Many home improvement stores successfully rent tools and equipment to DIY and pro customers. The rental side of their business is often seasonal, so operating it requires careful planning and daily follow-up to ensure the right equipment is available and in good working condition. Anyone who enters the rental business should understand the market and its customer’s expectations.
Offering rentals can improve the bottom line since it typically generates a 12-18 percent operating profit. According to the American Rental Association (ARA), rental revenue is projected to reach $64.1 billion by 2023. In 2019 revenue increased 5.3 percent to $61.56 billion. “Despite signs of a slowing economy, the equipment and event rental industry continues to perform well. The most important thing for rental companies to do is to execute their business plans and aggressively manage their operations, “says John McClelland, Ph.D., vice president for government affairs and chief economist.”
Why DIY Homeowners Rent Tools
Homeownersfeel a sense of accomplishment and pride when they can complete projects around their homes without the assistance of a professional. Rather than purchase tools for a specific project, many people prefer to rent equipment from a big box, the local hardware store, or a rental store. “The Rental Customer Needs Study” * indicates that 62 percent of DIY homeowners rented equipment in 2019. Forty-eight percent of them expect to rent more this year. Homeowners rented for a variety of reasons.
- 54 percent (infrequently or a short period of time)
- 49 percent (immediate use, don’t want to buy)
- 40 percent (store was conveniently located)
- 27 percent (could not afford to buy/own item)
Know Your Market
One of the biggest mistakes anyone can make is not knowing the type of equipment customers in their market want to rent. Do the research. Talk to existing customers, people at local construction companies, home renovators, and builders. Asking everyone a few basic questions can get you started in the right direction.
- What equipment would you like to rent?
- Do you prefer certain brands?
- How much are you willing to pay
- What are other services vital to you?
It’s also a good idea to check out your nearest competitors to find out what equipment they offer and the cost of rentals. Homeowners mention competitive rental prices, selection, and brand availability as factors in determining where they rent.
Invest in Quality and Maintenance
It’s critical to offer quality equipment that customers feel confident is in good condition. Regular maintenance and quick repairs are essential. Preventing problems before they happen ensures troubling issues are not being passed on to customers. Keeping equipment clean and looking new makes a good impression and can also indicate how the operation conducts business. Some things customers take into consideration before coming into a rental location include:
- Newness and condition of an item
- Positive past experience
Keep orderly records and paperwork
As with most businesses, managing payroll, budgets, and paperwork are routine functions in operating a rental business. Using software programs can assist in calculating expenses and determining revenue and profit goals. There are also specific measures every business should take to remain profitable and protect themselves against liability.
- Create a rental agreement and damage waiver that customers can easily understand
- Communicate terms upfront to avoid misunderstandings later
- before both parties sign the agreement, ask customers if they have questions
Promote the Business Online
DIY homeowners who participated in the “Rental Customer Needs Study” used various methods to gather information before going to a location to rent tools and equipment for their projects. In this day and age, it is essential to have an online presence to communicate with consumers. The website should have a professional appearance and include information consumers need about the business.
- 59 percent visited a rental store
- 52 percent searched for a store on the Internet
- 44 percent visited a rental store website
- 40 percent talked to someone they know
- 29 percent called a rental store
Excellent Service Means Repeat Business
Rentals are a great way to ensure repeat business. Customers who rent equipment will likely return to rent more equipment in the future. Being friendly and providing a hassle-free service is one way to become a rental destination. Rather than bog the conversation down, discussing procedures and paperwork, focus on the project, and how the equipment makes it easier to accomplish the task.
Is Rental Right for You?
Anyone entering the rental business must carefully weigh the pros and cons. One thing is sure, it is a service that will grow in demand by homeowners. “Rental can help homeowners save money while instilling a sense of pride in doing projects themselves,” said Tony Conant, ARA CEO. “We are pleased that so many homeowners see the value that rental offers.”