Alex wakes up every morning at 8 am sharp. She rushes through breakfast, takes the fastest route to work, and arrives exactly at 8:59, only to hear, “You are late.” While her heart and head engage in the same battle every day, she manages to “display” a grim smile. The brain won again while the heart experienced yet another death. This is a typical start to Alex’s day every morning before she continues to be another cog in the machine for her 9-5 job.
Have you ever been like Alex?
No, right? 2025 is the perfect time for you to start your own rental business. For instance, the construction rental equipment market alone will likely reach $200.85 billion by 2032. So, several opportunities are waiting for you to knock at their doors. But, how do you take the initiative? That’s what we are here for! Let’s get you started on how to start your own rental startup.
The ultimate rental checklist
Starting a business is not as easy as it seems. While there are so many ideas you would want to experiment with, there are a few rental business ideas that will actually pay off. You need to be on your toes 24/7 to make the most out of the opportunity. It’s like birthing and raising a child until they can stand on their feet.
As Walt Disney said, “The way to get started is to quit talking and begin doing.” Taking that initiative is all that matters, although you will face several challenges. Here’s how you can ensure you are headed in the right direction while overcoming hurdles:
Challenge #1: The “Me-too” Trap
Do you often see a thriving business and think, “I want to do that? ” If so, you are part of the “Me-Too” Trap—which means wanting to do what other businesses do. This eliminates the creative aspect of your business, as you no longer remain the only one to do it. You do not have a unique selling point that attracts and retains customers.
Today’s customer is more intelligent than ever. It looks for direct yet engaging solutions. So, what sparks that interest when they stop at your physical or online store?
Solution: Think of a long-term idea
Think of an idea that’s not only unique but sustainable. The key to being sustainably unique is to identify an unexplored niche. It’s always easier to enter into an untapped market! A niche market can make your business more successful due to less competition. A few ways to identify this niche are:
- Anticipating future trends: Focus on what is likely to be in trend in terms of rentals in the future rather than on the current need. Observe the ongoing trends and forecast what is expected to be a significant hit in the coming months.
- Integrate with AI: To improve your customers’ experience, propose a solution that involves AI. For instance, a website that gives AI-generated recommendations every time a customer adds items to their cart.
- Promote sustainability: Adopt rental solutions that use eco-friendly products and can help save the environment. Explore niches like renting out reusable event decorations, solar-powered equipment, or refurbished furniture.
A mere idea will not help you in the long run. To stand out from the crowd, adopt future trends, especially AI, and create a brand that resonates with your potential customers on a personal level. Before entering a niche, make sure you validate it through proper market research.
Challenge #2: Daunting research
Imagine conducting interviews in the scorching heat to determine what people want to buy. Before making a decision about a rental startup, several resources need to be looked at for in-depth knowledge. Rental markets evolve consistently, leaving entrepreneurs little room to be creative. Finding out what competitors are renting out can be even more challenging.
Solution: Conduct thorough market research
To cater to these challenges, make a plan to understand consumer demand and behavior so you can start a profitable rental business. Research shows startups take, on average, 3-5 years to be profitable. Several large scale rental businesses take their first steps as startups.
Take the example of Turo Rentals, which started as a startup and now earns $800 million in revenue. Such success stories indicate the need for strong competitor analysis and a detailed study of the market gap to target a specific niche. For instance, with Turo Rentals, ordinary people like you and I can rent their cars to others and earn while sitting at home. Cool, no? Turo was particularly successful during the pandemic when rental prices skyrocketed. So, people who had idle cars sitting at home had an opportunity to make easy money.
But these success stories don’t actualize out of thin air. They need research! Conducting research is critical to understanding customer pain points, studying the existing competitors, conducting primary and secondary research, and testing the idea through an MVP. Here’s how you can identify a niche and customer pain points:
- Analyze the existing rental market
- Assess what customers are complaining about in the existing solutions
- Track social media, such as Reddit and Quora
- Understand what’s in demand in your community
- Talk to your potential customers directly
Here are some questions you can ask them:
- What sort of items are they looking for—basic or high-end?
- What brands do they prefer or think are better?
- How much are they willing to pay?
