Thinking about starting up a rental business? Running a business that rents equipment rather than selling it has definite advantages. One of the more appealing aspects of renting out equipment is the potential for financial gain. But like most things, along with the positives comes some less desirable factors to consider before deciding to rent out your goods rather than selling them outright. From money to maintenance, we give you the pros and cons of running a rental business so you can decide whether it is the right move for you.
Increased Profit Margins
Constantly renting out your products to different people means you have an inventory that eventually pays for itself. You have the chance to continue to make a limitless, healthy profit on an item rather than getting one outright sum for a customer to permanently purchase.
Continued Customer Relations
Renting equipment is also a great opportunity to create long-lasting client relationships and promote continued business. Unlike simply going into a store, buying their goods and walking away, your customers will have continued service and interaction with your business from the beginning to end of their hire period, so you have a great chance to provide exceptional service and encourage that customer’s return as well as their positive feedback and word-of-mouth to other potential customers.
Opportunity for Growth
Hiring equipment to customers also provides you with the opportunity to grow your business by offering additional services that are relevant to the items you are hiring out. For example, if you are hiring out seating or decorations for weddings and events, there is a good chance that your clients would pay an extra fee to have your business not only provide them with the goods, but also assist in setting them up. Businesses like Mabey Hire offer pre-assembly and installation of their engineering products to save their clients time and labour. Depending on your equipment, you can make your business a one-stop-shop for your customers, creating a win-win situation for both parties.
Maintenance and Repairs
Renting your goods always means you have to deal with damage and wear because you will need to maintain your equipment in good condition. These costs can be quite expensive, so it is important to have a clearly outlined and signed agreement of the penalties of misuse, damage, loss or late returns with every customer.
Keeping Up to Date
Depending on the nature of your business, you may need to update your equipment based on changing trends and the needs of your clients. Staying current will give you an edge against your competitors. Although regularly updating your inventory could be expensive in upfront costs, in the long run it has the potential to be a solid investment as you are building a reputation for keeping up with the needs and desires of your clients.
There are numerous factors to consider before starting any business, but with the right people and forward thinking, it is possible to build a successful rental business.