How to Start an Equipment Rental Business

If you’re looking to start an equipment rental business, there are several factors to take into account to take your idea from a dream to a profitable, successful reality. Equipment rental businesses are experiencing a boom, and with the right business plan, you can become part of it.

As well as considering the financials and logistics of running your own equipment rental business, new businesses must also consider how to receive customer payments. A good payment processor helps equipment rental businesses handle recurring payments securely.

Steps to Starting Your Equipment Rental Business

As much as you may wish to get started with your business quickly, doing the groundwork is crucial for its long-term success.

1. Make a Business Plan

A business plan outlines your business strategy and your vision. It will help you consider the potential of your business as well as the challenges it will face from different angles. It’s also an important document to share with investors and lenders.

Be realistic with your business plan and factor in unforeseen costs and challenges. Your business plan should include:

• A summary: A summary of your vision for your business
• A company description: Basic details like what your company does, the people involved, the equipment it will offer etc.
• Market analysis: Show you understand the rental industry in your area.
• Analysis of the competition: What the competition offers and how you will differentiate yourself
• What you offer: How will you adapt as your business grows?
• Marketing plan: How will you market your new company?
• Financial plan: How are you planning on funding your new business?

2. Form Your Company

Register your company as a business following all the local legal requirements your country’s demands. Open a bank account with your initial capital.

3. Purchase New or Used Equipment for Your Fleet

Start with one or a few machines. As your business grows, you will add to your fleet. Consider second-hand equipment as a cost-effective option.

4. Create Safety and Risk Management Plans

Get insurance and teach your employees how to handle tools and machines safely. Create and implement any necessary safeguarding protocols.

5. Organise Your Business Operations

You will likely need a warehouse, an office area, and a showroom. Ensure any areas that customers enter are slick and professional-looking.

6. Make a Maintenance Plan

Keeping your fleet in working condition is one of your top priorities. Make an inspection plan that you can use every time an item gets rented out. Have a maintenance plan and protocols for the inspection, cleaning, and renewal process for each piece of equipment.

Financial Planning

Determining your financial goals is also a vital part of the process of setting up a new business. Take into account the following:

Rental Rates

Decide how much you’ll charge. Your rates should vary depending on the time of year, equipment type, and the condition of the equipment.

Rental companies typically rent equipment for days, weeks, or months. Set your rates to encourage longer rentals.

Payment Processing

Setting up payment processing for equipment rental is a vital step in establishing your business. European businesses that wish to work nationally or internationally can benefit from partnering with a payment processor that can accept over 100 currencies, facilitates secure transactions, and uses adjustable fraud scrub technology.

Setting up a merchant services account allows your equipment rental business to meet its payment processing requirements quickly and easily. Your business will benefit from:

• More accepted payments
• A mobile dashboard that helps you manage all your transactions wherever you are
• Fraud and chargeback protection

The ability to store customer data will also help you plan your marketing campaigns, keep your customers up to date with current offers, and monitor customer satisfaction.

Choosing a Category

Before writing your business plan, you must understand the rental sector. The equipment rental industry has different branches. Though many associate rental equipment with construction, there are several other options to choose from. You may wish to choose one or more of these categories depending on your market research and areas of interest.

According to the European Rental Association (ERA), there are six main rental categories in the equipment rental market. These are:

Construction Machines & Equipment

Individuals and contractors may wish to rent equipment instead of making the heavy investment of purchasing equipment.

Typical machinery your equipment rental company could rent include:

• Small machines: mini-excavators, skid steer loaders, hydraulic excavators, and dumpers
• Commonly used construction equipment: compressors, pumps, compaction machines, and other small machines

Power & Temperature Control

Temporary power solutions for site use, events, manufacturing or in case of shutdowns or power failures is another rental option. This category includes:

• Generators, transformers, mobile fuel tanks, and load banks
• Climate control solutions: heating or cooling systems and heat exchangers
• Lighting systems

Powered Access, Forklifts & Telehandlers

This type of equipment is needed for different types of work conducted at height. Jobs that could require a working platform or a building construction lift include:

• Roof or hall construction
• Industrial cleaning
• Installation work

Telehandlers are also needed for tasks related to transportation or on construction sites. Jobs in the industrial and event sectors that demand efficient logistics also frequently require forklifts.

