can still influence your typical customer base.
Customers can typically be separated into three different pricing tiers:
- Budget: Price is the most important factor for this type of customer. They will look for the rental company with the lowest rates, regardless of reputation and experience.
- Mid-range: This type of customer is looking for a combination of quality and affordability. Although price won’t be the most important factor, it will be a significant consideration.
- High-end: This type of customer is willing to pay the highest prices for the highest specification equipment and the best possible service. They will likely want the newest and best equipment and will request a delivery and assembly service.
Your reputation and customer reviews
This is another important factor that many people will look at. They may look at your customer reviews or decide based on recommendations from others.
Your reputation and reviews will likely be based on multiple factors, such as:
- The quality of the equipment.
- How you interacted and communicated with clients.
- Your pricing.
- Whether you offered a delivery and drop-off service.
- Whether the equipment was clean and well-maintained.
- Whether you offered your customers additional help and support.
Equipment You Will Need
Equipment is an essential purchase, as without it you will not be able to run your business. The type and amount of equipment you require will depend on the type of equipment you specialise in, the size of your premises and your storage capabilities and whether you offer a delivery option.
Below is a list of equipment typically required by an equipment rental business:
General Equipment Requirements
Regardless of the type of equipment rental business you set up and the type of equipment you specialise in, you will likely require many of the items listed below to help you run your business more effectively.
The type of storage equipment you need will depend on the size and weight of the equipment you rent out and the volume of equipment you will be storing.
You will likely require industrial storage equipment, such as:
- Pallet racking.
- Static shelving.
- Mobile shelving.
- Multi-tier racks.
- Wire partitions.
A forklift is a special motorised vehicle that is used for lifting and moving goods on pallets within a warehouse or another storage facility. They can carry heavy materials over long and short distances and can be used to properly store your equipment, move the equipment around your premises and transport the equipment to the delivery vehicle. The size of the forklift you require will depend on the size of your premises and the size and weight of the equipment you will be transporting. You will likely only require a forklift if you stock large, heavy equipment (such as construction equipment or furniture).
If you offer a delivery option, your delivery vehicles will be an important purchase. Depending on the size of the equipment you offer, the volume of your orders, and the number of orders you want to fulfil at one time, you may require multiple delivery vehicles. You could opt for large delivery vans or lorries. To help your business gain exposure, you should also install adhesive door and body panels with your business name and logo, your contact information and the typical services you offer.
Satellite navigation systems
Satellite navigation may be installed in your vehicles or may be an independent piece of equipment. A navigation system is essential, as it ensures you always follow the best possible route and avoid any traffic or road incidents that could cause unnecessary delays. A satnav system is particularly recommended if you offer long-distance deliveries (e.g. out of your local area) as your drivers will likely not be familiar with the routes and the areas.
Dash cams document driving and are the strongest and most efficient way of defending your company in the event of an accident or incident on the road. Dash cams can also help to deter theft and lower your car insurance premiums, helping to protect your business and maximise your profits. Dash cams can be installed on the front and back of your vehicles.
Dollies are essential equipment when moving large or heavy loads from your warehouse or storage area to your delivery vehicles or your customers’ vehicles. Moving dollies feature a large, flat platform on wheels.
There are different types of dollies available:
- Hand trucks.
- Platform carts.
- Furniture dollies.
- Stair dollies.
Moving straps and ropes
These are essential items for your equipment business. You can use them to secure any items to your moving dolly or platform cart, as well as to secure the equipment in your delivery vehicle to prevent it from moving around when you are driving. You will likely need different straps and ropes for different tasks.
Some of the moving straps and ropes you could choose include:
- Shoulder dollies.
- Forearm moving straps.
- Elastic straps.
- Ratchet straps.
- Ratchet straps with e-tracks.
- Nylon ropes.
- Twisted polypropylene ropes.
A CCTV system
Because you will be storing a lot of expensive stock and equipment, CCTV can protect your business from potential break-ins and theft. CCTV can also protect your business in the event of an injury or accident and can provide vital footage to the police if a theft or incident occurs in your business. You can choose the specification of the equipment and how many cameras you require.
Reception and admin equipment
If you allow customers to visit your premises to choose the equipment in person, make payments or collect the equipment, you may require a reception area.
Some of the equipment you may require for your reception are:
- A cash register and Point of Sale (POS) system.
- A phone – for customers to make appointments.
- An appointment book or scheduling software – to keep track of appointments and cancellations.
- A reception desk and chair.
- Business cards and appointment cards.
- Pricing signs and opening hours signs.
- Shelving for displaying products.
A waiting area
If customers can visit your premises, you may also choose to incorporate a waiting area or seating area.
Some equipment you could purchase includes:
- Comfortable chairs.
- A coffee machine or water cooler.
- Magazines and newspapers.
A website is useful for advertising your business and will likely act as your primary advertising and ordering strategy. Your website should list the types of equipment you offer, the volume of equipment (e.g. how many of each item is available), descriptions and photographs of the equipment, the area you are located in and the areas you deliver to and your contact information. Design your website to include your business logo and to reflect your branding.
A computer or laptop
If you run your business online or plan to advertise your services online, a computer or laptop is essential. You can use your computer for managing rentals, advertising, creating appointments, ordering equipment, running your business website and handling any business and administrative tasks.
Software can have a variety of uses, including:
- Scheduling rentals.
- Organising and managing daily operations.
- Creating, tracking and sending invoices.
- Managing payments.
- Accessing customer information.
- As a payroll tool.
- Scheduling appointments (e.g. when customers visit your premises).
Depending on the business software you opt for, you could also have tools for increasing your revenue, including booking tools and marketing tools. Many types of business software come with a mobile application for easy access on the go.
A business phone
A business phone will enable you to communicate with your customers and be contacted by potential clients. Your business phone number should be advertised on your website, your delivery vehicles and any leaflets or business cards you use.
A payment system
The type of payment system you require will depend on your primary payment strategy. For example, if you accept in-person sales, you will likely require a transportable Point of Sale (POS) system (e.g. a card machine) and a cash collecting system. If you accept online payments, you may require an online payment system or a way to track payments to your business bank account.
Business cards and appointment cards
Business cards can be used for advertisement purposes and handed out to customers and potential customers. The business cards should include your business name and logo, the services you offer, your location and your contact information. Your appointment cards should be designed in a similar way to your business cards but should feature a space for you to write the date and time of the appointment.
Personal Protective Equipment (PPE)
The type of PPE required by you and your employees will depend on their role within your business. For example, when working in a warehouse or storage premises, your employees will likely need PPE such as hard hats, high-visibility jackets and safety goggles.
Heavy-duty work gloves are necessary for anyone who handles the equipment or machinery. Gloves can protect your hands and fingers from cuts, scrapes and scratches and reduce the pressure on your hands. Protective gloves will also enhance your grip, making it less likely that you will drop any of the items you are carrying.
Depending on the equipment you rent out, you may choose to package the equipment before it leaves your premises. Some of your equipment may already be stored in boxes, but for equipment that isn’t, some of the packaging materials you may need include:
- Sturdy boxes.
- Packaging tape.
- Bubble wrap.
- Packing peanuts.
- Styrofoam inserts.
- A label maker (to label what is in each box).
Keeping all areas of your premises clean is imperative. You will likely need different cleaning materials for different areas of your premises. You may need to invest in cloths, sponges, antibacterial surface cleaners, bleach, sanitiser and a sweeping brush and mop. You may also need specific cleaning materials to clean the equipment between rentals.
As well as the equipment listed above that is required to help you operate your business successfully, you will also require a large inventory of equipment for rental. The type of equipment you choose can vary considerably, depending on the type of equipment rental business you set up. Some examples are listed below:
- Aerial work platforms, e.g. scissor lifts and boom lifts.
- Forklifts and telehandlers.
- Earth-moving equipment, e.g. excavators, skid steer loaders and backhoes.
- Air compressors.
- Construction site service equipment, e.g. skips, storage containers and towable lights.
- Compaction equipment.
- Construction vehicles and trailers.
- Floor care equipment, e.g. scrubbers and sweepers.
- Portable light towers.
- Portable generators.
- Concrete equipment, e.g. mixers, concrete buggies, site dumpers and core drills.
