Linens are something that everyone needs in some way. Many people think of linens as curtains, which a linen rental business can definitely use to its advantage. Linens might also include napkins, tablecloths, towels, and even floor rugs. When you know how to start a linen rental business, then you’ll be able to provide businesses with the linens they need and service them on their behalf while making a nice profit.
The average entrance rug, for example, might cost you $100 of capital to purchase. You could rent that rug out at $10 per month. In just one year, the entrance rug would pay for itself and start making you profits. That’s the reality of the linen rental business. Here’s what you need to get started.
1. You’re going to need to have capital on hand to purchase linens.
Whether you focus on towels, rugs, tablecloths, or all of the above, you’re going to need enough money on hand to supply a business with a minimum of two items for each contracted need they have. This is because you’re going to need to launder these linens at some point in order to maintain them, so you’ll need to have a clean item on hand to replace the item being laundered.
If you decide to start small and grow from there, then you can get going on a business venture like this one for about $2,000. The more capital you can put into your inventory, however, means that there is more potential for revenues.
2. You will need to transport items to and from your contracted customers.
As long as you have a delivery vehicle available, you’ll be able to take fresh, clean linens to your customers and bring the dirty linens back to be cleaned. A standard delivery van can usually accomplish this for businesses that are just starting out. If you don’t have reliable transportation right now, then this will also be a capital expenditure that you’ll need to make.
The facilities where you clean the linens may also be a capital expenditure. If you have a power washer, commercial grade laundry machines, and a place for linens to be dried, then you can run this type of business out of your home right now. If not, it can still be a home-based business, but you’ll need to invest into your office area to provide the right experience for your customers.
3. Get the licenses, permits, and other certificates that may be required.
Every jurisdiction is different when it comes to what the business owner of a linen rental business is required to have and maintain in terms of licensing. A business license applies in almost every jurisdiction. You’ll need to apply for the right to start a business and operate it under a specific name. There are usually fees associated with this process and you may need to secure insurance coverage before a license to operate is granted.
Some jurisdictions may consider a linen rental business as part of an overall luxury item category. If this is the case for your area, then you may be required to charge special rental taxes to your customers for the services that are being provided. This generally requires a special taxation license and may require you to go through a credit approval process. Most taxes that are collected on special levies are due once per quarter.
4. You’re going to need plenty of insurance.
You have three primary insurance categories that must be covered in order for you to be fully protected from something that might happen over the course of a day.
- General liability insurance. This will protect your business from most cases of negligence that occur on your grounds or while you’re in the process of serving a customer. If you smacked someone in the face with an entrance rug because you didn’t see them and the action broke their nose, your insurance could protect you from a lawsuit and provide medical expenses for the injury.
- On-site insurance. You are also held responsible for the condition of your linens when they are being used by a customer. If an entrance rug has a frayed rubber side and this caused someone to trip and hurt themselves, this type of insurance could provide you with some protections. Sometimes this can be included as a rider on a general liability policy.
- Vehicle insurance. You’re going to be driving to various contract points during the day to pick up or deliver linens. You’ll need to make sure that the vehicle is properly licensed and insured based on the standards of your local jurisdiction.
5. Take care of your inventory properly.
If you are cleaning your linens properly, then you’re going to be able to extend their lifespan. That’s the best way to make sure that there’s a solid ROI on every purchase that is made. Whenever you pick up linens or are cleaning them, make sure that you’re cleaning them in such a way that they can maintain their overall integrity.
To that extent, you’re also going to want to make sure that your customers are also taking care of your linens. Make sure to include a security deposit with your rental contract or at the very least put in clear terms and conditions that dictate when a customer would need to pay for a replacement item should it become ruined while on the job site.
6. Put everything into writing with a contract.
You will need solid contracts to make money in the linen rental business. Many large providers will require customers to sign a 5 year contract with standard rate increases and automatic renewals. Take a look at what your jurisdiction allows you to do and then formulate a clear, precise contract that benefits you and your customers.
Knowing how to start a linen business can provide you with a tremendous business opportunity. Use these tips to get your business started and then spend your capital wisely to begin the process of creating a profitable business venture.