- What do they expect from a rental business?
- Do they prefer an online store or an in-store experience?
- Do they prefer promotional coupons, seasonal discounts, and bundled deals?
Lastly, consider regional interests. If you live in a popular tourist destination, renting bikes or e-bikes is a great way to capture the tourist market!
Challenge #3: Identifying the business type
It can be challenging to figure out what part of the legal framework your business stands in. For instance, whether you are a corporation, a limited liability company, or a sole proprietorship. You will need legal guidance to determine your company type, which can cost a lot. The inability to tag your startup accurately can also pose legal risks.
Solution: Register yourself as a legal business entity
To start a legitimate business, you need to choose the legal structure that best suits your situation. Then, you need to complete the paperwork to establish your company as a legal entity.
a. Articles of Incorporation or Organization
If you want to create a corporation, file the Articles of Incorporation.
To establish a Limited Liability Company (LLC), you have to file the Articles of Organization. Both articles must be filed with your State’s commercial services department.
There are some similarities in the information that both articles contain. Both must include the company name, purpose of business, mailing address, and principal officers.
b. Certificate of Assumed Name
If neither of the options above is what you’re looking for, then you can form a proprietorship. Proprietorship is the easiest type of company to form. This is a business with only one owner who is not separated from the professional tax liabilities of the company.
To set up a proprietorship, all you have to do is visit the County Clerk’s office, fill out a Certificate of Assumed Name, pay a fee, and you’re good to go. The assumed name, as written on the certificate, becomes the legally recognized alias of the business owner.
Challenge #4: Navigating financial compliance
Starting a business involves several financial and legal compliances. Tax is one of the most important financial aspects that needs to be figured out in advance. Entrepreneurs often fail to identify the taxes they need to pay and understand the registration process to file those taxes.
Solution: Register for taxes
Once you enlist your business as a legal entity, the next step is to apply for an Employer Identification Number (EIN). An EIN is your company’s federal tax ID.
When you try opening a bank account for your business, many banks and commercial lenders will require an EIN. Moreover, an EIN helps avoid using your social security number. This reduces the risk of identity theft.
The Internal Revenue Service issues all EINs. The application is available online and is free of charge.
Now that you have your tax ID, you must learn of all federal, state, and local tax requirements for your business. The legal entity structure you choose for your business determines the taxes you have to pay.
Most startups opt to create an LLC. An LLC makes taxes much more straightforward with its “pass-through” taxation structure. This means that you only have to pay tax on your personal income. This income tax varies for each state and locality, so you must find the requirements specific to where you operate.
Then there is property tax, which again varies depending on your store. Lastly, you’re going to need employees, of course. This is where employment taxes, which are a federal requirement, come in. Employment taxes include Social Security and Medicare taxes, etc.
Challenge #5: Finding the right supplier
New businesses lack a track record of consistent payments and visibility, making it difficult to secure contracts with suppliers. Suppliers may not trust the business, especially given its profitability in the long run. Not only this, but newer businesses often have inconsistent cash flows that scare well-established suppliers due to the increased risk of lost payments.
Solution: Build credibility
Establishing yourself as a “credible” new entrant into a market can be tough, but not impossible. Building credibility requires strategy and rigor. How can you do it? Simply follow these pointers:
- Create a business plan encompassing your long-term goals, financial projections, and your overall structure.
- Develop a strong financial portfolio. Build a history of payments. Yes! Even the smallest ones.
- Secure enough investment for at least partial payments.
- Ask your previous clients for referrals (if applicable).
- Start with small orders to deliver on time and check your efficiency.
- Seek customers from online platforms (e.g., Instagram, Reddit, and Facebook) to build a strong profile.
- Stay in touch with your previous clients (if any), and investors who might be interested in putting in a good word for you.
There is so much you can do to ensure you gain the trust of the right suppliers. Suppliers and investors are both interested in your financial stability and their ROI. So, make sure you can justify your financial operations and arrangements by recording every transaction you make over time. Justify your spending and offer upfront partial payments to minimize the risk of order rejection.
