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Old 27th October 2015, 09:24 AM   #1
Peter123
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Default Rough Idea #1 (The Most Practical One)

Hi,

I guess I'll have to present something a bit more solid than my previous enquiry.

As a very basic idea I am considering a rental operation that specializes only in lawnmowers and snowblowers, and to a lesser extent retailing some related accessories. The rental would be based on a contract for the duration of the season.

Some considerations I have pondered are:

Snowblowers need snow, ie. snowfall is not guaranteed every winter, legal implications (some injures themself or damages property with the rental and tries to sue), mentality problems (not mine, who cares?), what to do with equipment beyond productive service life but still useable?, Where would be the optimum location? ('Burbs, industrial park near the 'burbs, semi-rural...?), any other considerations I'm missing?

Who are my customers?

Suburban dwellers who have enough lot to maintain but not enough to store both blower and mower and the maint accessories to go with them.

People who have no mechanical inclination to sharpen blades, tune-up, repair or replace worn or broken parts etc.

People who don't have the time to deal with above issues.

(Possibly) Small scale grounds maint contractors who wish to reduce overhead and increase productivity by having new(er) equipment for their season and if something goes wrong a quick replacement can be provided, reducing downtime.

Structural and operational requirements:

This is almost a blank page but I think there should at least be a back end with a single bay with roll up door and a small office space with store front. There should be adequate space to provide basic mechanical service, storage (offsite? sea container?),

Personnel:

Me (generating business, procurement, maintaining, general operations such as pick up and delivery etc), part time mechanic or third party?, business/finance/books, what am I missing?

If anyone would like to share some insight, it would be greatly appreciated... Thanks!

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Old 27th October 2015, 02:50 PM   #2
torka
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I can see where this could potentially work (assuming you address things such as the potential liability issues, which could be handled via the terms of your lease agreement... a good lawyer is going to be a MUST here).

Possible marketing angles: guaranteed availability (versus the "rent-all" places that might be out of -- say -- snow blowers, just as the blizzard of the century is approaching). And the ability to access higher-end ("semi-pro") level equipment that might otherwise be cost-prohibitive for the average homeowner.

You might also want to see if there would be any interest in your stocking a few "once or twice a season" things (like leaf blowers, power washers, etc.) that your regular lease customers could "add on" for a discounted fee -- keeps all the outdoor equipment rental coming through you instead of some through you and some through the other "rental" guys. By limiting it to your regular lease customers, it becomes a "value add" for them, and you don't have to deal with hordes of casual renters wandering through your door, potentially damaging or disappearing with your gear. Just a thought...

The commercial angle is interesting, as well. If you could get a couple of small biz landscapers on board, that could be a good source of continuing revenue. And a good way for somebody who's considering a landscape business to try it out before they invest a ton of money in equipment. (You'd probably need to include rentals of those landscapers' equipment trailers, too.)

Sounds as though you've put some good thought into the operational aspects of it. Time maybe to do some market surveying to see if there really is a market for it. (Don't just ask people if they'd consider something like this, because they'll probably say "yes." Ask also how much they think would be reasonable to pay -- see if the idea is economically feasible.) And do some digging to check out the competition -- you want some (because that indicates there is a market) but not too much (which might mean the market is saturated).

--Torka

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Old 27th October 2015, 04:43 PM   #3
Peter123
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Default

Quote:
Originally Posted by torka View Post
]
* a good lawyer is going to be a MUST here).

Oh...yes, the lawyer. Hmm... that could get expensive in a hurry. I'll put that on the back burner for the time being.

*You might also want to see if there would be any interest in your stocking a few "once or twice a season" things (like leaf blowers, power washers, etc.)
* Time maybe to do some market surveying to see if there really is a market for it. (Don't just ask people if they'd consider something like this, because they'll probably say "yes." Ask also how much they think would be reasonable to pay -- see if the idea is economically feasible.)
*And do some digging to check out the competition -- you want some (because that indicates there is a market) but not too much (which might mean the market is saturated).

--Torka
Great input Torka, thank you!

Questions:

Once I decide on my locale, how would I conduct a market survey (is this the same as market research?). Initially I guess the best place to start would be to seek other established businesses of this nature via the internet, BBB, Local business development centres. Is there an efficient, accurate way of surveying people to see just how much interest there would be in a service like this?

