We have good news for those who are trying to start a party rental business. And that is the party rental business requires fewer startup costs compared to other businesses such as retail stores and car dealerships. However, it all depends on the size of your rental business. Previously, we demonstrated how to plan your party rental business.
Even if you have only $5,000 in savings, you can still kick start your Party Rental Business. However, the budget will be enough to cover small household parties or organizational events.
Thinking about covering the mega parties?
Then, you may need to invest $300,000 or more.
We suggest you start small and grow at a stable pace. This means, first you need to start by allocating smaller budgets to build a foundation. And then, determine if that is the business you would pursue in the long term.
Unfortunately, not all people have enough savings to turn their creative ideas into business. But lack of money should not prevent you from taking action.
If you know the specific needs of your community in regards to organizing parties, or you are sure what party rental equipment will be in high demand and do well in your target population, then you should swallow your fears and go with the financing options.
Currently, you may be in one of the two following situations:
Scenario One: Having Enough Funds
That is great. Investing your own money is a convenient and worry-free way of starting your business. Because you do not have to worry about your bank loans. Thus, you may perform with greater flexibility and employ your utmost creativity.
If you have enough funds under your pillow, you can jump over Scenario #2
Scenario 2: Need to Secure Loans
Unfortunately, most people with creative ideas fail to start their business simply because they fear taking debt. We understand that loans give the type of psychological pressure, especially for those who grew up in conservative households.
By reading the stories of several successful party rental businesses and analyzing the industry’s potential, we came to the conclusion that thoughtful risk-taking will advance your goals. In other words, taking a loan based on a great business plan can help you to realize your business ambitions.
Concisely, taking a loan is not as evil as some cultures and scriptures state. Although healthy fear is needed, we shouldn’t be afraid of acquiring some capital from banks.
It is something like renting a house versus financing a house. In the latter, you pay to own the house.
Now let’s move on to more practical segments:
Where to get a loan to start a party rental business?
That is the question that most of us will be interested in.
The quick answer is banks or financial agencies such as credit unions and alternative lenders that offer lower interest rates, adequate amounts, attractive terms with no hidden fees.
Local banks are the best option among those. Just pay a visit to your local bank that you usually use and talk with a bank representative that manages your accounts.
We recommend banks for two reasons: Firstly, you know your bank. Secondly, the bank knows you. So, the loan process will be easier and more transparent for both sides.
Unfortunately, some individuals may not be able to get financing from banks because most banks require individuals to be in business for a minimum of 3 years or to have a FICO score above 750 before they can give out a business loan.
Do not get discouraged! The bank is not the only option, there are some other lenders some of which are listed below:
According to the company, they offer attractive terms, larger loans, and more importantly lower rates. Additionally, they claim that they require less paperwork than traditional banks and credit unions. Plus, they approve clients with bad credit, tax liens, and previous bankruptcies.
Please note: We highly recommend reading the contractual conditions before signing any documents. Sometimes lenders that offer loans that seem too good to be true, should be a subject for caution.
SmallBusinessFunding does not issue loans directly. It is a website that connects individuals with a huge network of lenders. One good thing about this platform is that the lenders compete with each other to offer attractive financing options to potential clients like you.
Although SmallBusinesFunding is BBB A+ rated business, we still urge you to be careful with the terms of loans to make sure their conditions meet your expectations.
Unlike smallBusinessFunding.com, Crestmont Capital offers in-house financing. That means you will be getting loans directly from the company and there won’t be a middle man.
We selected the company because its review score is 4.9 on Trust Pilot (as of November 22, 2021). They also claim that their financing application takes only a few seconds and the approval process is only 24 hours.
Other attractive features are: no upfront fees; no collateral required; 100% unsecured funds; and Bad Credit OK;
Yet again, you have to read the contracts to make sure their conditions are suitable for your needs.
This is one of the innovative platforms to get a loan for your party rental business. They claim that they helped businesses to get over $12+ billion in loans from 75+ lenders.
Its Trust Pilot reviews stand at a 4.7 score (as of November 22, 2021). And it makes the loan application easier and offers a convenient startup loan calculator.
We provided only three lenders, but there are thousands of them. To find the ones that serve your area, you can search the keyword “Small Business Financing + name of your location).
Managing Your Budget
Finding enough funds is not the end of the journey. We would say it is the beginning. As we all know, we need to manage our finances effectively to achieve profitable results.
