The equipment rental industry is characterized by various types of businesses like B2B, B2C, P2P, single-vendor and multi-vendor marketplaces. Within these market segments, there is more diversity. This heterogeneity of existing business demonstrates the scope for the entrance of new and innovative businesses in the industry.
Despite the differences, the key operations in the industry almost remain the same for every type of equipment rental business. Such operations are discussed below:
Equipment rental businesses supply light and heavy equipment for various purposes like construction, mining, compacting, demolition, oil and gas machinery, forestry machinery, etc. Every business has specific markets for supplying these equipment.
Logistics in the equipment rental industry include warehousing, inventory management, shipping, tracking and paperwork clearance. Single-vendor businesses might need to establish their supply chain communities and maintain them. Asset-light marketplace and P2P businesses may or may not involve logistics depending on the offered services.
Single-vendor businesses performing warehousing operations are also required to perform maintenance and repair works for their equipment. Multi-vendor businesses may be required to do the same if they offer warehousing services to their vendors. However, an exception could be made to this point depending on the service agreements between the marketplace owner and vendor.
Executive operations for equipment rental businesses involve business planning, forming office policies, establishing and maintaining partnerships, managing teamwork and command of chain, handling promotions, participating in external affairs and monitoring business progress.
Equipment rental businesses are required to perform a number of financial operations such as pricing, budgeting, payroll, taxes, preparation and revision of financial reports, preparation of financial terms, resource management, asset management and credit management.
Office functions for equipment rental businesses involve clerical work like data collection, data entry, business analytics, intra-business communications, etc. ecommerce businesses and marketplaces automate the majority of office functions with the help of a rental software.
Marketing involves forming various strategies for branding and business promotions. It also involves managing public relations and online reputation. For online equipment rental businesses, marketing operations are concentrated on digital marketing and online reputation management (ORM).
Equipment rental businesses are responsible for providing support services to their customers. Multi-vendor businesses are also required to provide similar services to vendors & users. However, outsourcing customer support operations is also a popular option in the equipment rental industry.
Note: The attributes mentioned in the business model canvas are not applicable to all equipment rental businesses. The actual business model canvas may vary from business to business.
Launching an equipment rental business will require thorough preparation including market analysis, document preparation, supply chain establishment, and many more. Read below to understand these steps in detail.
Market analysis can be conducted for a number of research perspectives. They require a researcher to define purpose and goals beforehand. An equipment rental B2B business is advised to include the following in the research:
The aforementioned goals will assist the researcher in ascertaining the scope of business and finding the most profitable market regions.
Businesses can use the following types of research strategies to conduct their market research:
Quantitative research strategies assist in the collection of numerical data that can be illustrated via statistical tools and methods. These strategies are used when we need measurable results to establish patterns, numbers and market dynamics. Quantitative research results are objective, traceable and can be replicated. They are consistent when conducting research on the same variables within a short time span.
List of Quantitative research methods:
Qualitative research strategies are used to understand phenomena and reveal underlying value. They are used to discover reasons, motivations, underlying causes, opinions, rationals and justifications behind various consumer behaviors and trends. Qualitative strategies are essential to find aims that cannot be interpreted in numerical values. Their results are subjective, inconsistent and demonstrate subject complexity.
List of Quantitative research methods:
A one-year budget helps entrepreneurs in making correct estimations about startup expenses. This reduces the risk of over-expenditure while adequately allocating resources to essential and non-essential operations.
The one-year budget should prioritize resources for infrastructure and inventory that consume the majority of monetary resources. Similar to the inventory, costs for providing services like equipment repair, delivery and customer support should be also accounted into the budget.
After analyzing the expenditure on infrastructure, products and services, the business owner can classify one-time and recurring expenses. Some of the one-time expenses that an equipment rental business may incur are trademarks registration, office renovation, partnership and business licensing costs. Recurring expenses, on the other hand include salaries, utility bills, insurance premiums, servicing and maintenance, marketing and branding costs, and software subscriptions.
Rationally, it is difficult to strictly follow a startup budget. Equipment rental businesses may include a 10-15% margin for any overhead expenses.
The paperwork for equipment rental businesses ranges from licenses to financial agreements, investor agreements, partnership documents, business insurance, trademarks, compliance certifications, initial policies and bank statements. Not all of the aforementioned paperwork is mandatory for all equipment rental businesses and the requirement can vary depending on various factors such as state jurisdiction, company size, etc.
Filling the paperwork on time can have the following benefits:
Supply chain establishment is essential for all types of businesses dealing with the supply of physical goods. An effective supply chain model improves the entire order fulfillment process and assists in reducing expenses. On the other hand, not binding to a well-defined supply chain model leads to consequences like drop in order fulfillment rates, overhead costs, unmet deadlines, supplier disputes, and reduced customer satisfaction and retention rates.
Gaining an in-depth knowledge of how the equipment rental industry operates in the targeted geographical region and maintaining important business relations at an early stage will assist an entrepreneur in setting up an operable supply chain.
Read below to know how an equipment rental business can establish its supply chain from scratch.
This includes the types of equipment, their quantity, sizes and variants. Based on consumer demand, the business owner can select the most profitable brands and any add-on products. Preparing the list in excel format (.xls or .xlsx) is useful as it will assist the owner in importing the data in a third-party inventory management software.
Get quotations for the required inventory from multiple suppliers. The business owner may be required to break down the inventory list to get all equipment at the best price possible.