- HVAC (Heating, Ventilation and Air Conditioning) equipment.
- Landscaping equipment, e.g. forest machines, harvesters, grinders and trenchers.
- Pump equipment.
- Roading equipment, e.g. road reclaimers and wideners.
Parties, Weddings and Events Equipment
- Tables and chairs.
- Linens, e.g. table cloths, napkins and chair covers.
- Decorations, e.g. lanterns, lights, letters, signs, arches and props.
- Tents, marquees and gazebos.
- Portable bars.
- Staging, flooring and dance floors.
- Catering equipment, e.g. serving equipment, china, cutlery and glassware.
- Indoor and outdoor games, e.g. casino equipment, arcade games and carnival booths.
- Children’s party equipment, e.g. bouncy castles, inflatables and toys.
- Concession stands, e.g. chocolate fountains, popcorn machines and candyfloss machines.
- Food and drink trucks and stands.
- Golf clubs and other golfing equipment.
- Scuba diving equipment.
- Surfboards and paddleboards.
- Skiing and snowboarding equipment.
- Fitness equipment, e.g. treadmills, exercise bikes and rowing machines.
- Racquet sports equipment, e.g. tennis and badminton racquets, shuttlecocks and tennis balls.
- Snorkelling equipment.
- Skateboards or roller skates.
- Camping and climbing equipment.
- Football equipment, e.g. football nets, footballs, football boots and gloves and cones.
- Laptops and desktop computers.
- Computer monitors.
- Sound systems, audio response systems and audio recording equipment.
- Microphones, speakers and digital audio recorders.
- Projectors, screens and pointers.
- Cameras and video cameras.
- Accessories, e.g. press boxes, power strips, cables and keyboards.
- Video conferencing systems.
When you are creating your business plan, an important consideration you will need to make is your expected start-up costs and running costs. Calculating your expected costs allows you to determine your initial investment requirements, your pricing strategy and your profit goals.
There are multiple costs associated with setting up and running an equipment rental business. Some of these costs will be one-off initial costs that you will need to pay when you are setting up your business. Other costs will be ongoing costs you will need to pay regularly – usually weekly, monthly, quarterly or annually.
Although the costs can vary depending on the type of equipment rental business you set up, some of the typical costs you can expect are:
Your business premises will likely be your biggest expenditure. Depending on the type of equipment you are storing (e.g. the size and weight) and the volume of equipment, you will likely need large premises with significant storage space. For example, you may opt for a warehouse or similar premises. You will need to rent your premises on a monthly or annual basis. Rental prices can vary significantly, depending on the location and the size of the premises. City centres or busy locations usually have the highest rental costs. Rental costs are often calculated per square metre. They can range significantly, from £500 to £15,000 per square metre annually.
Refurbishment and installation costs
You will likely need to refurbish or convert your premises to install the equipment you need for your business and make the area fit for purpose. For example, you will need to install storage areas. Depending on the size and layout of your facility, you may need to make changes, such as taking down walls and reconfiguring the space. You will also want to refurbish and design your premises to fit the aesthetic of your business and make it attractive to customers (if they visit your premises). Renovation costs can vary, from £500 to £50,000 depending on the level and scale of work required. Renovation costs could also include installing water lines, pipes, a water tank and electrical systems.
Your equipment is an important purchase. Consult the list above to determine the type of equipment you require. The cost of your equipment can vary significantly, depending on the specification of your equipment and how much equipment you need. Your equipment requirements may be higher if you have a large premises with more storage capabilities and you plan to offer a higher volume of equipment. You may opt to purchase less equipment initially and then expand your equipment as your business grows. Equipment for an equipment rental business can cost between £10,000 and £1,000,000, depending on the type of equipment you specialise in (e.g. construction equipment is typically more expensive).
Maintaining, repairing and replacing equipment
Repairs, maintenance and replacements are ongoing costs you will need to factor into your budget. Although some of your equipment will come with warranties, repairs and replacements are inevitable – particularly because you are responsible for ensuring all equipment is safe to use before it is rented out. Your equipment may also experience heavy usage. Regularly cleaning and maintaining equipment and ensuring it is used correctly can extend its lifespan, but potential repairs and replacements should still be factored into your budget. You may also need to upgrade and replace your equipment as changes and updates are released.
If you offer a delivery option, your delivery vehicles will be a major expenditure when setting up your business. You can opt for a van or a lorry. The price of a van can vary significantly, depending on the make and model, the size and whether it is new or second-hand. The cost of a van can begin at £5,000 (for a second-hand vehicle). For a new van, expect to pay at least £30,000. Alternatively, you could opt to purchase lorries. Lorries can be advantageous for delivering large equipment or higher volumes of equipment (e.g. to large companies). Lorries typically cost between £30,000 and £100,000.
Vehicle running costs
Your vehicle running costs include your vehicle insurance, fuel, MOT, services and the costs of any repairs. These costs can vary significantly, depending on the age and condition of your vehicle, the level of insurance you choose and the amount of travel you need to do. Typically, you can expect to pay between £100 and £1,000 per month, depending on your mileage.
These are the day-to-day costs associated with running your equipment rental business. Some running costs are paid monthly, and others are paid quarterly or annually. Your running costs can include electricity, gas, water, council tax and insurance. To maximise your profits, try to keep your running costs as low as possible.
You may need to hire staff, such as sales representatives, warehouse staff and delivery drivers. You will need to pay any staff you employ at least the national minimum wage and account for other expenses such as holiday pay, sick pay, maternity/paternity pay, National Insurance and any company pension contributions.
Your business website
Your business website will act as your primary advertising and marketing tool, allowing potential customers to find your business online. Your website may also feature an ordering system, where your customers can order or reserve the equipment. Your website should be functional, easy to use, attractive and search engine optimised, to ensure it ranks highly on search engines, such as Google. Your website will need regular monitoring, updating and upgrading. You also need to make sure your website is secure, particularly if you will be collecting any customer information. You may choose to set up and run your website yourself or hire someone to do this for you. You can expect to pay between £20 and £100 per hour for someone to set up and run your website.
When creating your brand identity, consider how you want your business to be perceived by potential customers. When creating your brand, consider the type of equipment you offer and your typical customer base. Branding can include creating your business’s visual identity, design and aesthetic, your business name and logo and your website. You could hire a professional to help you with branding or do some or all of the work yourself. Branding can cost between £500 and £10,000, depending on the level of work required.
Advertising and marketing
Advertising is an essential practice to ensure the success of your business. Advertising and marketing help your business to attract customers and can help you to maximise your profits. It is recommended that you spend between 1%-3% of your annual turnover on marketing. For example, if your annual turnover (or your desired annual turnover) is £200,000, you should spend between £2,000 and £6,000 on advertising and marketing. You may need to invest more money when you initially set up your equipment rental business or when you are trying to grow your business and reach new customers.
There are several types of coverage you could choose for your equipment rental business. Prices can vary depending on your insurance provider and the level of coverage you choose.
Business insurance typically chosen by equipment rental businesses includes:
- Public Liability Insurance.
- Professional Indemnity Insurance.
- Employers’ Liability Insurance.
- Business Travel Insurance.
- Equipment Breakdown Cover.
- Management Liability Insurance.
- Accidental Damage.
- Tools and Business Equipment Cover.
- Storage Cover.
- Personal Accident.
- Legal Expenses.
- Business Interruption Insurance.
Insurance costs can vary, depending on your insurance provider and the level of coverage you require. Prices typically start at £10 per month.
Typical Pricing for Customers
Once you have calculated the expected costs associated with setting up and running your equipment rental business, you can then determine your pricing. Different pieces of equipment will have different rental costs.
Multiple factors can impact your pricing strategy, including:
- The type of equipment you are renting.
- The value of the equipment (e.g. how much you purchased it for).
- The age and condition of the equipment.
- Whether newer or upgraded models are available.
- The volume of the order (you may offer discounts for larger orders).
- The rental term (you may offer discounts for long-term rentals).
- Whether the customer is responsible for maintaining the equipment while it is in their possession.
- Whether the customer has been charged a damage deposit fee.
- The demand for your services.
- Whether you offer a delivery and pick-up service.
- The pricing of your competition.