You can even visit a rental tradeshow to find a supplier who fulfills your equipment needs! When finding a supplier, make sure that:
- The supplier has expertise in the equipment you need
- You know your niche and locality
- The suppliers are of quality and worth buying
- The negotiation terms and conditions are flexible
It’s not just about the supplier. It’s also about you trusting the right supplier for your first order.
Challenge #6: Figuring out costs
Finding out your costs can be tricky, especially if you are starting a new business. Cost analysis requires expertise and deep knowledge of rental pricing, your current order capacity, and the costs you will likely incur. Many businesses fail to counter volatility in the cost of raw materials, labor costs, and changing market conditions. Therefore, they do not adjust their financial plans accordingly.
Solution: Conduct a thorough cost analysis
As a new company, you will not have a bottomless bank account to dip into when you want. So, make a robust budget from the get-go.
A hefty bit of your budget will go into procuring the rental equipment since that is the core competency of your rental business. However, there are several other aspects that will require financial planning. Expect the following additional expenses:
- Fee for creating a legal business entity (either LLC or Corporation)
- Cost of buying or renting the store space
- Equipment maintenance and replacement costs
- Employee salaries
- Storage costs
- Website launching and maintenance costs
- Advertising costs
- Cost of various insurance
- Tax expenditures involved
- Additional expenditure (discounts and promotions)
Compare your costs and prices with those of your competitors and similar niches to plan better.
For instance, while comparing a party rental business with an AV/Media business, the following cost analysis can help you out:
| Feature | Party Rental | AV/Media Rental |
| Initial Investment | Lower ($5,000 – $20,000— including tables, chairs, decor) | Higher ($20,000–-more than $100,000—including projectors, sound systems, cameras) |
| Ongoing Costs | Moderate | High |
| Target Market | Individuals, small events, community organizations | Corporations, event planners, production companies |
| Seasonality | Highly seasonal (holidays, weekends) | Variable, dependent on corporate events, productions |
| Customer Service Focus | Event planning support, general service | Technical support, on-site assistance, training |
| Equipment Obsolescence | Slower, driven by trends | Faster, driven by technological advancements |
| Maintenance Requirements | Basic cleaning, minor repairs | Specialized technical repairs, calibration |
Conclusively, choosing between a party rental and an audio-visual equipment business and deciding on the costs greatly depends on your leadership style, the ongoing trends, and your entrepreneurial goals.
Challenge #7: Uncertainty about rental rates
Entrepreneurs often find themselves in a difficult situation when deciding rental equipment rates. The major points of concern include figuring out competitors’ pricing, determining the right rental packages, and identifying the current trends and the costs to base the prices on.
If you are unaware of the current rates, you can easily overprice your rentals or even underprice them. In some instances, you might fail to cover the cost of the equipment despite consistently renting it out, leaving you with no ROI.
Solution: Create a pricing plan
To avoid these anomalies, the best way is to research and find online what others are charging in your niche. To stay competitive, ensure your prices are in the same price bracket as your competitors, with little differences. Set a rental rate that covers your costs and helps you break even as per your industry standard. Wise pricing strategies involve rental rates, late fees, and damage security. We’ll briefly discuss a couple of these below.
a. Rental rate
Here are some factors and calculations you can consider before creating a rental pricing plan:
| Factor | Definition |
| Equipment Name | Name of the equipment being rented. |
| Acquisition Cost ($) | The initial purchase price of the equipment. |
| Depreciation Rate (%) | The percentage of the equipment’s value lost per year. |
| Annual Depreciation ($) | The percentage markup is added to the base rental cost to generate profit. |
| Expected Rentals | The estimated number of times the equipment can be rented before replacement. |
| Depreciation Per Rental ($) | The depreciation cost per rental is calculated as Annual Depreciation / Expected Rentals. |
| Maintenance & Insurance ($) | A portion of the cost is allocated for the upkeep and protection of the equipment. |
| Cost Per Rental ($) | The base cost of renting the equipment is calculated as Depreciation Per Rental + Maintenance & Insurance. |
| Profit Margin (%) | The total rental price charged is calculated as Cost Per Rental × (1 + Profit Margin). |
| Final Rental Rate ($) | The total rental price charged, calculated as Cost Per Rental × (1 + Profit Margin). |
Example Calculation
Here’s a breakdown of the cost of a camera for a camera rental business:
- Camera Cost = $2,000
- Depreciation Factor = 25% per year
- Expected Rental Life = 100 rentals
- Maintenance & Insurance = 10% of cost per year
- Profit Margin = 30%
Camera Rental Rate Calculation
Step 1: Calculate Base Rental Cost
Base Rate = (2000 × 0.25) / 100 = 500 / 100 = 5 per rental
Step 2: Add Maintenance & Insurance
Assuming 10% of $2,000 is $200 per year, spread over 100 rentals:
200 / 100 = 2 per rental
Step 3: Apply Profit Margin
Total cost before profit = $5 + $2 = $7
Applying a 30% profit margin: 7 × 1.3 = 9.10
Final Rental Rate
Rental Rate = $9.10 per rental session
This is just one way to optimize your pricing plan to attract a larger audience in your niche and charge as per the market standard. Remember that there is no golden rule to follow, so you can adjust the formula according to what works for your startup.
