Times are tough, and many business owners are looking to diversify while things are quiet. There are several ways you might do this. You might create a budget line of your products, or extend your range of services. But if you’ve bought a lot of equipment, stock, or assets that are just sat around doing nothing, why not rent or lease them out? After all, they’re not earning you any money while they’re not being used. So put them to work, and start earning some of that investment money back!
It doesn’t matter what line of work you’re in. You might be a photographer or videographer. If you have no jobs coming up, you might rent out your camera or lighting equipment. Perhaps you have some heavy machinery for use in the construction industry. Mixers, diggers, and pneumatics can be essential pieces of equipment for many trades. Renting these out while you’re not using them could help generate a little extra income.
You can rent out spare office space. Maybe you have a company car that nobody is using? You might even have an entire call center under capacity. Whatever you have, somebody out there could use for the short term. Once you’ve determined what you might rent or lease out, it’s time to figure out how to turn this into a revenue stream.
Start by setting up a web page dedicated to this service. Shop around for the same kit or service with your competitors. Check how much they charge and find the average cost. Where are they advertising these rentals? What are their current campaigns? You need to figure out the best place to post your adverts and promotions to get maximum response. Once you have your 4Ps of product, place, price and promotion, it’s time to figure out the cost of getting it to market.
Protecting Your Assets
Start with the insurance costs. Your current policies are unlikely to cover private hire in this way. In some places, you might need to pay for a licence to rent out certain items. Your insurance provider might demand that you include training and manuals and maybe even safety wear with each hire. You need to price all this up to determine where you should be pricing each rental. Don’t forget, you should demonstrate the use of each item. Can you afford to hire someone to manage this if you need to?
You will also need to keep detailed records of who has your equipment, the condition it is in and where exactly it is. You want to know the following:
- When and where it was hired from
- Who authorised the hire from your team
- The condition of the equipment at the time of hire
- Name, address, ID and deposit of hirer
- Date and time it is due back
- Payments and deposits received
- Safety checks were undertaken
You can use asset tracking software to help you stay on top of your equipment. It’s essential you know where it is in case you need to get it back in a hurry, or it has not arrived back as scheduled. Ultimately, this is your business, and these assets are essential to its survival. Protecting them means you’re protecting yourself and your company.
The Cost To You
Now you know the cost to you to start renting out your assets, you can determine the best hire rate. Of course, you still have to cover the costs of marketing and any additional staff you need. Essentially, this part of your business should cost very little to set up and get running. You just need an effective promotion and marketing campaign to get you going, and you’re ready.
Don’t spend a lot on marketing, but do consider adding a little to your budget for customer service training. You might not have ever had to undertake customer-facing sales before. Your clients and customers are now coming to your premises to pick up the equipment. You need to make that experience comfortable, welcoming, and professional for the client. A little investment here can go a long way. Chances are you’ll win customers over that will return again and again.
Managing This Part Of Your Business
As a business owner, you are already a very busy person. Taking on a whole new business might be a step too far. Instead, you might appoint someone to take care of customers, check over the assets, and update records. You will still need to manage that person and make any changes to the business model as this part of the company grows. You also need to be absolutely certain that your assets are available to your company to use as the need arises.
There might be times when customers demand to speak to you about any issue or problem they are having. This could be quite a different experience for you. How do you currently manage clients that aren’t satisfied with your services? Could you adopt this model for the hire service? The more you can adapt the better. It saves you from reinventing the wheel as they say.
A Business Model That Works For You
If you must apply a completely new business model, then it’s important to find one that works for you. As much as you need to service your customers, if you can’t make this side of things work for the business, then it’s not worth pursuing.
You might start by considering the premises from which this part of your company will operate. Will you use an office or a warehouse? You might prefer to brand this part of the business to separate it from your main function. After all, your customers that hire will be a very different demographic to those that use your main business services.
How will you answer customer queries? The answer to this might depend on the modes of contact you’re willing to offer them. If you provide ordering through the website, then you might prefer to keep contact forms online too. If you can afford a telephone enquiries provision, then this might be beneficial for your customer. However, if you don’t have someone answering the phone that can answer questions about the equipment, it might be a waste of time for everyone.
Chances are you take a deposit for the works you provide as part of your main business. Will you be using the same methods of transaction for your rental business? Where is the cash kept? Can you take card payments in person?
If Things Go Wrong
You need to have a contingency or back up plan should your equipment be returned damaged or never returned at all. Your insurance policy should cover all this, but it might take time for you to see a payout. Can you afford to wait? It might be worth having a pot set aside should you need to buy any replacements in a hurry. Perhaps saving 10% of each hire for such an incident might be a good idea?
Managing this new side of your business should be made to be as easy as possible. You have plenty of other things to do like giving your main business a boost. You might hire a manager to take care of things. Or you might simply apply what you already know and do to this new business. Can you manage a rental business?