If you are running a chef agency, you may receive payment based on the wage paid to the chef. On average, chef agencies are paid between 15% and 20% of the chef’s salary. For example, if a chef is hired on a month-long contract for £5,000 a month, the agency will be paid between £750 and £1,000.
Alternatively, agencies charge a set fee for finding the ideal candidate. This fee can vary depending on several factors, such as the length of the contract.
Safely Running an Equipment Rental Business
Safe practices in your equipment rental business can help to protect the health and safety of you, your employees and your customers, as well as protect your equipment.
Some ways you can safely run your business include:
Check licences, training and qualifications
Some of the equipment you offer for rental may require specific licences, training or qualifications to use it. For example, chainsaws, cranes, heavy machinery and plant machinery. To ensure the equipment is used safely and correctly and to protect the health, safety and well-being of your customers, you should request to see proof of your customer’s licensing or training before handing over possession of such equipment.
Manage safety on the road
If you offer a delivery or collection service and hire drivers or drive the delivery vehicles yourself, you are responsible for managing road safety hazards.
You must ensure safe driving at all times, for example:
- Always adhere to speed limits.
- Anticipate any hazards and be prepared for how to deal with them.
- Don’t use your mobile phone while driving.
- Don’t drive distracted.
- Take the appropriate number of breaks.
- Approach zebra crossings correctly.
- Respect cyclists.
Obtain health and safety training
Health and safety training courses can teach you how to follow safe practices in your business.
Some training courses you could opt for include:
- Manual Handling.
- Warehouse Safety Course.
- Workplace First Aid.
- Assessing Risk.
- Health and Safety Level 2.
- PAT Testing Awareness.
- Fire Safety Awareness.
- Personal Protective Equipment (PPE).
Properly maintain and set up equipment
Any equipment you use must be properly maintained, correctly set up and safe to use. You must protect yourself and your employees from accidents or injuries caused by equipment. You should also perform regular equipment inspections to ensure your equipment’s safety and help extend the lifespan of your equipment. Maintenance includes regularly checking for faults, regular cleaning and ensuring equipment is functioning correctly.
Keep all areas clean and organised
This can help to reduce trips, slips and falls and can help to protect your employees and your equipment. Remove anything from the floor that could be a trip hazard, dispose of rubbish immediately, keep storage areas organised, clean up spills and make sure anything stored on shelves or high up is secure and isn’t at risk of falling.
Create defined forklift paths
If you use a forklift on your premises, you will need to create defined forklift paths that are large enough for the forklifts to safely navigate and are free from obstacles. The paths must be clear at all times and any person walking on the pathways should be extra vigilant.
Check and maintain electricals
Not only can this save you money by avoiding damage, repairs and replacements, but checking and maintaining electricals can help to protect your equipment from faults and protect the health and safety of everyone who visits your business. Implement a system for regularly checking electricals and ensuring they are up to code.
Carry out risk assessments
Risk assessments are a legal requirement for businesses with more than five employees. However, even if your business has fewer than five employees, risk assessments are still recommended to ensure the safety of you, your staff and your customers. Risk assessments can help you to identify any potential hazards and risks in your business and how these can be reduced or eliminated.
As part of your risk assessment, you should:
- Identify hazards.
- Determine who could be at risk.
- Evaluate any potential risks.
- Implement relevant safety measures.
- Record the results of the risk assessment.
- Review the risk assessment regularly.
Use appropriate Personal Protective Equipment (PPE)
PPE can help to protect you and your employees from obtaining an injury at work. Some of the PPE you may require includes heavy-duty gloves, goggles, hard hats, high-visibility vests or jackets, face masks (e.g. if working in dusty environments) and steel toe-capped boots.
Implement security measures
Because you will be storing expensive equipment on your premises, security measures should be implemented to protect your business from theft.
Some ways you can protect your equipment and stock include:
- Installing a CCTV system.
- Using secure and reliable locks.
- Installing an alarm system.
Keep a fully stocked first aid kit
If someone has an accident or sustains a minor injury, it may not be serious enough to warrant medical intervention. Instead, you may be able to offer treatment yourself. Having a first aid kit that is checked and replenished regularly and is transportable and easily accessible is recommended.
Complying with legal requirements is essential when setting up and running an equipment rental business. Failure to comply with legal requirements could not only result in an accident or injury, but you could also face consequences such as a warning, a fine, the forced closure of your business or, in serious circumstances, prosecution.
The legal requirements you need to comply with will depend on the type of equipment you supply, how you deliver the equipment, your location and the location of your customers.
Some of the legal guidelines you should be aware of include:
Create legal equipment hire agreements
An equipment hire equipment is a legal contract between two parties whereby one party is renting equipment to the other party.
In your contracts, you should include information such as:
- The type of equipment, the value and any important characteristics (e.g. the serial number).
- Any restrictions on how the equipment can be used.
- The intended purpose of the equipment.
- Details of how the equipment will be delivered and returned.
- The rental cost and how payment will be made.
- The rental lease period.
- The damage deposit (if relevant).
- The insurance details (if relevant), e.g. whether the renter is required to insure the equipment).
You should also specify whether the hirer is responsible for maintaining and repairing the equipment or replacing any damaged or lost equipment.
Apply for authorisation from the Financial Conduct Authority (FCA) for long-term rentals
If you offer long-term equipment rentals (more than three months) you must be authorised by the FCA to offer credit. For some business-to-business lending, FCA approval is not required. However, it is recommended that you contact the FCA directly to determine whether your business is exempt.
Comply with equipment safety standards
Any tools or equipment that you hire out must comply with the appropriate safety standards.
To ensure compliance you must:
- Confirm the supplier’s safety standards.
- Check all tools and equipment before hirings to ensure they are safe.
- Test electrical safety periodically.
- Keep accurate records of all safety standards testing.
Comply with the Provision and Use of Work Equipment Regulations (PUWER) 1998
Under the PUWER regulations , you must ensure any equipment that you use in your business or rent out to customers is fit for purpose and is maintained and inspected regularly. You must also ensure that health and safety risks are minimised to an acceptable level, that you have the correct knowledge and training to use the equipment, and that protective measures are put into place. You must also ensure the equipment is used under appropriate conditions.
Comply with the Electricity at Work Regulations 1989
The Electricity at Work Regulations state that any workplaces that use electricals must construct electrical systems in a way that prevents danger, maintain electrical systems to ensure they are safe, ensure electrical equipment is checked by a competent person annually and conduct Portable Appliance Tests (PAT). This includes electrical equipment you use in your business and electrical equipment you rent to customers.
Comply with the Consumer Rights Act 2015
The Consumer Rights Act is designed to protect customers from substandard products and overpriced services. It covers the selling, terms and conditions and supply of products and services (including equipment rental) to ensure consumers are better informed and more well-protected.
Under this Act, any equipment you provide must:
- Be fit for purpose.
- Match any description given by you.
- Be of satisfactory quality and not faulty or damaged.
Customers will also have the right to challenge any unfair small-print terms, conditions and costs.
Comply with the General Product Safety Regulations (GPSR) 2005
The GPSR ensures the safety of consumer goods and equipment and lays down a framework for assessing product safety under normal and reasonably foreseeable conditions. They ensure the safety of goods by stating specific controls. As part of these regulations, you should undertake and document a risk assessment that assesses the risks and risk categories associated with your products.
Comply with the Goods Vehicles (Licensing of Operators) Act 1995
If you offer a delivery or pick-up option and use a vehicle to complete deliveries and collections, this Act specifies that you will need to apply for the appropriate licence from the Driver and Vehicle Standards Agency (DVSA). You will need a licence if your vehicle has an unladen weight of 1,525 kg or more or a gross plated weight of more than 3,500 kg.
There are two different types of licences available:
- Standard National Licence: To carry goods within the UK.
- Standard International Licence: To carry goods in the UK and on international journeys.
When applying for your licence, you will need to advertise your application, advertise your proposed operating centre (where your vehicles are usually kept when not in use) and nominate a transport manager.
You will also need to pay:
- A one-off application fee.
- An issue of licence fee.
- A fee for the continuation of your licence after 5 years.
Appoint a transport manager
As part of your licence regulations, you will need to appoint a transport manager.