The issue of feasibility is a real can of worms now. Please pardon my lack of business terminology here! I guess I would have to devise a formula that would include the customer's price threshold, amount of rented units needed to generate sufficient revenue to cover overhead*, including my wages, profit expectation, and... ...which would equal what I would have to charge to make it feasible.
If someone could provide input to fill in the whitespace in this formula that would be very helpful.

* Re. Overhead: I am really going to have to brainstorm on all possible considerations for overhead expenses. There are the obvious factors such as property expenses, wages, insurances, taxes, inventory replenishment, equipment maintenance costs, vehicle costs, marketing and advertising, plant and operations (consumables, tools, etc). Seeing as I am a total newbie in this domain I feel pretty certain that there are many more considerations to add to this list. Or, is this list pretty complete but each item needs to be organized into sub-categories, or both?

The incidental items that you suggested are a good idea and it would be good to start off with a couple of pressure washers, maybe a chipper or two, a few weed eaters, eventually a roto-tiller, but where should I draw the line? That brings me to the next big question which is how should I choose the type of equipment I'll be providing?

Gas and electric power
Riding, push, self-propelled mowers
Sizes offered
Electric start

At this point I guess I'll have to call "One step at a time" and work with the files I've opened now.

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Old 28th October 2015, 01:24 PM   #4
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Speaking as a former cost accountant, you don't need to go crazy categorizing your overhead costs. Just separate them into two groups: fixed and variable (or if necessary, add a third for "semi-variable").

In the first group (fixed) are all those costs that won't vary with your business volume. For instance, if you rent a location that's big enough to accommodate your business for the foreseeable future, your rent expense would be fixed. The thing with fixed expenses is, the total amount stays the same, but the cost per unit declines as your volume goes up. (If you only have 1 customer, the revenue from that customer has to cover 100% of your location rental, but if you have 10 customers, you only need each one to bring in enough revenue to cover 10% of your location rental costs.)

The second group (variable) are the expenses that vary directly with your business volume. For instance, if you give every piece of equipment a tune-up every year, the more equipment you have rented out, the more you'll have to pay for tune-ups. The cost per unit will stay the same, but the total expenditure will rise. It doesn't matter if you have 1 customer or 100, each one will need to generate enough revenue to cover the cost of one tune-up.

Semi-variable costs are those that stay fixed over a range of volume, then jump to a higher level. To go back to the rent example, if you lease a space for your business you might be able to accommodate equipment to handle (say) up to 30 customers in that space. So for zero to 30 customers, your lease expense would be fixed. But if your business expands and you have more than 30 customers, you'll need to lease a larger space -- which would cause your lease expense to increase. If the new space could accommodate up to 100 customers' worth of equipment, your cost would be fixed for 30 to 100 customers, but after that would jump again. Salaries might be another "semi-variable" -- while you might be able to run the business yourself for a while, at some point the volume might become so great you need to bring an employee on board to help you keep up.

Dividing your expenses in this way will allow you to get a better handle on how much you'll need to be able to charge to cover your overhead at different volume levels.

For a market survey, start with checking out the competition and seeing what they charge. Your competition in this case would not just be "rent-all" places that do short-term, one-off rentals, but also landscaping firms. (Yep, they can be both potential customers and your competition. ) If you figure out that you need to charge $X to turn a profit, and you find that landscaping firms in your area are charging less than that already, you'll have to do some thinking. (Why should people pay extra to you to rent equipment and do the yardwork themselves, when they can pay less and get somebody else to do the work for them?) Not to say that you couldn't still make a go of it with some clever marketing and good audience targeting, but if that's the case, it's the kind of thing it's better for you to know about up front than have it be a surprise down the road.

--Torka

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Old 30th October 2015, 09:38 AM   #5
Peter123
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Wow...

This is a lot to take in already, but that's good! The advice you have provided is very valuable and there will be a lot of following up to do just at this stage. I will be sure to have other questions in time but it's pretty obvious what I need to do now - which is something I've known for awhile but constantly have had to put aside for various reasons.

I will need to determine within the next couple of months where I will be settling my family once my present career comes to a close. It won't be here in this town to be sure. There's still a lot I can do to work towards this and guess it will be formative in helping us (the other half) with this decision.

Here goes the first baby step...!

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