If you’ve been in the industry sector for a while and feel you’re ripe to start your own high quality equipment rental company, look no further! You are in the right place. Here, you will learn all the necessary steps and tips to successfully start and run your business.
Study Your Market
The high quality equipment rental industry is lucrative. According to the American Rental Association, it stood at $57.7 billion in 2023. Statista evaluates it at a staggering 59.5 billion US dollars as of 2024. The considerable growth means you, too, can battle your way in and make a profit.
But, before you dive in, like any business, you need to study your market. Yes, the prospects are excellent, but you can not serve the entire America at a go, especially for this kind of space. First, you have to research which niche is perfect for your startup. Can you have success in construction equipment or perhaps lawn and gardening equipment?
If you find the niche that best suits your skill, the next step is to analyze your competition. How many similar companies are there? Which ones have the most significant market share? Which ones will be your direct competitors? What is their edge against them?
From there, you have to study the amount of demand that you can meet. For example, if you want to start a roll off dumpster rental company, you must evaluate if there is demand for such equipment in your city or town. That’s the only way you can have a successful start.
Decide on the Type of Equipment to Offer
The high quality equipment rental business goes beyond the usual construction machinery. It’s true; construction is big and contributes about 4.4% of the US GDP, according to Statista, but it’s not the only one you can serve. The equipment rental industry has niches or segments. That means you must be specific about what equipment you will rent out.
Generally, there are three categories. They include construction and industrial equipment, DIY (do it yourself), general tool equipment, and others (event equipment, etc.). Most established businesses have equipment in all these categories. But it’s unlikely that your startup will have the capacity to offer all these unless you plan to stretch your resources thin.
You will have to choose one or two. And even in that one, you can’t offer all types of equipment. You might, in the future, when the business grows but not as a startup. For example, if you want to serve the construction industry, you can start as a bare crane rental company and then invest more in other equipment such as excavators and bulldozers later.
Explore the Ideal Location for Your Startup
The next step in starting your high quality equipment rental company is finding the right location. Similar to real estate, location is crucial. The United States is a large country stretching across six time zones, and a startup can’t possibly serve the entire land of liberty, even with the magic of the internet. You have to narrow it down to one area.
Your location of choice will directly impact your business’s chances of success. Ideally, it should be close to your target customers, where it’s easy for them to access and return the equipment without ranking up transportation costs and time. For instance, if you want to rent septic construction equipment such as pumps and excavators, you should set up your company in areas that need services like septic repairs. According to a study by the National Institute of Health, that would be mainly in the eastern states of the USA.
Your location should also have enough parking or storage space for your equipment. It also has easy access to roads or highways. Usually, customers need to transport rental equipment such as bulldozers or forklifts to sites, and you wouldn’t want to use bumpy, off-roads that could damage them.
Additionally, the ideal location should have a low concentration of similar businesses. However, don’t go too far where there is none. As much as you want most customers for yourself, it helps to be in an area known for businesses like yours. Isolating yourself won’t do you any good.
Assess Startup Costs
The whole point of owning a high quality equipment rental company is having equipment to rent. That means buying them. As a business owner, you need a comprehensive financial plan that includes the prices of each piece of equipment you intend to purchase.
Begin by itemizing the initial costs of each item. These include the cost of legal fees, buying or renting a suitable location, and equipment. Some equipment, such as heavy machinery, may need specialized transportation, such as a long-bed truck, so include that cost.
Then there are recurrent costs. If you’re renting equipment to excavating contractors, remember they will need constant maintenance. In your financial plans, include the cost of spare parts, repairs, and replacements. Your initial costs should extend to working capital and marketing, too. You need money to run the show before your business breaks even. That includes paying rent for a few months, employee salaries (if any), and utility fees, such as electricity and water bills.
Other operational costs include furniture, software licenses, insurance, legal fees, and taxes. However, the amount of taxes you pay may change depending on changes in laws. They also depend on the type of business you decide to register.
Choose Your Startup’s Legal Setup
The legal structure of your high quality equipment rental company is crucial in how you run it and the amount of taxes, liability, and paperwork you have to deal with. The most common business structures are sole proprietorships, limited liability companies (LLCs), partnerships, and corporations.
Each structure has pros and cons; your choice will depend on your goals and financial muscles. For instance, if you’re testing the waters with your rental business, a sole proprietorship is easy to start and comes with fewer costs. But you can change if priorities or fortunes change along the way.
Some proprietorships are excellent for small businesses. In fact, such businesses are the majority, accounting for 99% of all registered businesses in the US, according to the Small Business Administration. They offer relatively low taxes and a simple registration process. However, the owner’s assets are liable in the event of lawsuits or debt.
So, if you own reefer trailer rentals and a customer’s goods get damaged while in your truck, they can pursue compensation from you, not just the business. If a ruling goes against you and the company assets are not enough to cover the cost, your personal assets, such as a car or house, will be in line.
