Plenty of travel enthusiasts have ventured into the rental market by chasing their passion. And with millennials powering the rental economy, it’s one of hottest trends to hit the travel market. So, if you happen to be searching for ideas on how to start a rental business of your own, you’re in luck.
When you think of starting a rental business, what comes to mind? From T-rex costumes, surfboards and film cameras to speedboats, hot desks and electric scooters, the rental market has something for everyone.
No matter how wild your imagination, the above items all share something in common — they’re excellent ideas for starting a rental business. Ideally, starting a rental business should do three things — make money, provide value to your community and service your passion.
Do these sound like good reasons for pursuing? Perfect, read on to find out how to run a rental business.
What is a rental business
A rental business offers customers gear in exchange for a fee. Customers can choose a specific amount of time — usually hourly, daily or weekly, returning the rental item(s) at the end of term.
Renting gives customers the freedom to explore new activities without having to invest in expensive gear that they need to store long-term. Instead, experience-seekers can rent high-quality items from you for a fraction of the retail price and return once they’re done.
Starting a rental business
While there are many types of rental businesses out there — they’re not all created equal.Some rental companies yield a return right away, whereas others are more impacted by seasonality than others.
In particular, outdoor recreation startups are seeing wild growth since the start of the COVID-19 pandemic. Depending on where you live, you may see certain rental interests spike at different points in the seasons.
So, here’s where your business savvy, passion and understanding come in. We’ll walk you through the steps for learning how to run a rental business, no matter what kind of item you’re renting.
Identify your target market
Discovering your prospective customer’s interests is part of the fun of starting up a rental business. Before setting up shop, research what you need to create a sustainable rental company.
For data-driven insight, explore Google Trends with your specific rental market in mind. Your future customers may already be asking themselves why pay to own when you can rent instead — especially when equipment is often new and high quality.
Start by learning about your target market — including age and activity preferences to help spot trends and identify opportunities. Your rental idea needs to have the opportunity to earn revenue, otherwise, it’s just a hobby.
Research your competitors
Make a point of seeing what competition you will be up against and what might be a threat down the road, especially where the likelihood of a David and Goliath ending is slim to none. For example, let’s say you want to start a bike and scooter rental company in Los Angeles and San Francisco. you should greatly consider Lime Tours as a rivalry and any other VC-owned fleets in your area.
Narrow down your options by leaning into your desires and strengths. Because a rental business concept performs best when it’s rooted in both passion and possibility.
Sure, it’s going to take commitment and hard work to get your business off the ground. Having a solid grasp of both your competitors and your rental concept means you’ll be equipped with a strong foundation to build your rental business.
Land on your niche
As you look at how to run a rental business, look at your lifestyle for clues,. Let’s say you spend your weekends as a ski instructor at a local mountain, teaching guests and showing them the slopes.
Could you picture yourself renting out skiing equipment and chatting with fellow winter enthusiasts Really dive into how you want to spend your time and consider the types of rental equipment that make you feel jazzed.
Not only could you purchase your favourite brands and build relationships with local partners in your community, but you could live your days full of passion, inspiring others to embark on adventures, all because you decided to start your own rental business.
Assess your pricing
Before opening your rental business, look at how much your customers are willing to pay for rentals.
More importantly, base your rental pricing to be competitive but fair. Depending on how much competition you share, an existing rental market will give you a sense of what your target market will tolerate.
Here are some questions to consider when evaluating your rental pricing:
- Will your customers prefer to rent short or long-term?
- How does your pricing compare to similar operations in your area?
- Can you offer anything beyond your competitors that can command a higher rate?
Over time, your pricing will adjust to keep up with industry rates and market trends, but make sure the pricing you set is based on your own numbers — and not just a copycat of a competitor’s rental business.
Connect with your audience
Customers may not need to know every feature a rental item offers, but they’ll likely appreciate hearing about the benefits.
For instance, let’s say you go to list a rental kayak and you mention how it can help customers “enjoy the magic and serenity of the sea from an entirely new perspective.”
In contrast, if you highlight that guests can “embark on a journey in the ocean in the latest lightweight, vibrant kayak,” it might leave them wondering what they’ll experience if they choose to book your rental.
When guests rent a piece of equipment, they’re exchanging money for an item they believe will work as promised. Customers consider rental business owners as informed, local experts.
Naturally, guests appreciate your insight and suggestions — especially when visiting your city for the first time. Make a point to be friendly with rental customers and local businesses, with a focus on building positive associations with your rental brand name with every interaction.
Need help writing your rental business plan? Download our free template!
Setting up your rental company
Name your rental business
The first thing you need to do is name your rental business. All of your branding, business documents and marketing efforts will display and use our business name.
