If you have an entrepreneurial spirit and have working knowledge and experience in working with a variety of tools, you may wish to consider going into the tool rental business. Tool rental organizations offer professionals and homeowners with the opportunity to rent construction and carpentry tools for their use. Large or expensive tools are frequently rented when individuals will only need them infrequently or when the tools are too expensive to buy directly. The rental option provides DIYers and professionals with the tools they need to get the job done, at a cost that is far more affordable than purchasing.
The Target Market for Your Profitable Tool Rental Business
With more and more DIYers taking to projects on their own, a tool rental business can be quite lucrative. Your target market will be comprised of contractors and commercial workers as well as those residential folks who want to take on a big project on their own.
The costs to purchase many of these tools can be astronomical, especially when not used all the time. Plus, the maintenance of the tools comes off the plate of the user and is managed via the tool rental business owner. So, this can make your tool rental business and the working relationship of critical importance. Your customers will keep coming back whenever they need a tool that they don’t have that you have to offer. And if you treat them well and provide a fair price that is still profitable for you, then you will build loyalty and develop a nice profit over time.
As part of this process, make sure you are having conversations with construction organizations and other potential customers in the area. During those conversations, ask the following questions.
- What kind of equipment do you often rent that you don’t have?
- Do you have a favorite product line? If so, why?
- How much are you willing to pay to rent these tools?
- Are there other services that you need in addition to tool rentals?
By taking the time to understand your target audience (your future customers), you can make smarter decisions about the equipment that you will buy and make available for rental. Understand that inventory that doesn’t get rented will create a loss, not only in the costs you undertook to acquire the tool but also in the space that the tool is taking up. It will be more economical and efficient to purchase additional equipment later than to overbuy upfront and find out that you need to get rid of the unwanted tools.
Tool Rental Business Plan
Your typical daily activities will include:
- Processing paperwork for the rental and return of tools
- Accounts payable and receivable
- Maintenance of tools and adherence to warranty periods and safety guidelines – don’t overlook the need for cosmetic fixes too – if your products look old and uncared for, your customers may not want to rent from you
- Staying up to date on product recalls and new safety precautions for the usage of any particular tool
- Shop maintenance of the building and office spaces
- Inventory and restocking of office materials and tool accessories, nails, sandpaper discs, floor polishes, etc.
- Outbound advertising, marketing, and social media efforts to help you grow brand awareness
Getting Started in the Business
Take time to assess the market in which you want to run your business. Take a look at the competition in the area to see who you will be competing against if there is any competition at all. And if there is competition, pay attention to their differentiators and price points, as well as their advertising and marketing strategies. Remember that they have been in business longer and have the market share that you will be trying to get.
The following tips can help ensure you have covered all of your bases to get started.
- Conduct market research on the area to better understand your potential market share
- Determine your product lines and ideal inventory
- Finalize your business location
- Build your business plan which takes into account your potential market share, ideal product lines and inventory levels, and business location
- Obtain your inventory for the rental program
- Build your website and stake an online presence
- Launch your marketing and advertising on social media channels
- Begin prospecting for new business
- Create partnerships with complementary business owners
One of the most important steps for setting up your business will be to contact your secretary of state for the state in which you live so that you can obtain the proper documents necessary to incorporate your business. By incorporating, you will have the ability to purchase tools and pay other expenses in your company’s name. If you are new to starting a business, you may wish to consult with a business law attorney and place one on retainer so that you can receive any legal advice and support as you get started and once your business is underway.
Then, you will need to apply for a business license. Following state and local regulations, reach out to your secretary of state again to obtain the proper application necessary.
Treating Your Customers Right
No matter how much preparation you put into your business plan and starting your business if you don’t treat your customers well, it won’t matter. Make sure your business is more than just a rental company. Make your customers feel welcome and important, and ensure you can provide relevant advice (this is why you need to have a working knowledge of the tools that you are renting). Also, remember that customers don’t want a hassle. Make sure your rental agreements are tight and have the appropriate legal clauses, but don’t make your customers feel like they are signing for a new home or car. If you overwhelm your customers, they likely won’t return. Offer great customer service, fair pricing, and a simple rental process, and your customers will keep coming back for more.