To avoid this, you can decide on an LLC structure. LLCs combine the tax benefits of sole proprietorship/partnerships with the liability protection of corporations. They also have relatively flexible management structures and minimal paperwork compared to corporations.
Choose a Business Name and Register It
From there, it’s time to take the big leap and register the business. But first, you need a name that will appeal to customers and express what you’re offering. For example, if you intend to register a high quality equipment rental company catering to demolitions, the name should reflect that.
However, don’t box yourself with a too specific name, such as ‘Demolish Equip Rentals.’ Otherwise, if you decide to diversify in the future and offer other equipment like cranes or bulldozers, the name may not fit. You can change the name, but it will affect your brand and customer loyalty. It’s not always the case, but a study published by Science Direct showed that name change has negative implications in the information environment, especially for less-known brands.
Once you decide on a business name, check that it’s available and register it. Each state has its own registration process. However, they all cover basic steps such as choosing a name, filing the necessary paperwork with relevant authorities such as the Secretary of State’s office, and obtaining required permits, licenses, and tax IDs.
Create a Sales and Marketing Plan
Registering a business name is a big step, but it’s not the final clue to the income puzzle. Every business needs a marketing plan, and so does yours. The US government registers millions of startups each year, but not all succeed.
In 2023, a record-breaking 5.5 million new startup applications were filled, according to the US Chamber of Commerce. The Bureau of Labor Statistics estimates that about 20% of these new businesses fail within the first year. While the lack of a marking plan is not entirely why they fold quickly, it plays a role.
As a rental business, you must plan on how to reach potential customers. How will they know your company exists? What are the best marketing channels to get them? The best targeting method, and so on.
If you have rental equipment such as grinders, high-pressure hoses, moisture meters, etc., and you want to target waterproofing companies, the best plan would be to market your business in person to professionals in that sector. Highway billboards wouldn’t work great for a startup. Email marketing, Google-sponsored ads, and attending trade shows are also effective methods. While you may have all this in mind, writing them down in a marketing plan will be best. The document would act as a reference point for you and your employees.
Develop Partnerships
Entrepreneurship is challenging, especially for startups. You can’t afford to isolate yourself and ‘mind your business.’ As much as you are alone in it, you must create a network of suppliers, other rental businesses, and customers within the ecosystem.
As a high quality equipment rental company, you can’t possibly own an endless equipment supply. As a startup, you might not even have all of them. Other times, you might have rented out all your equipment, but you have a customer willing to pay. There is no point in turning them down. You can partner with a supplier with the equipment in stock or consider other equipment rental businesses for collaboration.
But why would you collaborate with your competitors? After all, they are after the same customers as you. But here’s the thing, not every rental business has equal equipment and resources. If you have specific equipment that your competitors don’t have, they may rent from you in case of high demand or vice versa. Furthermore, partnerships can lead to referrals when other businesses don’t have what customers are looking for.
Partnerships could also include cross-referral deals with other related businesses. For example, if you specialize in renting out construction machinery to roofing contractors, you can partner with them to offer discounted package prices to their customers. Such partnerships save money on marketing and create a win-win situation for both parties.
Stake Your Claim Online
The internet is a real place for businesses. It’s where potential customers find complete information about your business whenever they search for it. The more there is, the more they are likely to trust you.
You must have an online presence as a high quality equipment rental company. That includes a well-designed professional website, social media pages, and online classifieds. According to Forbes, about 71% of businesses had a website in 2023, while the internet as a whole had 1.09 billion sites. On average, there are about 252,000 new sites every day.
These numbers only show how essential the internet is. You can’t afford not to have one. Forbes also reported that 76% of customers look at their online presence before visiting a business premises.
Your business website should have all the information related to your business and what you rent, from contacts & location to pricing and availability. It should also include photos of your equipment, how they work, where they are used, and so on. Generally, as much information as you can provide.
It’s also through this website that you target customers via search engine optimization (SEO). The process involves optimizing your website to appear on search engine first page results. There are various ways to do it, but one is using targeted keywords related to what you rent. For example, if you rent mud jacking pumps, you embed this ranking keyword in your website’s content.
Launch Your Equipment Rental Business
The last step is to launch your equipment rental business. It involves setting up shop, marketing, and getting ready for customers. Before the launch, you should ensure all necessary permits and licenses are in place. You can’t operate without them. During the launch, ensure you have your rental equipment inventory ready.
If you have the capital, you can create an awareness campaign to create some buzz around your business. Remember, the aim is to create awareness and attract customers. A grand opening can go a long way in making this buzz.
You can invite your potential customers to the grand opening by sending cold emails or even creating an event on social media. For instance, if you are in the fabrication space, you can send invites to a metal fabricator. The event will give you a chance to network and establish relationships with potential customers and partners.
Starting a high quality equipment rental business requires careful planning and strategic execution. With a well-crafted business plan, you can set yourself apart from and position your business for success. Remember to continue adapting and evolving to industrial changes and to prioritize customer satisfaction.