Aim to choose a name that is both memorable and descriptive. And more importantly, these days— if the domain is available. If your name-checks all the boxes, go to your local Registrar of Companies to get it approved and then purchase your domain.
Register your rental business
Once you decide on a name and are ready to make things official, start with registering your business.
When setting up your business, you can select either sole proprietorship, partnership or lis as a corporation. Look at which category most closely aligns with your business partnerships before you make a decision.
Secure a business license and necessary permits
Before operating out of a brick-and-mortar storefront, you’ll need to get a local business license. Check with your local municipality to secure yours. It may be necessary to obtain additional permits and approval based on your rental business type and where you operate.
Open a separate bank account
With a rental business name and license, you’ll want to open a business bank account. A separate track record of your rental expenses and revenue makes accounting a lot easier.
Before opening your rental business, look into hiring an accountant or sourcing bookkeeping software to stay up-to-date on your overall financial picture.
Purchase liability insurance
Protect your business, and yourself, by obtaining liability insurance. Valid insurance protects your rental company from accidents or risks. A reputable commercial insurance broker can guide you on your coverage needs.
Some commonly required in the tourism industry are Commercial General Liability (CGL), Property Insurance, and Accounts Receivable Insurance.
Depending on the type of rental business you run, your insurance may vary in cost. It’s worthwhile connecting with an insurance broker and sourcing a few quotes before committing to an insurance provider.
Provide guests with rental agreements
A rental agreement should outline common FAQS guests might have as well as terms your rental business might have.
When you create rental agreements, you clarify expectations and give customers an idea of what to expect — especially if things go wrong. People need to know that they can trust and rely on you to provide what you promise and having an agreement in writing protects all parties involved.
Establish your rental business online
Once you decide on the type of rental business you’re going to start up, invest in making your rental company accessible online 24/7 and easy for prospective customers to find.
Understandably, convenience is top of mind for customers, followed by quality of items, a simplified, seamless booking experience with a rental company.
Design rental packages
When looking for ways of increasing rental revenue, packing items can be a great place to start.
Many customers are happy to pay for added convenience, and sometimes peace of mind is well worth the extra costs.
If it aligns with your rental business, explore whether having a one-stop-shop approach suits your rental business model.
Ease of booking
When you first start a rental business, it’s important to make the booking process easy for future customers. Allow customers to book in advance and for as little and long as it makes sense for your business model.
Normal wear and tear is part of renting. But one way of reducing this is to incentivize guests to book rental items for a more extended period. Reduced turnover can extend the lifespan of your rental equipment.
Invest in quality photos
Capture photos of equipment being used in various scenarios to help future guests imagine themselves using the items.
Quality photos can make a world of difference for people comparing options online. Highlight attention to detail, focus on quality and showcase the experience so guests feel connected to and trusting of your rental business.
Make a functional website
When building a website for your business, focus on functionality over fanciness. Guests appreciate having as few barriers when choosing to book online.
Simplifying your rental process helps guests navigate directly and quickly. If you’re stuck on what to use for a rental website builder, explore our SiteBuilder — no coding experience required.
How to run a rental business
Choose a booking system
When starting up a new rental business, facilitating rentals through an online booking system can save you a lot of time.
Even if you’re a spreadsheet whiz and enjoy administrative tasks, online bookings are so much easier from a guest perspective.
If you’re comparing options for the needs of your rental business, make a list of the features you’d like to have included in your booking software, knowing that the company can grow with you.
By knowing what you need and not being swayed by fancy features you won’t use, an online booking system can kickstart the profitability of your rental business and help keep the juggling at a minimum.
Decide on your online booking software
Many customers expect to have the freedom to book rental equipment online because it can save them time and energy. Plus, online bookings allow customers to compare options, prices and rental terms between rental companies, all without leaving home.
Sometimes the urge to rent something wakes customers up at 2 am. With online bookings, you can capitalize 24/7 on a customer’s desire to book.
Plus, by taking your rental business online, you make it easy for people to compare and commit to a rental booking. When choosing your booking software, collect all of the elements that you know you’ll need.
As a rental business owner, your goal should be to create a simplified rental experience. Allow customers to explore options, compare timelines and create easy pick-up and returns.
Here’s what you might need when starting a rental business:
- A booking calendar
- Automated emails
- Invoices and payments online
- Rental agreements and waivers
Manually sending emails to each guest can be time-consuming and tedious. With Checkfront, you can send automated emails, including booking confirmation, reminders and invoices to every guest.
Inspire repeat bookings
As you continue to run a rental business, how important will repeat bookings be to you? Consider what customers will be inclined to share with their family and friends. Are there ways you can go about and beyond to elevate a rental experience for a first-time customer?