b) Late fee
Next, decide the amount you will charge for late returns. You can charge the fees at a varying rate, per minute or per day, or you can set a flat rate. This is crucial for avoiding orders that are returned ridiculously late.
c) Damages and security
You can also charge your customers for any damage that your rental items may incur when in their possession. This is important because you should not have to spend your own money on damages your customers cause.
Another way of dealing with damages is charging a security deposit. If any damages are incurred, you can simply deduct the amount from that deposit.
Constant financial analysis and reporting are the keys to quality operations and long-term growth of your rental startup.
Challenge #8: Difficulty finding the right rental solution
Many businesses do not employ the right rental asset management system to manage their rentals. Reason: high cost, heavy reliance on manual systems, and most importantly, lack of awareness. This means they use manual systems, such as spreadsheets, that can slow down operations. Fragmented item details, data silos, and lost rental items are some outcomes of not using the right solution.
Are you willing to bear this cost?
Solution: Acquire a rental management software
No, right? When you have just started your business, acquiring SaaS-based rental asset management software is essential to populate the system with your item details. Rental companies cannot operate without adequate rental management. You must track your inventory and orders, manage item life cycles, send equipment for maintenance, monitor your finances, and more.
Rental asset management systems enable you to create a centralized repository for your rental items that can be updated in real time. This way, you stay up-to-date with what items are available for use, in what quantities, and whether they are being rented out. This information makes it easier to maintain the current repository and ensure item availability for the next rental.
Rental software also offers several other benefits, such as the ability to send alerts to your customers when their return date is approaching. This helps streamline customer management and develop a stronger relationship with them with spot-on services. For instance, Leuder Construction experienced a significant reduction in costs and time on projects worth more than $50M+ after using a rental asset management solution. Their warehouse manager expresses his satisfaction with the platform, “I have been very happy with the dependability [the software] offers.”
Challenge #9: Finding the “perfect spot”
With property rates skyrocketing, finding a location for your store is becoming increasingly challenging. Competition for a retail space is fierce because it’s rare to find just the right place that can automatically garner customer attention and loyalty. Also, with every business looking to sell online, foot traffic has gone significantly low, so it’s even more important to set up where it’s easier for customers to find you.
Solution: Set up a physical store at the best place
Your rental store location can make or break your business. Be mindful of the following before you set up shop:
- Zoning: Ensure the chosen area/locality is zoned for your commercial business.
- Accessibility: Determine if your store is in an easily accessible area for your target audience.
- Traffic analysis: Select a high-traffic area for your store to get a higher footfall.
- Competition: Remember that the nearby stores should not directly compete with you. business
- Appearance: Make sure the location is safe and welcoming.
Most importantly, consider your budget! Check your budget before you commit to a location. It’s best to look for stores that don’t require many renovations and have an easy-to-navigate floor plan.
In addition to all these aspects, don’t forget about storage. You want a store with ample storage and display cases. Changing rooms is also necessary to open a costume rental business. If those don’t exist already, you must consult a contractor to add them.