Warehousing services are easily available in modern towns and cities. A business owner can opt for them or set his own property for warehousing. Other options include renting or buying a warehouse and opting for a shared warehousing facility.
For equipment like cranes, bulldozers, backhoes and excavators, self-transportation is the most reliable option for equipment rental businesses. For this, the business may need to hire drivers and equipment operators. Smaller handheld equipment and add-on equipment such as safety gloves and helmet can be delivered by a third-party service or trucking company.
Note: The aforementioned steps may not be applicable on multi-vendor marketplaces that are based on an asset-light business model, requiring least possible investment and sources from the business owner.
Return, either at the end of the rental duration or due to faulty equipment, should be handled by the business itself when dealing with cranes, bulldozers and similar equipment. Smaller equipment can be either returned by the customer via carrier or the business owner can facilitate the return himself.
The infrastructure mainly involves an office, workstations, internet connection, security, elevators, etc. Obviously all this can be avoided by renting shared working spaces or a fully-furnished office.
The business owner also might need to buy or rent trucks for delivery or look out for warehouses as mentioned above in the section 'Establish the Supply Chain.'
Finding human resources for a startup equipment rental company can be challenging. Following are some of the ways to address the challenges:
After the equipment rental business has been set up, getting the first few bookings may seem difficult. Breaking this barrier will require strategic branding and marketing with precise implementation. Having said that, a proper start with observant result-driven marketing ensures quick transformation of a small size business to a midsize business.
Refer to the 'Marketing an Equipment Rental Business' for detailed information on marketing.
Standing up to the competition will require the business owner to adapt the modern practices and technologies that will streamline the entire rental process. The usage of equipment rental software for this purpose and automation is highly recommended.
Operations streamlining will have several benefits as laid down below.
Rental software automates price calculations, billing, payment collection, reporting, reminders, subscription renewals, communication, product visualizing, backup & restore, etc. This increases the overall productivity of the business while minimizing the workload. Reduced salary expenses on employees is a consequent benefit.
Several payment protection protocols are integrated on a rental software that enable safe and secure payments for an equipment rental business. Moreover, the various types of gateways and the type of integration (hosted or self-hosted) further reinforce the safety of the payment system.
A payment gateway can also support various payment options such as electronic bank transfers, eWallets, credit cards, debit cards, finance and digital currency.
Rental equipment is at a high risk of being stolen/lost by the customers of an equipment rental business. Rental software negates the risk with several features such as automated logging and GPS tracking, making it much safer for the business to rent out equipment to distinctive customer segments.
Consumer data, such as name, address, billing address, organization, rental date, payment info, etc. are all stored on a cloud when using a rental software. The business can access this data anytime for data analysis and various other purposes such as marketing and enhancing sales journey. Rental software also process data in real-time, eliminating the need for manual logging.
It is easier to log and maintain inventory on a rental software. Business owners can track the delivery of equipment or calculate the returned inventory later at the end of the rental period with ease. Third-party integrations such as Aftership also assist the owner in managing the delivery of lightweight and handheld equipment. Similarly, the location of equipment in different store rooms can also be stored on a rental software.
Rental software provides the option to create a web storefront or multiple storefronts on a marketplace. Along with this option, the software also provides advanced features for overall website management. These features include dedicated dashboards for customers, vendors or marketplace owners. Multi-user CMS enables smooth homepage, inner pages and catalogue management. Some software support multiple sub-admin accounts to assist the business owner in overall management.
Modern technology enables various web-based revenue streams for online businesses. These include subscription packages, PPC campaigns, display ads and more along with the traditional .rental fee and commission. For more reference, check the business model canvas diagram in the guide.
The global penetration of the internet and increase in smartphone devices and computer technology call for smart digital marketing solutions. Strategies like SEO, PPC, affiliate marketing, email marketing and social media marketing are essential in the 21st century and there are various software tools available for their implementation. Modern rental software also support several marketing features. While some are pre-integrated, others can be added with the help of TPIs (third-party integrations).
Yo!Rent is an ecommerce rental software developed by FATbit Technologies after thorough research into the rental economy. It mitigates various pain points of rental businesses, such as the complex pricing mechanics, irregular inventory flow, overrun due dates, inefficient equipment tracking and maintenance. With the help of Yo!Rent, entrepreneurs can launch an online multi-vendor equipment rental business where along with renting out their own equipment, entrepreneurs can also allow other businesses to sign up and rent out their products.
Although Yo!Rent is a readymade solution and is inclusive of all essential features required to start an online rental business, it is also fully-customizable to accommodate the varying needs of small and large size businesses. It is not just the online storefront that makes Yo!Rent an ideal solution to launch an equipment rental business, but it is its backend control system that has been divided into three different interfaces:
Note: Instant demos for admin, vendor and front-end interfaces are available on Yo!Rent’s official website. These demos do not require visitors to provide their emails or sign up and are fully-interactive.
Yo!Rent also comes with unlimited user accounts and product listings to make the website scalable along with the growth of business.
GearFlow is a heavy equipment rental marketplace powered by Yo!Rent. It connects various contractors and construction companies with OEM manufacturers and equipment traders to ensure a smooth supply of rental heavy equipment. Launched in the year 2018, GearFlow was able to raise a seed funding of $1 million. For extending business operations, Yo!Rent team also integrated the option to turn on equipment sales as per the business owner’s discretion. You can check the full case study of GearFlow on Yo-Rent.
Yo!Rent provides one-year of free technical support to all its clients. This ensures smooth business operations especially at startup level.