The unique financial challenges millennials and Gen-Z face have shaped the priorities of young people today, significantly differently than the previous generations.
Both generations are less likely to consider home ownership a goal for the near future and prefer to rent out smaller living spaces. They are likely to move frequently which impacts how they view furniture ownership.
Only a very small minority of millennials are willing to invest in furniture. This has caused a massive boom in the furniture rental sector, with sales expected to grow 9% between 2023 and 2033.
It is a good time to invest in this industry and cash in on its growth.
However, starting a furniture rental business comes with its own set of challenges. After all, 9 out of 10 startups fail in their first year of operations.
Learn how to start a furniture rental business successfully to tap into this industry.
The state of the furniture rental industry in 2024
The furniture rental industry is poised for exponential growth. Many factors are driving this growth; market trends, work-from-home and hybrid work policies, and the global expansion of the rental economy.
Established furniture rental companies and new startups are researching to develop new services while improving existing facilities. The goal is to improve service delivery, leading to sector growth.
The biggest hurdle in the sector’s growth is a lack of awareness about furniture rental services. It is most pronounced in low and middle-income countries.
Despite this, numerous furniture rental businesses are competing for the market share.
The North American region dominates the global furniture rental market owing to major service providers.
Furniture rental businesses are banking on the already-aware market and a young population that is no longer interested in purchasing furniture.
Rapid growth for the furniture rental industry is predicted in the Asia-Pacific region, home to emerging economies with a sizeable young population to cater to.
The business models furniture rentals can use
There are three major ways a furniture rental company can model its business.
You can buy and own the items you rent out, act as a marketplace for other furniture providers, or adopt a full-stack model where you own the entire value chain.
In the full-stack model, you will have to invest heavily. The larger number of assets required means you will face a larger storage space and a higher warehousing cost.
The full-stack furniture rental model will allow greater flexibility as your business can swap the older inventory or sell it off to get more modern and trendy furniture.
No matter which model you choose for your business, you can opt for a subscription model, which is most commonly used in the industry.
Rent out your furniture to individuals for longer spans minimizing the price for them, but retaining them for a longer duration.
Starting a furniture rental business
The earliest stages of your furniture rental business will be the toughest. Make a strong entry into the sector to ensure long-term success and viability.
Here are 11 steps to successfully launch your furniture rental business:
1. Conduct market research
Knowing the field you will be competing in will allow you to approach your goals with the right strategies and tactics.
Gauge demand and measure business viability before making your initial investment.
Market research will give you insights into the services and products on offer by your competitors, and how to best position yourself against them.
Use these insights to leverage quality, variety, delivery and assembly services, and payment flexibility to stand out.
2. Narrow down your target market
Choose a niche within the furniture rental sector, narrow down your competition, and invest your resources to target your audience.
Develop your marketing strategy and supply chain exclusively for the target audience you narrowed down for your furniture rental business.
A few interesting niches are specialized home furniture, outdoor furniture, office furniture, luxury furniture, and furniture for the entertainment industry.
You can always grow and scale your rental business as the revenue pours in and you have established a customer base.
3. Anticipate and document your expected costs
List your initial and expected expenses to help plan your finances effectively and avoid needless spending.
It will also help you source adequate funding.
Some of the expenses you should expect include business incorporation fees, lease expenses for your office and warehouse, procurement of your furniture rental inventory, website development, branding and advertising, and license and permit costs.
Add powerful furniture rental equipment software to the list of expenses as it will help you proactively give your customers a great rental experience.
4. Choose an office space
While you can run a furniture rental business out of your home, using a proper office space should be preferred.
Use a proper office to improve your brand image and increase visibility.
Choose a location near your target market to boost attraction towards your business.
For example, if your furniture rental business specializes in office furniture, your business should ideally be near offices to save costs in delivery and pickups.
Between purchasing an office and leasing it, choose the latter as it won’t commit you completely to a specific geolocation.
5. Acquire a warehouse
Get a warehouse to house and display your entire furniture inventory, as it won’t be possible to showcase it in your limited small office space
Choose a spacious warehouse to eliminate the need for stacking furniture.
For a furniture rental business, mold and pests are a huge concern when selecting a storage facility.
Find a warehouse with adequate security measures to minimize the risk of theft. Additionally, you can opt for warehouse insurance.
Choose an insurance that also covers the furniture inventory housed in it.
6. Source your furniture inventory
Make informed decisions when sourcing your furniture rental inventory to minimize your initial investment.
Save money by sourcing your inventory from low-cost retailers who offer bulk discounts.
Consider buying secondhand furniture provided that you check every item for damage and defects. Additionally, if you have the means, you can always upscale it as you grow your business.
7. Establish a pricing strategy
Think of a pricing strategy that helps your business be successful as you would have already invested heavily in acquiring your furniture.
Your profit margins should cash in on quality, delivery, service, and variety.
Maximize your profits for every service you provide, including furniture assembly and service.
Have an effective pricing system in place as it can be the deciding factor for your customers choosing to do business with you and your competitors.
8. Outsource delivery and pickups
As a furniture rental startup, it will be impossible to build your fleet of trucks to deliver and pick up your rental orders.
Choose a logistics company, bargain with them, and agree on a mutually beneficial plan.
An advantage to outsourcing logistics to professional movers is the peace of mind you’ll get knowing that your inventory is being handled safely and securely.
At a later stage of your business, you can invest in a logistics department if it makes perfect sense financially.
9. Use furniture rental software
Invest in good rental equipment software to overcome the challenges of maintaining visibility and control over your furniture rental inventory.
Rental software covers all aspects of a rental business including management of assets, orders, customers, logistics, pricing, and more.
A dedicated furniture equipment rental software can help your business with inventory tracking, order management, invoicing, and payment processing.
You can create an online rental store for your business where customers can quickly sign in and book the furniture they need.
From booking to renting out, and from returning to maintenance, good rental software will help you with all facets of your business.
10. Draft comprehensive rental agreements
Be mindful that your customers will likely misuse or damage your rental items.
Draft an in-depth rental agreement and ensure coverage of damage or loss by the customer.
Your rental agreement should include a detailed list of rented items, the applicable rental fee, rental duration, payment terms, usage terms, and payment in case of damage or late return.
11. Promote your business online
To make your furniture rental business successful, make sure that you promote and market it right.
Create a website to tap into your customer base which is likely to be found roaming the internet on their mobile devices.
Create an online rental store to quickly book and rent out orders and maintain an ideal business-customer relationship.
Maintain your online presence on social media to promote limited-time offers and special discounts. Create communities on various platforms to boost engagement with your target audience.
Invest in eco-friendly practices for your business and your rental inventory to align your business toward a greener future.
Never miss out on opportunities to promote your furniture rental business in the right circles; online or in person.
Product-as-a-service is the way of the future
The furniture rental sector is a growing industry with a positive outlook.
Launching yourself and capitalize on the shift towards the product-as-a-service model in the furniture rental industry.
Ensure success by offering your rentals in a niche that you understand completely.
Use rental software to take care of your business anywhere, anytime.
Come up with a pricing strategy that ensures you keep hitting revenue targets every month, quarter, and year.