Challenge #10: Spreading word of mouth
For small rental startups, the best way to gain clients is through word of mouth. Without any marketing effort from your end, you might find it difficult to connect with more potential clients. Entrepreneurs often miss out on this aspect as they are too busy gaining traction online or through their physical stores. A simple way to get this traction is also to ask your current clients to tell others about your business.
Solution: Print business cards
It might sound like an obsolete idea, but it holds true for several rental businesses. Business cards help with networking, as you can distribute them to potential customers or existing customers. Moreover, business cards are an inexpensive way of spreading the word around.
Usually, business cards are going to be the first introduction to your business for most prospective customers. This is why you have to make sure that they are neat and attractive and have all the necessary information on them. They are also the most portable form of marketing available to any small business.
Challenge #11: Lack of online traction
One of the biggest challenges when starting a new business is creating a profound online presence to attract potential customers. This means missing out on organic traffic from social media platforms and Google. These days, not having a website equates to compromised credibility because 85% of consumers now use the internet to find businesses. Without a website or online presence, there is no single platform that your users can refer to to get a holistic view of your rentals.
Solution: Create an online presence
While physical stores are equally important, online stores enable customers to rent around the clock from the comfort of their homes.
An online store or site can boost your brand image and earnings. For this reason, 73% of small businesses already owned a website in 2023, while 23.5% plan to acquire one soon, highlighting how critical an online presence is for increased sales. The cost of creating a website can vary.
But if you use rental asset management software, you can create your customized website by leveraging pre-designed templates available on the platform and place your rentals up for sale there. Not only this, but you can even integrate with other website platforms like Shopify and WordPress. You can even optimize the site for SEO to ensure it ranks well on Google. Add keywords to your site, develop it without coding, set themes, and organize it just how you want. Isn’t it convenient?
Here’s what you can do to create a strong brand persona online:
- A sleek website that shows you are a legitimate business that customers can trust.
- Use a rental website builder to effortlessly create your first website.
- Relevant information that your customers will want to know, such as how they can rent from you, a rental agreement, or your store location.
- An easy-to-navigate site that does not confuse customers.
- Pictures only where they add value; otherwise, remove the clutter – more is not always better.
- A conversational tone that is not hard to read.
Challenge #12: Researching for an insurance plan
People renting out equipment sometimes require equipment insurance to avoid paying for damages. Rental startups renting out expensive equipment incur even higher insurance prices due to this. If you need a specialized policy for your startup, you will have to pay even more, which can be a massive dent in your expenses.
Solution: Research for the best plan
A rental startup needs several kinds of insurance, including:
- Property insurance: Covers your store in case of natural disasters, theft, and weather damage in some cases.
- General liability insurance: Protects you and your business assets from any lawsuits that may arise due to bodily harm incurred from item use.
- Workers’ compensation insurance: Protects your business in case of employee injury or illness from work-related exposures.
- Rental equipment insurance: Covers your rental items in case of loss in natural disasters or breakage.
Factoring in these aspects, you need a policy that best suits your rental needs. Consult a professional and choose a plan that optimally covers your rental liability. The trick to optimizing this process is identifying risks specific to your startup. For instance, if you are a construction rental startup, you must account for the risk of damage, liability for injuries caused by equipment malfunction, and any threat to the equipment while transporting it to your customer.
Challenge #13: Equipment misuse
How often do you hear, “It’s just rental equipment?” Sometimes, equipment is mistreated only because it does not belong to the rentee. This significantly increases a business’s cost, as repair and maintenance are expensive. Sometimes, they cost even more than the actual price of the equipment.
Additionally, damaged equipment goes out of service quickly, leading to lost opportunities for revenue. Damaged equipment also costs more in terms of insurance, further adding to your startup’s running expenses.
Solution: Clarify the terms of the rental agreement
No rental checklist is complete without discussing the most important document for rental startups: the equipment rental agreement. Since many customers will interact with your equipment during its useful life, you must define the terms of use.
The agreement must include all relevant information so that both the rentee and the renter are on the same page. This will also help avoid conflicts in the future.
Here’s what to add:
- Equipment: Which equipment is being rented out? Does it have any additional attachments? If so, list those down.
- Term Length: The duration of the rental period. Clearly mention when the rental period starts and ends and the due date.
