There are a number of local contractors and DIY specialists that have projects happening right now in your community. Many of them will encounter an issue that will require a specific tool to be used. Rather than choose to pay a one-time expense for a tool that they may only need once, many will choose to visit a tool rental business for a short-term lease for what is needed. This is why knowing how to start a tool rental business can be profitable information to have.
The first step is to recognize which tools are commonly required by the local community. Speak with contractors, DIY homeowners, and others within the industry to get a feel of the inventory that you’ll want to carry. Then you’ll need to determine the cost of obtaining this equipment so you can get an idea of how much the initial investment for this business must be. Once complete, you’ll be able to follow these additional steps.
1. Officially Form Your Business.
You’ll want to have a business that is incorporated for this type of business. You can choose to form a corporation, but a limited liability company is usually a better option. This will allow all business expenses to funnel through corporate accounts instead of personal accounts. You’ll need to file paperwork with the appropriate governmental agency in your community and pay any fees associated with incorporation. To finish this step, you’ll generally need to have a location selected.
2. Secure Your Insurance.
Even though you’ll be renting tools to others and likely having renters sign waivers against holding you responsible for damages or injuries they cause on their own, that won’t always stop litigation. What if a customer claims your poor maintenance practices caused an injury or damage to their home? That’s a potential seven figure claim. Have insurance in place from Day 1 that will protect your income and business from such a claim.
3. Get Licensed.
A tool rental business will typically need to have a specific business license in addition to the general licenses that are required of all businesses. The tools being rented will generally dictate this step. Heavy equipment rentals tend to need specific licensing, while basic hand and power tools may not. Speak with your local government agencies about what your community will require you to hold in order to be in business.
4. Consider A Business Partnership.
Is there a hardware store in your community right now? Maybe there is a lumber yard? If these businesses are independent franchises or operate under their own branding, then you may have the chance for a solid business partnership. Consider referring business to each other to expand the local profile of everyone involved. Just make sure that your business has made it easy for customers to be in contact with you for the best results.
5. Make Your Tool Purchases.
There are two basic approaches that can be used when it comes time to secure your actual equipment.
- You can purchase all of the tools you would ever expect to rent now so that a full selection is immediately available.
- You can purchase the tools that are the most likely to be rented frequently and then expand inventory options when the finances allow.
You may also wish to consider using a specific brand of tool as part of your rental business as well. The specific branding can help to set you apart from other rental businesses in the area. The specific identity may limit fringe customers from coming in, but those who are loyal to the brand are going to show up in droves.
6. Make Sure That You Have A Policy For Deposits.
Some of the tools that you’ll be renting out are going to be extremely expensive. To guard against unexpected damages and repairs that a customer won’t want to pay, require a specific security deposit against damage before allowing the tool to be rented. This will protect your investment and give customers the motivation to take care of your equipment. If damage does occur, then you’ll have cash on hand to fix the problem.
7. Get The Word Out.
Your tool rental business isn’t going to have a large customer base if the local community doesn’t know anything about your company. Market yourself locally through traditional and digital techniques that will let people know that you’re ready to help them with their projects.
Knowing how to start a tool rental business can help you create a business that can become quickly profitable. Follow these steps today and you’ll form a solid business foundation.
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