Looking to start an equipment rental business? Here is a step by step guide.
Equipment rental is a viable business to consider. That is because not everyone including professionals has the finances to purchase such tools.
For these types of clients or market segment, they’d rather incur a fraction of the cost getting these from a rental than having to buy them outright.
Start An Equipment Rental Business
Cost is a major consideration for a lot of people seeking to use such equipment. Apart from the cost angle, certain equipment may only be needed for specific jobs.
In other words, one-time users of equipment won’t be needing them for additional tasks and would rather rent than buy them.
In any case, there’s a lot of potential for rental businesses. If you’re interested in starting but have little knowledge of what it takes, we’ll give you the necessary guidance you seek.
Join us as we discuss the steps on how to start an equipment rental business.
Having A Plan
Although this may sound cliche, the impact of having a business plan has helped with business growth and development since time immemorial. This remains the case today.
Your plan will help you channel your priorities and also help the business navigate through challenges.
A plan considers the business name, determines the startup and ongoing costs, identifies a target market, as well as helps, determine the time it will take to breakeven. These are central to operating a successful equipment business.
Stick with us as we expand on these and more shortly.
Choice Of A Business Name
How important is this to the success of a business? Very important! More important is the need to choose the right name.
In choosing the right name for an equipment business, caution must be exercised to avoid duplicating existing business names.
A Secretary of State business name search tool is available to help you check for availability. This is designed to prevent all forms of duplication. Having determined the availability of a name, it is necessary to also register a domain name.
This is an online identification string or address where internet users can gain access to your website. Consider your domain name as your website name.
Next, consider setting up a professional email address. A professional email address should contain your business name in it.
Startup And Ongoing Costs
Having your equipment rental startup and ongoing costs fully worked out in detail is essential to how successful the business becomes. Being a tool rental business, a bulk of the cost will go to equipment purchase. You must avoid cutting corners.
In other words, quality tools should be purchased. These are more durable and last longer.
Identifying A Target Market Or Niche Area
There is countless equipment for a variety of uses or applications. You’ll need to focus on either a specific or multiple niches.
In any case, the aim is to have a full grasp of your preferred niche or niches. The better your understanding of the niche area, the higher your chances of success.
Profitability for a tool rental business is also determined by an understanding of your break-even point. Now, this is the point at which the total cost of expenses equals total revenue. Here, a state of equilibrium is achieved.
This is important for your equipment rental business because it helps determine the cost structures and the number of units that must be sold to cover the cost and make a profit.
Form A Legal Entity
Starting an equipment rental business without a legal entity exposes you to liability especially when such business faces a lawsuit.
However, this can be prevented by forming a legal entity that serves your business needs. There are several of these such as an LLC or Limited Liability Company or a corporation among others.
It is best to seek legal help or advice from a corporate lawyer before proceeding to choose a legal entity. That way, you are given the best advice on what structure will be most beneficial to your equipment rental business.
Apply For An EIN And Register For Taxes
An Employer Identification Number (EIN) is issued by the Internal Revenue Service (IRS) for purposes of taxation.
The business structure you choose will determine whether you qualify for an EIN or not. A business with employees is required to register for this 9-digit number.
Federal and state taxes apply to businesses, including tool rentals. You’ll need to find out what taxes your business qualifies for. The easiest way to find out is by visiting your state’s department of revenue.
Business Bank Account And Credit Card
Never make the mistake of using or mixing your bank account with that of your equipment rental business.
Doing so not only complicates your business transactions but also exposes you to legal risks. Your business is likely to be sued by a dissatisfied client. Under such circumstances, you are likely to lose your earnings and life savings.
The same applies to your credit card account. There should be a separate credit card account for your tool rental business. A separate business credit card account helps build your credit rating. This, in turn, can be used to source for funding in the future.
This is crucial for your tool rental business. You need to have a grip on what comes in and what goes out. Business accounting enables you to have excellent financial performance.
It is much more beneficial to your business than operating blindly and leaving things to chance. This is likely to derail the business.
Permits And Licensing
Are there permit and licensing requirements for renting certain equipment? These are questions you’ll need to find answers to. Find out if there are local regulations regarding permits and licensing and adhere to them before starting.
Business insurance protects your tool rental business from accidents or damage. When equipment is rented, they are likely to get damaged. Insurance serves to take the liability off your shoulders.
However, you’ll need to choose a reliable insurance partner in addition to selecting a comprehensive insurance plan.
Getting the word out about your tool rental business is equally vital. You want to create awareness of your business to potential clients. Thus, you should take the time to engage in result-driven marketing efforts.
These could include the distribution of flyers and business cards to social media marketing and paid print and electronic media ads among others.
All of the above steps are proven ways to start an equipment rental business. Not only will these guarantee your success, but the steps will also ensure your business becomes, and stays profitable for the long term in addition to guaranteeing its growth.