Rental businesses are witnessing a boom all across the globe. Of course, renting an item is cheaper than purchasing it, but the preference for renting goes deeper. Millennials tend to value experiences over ownership, and they also seem to have an insatiable demand for up-to-date products.
Consequently, the rental industry continues to expand despite the cut-throat competition it faces. In such a setup, it is imperative for rental business owners to both distinguish themselves from the competition, and also feed this renewed interest in the rental sphere.
For this purpose, referring to some principal rental business lessons can prove extremely helpful.
Rental services have been around for a long time but customer needs are perpetually changing. Rental businesses, therefore, need to innovate in all aspects of their operations in order to stay ahead of current trends. Therefore, upgrades are in order in a massive way.
A rigorous analysis of current practices must be carried out for all domains, such as finance, human resources, and marketing. This will allow you to investigate where you may be falling behind and also provide you with opportunities to innovate and optimize your processes.
EZRentOut has worked in the rental industry for a long time, helping rental businesses lower costs and increase ROIs across the board. Based on our conversations with hundreds of rental business owners, and our own expertise in the sphere, this blog will present some key rental business lessons to help you set your rental business up for success.
Rental Business Lessons: Finances
Rental businesses are capital-intensive. Inventory costs are very high as rental companies need to ensure both variety and ample quantity of goods at all times. The burden of ownership indicates that companies have to handle all maintenance costs, downtime loss, and also deal with the risk of product obsolescence.
Hence, it is vital to ensure that you invest in cost-effective avenues and try to optimize your expenditure. Investing wisely will also generate greater profitability which is essential to any business.
Understand what your target demographic is looking to rent from a rental company like yours. Would they prefer high-end or budget-friendly models?
Initially investing in staples for your business can create a steady cash flow. Once you have established that, investing in other, less-frequently used or novel items will diversify your portfolio at a reduced financial risk.
Implement the pricing strategy that will work for your company and will ensure timely cost recovery for your equipment. Factors to take into account are your target market, the cost of living in your location, and the value your service is providing. You can offer a flat fee per hour or day, tiered pricing, or even pricing brackets that stack to create dynamic pricing structures for your customers.
Invest in a renter’s insurance that covers all the assets you plan on renting out. This will help cover damages or losses caused by customer negligence, employee theft, or natural disasters. Rental business insurance can also help with claims and protect you legally if customers come blazing down with lawsuits.
Devise a methodology for efficiently tracking your expenses. Ensure constant communication with your financial management. Alternatively, you can invest in accounting software to automate record-keeping and save time. You can also use these to perform monthly and yearly comparisons of your finances, gathering meaningful insights for future decisions.
Just because you’re a rental company doesn’t mean you have to own all your equipment! Equipment leasing can prove economical when you are trying to strip costs. Capital equipment leasing can help you own equipment after a predefined period of leasing it as well. You can simply sub-rent these items out to your customers, and earn huge dividends for items that have a short shelf life or require frequent costly model upgrades.
Test the waters before you dive head-first into asset acquisition. Waiting for cash validation from your rentals before you increase expenditure is always a good call. Monitoring finances and inventory simultaneously is going to be key for you. Idle inventory is expensive and so are lawsuits!
Party Rentals can capitalize on these rental business lessons as they feature expensive equipment – such as tents and inflatable toys – and require efficient financial tracking.
This kind of equipment is also extremely prone to wear and tear (think bouncy castles on birthday parties!). This increases maintenance costs and can even bring lawsuits your way if it turns out your equipment wasn’t serviced properly. Thus, being insured is crucial in this business.
Rental Business Lessons: Customers
A loyal customer base is extremely important in the rental industry. This is because a lot of the business you’ll do will be repeat business. Selling to a repeat customer is much easier than selling to new ones, so it is crucial to look after your customer base. Every company should, therefore, try to make renting as easy and hassle-free for customers as they can by using these rental business lessons.
This one is obvious. Always strive to provide impeccable customer service and overall platforms. Support before, during and after the rental are all equally important and reflect your commitment to the people that bring you profit. Feeling valued increases customer loyalty for your brand, and that’s extremely important, especially for niche industries.
It’s a great idea to streamline rental workflows wherever you can. As an example, you can offer bundles for items that usually go out together. With everyone using the internet in all facets of life, things like online contracts and electronic signatures can also make the process of renting out a lot more transparent and hassle-free.
Feature tutorials or documentation to show how to use your equipment properly. Any additional tips or examples of usage are very well-received by customers. Often customers might not know the full utility of a product and will appreciate you looking after their interests at all times.