Modular & Sanitary Space

Modular space is an effective means of providing additional space on a customer’s site for short-term and long-term projects. Containers can be used to build on-site offices or accommodation, toilets and other sanitary facilities or be used as storage space.

Traffic Safety

This category is aimed at professionals working on construction sites. Safety is a primary concern for construction workers when working on busy roads. These items offer solutions for traffic safety.

Basic items include beacons and traffic signs. However, different countries may have different regulations regarding traffic safety. Therefore, this rental category requires advanced planning and specialised knowledge.

Smaller Equipment and Tools

This category can appeal to individuals just as much as businesses. You will require an extensive inventory of small equipment and hand or power tools that can help your customers tackle a wide range of jobs and surface types.

This equipment should be geared towards metalwork, woodwork, construction, or DIY projects. Consider equipment like concrete mixers, fan heaters, portable generators, wallpaper strippers, and floor sanders. Common tools like power drills, portable cut-off saws, power saws, rock splitters and breakers, and electric rotary hammers are also great options for your inventory.

How to Choose a Sector to Serve

Many equipment rental companies offer an “everything under one roof” approach to rentals. However, this may be challenging for small businesses that are just starting. When deciding on the sector or sectors you wish to serve, you must conduct market research and answer the following questions:

Who Are Your Potential Customers?

Your customer base will largely depend on the common industries in your area. Ensure that you also offer equipment suitable for home use if DIY is a common hobby in your country or area. Extensive market research will be necessary to understand who your potential customers are and what they need.

For many businesses, setting up a global payment gateway helps streamline their operations by making it quick and easy to pay. A payment gateway facilitates recurring billing and ensures secure transactions for your business and clients.

What are the Going Rental Rates in Your Area?

Studying the competition is a key part of a good business plan. You must understand the going rates for rentals as well as the demographics of your area.

Be clear about where you want to position yourself in the market when you set your prices.

Who Is My Competition?

The success of your business operations may depend on how much competition you have and what other rental businesses offer. Research the competition and find ways to stand out. This could be based on price, excellent service, product range or proximity.

Another excellent way to stand out is trust. Ensure you know how to create trust with your website and with all your in-person dealings.

Will Seasonality Affect Your Business?

Demand may fluctuate throughout the year depending on factors like the weather and construction patterns. Make sure you have standard, high-demand equipment that you can rent throughout the year as well as more specialised tools.

Why Should I Serve More than One Industry?

Setting up a heavy equipment rental business could be a lucrative and successful business idea when taking your competition, target market and setup costs into account. However, only serving the construction industry could have its pitfalls.

To avoid putting all your eggs in one basket, new rental businesses should consider serving multiple industries. There are several compelling arguments to suggest that this could be a savvy move for your business:

1. Grow Your Customer Base

It’s logical that the wider the range of equipment you hold, the more potential customers you can reach out to. By appealing both to companies and individuals, you can develop a wider customer base.

• Offer multipurpose equipment to appeal to many different types of customers
• Brand your equipment to boost your image and visibility in the community
• Offer different types of payment methods to suit different customer segments

2. Grow Your Company at a Faster Rate

A rental business with a growing customer base and multipurpose equipment for use in multiple industries will grow quicker than a very niche rental company. When your business grows, you’ll be able to:

• Offer more services such as an in-house equipment servicing department
• Invest in more or more varied equipment
• Serve a larger number of businesses and individuals
• Expand your business to more locations

3. Be Profitable All Year Round

The productivity of some sectors is subject to the elements, especially in countries with harsh winters. Roofing, for example, is a sector that slows as weather conditions make work hazardous.

Serving many different sectors ensures your business doesn’t have an off-season as you can rely on a constant income from industries that aren’t subject to the weather. Having a wide equipment inventory will give you steadier and more predictable revenue.

Solid Planning Will Put Your Rental Business In Good Stead

Starting an equipment rental business is exciting, but taking the right steps at the right time is crucial for success. The more you understand about your sector and how you can fit into it, the more likely you will be to set up a successful long-term business.

Implementing common-sense strategies like setting up payment processing will help to secure your financial future by giving you the tools to manage your transactions and revenue. Partner with a payment processor that has your back and can scale with you to maximise your business’s potential.