For example, you can create package deals or offer cheaper rates for longer rental bookings. Additionally, try setting up designated drop-off locations for flexible after-hours returns, if it’s possible and valued by your customer base.
When learning how to run a rental business, aim to attract and retain repeat rental customers by designing offers that are hard to refuse and providing quality experiences every time.
Ultimately, the goal of your rental business should be to create a simplified rental experience — one that makes renting more fun than owning.
Request feedback from your customers
When starting a rental business, ask for feedback from your customers. Demonstrating an active interest in your customer experience will provide you with valuable ideas for building a sustainable rental business.
Customers notice when you look after the small details. And some will become loyal, repeat customers once they see that you’re a trustworthy rental business. But, you won’t know what people expect from your business unless you ask customers how you’re doing.
Simplify rental pickup and drop-off
When starting a rental business, make a point to create a rental system that makes pick-up and return of rental items painless for customers.
Convenience is king when it comes to rentals. And the advantage for your business is that customers will pay for added convenience. Aim to automate as much as you can by leaning on your booking software.
Ensure each guest signs a rental waiver as part of the booking process so there’s minimal paperwork to be done in person. With Checkfront, you have the option to provide digital waivers in advance to your customers.
Streamline as much as you can for your business so that your customers see how much you value them.
Taking care of rental equipment
Successful rental businesses are meticulous about taking care of their equipment. Why? You might wonder whether maintaining equipment is worthwhile when it might seem easier to replace items as needed.
Buy rental equipment items
Before filling a storage locker with 25 new mountain bikes, scuba tanks or pairs of snowshoes, ensure you have the demand to support the inventory. Start small and build up your rental inventory selectively.
Purchasing rental items doesn’t have to cost top dollar. In fact, take advantage of shoulder-season deals, buying gear that’s high quality without having to pay full price for brand new gear.
Savvy rental business owners start with a few items and gradually build up stock as interest increases. By getting a better handle on the rental process, you’ll foster a better experience for your customers.
Be proactive with equipment maintenance
Address equipment issues promptly — ideally before customers have equipment break down. Get to know the durability and lifespan of your equipment.
Schedule regular maintenance to reduce the risk of equipment failing while out with a guest. With COVID-19 still a part of our reality, it might be necessary to isolate certain equipment before heading out on the next rental.
It can be a major disappointment if something breaks while out in the mountains or touring a new city. Keeping on top of routine maintenance with equipment can save you money when it comes to replacing rental items over time.
In this case, maintenance promotes equipment longevity and reduces the amount of cash outflow when you’re early on in your rental business.
Plus, you’ll start to see when your equipment starts costing you money and can time out rental offloading before equipment reaches the end of it’s life
Create a maintenance schedule
Anticipate and repair items before they reach the end of their lifespan to provide an optimal experience for all rental guests. Wear and tear are part of running any equipment rental business. Create systems that mean returned items are dealt with promptly.
Before I started working as a Content Writer, I worked as a videographer. And one of the first lessons I learned was charging batteries and backing up footage immediately following a shoot. This habit reduced stress in last-minute bookings because I didn’t have to guess whether the equipment was ready to go.
Get in the habit of designing systems that make life easy for you, your customers and your staff.
Making the switch from tour provider to rental business
For tour and activity providers looking to get into the rental business, there are plenty of opportunities for you, too.
The first thing you’ll want to look at is whether you can compete in your current rental market. Next, you’ll need to do a cost-benefit analysis to see how much additional revenue you might be able to earn.
Ultimately, the goal of your rental business should be to create a incredible rental experience — one that makes your business stand apart from competitors.
Ideally, running a rental business should bring you more revenue without adding on extra stress. Plus, you can explore options for automating and delegating part of your rental business operations over time.
Some travel businesses pivot and start up a rental company that pairs well with tours and activities they currently run. Adding on a rental business can be a profitable way of building on your existing industry knowledge and providing guests with one-stop-shop experiences.
Always be learning, and don’t be afraid to start small. Some of the most profitable rental businesses began when an entrepreneur aspired to solve a problem.
Sure, starting up a rental business involves tackling a long list of to-do’s — but, it’s nothing you can’t handle. Start chipping away at building out your rental business step-by-step.
From choosing a rental business type, naming your business, evaluating your market, building relationships, designing your online presence, and getting your first customers, there are many steps to follow.
Thankfully, with the help of this guide and your business savvy, you should have a clear blueprint to help build a successful rental business.
Believe that starting your rental business idea is worthwhile and that you can create a business that earns revenue and respect while adding value to your community. And that is a beautiful feeling.
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