- Rent Amount: The cost of renting the equipment for a set period. Also, specify acceptable payment methods.
- Termination: Situations may arise under which either you or the customer has the right to terminate the agreement. Spell out these conditions. For example, if a customer orders a particular rental item but you accidentally deliver something else, the customer should have the right to terminate the agreement.
- Usage Limitations: Rental businesses accept that equipment will undergo “normal wear and tear” in customers’ hands. However, it is crucial to define what constitutes normal wear and tear so that no one abuses the leeway.
- Transport: Who is responsible for transporting the equipment to the site of usage?
- Contact Information: What should the customer do if something goes wrong? Who should they contact?
- Penalties: What are the penalties for damage, loss or theft? Also, if you wish to charge any late return fees, specify that as well.
Using a rental asset management solution allows you to require your customers to sign the rental agreement before renting the equipment. You can also email them to ask them to sign the contract electronically or ask them to sign it at checkout to avoid legal complications.
Challenge #14: Hiring the right people
Now that you have a well-developed plan for your rental startup, the next step is finding the people who can help you deliver. This is the trickiest part! A bad hire can cost your startup 30% of the employee’s first-year earnings. As a startup, you cannot afford to lose so much even if you start making enough.
The hiring process can also be gruesome as you filter out the resumes to find the perfect match. Sometimes, candidates look great on paper, but it’s not the same in reality. They might lack the skills you are seeking to help grow your startup. So, you must be wondering, what’s the solution?
Solution: Set a hiring criteria
Whether you are looking to hire one, two or three candidates, ensure you have a set standard for each role/position. When you put the job ad, accurately highlight the job description, so only the relevant individuals apply. Once you start receiving applications, scrutinize the resumes to see if they meet your job requirements or not.
Some other things to keep in mind are:
- Carry out a background check on all prospective employees. This is essential as 70% of candidates lie on their resumes to secure a decent job.
- Design an onboarding process to train new employees and clarify all aspects of the job.
- Give your employees a feeling of the work culture at your startup and clearly communicate your expectations.
- You should also discuss company values and goals to inspire employees to excel in their new roles.
A successful hire will help boost your business efficiency and make it easier for you to deliver those first few orders. Using a rental asset management system makes it even easier to handle rental orders since you can assign each customer to an employee. This helps streamline customer management while ensuring that each customer receives the best service from your end.
Challenge# 15: Keeping up with the orders
Once you start receiving orders, the next thing is to keep up with the orders. That’s not an easy feat! You must be on top of each rental order to ensure you fulfill them on time. Some problems you can encounter include:
- Order inaccuracy: Wrong orders received, noted or manually recorded cause delays.
- Slow order fulfillment: Delays in order shipment and slow warehouse operations.
- Poor communication with customers: Customers remain unaware of the order delivery, cost, or placement, and if they are not notified on time, they may become frustrated.
- Payment processing errors: Inability to pay due to system glitches leaves a negative impression on the customers.
- Slow return handling: Inefficiencies in managing returns and refunds, as well as complications in return policies, can discourage customers from buying again.
Solution: Build long-term relationships with customers
Building long-term relationships with customers is the foundation for repeat rentals and consistent revenue generation. But how can you ensure that your customers are well-satisfied with your services? This cycle starts right when you rent equipment to a customer.
- Ensure the equipment you are providing is of top quality to avoid returns
- Provide excellent customer service by sending prompt replies
- Keep in touch to ensure they don’t need help using the equipment
- Only take orders that you can deliver. Don’t overcommit
- Clarify the terms and conditions of the rental beforehand
- Get their regular feedback for improvements in your service
Quality rentals, fast service, helpful replies, and well-thought out terms and conditions will enable you to build a more substantial customer base. Invest in your customer service for better lead generation and customer retention!
Starting your rental business couldn’t get any easier
While starting a new business might seem daunting, the passion and rigour to break that frustration cycle will keep you going. Having your rental startup will open up a world of possibilities and give you the freedom to actualize your ideas.
Using a rental asset management solution makes these processes less tiring by automating rental workflows. Manage your rental items, set their rates, create a website, generate orders, and even SEO optimize your site for efficient operations. So what are you waiting for?
