Not all successful construction equipment businesses revolve around direct sales. Some focuses on equipment rentals. Construction companies often prefer to rent their equipment instead of buying it due to cost-savings it offers. If a company only needs a bulldozer for one month, for instance, renting is probably cheaper than buying. But if you're thinking about renting out industrial construction equipment, there are a few things your should know.
Don't buy more construction equipment than what you can feasibly rent out. If you're forced to sit on a surplus of equipment, it will hurt your profits. You have to remember that construction equipment depreciates in value over time. Therefore, the more unrented equipment you have sitting in storage, the more money you'll lose.
Try to get into the habit of inspecting your equipment after each rental. Renting out a damaged or otherwise not functional piece of equipment to a customer doesn't exactly send a positive message about your business. Customers expect to receive fully functional, undamaged equipment. Furthermore, renting out a damaged piece of equipment could push back the deadline on the customer's own construction project.
What's the budget of your typical customer? You need to answer this question if you plan on making money by renting out construction equipment. If your average customer has a high budget, you can invest in premium, name-brand equipment. On the other hand, customers with a smaller budget probably want cheaper equipment to rent. The bottom line is that you need to identify your customers' budget to offer them equipment that meets their needs.
One of the most important elements of a construction equipment rental business is the actual rental agreement. This legally binding document outlines the payment responsibilities of the customer as well as your company's own responsibilities. Neglecting to create a proper rental agreement is a serious mistake that could come back to haunt you later down the road. If you need help preparing a rental agreement, consult with a legal expert who's familiar with rental businesses.
You can't expect construction companies to rent your equipment unless it offers some value to them. Therefore, you need to ensure that your prices are aligned with their needs. If it costs more to rent your equipment for three or four months than it does to buy it, customers will probably choose the latter. So, make sure there's real value offered with your equipment rentals.