Manual logging of data can be tedious, time-consuming and fallible. Automating the process by migrating to software can make things much easier while providing you with transparency and accessibility into your transactions. This will also help handle customer queries more efficiently as you can provide them with much more personalized service.
Rental contracts should be signed for every transaction. The terms should clearly specify renter and company responsibility so conflicts in cases of loss or damage can be avoided. Define acceptable wear and tear and penalties in case of loss or damage clearly in your agreement.
Innovate and evolve with the changing needs of your customer. Your company’s profit is going to be tied to how you treat your customers. Continue to upgrade your customer service standards and make sure your rental agreements are watertight.
Sports gear will sometimes have to deal with very specific customer queries. Used sports gear needs to be sanitized and cleaned properly after a rental for fear of infections traveling from one wearer to another.
This gear also needs to be maintained well to temper the chances of injury on the field. In case of complaints, customers will naturally be upset and reach out to customer service. Sports rental companies can lose their entire customer base if they fail to handle these genuine complaints fairly.
Rental Business Lessons: Equipment
Rental equipment is the biggest asset to a rental business as this is what customers are referring to you for. The condition of your equipment is reflective of your brand image in the mind of your consumer. From aesthetics to functionality, all aspects are critical and must be taken care of.
Tracking, timely testing, and maintenance should all be done systematically. Rental businesses have lost customers over the smallest of errors found in equipment, sometimes even lawsuits because of injuries caused resulting from negligence. Consider the following rental business lessons to avoid such mishaps in your business.
Consider tagging all rental equipment so tracking can be simplified. This will help you monitor items going in and out. QR codes are a cheap but robust option as they require a small space and still retain good readability in case of fractional damage. Other alternatives include Barcodes and RFID tags, with the former being perfect for smaller businesses, and the latter being great for high-volume rentals.
Schedule periodic maintenance for items to verify that they are working properly and to identify any underlying issues. Perform the required servicing and ensure that the items are available for rent again as soon as possible. Downtime costs money; equipment cannot be rented out so you lose out on profit. Additionally, you should always test equipment in front of the renter to verify functionality and then test it again when it is returned.
Keep meticulous records of all transactions in an online database for easy access. Track due dates, payments, item availability, and the movement of goods to and from customer’s houses if you do deliveries. Vigilance adds longevity to your business, and can often mean the difference between good customer experience and a poor one.
Attach security tags to rental equipment to keep customers from accessing the insides of the gear. This will protect your assets from being tampered with and preserve their authenticity. You don’t need to worry about high-ticket parts being swapped for poor quality substitutes!
You can categorize equipment as assets, asset stock, and inventory. Assets are critical items that need to be tracked individually, asset stock items are tracked in bulk, and inventory items are consumed once issued. This also optimizes your procurement routine.
Ensure top quality for all your products. Rental businesses have an extensive portfolio and several orders might be processed in a day. It reflects poorly on you when a customer places an order, only to find out later that it is currently not on the shelf.
AV equipment rentals have to be extremely well-maintained as problems like blown out speakers or broken headphones can bring your rating down. Testing and maintenance thus become necessary in order to retain business. It is also important to certify that cameras or video equipment have not had a change of parts, which makes security stickers a must-have.
Rental Business Lessons: Employees
In any business, companies need to ensure that their employees feel motivated and cared for. An ideal workplace is where employees feel empowered and valued at all times. This cultivates a connection with the mission, values, and goals of their company. They see the company’s profit as their own and the company’s loss as their own.
This connection drives employees to contribute to their full capabilities which can have a domino effect on your company. Your customers will receive better service, your equipment will get better maintenance, and your overall company image will improve.
If your employees feel positively engaged with the brand, they will market you whenever they have the chance in their own respective social circles. So how do you promote such feelings of ownership?
Don’t let go of a chance to appreciate hard work. Follow-up the accomplishments of your workforce and make your interest evident. This gives employees a sense of purpose and the feeling that they are actively contributing to “their” company’s success. Devise a way to track performance for all individual employees and observe how much revenue they processed. Periodically highlight your company’s achievements to boost the morale of your workers.
Providing training to your workforce can have a huge host of benefits. Courses on health and safety standards and best practices for inventory management can be important when you’re handling an extensive collection of assets. Some non-traditional training methods such as microlearning have made training more interesting and engaging for employees. Walmart was able to reduce workplace injuries by 54% by using microlearning to break down training content into bite-sized tutorials which helped employees retain information much better!