A transport manager is responsible for:
- Ensuring all drivers have a valid licence.
- Ensuring all vehicles are taxed and insured.
- Ensuring all vehicles have a valid MOT and are properly maintained.
- Ensuring all vehicles are loaded safely and are not overloaded.
- Ensuring drivers do not speed.
- Ensuring drivers do not break the drivers’ hours rules.
- Ensuring the vehicle operators do not break safety rules.
To become a transport manager, you will need to obtain a Transport Manager Certificate of Professional Competence (CPC) qualification .
Comply with the drivers’ hours rules
The GB domestic drivers’ hours rules apply to anyone who drives a goods vehicle (including delivery vehicles).
You will need to comply with the guidelines regarding:
- Daily driving limits: You cannot drive for more than 10 hours per day.
- Daily duty limits: You cannot be on duty for more than 11 hours in a working day. You must also ensure you take appropriate breaks when driving and comply with fortnightly rest periods.
As the business owner, you are required to:
- Keep accurate records of your drivers’ hours records for a minimum of one year.
- Ensure all drivers are properly trained and understand regulations.
- Organise your drivers’ time to enable them to follow the regulations.
- Check your drivers’ hours records.
- Monitor your drivers’ working times.
Ensure lorry drivers have a HGV licence
If you opt for lorries to transport your rental equipment, you will need to ensure your drivers hold a heavy goods vehicle (HGV) licence . To apply for this licence, they will need to obtain a Driver Certificate of Professional Competence (CPC). Contact the Traffic Commissioner to determine whether you or your employees require this licence.
Comply with the Manual Handling Regulations (1992)
Manual handling is an inevitable part of this industry. You will be handling heavy equipment, bending down and reaching high and using repetitive movements, all of which could result in pain or injury. Following manual handling regulations can help to protect you and your employees from sustaining an injury or illness as a result of manual handling tasks. Much of the work you do in your business will involve manual handling (e.g. moving or lifting equipment and loading or unloading vehicles). It is therefore imperative that you follow manual handling regulations properly.
Comply with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 2013
RIDDOR states that you must report all injuries, diseases and dangerous events that occur in your business. Reports must be made to the Health and Safety Executive (HSE) using an appropriate recording document. As injuries may be more likely in your business, because you will be working with potentially dangerous equipment and large and heavy items, appropriate recording can help you to recognise any mistakes or patterns and prevent future injuries.
Comply with fire regulations
As the business owner, you are responsible for fire safety measures on your premises.
There are multiple fire regulations you must ensure you comply with, including:
- Conducting a fire risk assessment.
- Complying with the Regulatory Reform (Fire Safety) Order 2005 .
- Implementing any necessary fire safety measures.
- Implementing emergency procedures and ensuring these are clearly displayed.
Prepare a health and safety policy
The law states that every business in the UK must have a specific policy for managing health and safety. Your policy should state exactly how you will manage health and safety in your business, who is responsible for specific tasks and how and when these tasks are completed.
Appoint a competent person
A competent person should be appointed to help your business meet your health and safety legal duties. You can act in this role yourself or appoint another person to fulfil this role. The competent person should have the skills, knowledge and experience to identify any hazards in your business and put controls in place to protect people from harm.
Comply with the General Data Protection Regulations (GDPR) and the Data Protection Act (DPA)
You must comply with both pieces of legislation when storing or sharing personal information, such as your customers’ personal information, contact details and banking information. You must also apply for a Notification to Process Personal Data Licence. If you process or store personal information such as personal details and banking information, you will need to apply for a licence with the Information Commissioner’s Office and renew your registration every year.
Comply with employment legislation
You must ensure you follow employment legislation, including the Employment Rights Act (1996 ) and the National Minimum Wage Act (1998) . You must also comply with legislation relating to recruitment, working hours, sickness, discrimination, dismissals, and maternity or paternity pay.
Ensure your website complies with the guidelines
If you set up a business website, there are several guidelines you need to comply with, including:
- Privacy policies.
- Cookie legislation.
- Service descriptions.
Under the Equality Act (2010) you must also make reasonable adjustments to your website to ensure it is accessible to people with disabilities.
Comply with the Workplace (Health, Safety and Welfare) Regulations (1992)
Under these regulations , if your business has five or more employees you must ensure you conduct appropriate risk assessments, minimise any risks and maintain all equipment. You must also make sure high levels of cleanliness are maintained.
Register your business
You must register your business with HMRC before you begin operating. You can register as a sole trader or as a limited company. You will need to register your business name and any other relevant information.
Register for self-assessment tax
This allows you to calculate and pay your own taxes each year. You will need to track your finances every month and submit any expenses as part of your tax assessment.
As part of your tax responsibilities, you must:
- Record all forms of income and expenses.
- Complete an annual self-assessment tax return.
- Register for VAT if you earn above the threshold (currently £85,000).
- Pay National Insurance contributions.
- Keep a record of your business accounts for the previous five years.
Positives of Owning an Equipment Rental Business
Running an equipment rental business can be rewarding in many ways.
Some of the main pros associated with this type of business include:
Increased profit margins
Although you will be responsible for the initial purchase cost, constantly renting out your equipment to different customers allows you to earn back your initial payment and make a profit on your investment. Once the rental costs have covered the initial price, any additional rentals will be a profit. The equipment you purchase can have a good return on your investment, which can help you to maximise your profits.
Continuous customer relations
Renting equipment to your customers allows you to create long-lasting business relationships that can help to encourage repeat or continuous business. Your customers will receive continuous service and will have repeated interactions with your business while they are renting your equipment. If you provide them with excellent customer service and work hard to build positive business relationships, you are likely to see repeat business and recommendations to other customers, helping you to grow your customer base and your profits.
Choose the equipment and industry you specialise in
As the business owner, you will have complete control over the type of business you set up and the type of equipment you want to specialise in. You can also choose whether to offer additional services, such as delivery, collection and equipment assembly. You can make the best decisions for you and your business, based on what is most likely to be profitable, your industry knowledge and experience and your business preferences.
Working in this industry, you will be working on a diverse range of tasks every day, from communicating with customers to managing inventory, advertising and managing your premises. Every day will be different, with different customers and contracts. This helps to keep your work interesting.
Opportunities for growth
An equipment rental business has high scalability, meaning that it has the opportunity and capacity to expand and grow easily. Once your original business plan succeeds, you can grow your business, for example, by purchasing more equipment, changing your premises and expanding your customer reach. You will already have positive relationships with your suppliers and customers and can utilise these relationships to help you grow your business with minimal stress.
Opportunities for small businesses
Unlike many other industries, the equipment rental industry is not dominated by major companies. The majority of rental businesses are independent businesses. This results in more opportunities for small businesses and opens up gaps in the market for new businesses to succeed.
The popularity of renting equipment is growing year on year, with the industry at an all-time high. With more businesses and individuals seeing the benefits of renting rather than purchasing equipment, the demand for your services is likely to be high. High demand makes it more likely that your business will succeed.
Unlimited income potential
The more experience and exposure you gain, the more successful your business will be. As your business grows and you develop a good reputation, you will see your profits grow. You can even charge higher prices and expand your business to increase your profits. An equipment rental business can have a high income and your profit margins are likely to be high. With a good business plan and strategy for growth, your business could have unlimited income potential.
Low entry barriers
Setting up an equipment rental business doesn’t require any specific qualifications or training. Instead, all you will need is the relevant knowledge and experience in your chosen industry. This makes it easier (and quicker) for you to set up your business, particularly compared to other industries that require months or years of specific training and formal qualifications.
Connect with other people in the industry
You can build connections with other people in your chosen industry and even your customers. Building both professional and personal relationships allows you to stay up-to-date with new trends, releases and designs and create useful business connections that can help you to grow your business.
Control your own workload
You can set your own working hours and decide how involved you want to be. You can choose whether to work weekdays or weekends and run your business around your personal life. As your business grows and you hire more employees, you could also choose to take a step back and hand over a lot of the day-to-day responsibilities.
Be your own boss
There are multiple ways you can run your business and maximise your profits. As the business owner you decide the type of equipment rental business you set up. You can choose your premises, the type and volume of equipment you purchase, the employees you hire, choose whether to expand your business and decide exactly how to run your business. You can make the best decisions for you and your business.