First things first, once we have the money we need, we should start allocating them for the following areas:
1. Equipment Procurement
Equipment procurement is an essential part of the party rental business as the business needs adequate equipment and supplies to meet the demands of the customers. We have already written an informative article about procuring equipment.
After finding vendors, you need to list the equipment with their prices. Never overspend your budget as part of the money will be needed for other purposes.
2. Incorporation fees (or cost of becoming a legal entity).
We all know that we need to register our business with the state in order to operate legally.
The process of which will require paperwork filing that can range between $200 to $1000 according to Forbes.
3. Business Insurance.
As we mentioned previously, having reliable insurance is important for your party rental business.
You need to get insurance before starting your operations to avoid liabilities down the road
Business insurance ranges somewhere between $500 (liability insurance) and $1,191 (Business Owner’s Policy) annually.
4. Office Space and storage
Having a safe and secure storage place is essential for maintaining your party rental equipment in good condition.
You have two options when it comes down to storage. You may either rent the space or use your pre-existing property. Of course, the latter will save you some money, however, you should place your business location in a strategic area to cut the transportation costs and be closer to high-traffic areas.
5. Office furniture and supplies
This includes computers, tables and chairs, and stationaries that will be essential to serving the customers in your office.
We usually suggest our customers make the office settings clean and pleasant as it is the place where you would finalize the sales. Unpleasant and disorganized offices may not create a good impression. In a way, the office represents the face of your business.
It is usually recommended to invest about 5%-10% of your total budget in your office. However, that may totally depend on your business plan.
Believe it or not, you won’t succeed in business without the use of the internet.
We can say that with great confidence. Currently, the number of internet users is increasing gradually, and web-based sales are increasing at the rate of 32.4% year over year
Did you know that U.S. online consumers spent close to $792 billion in 2020?
If you are missing a website, then you are missing a great opportunity. That means you need to allocate some portion of your budget to your websites.
We noticed that the majority of party rental business startups do not have knowledge in web developments, so Reservety created a convenient and dummy-proof all-in-one solution that will help you to build your website and get it running in no time.
Our primary aim is to remove the additional hustles from rental business operations so the business owners can focus on other things.
You have to keep in mind that utility bills also add up. Thus, you have to allocate some funds for it as well. Utilities include things like electricity, water, gas, phone, internet, and HVAC units.
Utilities usually cost around $2.10 per square foot in the US.
If your business is located in other countries, you need to make a list of utilities and call the relevant companies to get quotes. Based on the quotes, you may allocate adequate funds with greater precision.
Reliable vehicles such as pickup trucks are very essential for any party rental business as the majority of your customers want to deliver the equipment to their location.
Also, you should set aside funds for predictable costs such as fuel and oil change, and unexpected transportation costs such as vehicle maintenance and repairs.
But you do not have to own a vehicle if you are on a limited budget because you can outsource the delivery services to other companies.
The party rental business is a labor-intensive business.
Party equipment installations, maintenance, loading, and unloading require physical labor. So, you need to hire some people to help with day-to-day operations.
Apart from laborers, you may need to hire someone with accounting and administrative skills. However, if you use Reservety software, anyone can operate the administrative works conveniently as the technology makes the invoicing, reporting, and inventory management tasks much easier.
If you are starting out as a small company, then you may do the administrative task yourself, using Reservety’s convenient system. That way, you may save some money by eliminating one position from the payroll.
When it comes down to amount, some sources believe companies should allocate 25% of their total budget for payrolls. But, we believe it should depend on your business model. In other words, it may be more or less than 25%.
Some startups downplay the importance of marketing, even though marketing is the essential part of kick-starting your business. Without marketing efforts, it would be very hard to draw the attention of potential customers.
Therefore, we recommend setting aside some budget for marketing campaigns such as sponsored ads and promotional events.
Nevertheless, we must note that the marketing results do not correlate with the money you are spending. It mostly depends on your creativity. In other words, tasteless ads (no matter how much you spend on them) will not bring good results.
Considering the importance of marketing, Reservety integrated marketing technologies into its system so you can market your products directly from your website. Additionally, we have shared some good tips to attract customers to your party rental business. You may read it here.
This was the second part of the How to Start a Party Rental Business series. We hope the section gave you an idea about how much budget you may need and which areas you need to allocate it to.
In the upcoming parts, we will give more details so you can start your party rental business with greater confidence, and more importantly, with more knowledge. Stay tuned for part 3 of the series.