Many people have considered whether they could, or should, start their own business. Rental equipment businesses have often been started by one person, who made their ‘corner shop’ business into a national, or sometimes international, company. Can it still be done in that way, or are those days over?
Successful businesses can still be started by an independent person, or partnership. This piece is being written by someone who did so, and successfully sold the business after 20 years. As always, there is an element of luck and risk, but it is basically hard work, and devotion to a dream, that will make the success happen.
A new business needs all possible advantages, and location is one which can be used.
•Research all equipment rental businesses in the areas that are being considered.
•Meet with any existing rental business owners; discuss their plans if they will agree, find out what equipment they rent, etc.
•Attempt to avoid competition. Consider establishing in a business location where equipment rental is not available locally.
There are many reasons for wanting to start one's own rental business, some are logical and reasoned, some are fanciful and illogical, and some might be called plain stupid.
A logical reason for wanting to own and run your own business is that the rewards should outweigh the problems. Any business is a risk, and many people would question - why take the risk to start their own business, when the rewards are not guaranteed? That is an individual decision, or to be taken with a partner. As with all decisions, more inputs to the question will give a better answer.
Fanciful reasons might include the concept that a business owner will just be able to work when they wish; there will be a continuous stream of profit, and lots of free lunches to be enjoyed.
Stupid reasons may include that staff will obey orders unquestioningly, there won't be problems and the resulting wealthy life will be able to be lived exactly as one would wish.
A good method of starting a rental business is to concentrate on minimising the risk and costs, and arranging the maximum likelihood of success and return on investment.
The new owner should realise that there will be a great investment in their time, but by doing so correctly they can minimise the financial risk and cost. Have dreams, but base them on practical realities.
Start with a plan, call it a start-up business plan, or similar. It should be in phases, divided by the time period and commitment amount of the phases. Complete as much as possible in the planning phase, before committing costs. It will save time later, when time is short and more valuable, and provide information for costing out the business plan.
For an independent person to start any business there have to be two basic decisions made to commence. Is it desirable, and is it practical?
The future owner will have to realise and accept the reality of owning a business. There are plusses and minuses, as with most things in life. It is hard work, vacations may seem a thing of the past, and money will be a continuous worry. But life will be great and exciting, every decision will be their own - correct or not - and the rewards should come in time.
Practical considerations have to be taken into account. The largest likely problem will be cash, or lack of it, to start the business and to continue the business into the profit phase. There are definite requirements to a successful business, principally financing, and unless those can be achieved there is no reason to attempt the impossible.
Many business requirements will be individual to a particular enterprise, but some are similar in all business ventures, especially small rental ones.
• There are legal obligations.
•There are practical requirements.
As a result of research, a practical business plan can be written.
Don't be blinkered, always consider alternatives. Give yourself any advantages that may be available.
•Consider opening a business outside a major town or city, providing the location is accessible and will be visible from a major road; and ensure adequate signs are displayed. Costs will be less.
• Consider equipment which competitors are not renting, but try to find out why.
•Delivering equipment may be better economically than paying excessive rents for central premises, as well as giving better client service.
•Be aware of any prospective equipment rental markets, a new construction, new marina, etc., and find out who are going to be the smaller sub-contractors. n • Ensure that sufficient effort is made towards marketing, which will be the critical part of the business.
A major part of the business plan should be cash flow projections. Be realistic, the cash will flow anyway; expecting it to do so will be better than being surprised.
No rental business is likely to make an overall profit immediately, but should do over a period of between one and three years. It is necessary to have a plan which will enable the business to survive during that preliminary phase. Any additional activity which will use the existing business structure to show a quicker profit, such as contracting or equipment sales, should be considered.
Be realistic. If a plan cannot show a profitable business in a reasonable time, reconsider the whole idea.
Ideas which will help the likelihood of success:
•Minimise the range of equipment. Avoid trying to offer a vast selection of equipment, but become known for renting a niche range. Research and add different niche equipment as it is demanded by clients.
•Compete on the excellence of service and equipment, not on price.
•Maximise use of resources: If more space is available in the business than being currently used, consider renting it out. Staff can be contacting potential clients when not otherwise working, etc.
•Purchase new equipment in small amounts. Only buy multiple internet to source equipment, etc.
•Always try to suggest extra equipment rentals or sales to each client. If delivering, include any likely additions to the requested rental on the transport; they can be suggested at the site.
•Negotiate delayed payment schedules with suppliers. If not possible at the beginning of the business, it may be possible after a few months of prompt payment of their invoices.
•List which marketing is effective. Flyers in a local café may have more result than expensive adverts in the yellow pages and newspapers.
•Only purchase small quantities of spares, and only as required.
• Make a working business plan, which will allow the business three years before profit is realised.
•Do not assume business loans will be available until they are offered in writing.
• Treat all clients in the best way possible. n Do as much marketing as possible; never stop or slow the marketing effort.
Starting any new business is a risk, but there are no reasons why a new, independent, well-planned business cannot succeed. Good luck.