Are you looking to start your own business? Do you have good knowledge of furniture making or furniture in general? Then starting a furniture rental business plan is an excellent idea.
If you are wondering about the scope of the business and worried about how profitable the furniture rental business is, we have a complete guide to assist you to start a furniture rental business.
The furniture rental business has seen remarkable growth in recent years. The estimated value of the furniture rental business today is around 5 to 8 billion dollars. The demand by the millennial is contributing more towards the growth of this business. Today’s millennials are renting various places before they purchase their own home. That is one of the affordable options for the people who will be changing location due to their job or other personal reason. Most of them prefer renting furniture for buying them. It is found that more than one-third of the houses in the US are rentals, which has created a demand for rental furniture, and it can get even bigger with time.
There are two types of potentials customer for the furniture rental business:
- People who have shifted to a new location for job purposes and do not have money to purchase furniture for their home décor. So, they will look up to renting furniture till they relocate to another location.
- New offices that do not have enough costs to buy furniture for their office décor.
So, if you are convinced to start the furniture rental business and wondering where to start, follow these simple steps:
1. Do a Market Research
Every business starts with market research. That will help you to understand the business. Analyzing the competition is one important to success in any business. You must know who all are the major competitors in your industry, what type of strategy will help you make your business unique from your competitors. You need to be best from various in terms of your competitors such as quality, variety, assembling, delivery services to stand out from your competitors.
2. Select the Niche
The way to narrow down your target market is by selecting the niche. You can choose to offer rental furniture services to a residential building or corporate offices. There is a different type of furniture to providing for rental, Choose from different niches such as luxury furniture, office furniture, basic home furniture, or outdoor furniture. This will help you to plan your business operations, promote, and marketing around a particular target market.
3. Startup Cost
It is necessary to list down the startup cost that your business requires. That helps in sourcing the required finances. You will need to incur expenses on the following things:
- Expenses for office and warehouse space
- Business incorporation fee
- Cost to develop the business website
- Advertising expenses
- Expenses on licensing and other essential permits
4. Financing Your Business
After identifying and listing all the expenses, the next step is to hunt for capital. If you have done savings to start your business, then you don’t need to look up anyone for financing your business.
You can go to the bank for loans or Small Business Administration to get finance as they charge lower interest rates and longer repayment terms. After deciding where to get your finance from, the next step is to take care of legal requirements to start the business.
5. Fulfill the Legal Requirements
Before you start to operate your business, it is necessary to fulfill all the legal requirements. To start your furniture rental business, you need to register your business with the state where you are looking to operate.
Most businesses prefer registering their business as a Limited Liability Corporation to protect their assets from business debts. After registering your business, apply to get Employee Identification Number (EIN). That will help you to lawfully run your business in the United States. You will require EIN for various reasons as to open a business bank account, apply for licensing and permits, and file taxes.
6. Get an Office Space
The next step is to find the physical workspace for your business. The right location is always the key to run a successful business. You can choose to work from your garage in the initial days of your business. However, it suggested having a dedicated office space. It will help you build a brand image in the market.
Here is some suggestion to choose a location for your furniture rental business:
- If you planning to rent out the home furniture, it is will have a great demand if you locate your office in a residential community.
- If you are planning to rent out office furniture, it will make sense to establish the office in a commercial area where offices are located.
If you cannot afford to purchase an office space, you can decide to lease a physical store.
7. Get a Warehouse
You need to get a warehouse to store your furniture, till someone hires it. Make sure you get a warehouse with enough space to place your furniture properly, if you accommodate it one on the other, it will increase the cost of damage repair and maintenance. Make pest control to your warehouse to ensure there are no rodents that can eat away the form. If it is expensive for you to get a warehouse, you can make use of your space in your garage but the security of the furniture should not be an issue. Don’t forget to get insurance for your warehouse.
8. Hire a Moving Truck
You will require a moving truck and helping hands to send furniture to the customer’s doorstep and set it up for them. In the initial days, you can hire this service as it proves to be very expensive. Once your business picks up, you can buy your moving truck and add more trucks, if your business expands further. You also require to hire people to move furniture around.
9. Pricing Strategy
Starting a furniture rental business is expensive, so you need to careful with your pricing strategy. Set up profit margins considering the different aspects like quality, variety, service, and delivery.
If you offer assembling and delivery services, make sure you add those costs to the customer bills. You can ask your customers to pay a security deposit to ensure your furniture remains in good shape as long it is rented. Effective pricing will also help you to stand out from your competitors. You should not keep your competitors aside when you are working on a pricing strategy.
10. Draft the Rental Agreements
Renting your furniture to customers without the agreement is very risky. They may not take responsibility for using furniture well as they don’t own them. So, it is necessary to draft a rental agreement before you rent out your furniture to customers.
Remember to include the following things in your agreement:
- Name of the renter and the rented
- Number of listed items
- Rental fee
- Rental duration
- Payment terms
- Damage or return policies
11. Promotion of the Business
Before people buy from your business, they need to know that you exist. Effective marketing is essential for making good sales create a brand image of your business in the consumer’s mind. You can take the help of your family and friends to make use of word-of-mouth marketing. It is essential to establish an effective promotional technique to attract potential customers.
- Create and develop an attractive website for your business.
- Create a page on Facebook, Instagram, Pinterest, and others and share stories to keep in touch with the millennial.
- Use online advertising to promote your business.
- Offer a promotional deal to the customers
13. Online Showroom
It is one of the great ideas to get the attention of the customers. Most of the potential customers for the furniture rental business are millennials who are always on social media platforms. Develop a website that showcases the different furniture options available at your store. It not possible to take all your customers to the warehouse to display the furniture then will help your business work well. You can provide the option of online booking and payment to your customers through your website. All this works well to get potential clients.
Service rendering is an essential part of the furniture rental business. Installing the furniture, repairing the damaged furniture is key for the success of this business. Make sure your employees are well trained. Giving quick responses to the phone call you receive for servicing work; are the necessary things that will build your customer base.
The mentioned steps are the fundamental steps to start a furniture rental business. As you start, you will get the experience, how to grow and expand this business. Work on everything that you feel will enhance your business. Most importantly, always make sure your customers are satisfied.
We assume the information provided in this article is helpful and motivating enough to start your furniture rental business.