How to start Tool and Equipment Rentals business to make money for individuals want to quit their jobs and start their careers as an entrepreneur are as follows:
Description of Job
• Rent specialized tools to hobbyists and professionals.
• Rent testing, measurement, and configuration equipment.
Do you need to own a high-powered brush cutter for a one-time clearing of a
patch of ground on your property? Does it make sense to purchase an electronic
testing device for a one-time installation or modification of a new feature for an
automobile you are working on in your driveway? Can you justify purchasing an
extra computer and monitor for a weeklong special project?
The answer in each case, and many others, is that it often does not make
sense to make a capital expenditure for a one-time or occasional use of an expensive
piece of equipment.
That’s the rationale behind equipment rental companies; they spread the cost
of a unit over many users. If the rental unit is managed and maintained properly,
the owner may write off the depreciation over time and then sell the used equipment
to recover some of its original cost.
Don’t try to compete against the major national franchise tool rental companies,
at least at the start. These operations require a major up-front investment in
equipment, training, retail operations, franchise fee, and mass-market advertising.
Instead, concentrate on renting out expensive and hard-to-find tools and
equipment. Your business plan should be built on a high per-device fee for a low
volume of daily or weekly rentals.
Research the cost and life expectancy for specialized equipment before you
make any purchases. Some tools have an almost unlimited life; other pieces of
equipment are so specialized or unusual that they may become outmoded or
unusable after a very short period of time. Your business plan should be based on
a realistic estimate of the number of times a device can be rented while in your
possession; the total yield plus any resale value has to produce a profit.
In most agreements, you are responsible for the maintenance of equipment
and must bear the cost of any equipment that breaks in normal use. However,
your rental agreement should spell out situations where the customer must pay
for repair or replacement of the equipment because of negligence or misuse. The
customer is also responsible for replacement if the equipment is lost or stolen.
Know the Territory
If you have a special interest or hobby, you may already possess some unusual tools
or equipment that others may want to “borrow”—for a fee—from time to time.
Learn as much as you can about the demographics, hobbies, and activities in
your region. Look for clubs for hobbyists and special-interest groups; become
familiar with shows and demonstrations aimed at hobbyists and do-it-yourselfers.
Attend meetings and ask about the sorts of tools and equipment members
would like to use from time to time.
Look into selling insurance policies to customers to cover them against loss
or theft of rented items and other unexpected costs; some rental companies selfinsure,
applying extra payments made by customers to a pool of funds earmarked
for replacement of equipment.
How to Get Started
Post flyers and ads on community bulletin boards, in retail stores, and at community
centers. Place ads in newspapers, shopping guides, and special-interest
newsletters. Attend meetings of clubs and make members aware of your interest
in acquiring and renting equipment they may need.
Your principal up-front cost will be for the purchase of equipment. You may be
able to buy some used or reconditioned equipment; be sure the items come with
a warranty and a ready supply of parts for repairs.
Other costs include advertising and promotion.
How Much to Charge
Your business plan should include a realistic estimate of the demand for each
item and its life expectancy. Calculate a price based on the expected revenues an
item will generate over a reasonable period of time, taking into account the cost
of the equipment, its possible resale value, and the cost to you for the money you
have invested in inventory.
As an example, consider a $500 tool that you think will be rented once a
month and that should have a value of $200 at the end of two years of use. Your
real cost for the item is perhaps $350; rented 24 times in two years, your breakeven
price for the equipment alone is about $15. You’ll also want to add in a portion
of the cost of operating your business and paying for repair or replacement
of items that break, and you should make a profit for your time and effort. In this
example, you could justify charging about $50 for short-term rental of the tool.
Legal and Insurance Issues
Special notes: You’ll want insurance on your equipment; don’t expect to collect
if a single power sander is stolen or if a wrench breaks, but you should be covered
in case of a major loss of expensive equipment at your site or while rental
items are in the possession of clients.
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