SAS, the leader in analytics software, was given the accolade of the best place to work with an employee turnover of only 2-3%. They attribute their success to an employee-centric workplace that respected its employees. It is necessary to understand that respect and work flexibility for employees are more important than their pay scale.
Be sure to give the new hire a warm welcome, and to encourage innovation and creativity. The best ideas come when employees brainstorm collectively and are provided with fluid communication across all levels. This can allow them to learn from each other, share ideas, and become stronger as a team.
Providing bonuses and other perks may not be everything, but they still encourage productivity and should be utilized as needed. Promoting referrals will also make it easier to find talent and hire skilled labor. Remember, the best companies think out of the box when it comes to hiring and retaining the best talent.
Taking care of their workforce is how SAS hit record profits in 2009, soon after they lost their customer base in the fall of 2008. The Feelings of ownership and belonging nurtured in employees will always maximize productivity and loyalty for a company. In short, it’s important that you take care of the fact that your employees are taken care of!
Construction equipment rentals can profit from these rental business lessons as they require employees to be trained well in matters of health and safety standards because of the hazards that come from handling bulky equipment. Compliance with OSHA and other regulatory bodies can often be a nightmare, which is why industry training and stringent documentation can become extremely crucial.
Rental Business Lessons: Marketing
Getting your name out there is of utmost importance as the rental industry is quite congested. Failing to establish a strong schema of your company in the consumer’s mind will impede you from getting business from them.
Altering your marketing strategy is a direct way to attract more business. All companies strive for visually compelling, funny or emotionally engaging ads – anything that will leave a lasting impression. Here are some rental business lessons that you can look into to achieve this more effectively:
Renting customers expect every company to have an online website. Interact with your customers on social media so they feel connected to your brand. These online platforms have an exorbitant reach (Facebook alone has 1.47 billion daily users), so tapping into these markets is key. Platforms like Google Plus and Yahoo Local can also help customers locate you with respect to your geographical location.
The number of digital buyers went up to 1.66 billion in 2017 which is indicative of online shopping rapidly becoming a favorite amongst consumers. People appreciate the control that comes from online transactions. In a survey, 71% of respondents said that the ability to reserve equipment online positively impacts their renting experience. The make the most of this rental business trend, be sure to have your entire equipment portfolio up and add sufficient details for each product to amplify your SEO efforts.
Promoting testimonials brings credibility to your name, and responding to reviews shows that you care about your consumers. Promote and respond to reviews and always stay in touch with your customers. If a customer’s activity has diminished over time, reach out to inquire where you fell short. This is important as Word-of-Mouth marketing still continues to add impetus to business growth.
Not everyone who comes to your website is going to rent an item. However, since they did show interest in your company, it is likely they might bring you business in the future. For this purpose, it is good practice to email or text information about new additions or ongoing discounts. Keep it concise and also provide an easy way to unsubscribe to these alerts so consumers don’t become annoyed.
Partner with rental companies in a different industry but the same audience as you. For example, a car rental company can refer its customers to a partner apartment rental company, and vice versa. This puts your company on the radar of your partner’s customers. Sponsoring events catering to your demographic also has the same effect and should be looked into.
Devote time and energy to establishing an online presence because as of July 2018, there are 4.2 billion global internet users. That means it’s much more likely for people to find you online than spot your physical store. Let customers do your marketing by effectively using testimonials and reviews to your advantage; they do wonders for building trust for your services.
Book rentals can benefit from these rental business lessons for effectively marketing their company. They can feature web stores as searching for titles online is much more convenient than in a store amongst thousands of titles. Utilizing an emailing list to bring new additions to the attention of their customers helps them discover new titles and enhances their reading experience.
A Final Word
Competition in the rental industry is already very high. As world economies continue to plummet, product prices will keep on rising. Consequently, rentals will keep becoming the more viable option for the average consumer, driving more and more entrepreneurs to try their luck in the rental business. In light of such predictions, rental business owners will have to stay vigilant in how they operate their business.
Our rental business lessons recommend keeping your portfolio fresh, your finances in check and prominently getting your name out there. Treat your consumers and your employees right while you are at it. There is going to be a lot of multitasking involved, but this is something you can easily achieve by following our basic rental lessons for beginners.
We’re EZRentOut, an equipment rental software used to manage customers, orders, and payments from one centralized location.
You can try us out by signing up today for a free 15-day trial. For more assistance, drop us an email at firstname.lastname@example.org.