Negatives of Owning an Equipment Rental Business
Although owning an equipment rental business can be rewarding, there are some potentially negative aspects of this type of business that you should be aware of.
Maintenance and repairs
As the rental company, you will be responsible for maintaining the equipment and dealing with any damage or wear and tear. Even though you will likely have contracts in place to cover you if any equipment becomes damaged in your customer’s possession, there are many repairs and replacements you will be responsible for. Equipment that experiences heavy use or is more than a couple of years old can break or begin to work less efficiently. You will be responsible for maintaining the equipment, which can be time-consuming, and paying for repairs and replacements, which can be expensive.
To keep your business competitive, you will need to update and upgrade your equipment to keep up to date with changing trends and new releases and technology. You will need to ensure your equipment fits the needs of your customers and ensures your business is competitive. Regularly updating and upgrading your equipment can be expensive.
High initial investment
The initial finances required to purchase equipment can be high, particularly if you are purchasing expensive equipment (such as construction equipment) or a high volume of equipment. To create a complete equipment inventory, you could potentially need to invest hundreds of thousands of pounds. You will also be responsible for the costs relating to your premises. High upfront costs may require you to seek outside investment, can make your business higher risk and can result in it taking longer until you begin turning a profit.
As time goes by, the value of your equipment will drastically decrease. If you cannot earn back the initial cost of the equipment in rental costs, if new equipment is released or if the resale value is too low, the depreciation costs can have a significant impact on your finances.
High running costs
As well as the costs of maintaining and replacing equipment, you will also be responsible for your premises’ costs, your delivery costs and the costs associated with hiring employees. High running costs can affect your profits and reduce your profit margin.
Complying with legislation
This industry is highly regulated, with a large number of laws and regulations you must be aware of. You need to ensure you follow all policies and procedures, particularly those relating to health and safety. Not only can it be time-consuming to ensure compliance, but failure to comply, even unintentionally, could have serious consequences. An equipment rental business can have high liability, particularly if you hire employees, which can be a lot of stress and pressure for the business owner.
No matter how careful you are, there is a multitude of potential hazards and dangers when working with potentially dangerous equipment and machinery. If an employee or customer becomes injured when using your equipment, your business may be held liable. If you are found to be at fault (e.g. if maintenance checks weren’t completed properly) this could have a detrimental effect on your business and even result in prosecution.
Working in this industry can be extremely physically demanding, as you will be completing a lot of manual handling activities, for example, cleaning, maintaining and moving heavy equipment and machinery. This can be physically demanding on your body and result in pain, strain or injury.
Travelling long distances
If you offer long-distance deliveries or collections, you (or your employees) could be driving for hours regularly. Not only can this result in high fuel costs, but there are also some health concerns related to driving for much of the day, such as:
- Back pain and strain.
- Reduced cardiovascular fitness.
- Muscle strain and joint stiffness.
- Eye strain.
- A rise in blood sugar.
- A rise in cholesterol.
- A rise in blood pressure.
It can be difficult to build a reputation
A good reputation is key in this industry, as many customers look at your reviews or ask for recommendations from others when searching for equipment rental. This can make it difficult for you to establish your business and grow your customer base. Difficulties in creating your client base will result in a reduced income and could affect your ability to continue pursuing your business.
Issues out of your control
This can be one of the most frustrating aspects of running a business, as things that are out of your control can delay rentals and have a negative impact on your profits. For example, a customer not returning the equipment on time or traffic issues can prevent you from having the equipment ready on time. These issues can cause you to miss a delivery deadline, which can result in unhappy customers and a loss of business.
Motivation of employees
If you hire employees, such as warehouse staff, sales representatives and delivery drivers, to work for your business, they may be less motivated than you to ensure your business is always represented highly. You could hire an employee who is unmotivated, disinterested or doesn’t operate to your standards. This can result in bad reviews or the loss of custom which can have a detrimental effect on your business.
It can be demanding
Not only can running an equipment rental business be mentally and physically demanding but as the business owner you will have a lot of additional responsibilities, such as maintaining the equipment, advertising and marketing, complying with health and safety requirements, liaising with customers and completing administrative tasks. You will also be solely responsible for ensuring your business succeeds.
It can be stressful
Not only will you have a lot of day-to-day responsibility, but you will also be responsible for ensuring each piece of equipment complies with health and safety regulations and that your clients are completely happy. You will also be responsible for managing your employees and creating contracts and managing your inventory. Running an equipment rental business and ensuring your business succeeds can be very stressful.
As you are self-employed, you won’t receive benefits such as pension contributions. You will also be responsible for doing your own taxes and organising your National Insurance contributions. You will also have a lack of job security.
Your business could fail
Starting up your own business can be risky. Many new businesses fail which could result in you losing money or getting into debt. Your business could fail for several reasons, such as high local competition, an ineffective business plan or if there is another recession or a period of financial difficulty.
Planning Your Equipment Rental Business
If you are considering starting up an equipment rental business, an effective and well-designed business plan is essential. A business plan can help you to focus on the specific steps that will help your business succeed, plan your short-term and long-term goals, determine your financial needs and help your business to grow.
Your business plan should contain information such as:
- Your company information.
- Your company description.
- The services you will provide.
- Your branding, marketing and advertising plan.
- The structure of your business.
- The operational plan for your business.
- The financial plan for your business.
When creating your business plan, some factors you will need to take into consideration include:
The type of equipment you want to specialise in
This is the first consideration you will need to make when planning your business. Because each industry (e.g. construction, party planning or sports equipment) has significant equipment requirements, you will likely choose to specialise in one industry or a specific type of equipment rental. Consider the market demand, the costs and projected profits of different types of equipment and your own knowledge, experience and interest.
The volume of equipment you require
This is another important consideration. The volume of equipment refers to how many individual pieces of equipment you stock (for example, if you hire out technology equipment, you may have 40 laptops). When deciding how much equipment to purchase, consider your typical customer base and how much equipment they are likely to require at one time, your storage capabilities and your available capital.
Your business premises
When considering your business premises, consider the size of the facility you require and the storage capabilities. For example, a business specialising in party and event décor will require less storage and a smaller premises compared to a business specialising in construction machinery. Your business location is another key factor you will need to consider.
Your staffing requirements
Your staffing is an important consideration you will need to make. The number of employees you require will depend on the size of your business. You may require warehouse staff, sales representatives, delivery drivers and cleaners. Consider the costs associated with hiring these employees and the potential increases in your profits. Keep in mind that your staffing requirements could change as your business grows and evolves.
Your target market
Determining your target market is a key step in helping your business succeed. Different types of equipment rental businesses and different services will attract different customers. Some other factors that can influence your target market are your location (and delivery locations), your reputation, your knowledge and your pricing strategy. Once you have identified your target market, you can then focus on how to attract these customers to your business.
Being aware of your competition is an important step to ensuring the success of your business. Analysing your competition allows you to look at what they do well and what you think can be improved upon. Look at the equipment they specialise in, the services your competition offers, their pricing, their target market and the number of employees they have. Analysing your competition also identifies whether there is space in the market for your business; for example, if there is already a successful equipment business specialising in golfing equipment operating in your area, you may choose to focus on a different type of equipment or customer base instead.
Your brand and your unique selling point (USP)
Creating your brand is a key way to ensure you stand out from your competition. Branding can help you to focus your target customer base, attract customers and concentrate your marketing and advertising strategies. Some ways you can create your brand are by focusing on your business’s visual identity, considering the equipment you will specialise in and creating a brand story. Your USP can also be part of your brand and can help your business stand out from your competitors. Consider what makes your business special and how this fits into what defines your business.
Your marketing and advertising strategies
Marketing and advertising are especially important when you first begin operating your equipment rental business. Your marketing strategy needs to be effective and budget friendly. Consider your target customers and the best way to reach them.
Some ways you can market and advertise your business are:
- Build a functional and attractive website.
- Contact businesses that operate in your chosen industry.
- Use paid advertising.
- Partner with relevant businesses or websites.
Your start-up costs and running costs
Consult the list above to help you calculate the approximate costs of setting up and running your business. Determine what equipment you need and the amount of equipment, as well as the cost of setting up your business, to help you determine your start-up costs and what your initial investment requirements will be. You can then calculate whether you can finance your business yourself. Determining your start-up costs and running costs can also help you to create a budget and predict when you will begin to turn a profit.
