Frequently Asked Questions About Rental
So you want to be in the rental business?
You have already made the choice to start a rental business, but where do you start? There are so many questions to be answered. What equipment do I need? How do I make money with this equipment? And how do I know I am buying the right equipment? We want to help you with the "Right Stuff" that will be needed to open a rental store. We will help you determine what to start with, which items you will need immediately, and what you will want to add later. We can also help with computer software, supplied by Systematic Software to automate your rental store. If you are starting small, we have manual inventory control systems to help manage your rental inventory. We not only have the equipment that you will need, but also the parts to maintain the equipment, in our 5,000 square foot parts department.
What kind of a return can I expect on my investment? Typically, you can anticipate a $1 dollar annual return for each dollar invested. Since you only pay for the equipment once, you will continue to receive returns on your investment year after year. In our one-day Rental Seminar, we will discuss how long to keep your inventory. By turning your inventory at the proper intervals, you will maintain the reputation of having top quality equipment that performs. Satisfied customers means more repeat business and more $$$$$$$$.
- Do I need to purchase Industrial Equipment? It is very important to have industrial grade equipment. Never use homeowner grade equipment. This type of equipment will not satisfactorily perform in rental use. Your customers will use the equipment harder than you would at home. If you are sending out homeowner quality equipment, and it fails, your customer will be skeptical that all your equipment is inferior and may go elsewhere for future rentals. To protect yourself from dissatisfied rental customers, and unnecessary repair bills, buy the right equipment in the first place.
What kind of equipment should I have? First, determine who your customers will be. Typically, they will be ranked in the following order:
Approximately 75% of your rental customers will come from contractors, industrial companies and municipalities
Approximately 25% of your rental customers will be from homeowners
A general list of tools and equipment you will want to consider includes the following: Air compressors, auto tools, concrete tools, drain cleaning equipment, floor maintenance and floor sanding equipment, generators, heaters, lawn & garden equipment, material handling, nailing, painting, power tools, pressure washers, water pumps, rotary & demolition hammers, sand blasting, scaffolding, tile, and general tools and equipment.
You will only want the most frequently rented items. We suggest that you keep a log of requests for rentals that you have missed, either by not having the equipment or by not having enough equipment.
Should I consider the opportunity to Accessorize? You should find that approximately 75% to 80% of your rental income will come from rentals. The other 20% to 25% will come from sales. Some of the items that you will sell are:
Saw blades, safety glasses, gloves, boots, ear protection, sandpaper, carpet shampoo, nails, hand tools (shovels, hand trowels, etc.), tape measures
What type of sales should I be prepared for? There are many rental items that have an associated "automatic sale". For example, a customer rents a gas powered cut off saw and buys the blade for it.
1. These blades sell for $9.95 to $11.99 each and cost you $2.60 each. These are premium blades that will last longer than most other available blades selling for as much as $8.99 each.
2. Send more blades than you think they will need. Tell your customer that all unused blades will be refunded. You just want to make sure that he has enough. If he doesn’t, he may go somewhere else to buy them
How long should I keep this equipment? A good rule of thumb is when a gasoline powered piece of equipment has returned its initial purchase price two to four times, then you will want to sell and replace it. You may ask why so soon? At this point, the equipment is going to still be in good enough condition that you will be able to get 60% to 70% of the wholesale price for it. Remember that your customers do not have access to this type of equipment, and if they did, it would be at retail price. By selling it at this time, you are reducing your maintenance expense by replacing it with a new piece of equipment, and your customers will be renting newer equipment that may have better or more convenient features and will be dependable.
Electric equipment is more forgiving. There is normally less to go wrong with an electric product than with a gasoline powered product. You can usually figure that when it has returned four to seven times its initial purchase price, it is a good time to "purge" it from your inventory.
It is important not to keep inventory too long. If you go into most rental yards, you will see old, worn out looking out equipment. Think of this, if you had the opportunity to rent an old, worn out looking piece of equipment, or one that looks new, which would you choose? Of course, the new looking one. If you rent a contractor an old unit that fails on the job site, this means loss of time while he or one of his employees goes to your store to get a replacement, or they have to wait on you to bring them a replacement.
Do I need to keep the equipment clean? The perception by your customer is that, if you have clean equipment, it has been properly maintained and that you care about your equipment. They will take better care of it than equipment that is dirty. They will also have the perception that it runs better. Think how much better your car seems to run after you leave the car wash.
How do I service it properly? On gasoline powered equipment, 50 hours of rental use is like 3,500 miles in your car. Change your oil and you will save on your maintenance budget. All gasoline-powered units should have the air filter and oil level checked as soon as it is returned by the customer. This will let you know that it is "ok" and will prevent you from getting too busy to check it for the next rental customer and have a possible failure of the product. By checking the oil level before you start the engine, you can make sure that your customer hasn't done anything to harm your engine.
Shouldn't I have all the big equipment? Back hoes, trenchers, and skid steer loaders are important, but make sure that you buy this equipment as you need it. Your customers will tell you what they want to rent. You want to have your equipment rented out and not sitting in your lot. The return rate for a $20,000 skid steer loader is only twice the rate of an electric pavement breaker that costs $1400. How many rentals of smaller equipment could you get from the same $20,000 investment that a skid steer loader costs?
How do I generate repeat business? When a customer comes in to rent an item, ask them what they are doing. If they are breaking out concrete to fix a sidewalk or patio, they will need an electric breaker. You very well may be able to rent them a cut off saw to score the concrete before they break it up to give them a smooth edge when they pour the concrete. You can also ask if they need a mixer or if they are having their concrete delivered. They may rent a concrete mixer to prevent buying more concrete than they need to meet the minimum required by concrete suppliers. By simply asking a few questions, you may have turned a single rental into a multiple rental and have a customer that is going to be more satisfied with their project or repair job, and with the help that you gave them. This will generate REPEAT business.