You can book a lot of profit on the furniture rental business, provided you incorporate effective pricing and payment policies. This BusinessZeal post will give you a guide to start a furniture rental business.
Offer financing options and usage of credit cards for rental payment in order to get maximum number of customers.
Starting a furniture rental business can be a very lucrative venture. However, before you initiate the process, you will have to conduct a business feasibility study, competition analysis, and market research. This will tell you how viable the prospects of your furniture rental business are. Ensure that you have a foolproof business plan in place, which will not only act as a guide to set goals but will also be required for availing loans. Have policies in place regarding payment terms, rates, etc., to avoid any conflicts later. Check with the local, state, and federal authorities to know about the necessary permits, licenses, and taxation required by you to start this business. To keep your business floating, you cannot let your prices fall below a certain level. Hence, capitalize on your key selling points like quality, variety, delivery, flexibility in payment, etc. Here are a few more points that will tell you how to start a furniture rental business.
Select a Niche
It is essential that you establish an identity for your business. There are many types of furniture rental businesses; hence, you will have to select a niche which you intend to sell. It can be anything from baby furniture, corporate furniture, luxury furniture, to basic home furniture. Home furniture could also be divided further into living room, kitchen, or bedroom furniture. This will not only help set up an identity for yourself but it will also give you a focused target market. You can then plan your operations, marketing, and promotions around that particular target market.
Locate a Retail Store
While you can operate this business from your home, getting a proper office space is recommended. Try to lease a retail space in a commercial area. Getting an office near the shops of home supplies, offices of real estate agent, etc., can help you get better visibility and customers. If you have rental furniture which can be used by students, ensure that you have an outlet near their college/university dorms or hostels. If you are planning to lease out office furniture, try to have a store where offices are taken on rent.
You will have to take help of your attorney to make a rental contract that will lay down the terms of leasing out the furniture. It will include the leasing date, total period, return date, before due date return policy, repair policy, compensation for damage policy, payment terms, late payment, etc. Both the parties will have to agree to the terms and sign on it. This is an important step because a legal contract is a proof of the arrangement that has taken place between you and the renter.
You will require a considerable amount of money for buying various types of furniture, storing it in a warehouse, and for hiring a company to look after the transport. If you do not have the necessary savings, you can go for an SBA loan or a bank loan. You can also check if any business incubators are available in your area. They will help save a lot of cost and provide support. Also, you can avail a credit union loan if you are a member of one. This will enable you to get finance at lower interest rates.
Get a Warehouse
You will have to get a warehouse space to store your furniture, till the time someone hires it. Ensure that the warehouse is spacious enough to accommodate all the furniture, and you don’t end up stacking it one above the other. Doing this can often damage the furniture and increase your cost of maintenance and repair. Also, ensure that there are no rodents in the warehouse which can eat away the foam. As a cautionary measure, get a pest control done for your space. Also, look for molds on walls which can get transferred to your furniture and spoil it. Apart from this, it is essential that you put up your furniture in a place which has the necessary security arrangements for your goods. If you think this is expensive, you can also utilize a garage space, but security of the furniture will become a major issue. Also, don’t forget to check the warehouse insurance requirement.
Hire or Buy Moving Trucks
You will have to send the furniture to the customer’s doorstep and even set it up for him. For this, you will require to hire moving trucks and helping hands. In the initial days, it is advisable that you hire this service. However, it will prove to be very expensive in the long run. Once your business picks up, buy your own moving truck and add one more when it expands further. You can also hire people who will help to move the furniture around.
In order to attract the attention of customers, try to have an interactive website which will showcase the various furniture options that will be available with you. As it will not be possible to take all the customers to the warehouse to display the furniture, this can really work well for your business. You can also display the photos of a variety of furniture, quantities available, similar options for their selection, colors, charges for hire as per duration, etc. Have a rent calculator which will estimate the amount a customer will have to pay for a certain piece of furniture. If you want, you can accept online booking and payment as well. This will help you get many clients.
It is advisable that you get good quality furniture for your business. For this, you can open an wholesale account with a wholesaler to save cost as retail outlets will charge you higher. You can also go for cheap furniture available on online websites. However, if you are planning to get secondhand furniture, ensure that it looks good and is in a proper condition. You can also polish it at home so that it looks new. However, don’t spend on something that looks used, tattered, and has stains on it. People will never pay you a good amount if you offer furniture that is below par in quality.
Check the Furniture
Once the furniture comes back in your possession after you had let it out for a period of time, conduct a thorough check. If you find that the renter’s cat has clawed on the leather sofa or if the chairs have beverage stains on them, do charge the renter for all this damage. Also, check all the wood and metallic works of the furniture as people tend to stick the broken legs of chairs together with adhesives. Scan your furniture thoroughly to spot any kind of problems. If you find anything is amiss, spoiled, or damaged, promptly add it to the renter’s bill.
Once the furniture arrives back, you will have to clean it, sanitize it, and wrap it properly for storage. If there are any sofa covers that need laundry, do not hesitate to spend on them. A customer will be impressed if the furniture smells good and has a ‘just out of the store’ look. So, do not forget to package it accordingly. If you find that any kind of repairs are required for the furniture, undertake them before leasing it out again. Ensure that the furniture is squeaky clean before you rent it out again.
There are many furniture rental businesses that adopt a rent-to-own model for raking up the profit and are successful at it. After you generate enough revenue, plan this transition properly and venture in it to book more profit. This also allows the renter to use the furniture and buy it when he can afford it. However, ensure that people who opt for this scheme do buy the furniture after renting it for a substantial period. There are many people who pick up used furniture from the side streets. However, they are more cautious about getting things like futons, couches, mattresses, etc., from random places. Hence, ensure that you also add these to your business for increasing profit.
Let us suppose you have spent $5,000 buying a sofa and you are charging $500 per year for leasing it out. It will mean that your initial investment will take 10 long years for recovery, so forget the profit attached with it. Hence, in this case, increase the charges such that you will book a good amount of profit as well as recover your investment amount quicker. Also, if you are giving doorstep delivery, do not forget to add the logistics charges as well. Unlike a cash loan, you cannot run a credit check on a customer. So, you are taking a higher amount of risk. Hence, proactively try to get a certain higher amount as deposit as it will secure your furniture. Also, in case of any damage to the furniture by the customer, you can reduce these charges from the deposit.
Promoting Your Business
For promoting the business, register with various online directories. You can also advertise in newspapers, directories, magazines, etc. Try to become a BBB member and get a good grade. Also, utilize your moving trucks for branding. Apart from that, you can also take your business the social media way and promote it.
It is recommended that you go for a franchise or buy an established business to avoid the teething troubles of a start-up. Also, as it comes with a proven customer base, reputation, and an established set-up, it will be helpful for you. As your business is heavily dependent on the furniture you offer, it is necessary that you undertake the proper insurance.