Are you planning to put up a party rental business? Having a passion for parties and events is good. But having ample knowledge and the right tools for the business are equally essential.
And with the current health pandemic making things harder for the events planning industry, it is a must that you establish your party rental company the right way. But how exactly do you do so?
What are the non-negotiable aspects of a party rental business? Continue reading below for a step-by-step guide on how to start a party rental business.
- Begin With the Trends
If you wish to learn how to start a party rental business the right way, you need to know the current landscape of the renting industry. As we mentioned earlier, the pandemic is posing new challenges to the industry.
People are apprehensive when it comes to hosting parties. Some cities even restrict mass gatherings. In turn, you may need to be more creative in attracting prospective clients.
But regardless of the global situation, some trends remain for the long-term. One of which is sustainability. Today, party hosts, planners, and rental businesses use items that will serve them longer.
For example, some rental companies use plastic tablecloths instead of conventional cloth. Some also use energy-efficient lights.
These are a few examples of trends you should be aware of.
- Identify Your Market
Next, you need to identify your target market. This will highly depend on the area of specialty that you wish to take on. Not all party rental businesses offer the same set of services.
Some companies cater to birthday parties while others choose to work on weddings. Others go for corporate events while some accept all sorts of events.
Furthermore, your market will depend on the specific type of services you will offer. For example, you may only want to offer chairs and tables. You may also wish to offer photo booth services.
By determining your area of specialty, you will have a better profile of the clients you want to target.
- Write a Business Plan
Next, you can start writing your business plan. This is perhaps the most important step in building your party rental company. It is also something that your bank or financier will look into for your business’ funding.
A typical business plan can be anywhere between four and 10 pages long. As for the outline, it should start with an Executive Summary. Here, you will summarize your entire business proposal.
Though it is the first section of your business plan, it is the last one that you will write. The second part is the Business Description. It should contain your business’ mission; what your business does; and key information about your industry.
It should also contain a clear description of your products and services. It should also indicate your business goals. Your business plan should also include a solid strategy regarding the promotions of your party rental business.
- Create Your Entity
After drafting your business plan, you can now form your business entity. This is the step that will validate your business. This will allow you to operate your party rentals legally.
Here, you will have to choose the type of entity for your business. It can be a sole proprietorship; a partnership; a corporation; or an LLC. Each option has its strengths and weaknesses.
Choose sole proprietorship if you own the business by yourself. Go for a partnership if there’s another party who co-owns the company.
If there are more than two owners, a partnership is what you want. But the most popular option for multiple owners today is LLC. It offers the same liability protection as companies have but with the ease of operation of a sole proprietorship.
- Pick the Best Location
Next, you need to find a location for your main operations. This will serve as your office where prospective clients can go.
This is also the place where you will store all your party equipment and other supplies. For starters, you may consider renting a small warehouse.
- Work on the Permits
After choosing the location for your business, you can now secure your permits. Generally, party rental businesses do not need any licenses. However, you will have to go through many processes to obtain your permit to operate.
These are your local, state, and federal registrations. Examples are the Occupancy Permit, Employer Identification Number, and the sales tax permit.
- Finance Your Business
With your permits complete, you can start working on the funding of your business. The common route most businesses take is applying for a loan. Finding a lender is easy, but the hard part is securing loan approval.
The key behind a loan approval is a good credit standing. Furthermore, the lender should see that you can invest 15% to 25% of your money on the total start-up expenses.
- Insurance is a Must
Since you cannot guarantee what happens in a day, you need to invest in insurance coverage.
But with many kinds of insurances available, which ones should your business buy? Ideally, you want to buy general liability business insurance.
This will protect your business in case your equipment causes any sort of injury to the guests. If your rental equipment involves electronics, you may invest in commercial property insurance.
- Get the Right People
Last but not least, you need to hire the right people who will make up your team. Start small by hiring just enough people to cover all areas. Be mindful of the pay scale to ensure proper compensation for everyone.
Now You Know How to Start a Party Rental Business
Now that you know how to start a party rental business, your next goal is to grow your business. But growth takes a lot of patience and determination. It also requires doing things the right way.
Check out our other articles where we discuss the best practices in managing a business. We share valuable tips that will help take your business to the next level.
Further reading:
- Set yourself up for success and insure your workers and business with Cerity Insurance.
- Read on to find out Why It’s Important To Know What Your Customers Want.
- Why start your own business.