Financing your business
Consult the list of start-up costs and running costs above to determine what capital you will require. Can you finance the business yourself or will you need to source outside investment? You will also need to calculate when you are likely to begin turning a profit. If you require outside investment, you could consider a bank or other financial institution, a business loan or an investment partner.
Your pricing policy
How will your price your equipment? What factors will influence your pricing? Will rental costs be per day, per week or per month? Will you offer additional services (e.g. delivery) and what will the associated cost be? Will you offer discounts for customers with a high order volume? Consider the pricing of your competitors when setting your prices. Keep in mind that your pricing could change as your business grows.
Your sales forecast
How many contracts can you manage at one time? Are there certain times of the year that are likely to be busier than others? What are your weekly, monthly and annual sales forecasts? You can also analyse the sales forecasts of similar businesses and look at how sales vary throughout the year to estimate demand. As your business grows, your sales forecast is likely to change.
Your strategy for growth
Your strategy for growth is the actions you will take to realise your goals for expansion and any potential challenges your business could face and how you will avoid or overcome them. This can help to make your business more successful.
Potential challenges could include:
- A lack of long-term rentals.
- A lack of returning customers or ongoing custom.
- Difficulties connecting with new customers.
Some potential strategies for growth include:
- Improve your marketing and advertising strategies.
- Expand your equipment inventory.
Your business summary
Your business plan should include a detailed overview of your business, including the type of equipment rental business you are setting up, the equipment or industry you will focus on, the services you will offer, your typical customer base, your staffing requirements and your business goals.
Your business goals
Your business goals or objectives are an essential part of creating your business plan. Your business objectives highlight the targets and goals of your equipment rental business and help you to create a one-year, three-year and five-year business plan.
Your business objectives should be SMART:
- S = Specific
- M = Measurable
- A = Achievable
- R = Realistic
- T = Time-bound
Check you have complied with all legal requirements
Consult the list of legal requirements above to check you have complied with all requirements and regulations and that all your paperwork is accurate. Failure to comply with legal requirements could have a detrimental effect on your business or could result in a fine, the forced closure of your business or, in serious cases, prosecution.
Download our business plan
Health and Safety for Managers
Team Leading Level 2
Celebrating our clients and partners.
How to Build an Equipment Rental Financial Model
- January 30, 2023
👇 Check all our resources on Equipment rental businesses 👇
Every business needs a financial model. Whether you want to understand what’s your breakeven , your valuation or create a financial model for the business plan of your equipment rental business, you’ve come the right way.
In this article we’ll explain you how to create powerful and accurate financial projections for a construction equipment rental business with a fleet of 35 vehicles. Note that the numbers, charts and financials come from our financial model template for equipment rental businesses.
1. Forecast Vehicles Acquisition & Lifespan
The first step of any equipment rental financial model is to forecast the actual number of units over time. Units can be vehicles, equipment, tools, etc.
In our example here, we are forecasting financials for a construction equipment rental business that leases heavy vehicles such as: bulldozers, forklifts, dump trucks, etc.
For each type of vehicle, we need to set:
- How many vehicles you will acquire over time, and when
- How much you pay for these vehicles
- How you finance the acquisition of vehicle (leasing, debt or equity )
- How long you expect to use these vehicles
- Whether you plan to sell the vehicles at a salvage value in the future (or not)
In order to do so, prepare a table like the one below, where you can list all the different vehicles, their category (forklift, bulldozer, backhoe, etc.), purchase price, and all the criteria listed above.
The different sections are as follows:
- The different types of vehicles and their category (each category will have a different pricing as we will see later on). For each type of vehicle:
- The number of vehicles acquired, the date of acquisition and the price paid per vehicle;
- The average rental lifespan (how many months do you use their vehicles?) and their salvage value (the value at which you will sell them back at the end of the rental lifespan;
- Debt assumptions: the % of the purchase price that’s covered by a loan (as you will likely have to pay some of it yourself), the interest rate per year and the term of the loan
That way, you will be able to forecast accurately how many vehicles are available. In other words, how many vehicles you can use to rent to customers before you need to sell them back at the end of their rental lifespan.
Equipment Rental Financial Model
Download an expert-built 5-year Excel financial model for your business plan
2. Forecast Revenue
Now that we have estimated the number of available vehicles over time, the next step in our equipment rental financial model is forecasting revenue.
Revenue is the function of:
- Number of available vehicles
- Utilization rate . Unfortunately not all vehicles will be rented at all times: it is practically impossible to reach 100% utilization rate as, for construction equipment and machinery especially, you will need to time between each customer to clean the vehicles and do some maintenance
- Rental price (per day or per month)
1. Number of available vehicles
We already have that (see section 1)
2. Utilization rate
Utilization rate can either be set at category level or for all vehicles. Make sure to set utilization rate month by month to take into account seasonality.
In the end, you’ll be able to forecast accurately the number of rented vehicles vs. the total number of available vehicles over time, as shown below.
3. Rental price
Pricing can be set by vehicle category. For example:
- Forklifts will have an average daily rental fee of $200 and a monthly rental fee of $4,200
- Excavators will have an average daily rental fee of $1,200 and a monthly rental fee of $20,000
- and so on..
Now that you have set all 3 parameters for each vehicle category, you should be able to easily calculate revenue for all vehicles as shown below.
3. Calculate Expenses
In addition to one-off startup costs , you must also budget for all the operating costs of running an equipment rental business.
We have laid out below a clear overview of all the key expenses you can expect to operate a construction equipment rental business with 35 vehicles. Yet, note that the amounts below are purely for illustrative purposes and depend on a number of factors which may not fully apply to you.
Unless you acquired the real estate, you will need pay rent every month. Using our example above, you should set aside $10,000 per month for a 10,000 sq. ft. commercial space (at $10 per sq. ft. per month).
Fleet Maintenance and Servicing
Whether you rent heavy machinery, vehicles or small equipment and tools, you will need to spend money on maintenance and servicing. Unfortunately, there is no average here. The cost depend on the type of equipment you rent, their quality as well as their usage.
Depending on the size of your business, you can employ on-site mechanics and technicians to help with frequent vehicle maintenance and servicing. Alternatively, you can frequently contact an external team to handle everything.
For example, a crane will cost between $4,000 to $6,000 per year in preventive maintenance. So assuming you rent 35 heavy machinery and vehicles, you can expect to spend the same ($4,000 to $6,000 in maintenance per unit per year).
Therefore, maintenance costs can range from $140,000 to $210,000 per year for such a business. This includes spare parts, technicians’ and mechanics’ salaries as well as any other 3rd party maintenance costs.
Assuming you run a fleet of 35 construction vehicles, you will require about 3 operators at all times onsite for the smooth running of business operations (handling deliveries, cleaning, etc.). This is in addition with other support staff (receptionists, finance & HR, etc.).
For a company leasing 35 heavy vehicles and equipment, here is an example of the number of employees you would need:
- 2-3 personnel dedicated to offering client support (booking, reception); and
- 2 on-site specialist mechanics to help with frequent servicing and preventive fleet maintenance ( $56,000 average salary)
- 3-4 operators ( $65,000 average salary)
- 2-3 sales reps ( $115,000 average salary)
- 2 support staff (HR & finance)
- 2 management (CFO, CEO)
In total, you would incur around $80,000 per month to cover monthly wages of the 12-15 employees including management (including 20% taxes and benefits).
4. Calculate Lease / Debt Interest
Another important part of any equipment rental financial model is to forecast your balance sheet, and more especially:
- Your assets (if you own the equipment / vehicles); and
Doing so will allow you to do 2 important things:
- Calculate debt interest expenses . Indeed, if you purchase some of the vehicles with debt, another important expense will be the financial interest on the loan which you must forecast accurately
- Forecast your cash flow statement . Indeed, as we will see in the next section, one of the most important impact on your cash flow are debt repayments (not the interest itself but the principal repayments instead).
Therefore, make sure you calculate, each mont:
- Any debt drawdown (if you acquire new vehicles with debt in the future)
- Debt repayment (the actual loan repayments)
- Debt interest (the interest expenses that will appear on your profit-and-loss)
In the end, you should be able to obtain something like the chart below:
5. Build your P&L And Cash flow
Once we have forecasted revenues and expenses, we can easily build the profit-and-loss (P&L) from revenues down to net profit . This will help you to visualise key financial metrics such as Gross Profit or EBITDA margin as shown below:
The cash flow statement, in comparison, needs to include all cash items from the P&L and other cash movements such as capital investments (also referred as “Capex”), fundraising, debt, etc.
Forecasting cash flow is vital as it will help you understand how much funding you should get, either from investors or the bank (SBA loan for example) to start and run your own equipment rental business, which we do in our financial model template with the use of funds chart (see below).
In this chart below, we’re showing you an example of a cost structure a 35-heavy vehicle equipment rental business. Unsurprisingly, 80% of total expenses are the actual cost of acquisition of the vehicles, of which the large part will be covered by debt, as well as salaries.
We earn commissions if you shop through the links below. Read more
Equipment Rental Business
Back to All Business Ideas
How to Start an Equipment Rental Business
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on April 13, 2022 Updated on December 2, 2023
$8,550 - $18,100
$62,000 - $156,000 p.a.
Time to build
1 – 3 months
$50,000 - $125,000 p.a.
If you’re looking to start a business from home and make good money, an equipment rental business may be just the ticket. It’s a large and growing industry, expected to rebound more than 60% from a huge dip in 2020. Equipment rental offers all kinds of opportunities – from party equipment to large tool rental and heavy construction equipment. You’ll need to make an investment to get started, but you should start seeing a return relatively quickly.
Before you start shopping for your items of choice, you’ll need to learn more about the business side of things. Luckily, this step-by-step guide details the entire process of developing and launching a successful equipment rental business.
Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.
Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .
Step 1: Decide if the Business Is Right for You
Pros and cons.
Starting an equipment rental business has pros and cons to consider before deciding if it’s right for you.
- Good Money – Depending on the equipment, you can make hundreds a day
- Flexible – Run your business from home on your hours
- Minimal Labor – Pickups and drop-offs only
- Big Competition – Compete with companies like Home Depot
- Up Front Investment – Spend some money get started
Equipment rental industry trends
Industry size and growth.
- Industry size and past growth – The global equipment rental business was worth $53.2 billion in 2020, after more than a 60% decline from 2019 numbers.(( https://www.statista.com/topics/8063/equipment-rental-market-in-the-united-states/?#dossierKeyfigures ))
- Growth forecast – The global equipment rental business is projected to grow more than 60% by 2023 to regain its 2019 total of more than $87 billion.
- Number of businesses – In 2021, 10,873 tool and equipment rental businesses were operating in the US.(( https://www.ibisworld.com/united-states/market-research-reports/tool-equipment-rental-industry/ ))
- Number of people employed – In 2021, the US tool and equipment rental business employed 27,798 people.
Trends and challenges
Trends in the equipment rental industry include:
- More and more construction companies and builders are opting to rent large equipment rather than buy, which is good news for the equipment rental industry.
- The new infrastructure bill, which is driving the construction industry, is also expected to increase the equipment rental industry.
- DIY projects are trending, with homeowners attempting to do remodeling and repairs on their own, and these people tend to rent rather than buy tools and equipment.
Challenges in the equipment rental industry include:
- Evolving technology makes it necessary for equipment rental companies to periodically upgrade their equipment.
- New technologies are being used to track equipment, which is solving a consistent problem in the equipment rental business but is an added expense for rental companies to assume.
How much does it cost to start an equipment rental business?
Startup costs for an equipment rental business range from $8,500 to $18,000, although the costs vary widely depending on the type of equipment. These calculations assume that you will start out with large tools such as chainsaws, tile saws, drills, power washers, and so on. Costs also include the down payment on a truck or van to transport your equipment.
Be sure to have an equipment rental agreement in place that customers must sign, and it should include a liability waiver in case someone is injured by the equipment. Also, make sure that your equipment is properly insured.
How much can you earn from an equipment rental business?
Daily rental rates for most smaller tools average about $40. Your profit margin should be about 80%.
In your first year or two, you might have 10 pieces of equipment and rent six of them five days per week, bringing in more than $62,000 in annual revenue. This would mean $50,000 in profit, assuming that 80% margin. As your business gains traction, you could add 10 more pieces of equipment and rent 15 of them five days a week. With annual revenue of $156,000, you’d make a healthy profit of $125,000.
What barriers to entry are there?
There are a few barriers to entry for an equipment rental business. Your biggest challenges will be:
- The startup costs to purchase equipment
- The space to store your equipment
Related Business Ideas
How to Start a Tool Rental Business
How to Start a Self Storage Business
How to Start a Rental Property Business
Step 2: hone your idea.
Now that you know what’s involved in starting an equipment rental business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Why? Identify an opportunity
Research equipment rental businesses in your area to examine their products, price points, and what rents best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a business that rents wet tile saws, or party supplies and party equipment like bouncy houses and karaoke machines.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as construction equipment or larger tools for the do-it-yourself-er.
This could jumpstart your word-of-mouth marketing and attract clients right away.
What? Determine your products or services
You’ll just need to determine what equipment you want to rent. You should specialize in a certain type of equipment so that you can focus on a certain target market. You might want to call construction or remodeling companies to see what they are most likely to rent.
How much should you charge for equipment rental?
Prices will vary based on the type of equipment that you rent. Check local market prices to make sure you’re competitive. You should aim for a profit margin of about 80%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Your target market will either be construction-related companies or homeowners. You should spread out your marketing to include TikTok, Instagram, Facebook, and LinkedIn.
Where? Choose your business premises
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a storage space for your equipment. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .
When choosing a commercial space, you may want to follow these rules of thumb:
- Central location accessible via public transport
- Ventilated and spacious, with good natural light
- Flexible lease that can be extended as your business grows
- Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- Name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “equipment rental” or “tool rental”, boosts SEO
- Name should allow for expansion, for ex: “Premier Rental Solutions” over “Power Tools Rental Solutions”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step Business Name Generator . Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Find a Domain
Powered by GoDaddy.com
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Summarize your equipment rental business’s goal to provide a wide range of quality, well-maintained equipment for short-term or long-term rental to various industries.
- Business Overview: Describe your business’s focus on renting out equipment such as construction machinery, event gear, or audio-visual technology to meet diverse client needs.
- Product and Services: Detail the types of equipment available for rent, including categories like heavy machinery, landscaping tools, party supplies, or audio-visual equipment.
- Market Analysis: Assess the demand for rental equipment, considering target markets like construction companies, event planners, or DIY homeowners.
- Competitive Analysis: Compare your rental offerings to other equipment rental businesses, focusing on your strengths like equipment variety, maintenance quality, or flexible rental terms.
- Sales and Marketing: Outline your strategy for attracting customers, including digital marketing, building relationships with industry professionals, or offering competitive pricing.
- Management Team: Highlight the experience and qualifications of your team, especially in areas like equipment maintenance, customer service, and business management.
- Operations Plan: Describe the process of equipment rental, from inventory management and maintenance to customer service and delivery logistics.
- Financial Plan: Provide an overview of financial aspects, covering startup costs, pricing strategy, and expected revenue.
- Appendix: Include supplementary documents such as equipment catalogs, maintenance records, or market research data to support your business plan.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Step 5: Register Your Business
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to equipment rental.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your equipment rental business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
- Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
- General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
- C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
- S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.
Form Your LLC
Choose Your State
We recommend ZenBusiness as the Best LLC Service for 2023
Step 6: Register for Taxes
The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist , and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
- Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best option, other than friends and family, for funding an equipment rental business. You might also try crowdfunding if you have an innovative concept.
Step 8: Apply for Licenses/Permits
Starting an equipment rental business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Step 9: Open a Business Bank Account
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your equipment rental business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Rental 360 , EZ Rent Out , or Point of Rental , to manage your inventory, schedule, invoices, and payments.
- Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero .
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Starting an Equipment Rental Business can be a lucrative venture, and aside from the obvious steps like creating a website and networking, here are some practical and effective marketing strategies to help your business thrive:
- Strategic Partnerships: Forge partnerships with construction companies, event planners, or other businesses that frequently require equipment, offering them exclusive deals or discounts for consistent rental agreements.
- Social Media Campaigns: Leverage platforms like Instagram and LinkedIn to showcase your equipment in action, share success stories, and engage with your audience by running targeted ads to reach potential customers in your local area.
- Referral Programs: Implement a referral program that rewards existing customers who refer new clients, encouraging word-of-mouth marketing and building a strong network of satisfied clients.
- Local SEO Optimization: Optimize your online presence for local search by ensuring your business information is accurate and consistent across online directories, making it easier for potential customers in your area to find you.
- Specialized Equipment Packages: Create bundled packages for specific industries or events, offering a convenient and cost-effective solution for customers who may need a variety of equipment for a particular project or occasion.
- Community Involvement: Sponsor local events, join community groups, and participate in relevant industry associations to raise awareness about your business and build trust within your community.
- Online Reviews and Testimonials: Encourage satisfied customers to leave positive reviews on online platforms like Google, Yelp, or industry-specific websites, boosting your credibility and influencing potential clients.
- Seasonal Promotions: Introduce seasonal promotions or discounts during peak periods when demand for certain types of equipment is higher, attracting more customers during specific times of the year.
- Educational Content: Create informative content, such as blog posts, videos, or webinars, that educates your audience on how to use different types of equipment safely and effectively, positioning your business as an industry authority.
- Customer Loyalty Programs: Implement a loyalty program that rewards repeat customers with discounts, exclusive offers, or priority access to new equipment, fostering long-term relationships and customer retention.
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your equipment rental business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your equipment rental business could be:
- Rent top-of-the-line tools for your DIY projects
- Why buy when you can rent everything you need for your party?
- Heavy construction equipment at great rates
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an equipment rental business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in equipment rental for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in equipment rental. You’ll probably generate new customers or find companies with which you could establish a partnership.
Step 12: Build Your Team
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an equipment rental business include:
- Drivers – equipment drop-offs and pickups
- General Manager – scheduling, inventory management, accounting
- Marketing Lead – SEO strategies, social media
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Step 13: Start Making Money!
An equipment rental business is a great opportunity to start a company that can grow. You can run your business from home and make an excellent living. Start with small stuff, work your way up to larger items and someday your business could rival United Rentals, the largest equipment rental company in the world!
Now that you understand the business of equipment rental, it’s time to head to the hardware store and start shopping so you can start your successful entrepreneurial journey.
- Equipment Rental Business FAQs
Yes, you can make good money from equipment rentals since your ongoing expenses will be low. The key is to purchase the equipment that people will be most likely to rent.
Prices will vary based on the type of equipment you rent. Check local market prices to make sure that you’re competitive. You should aim for a profit margin of about 80%. Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points.
It is important to establish a maintenance schedule and set procedures for handling repairs, including regular inspections and preventative maintenance, as well as prompt response to customer complaints or concerns.
Yes, it is possible to start an equipment rental business on the side, although it may require significant time and effort to manage both the business and your other commitments. It is important to carefully consider your available time, resources, and expertise, as well as the potential demand for your services and the competition in the market.
Renting out heavy machinery or specialized equipment may be subject to additional regulations and safety requirements, depending on the type of equipment and the industry in which it is used. It is important to research and comply with all relevant regulations and safety standards, and to ensure that your staff and customers are trained and educated on safe operation and handling of the equipment.
To increase customer retention for your equipment rental business, you can focus on providing exceptional customer service, including prompt response to inquiries and complaints, flexible rental terms, and personalized attention to each customer’s needs. You can also offer loyalty programs or incentives for repeat business, and regularly communicate with customers to stay top of mind and offer new promotions or deals.
Leave a Reply Cancel reply
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
- Decide if the Business Is Right for You
- Hone Your Idea
- Brainstorm a Business Name
- Create a Business Plan
- Register Your Business
- Register for Taxes
- Fund your Business
- Apply for Licenses/Permits
- Open a Business Bank Account
- Get Business Insurance
- Prepare to Launch
- Build Your Team
- Start Making Money!
Subscribe to Our Newsletter
57 Best Service Business Ideas
Published on December 1, 2022
The services sector is undoubtedly the biggest economic sector in the US as it accounts for nearly 70% of the country’s gross domestic product. It ...
24 Construction Business Ideas
Published on July 13, 2022
As the US economy regains strength in the wake of the pandemic, the construction industry is anticipating strong growth with plenty ofopportunities, ...
18 Rental Business Ideas
Published on July 12, 2022
Businesses that rely on regular rental payments are guaranteed a steady stream of income, which is why so many of them draw so much entrepreneuriali ...
No thanks, I don't want to stay up to date on industry trends and news.
Equipment Rental Business Plans
Did you know each of these plans was created in LivePlan? Learn More
Beverage Machine Rental Business Plan
Margarita Momma is a start-up frozen drink machine rental service, providing machines to individuals wishing to spice up a party or event with a frozen beverage alternative.
Equipment Rental Sales Business Plan
Equipment Rental is an established heavy-equipment rental and sales business.
Office Equipment Rental Business Plan
House of Projectors is a start-up service provider, renting LCD computer projectors to businesses.
Retail Property Sub-leasing Business Plan
Galerie de Beaute will be the first salon mall in the state, sub-leasing mini-salon units to hairdressers, nail technicians, aestheticians, and massage therapists.
Tools Rental Business Plan
Borrow My Tools is a start-up company serving the San Mateo, CA community with home improvement tools for lease or rental.
Starting an equipment rental business makes a ton of sense in today’s world. With a trend towards minimalism and reducing environmental impact, allowing customers to rent the equipment they need versus purchasing outright is a win-win for both you and your customers. You might be wondering how much inventory should I take in, and how long should rental terms be, and the like.
The only want to determine these scenarios is putting the effort into creating a business plan that will unpack and optimize your equipment rental business opportunity. Get started today by perusing our selection of equipment rental business plans.
If you’re looking to develop a more modern business plan, we recommend you try LivePlan . It contains the same templates and information you see here, but with additional guidance to help you develop the perfect plan.
The quickest way to turn a business idea into a business plan
Fill-in-the-blanks and automatic financials make it easy.
No thanks, I prefer writing 40-page documents.
Our biggest savings of the year
Cyber Sale Save 60%
for life on the #1 rated business plan software
- Media production & broadcasting
- Higher education
- Gaming and software development
- Electronics manufacturing
- Audio & visual equipment
- Stage & lighting
- IT equipment
- Advanced technology
With cheqroom, sigma can make a business case for new purchase more easily, cheqroom features.
- Reservations & check-outs
With Cheqroom, SIGMA can make a business case for new purchases more easily
- Customer stories
- Tools & eBooks
- Asset labels
Asset labeling for better identification
Starting an equipment rental business here is our advice.
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 camera equipment, bikes, luxury cars, party supplies, … Our advice will help you make your rental business a success.
Visit our Youtube channel to watch more videos about equipment management!
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 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. To track what you have and decide what to buy, it's easier to use asset management software to stay ahead.
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 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 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.
4. 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!
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, or 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 the 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 . Every application on this list is designed to help you manage your small business!
8. 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!
9. Treat your customers right
Rentals are repetitive – your customers only rent your equipment for a period of time, so if they need it again in the future, they have to rent it 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.
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. Sign a check-out agreement !
- How should the rental equipment be treated – what is acceptable wear and tear?
- When and where does the rental agreement 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 upfront 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. So here is some advice from the US Small Business Administration on creating a business plan!
These are our tips for starting your own equipment rental business. We hope that this guide has been helpful to you.
Stay in control of your gear with Cheqroom
Interested in our equipment management software? Start a free trial or book a demo.
More blog articles
9 o-col-12 s-wysiwyg"> faq on starting a rental business, do i need much equipment to start a rental 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.
How to take care of my equipment inventory
Assure regular maintenance; Do prompt and thorough repairs, fix any issues quickly and thoroughly. Do cosmetic fixes- your equipment shouldn’t just work like new, it should look like new as well.
How to be a good rental business
Create partnerships with locals or companies with which you can exchange referrals, help each-other out. Be good to your customers, meaning hassle-free with friendly service and don’t go after their money.