When the economy tightens, or our niche becomes crowded with competitors, it is natural to look for ways to increase our sales. The first thing people often ask themselves is, “what else can I add to my inventory to increase my average ticket?” Inevitably, the idea of adding rentals to your offerings becomes a part of the discussion, but let’s dig into this option a little further.
It is reasonable to think about adding to what you already offer, but you need to look at your company’s mission statement before running out and making a purchase. Ask yourself what your mission statement says about who you are and what you do, and how adding rentals to the bottom-line can fit? You’ll also want to consider your reputation—if you’re a florist or DJ who starts to advertise tables and chairs, will you diminish your perception of expertise in your field?
If you don’t have a mission statement to guide you, then take a step back and consider starting there.
How will rentals affect your business?
Once you’ve had a chance to think through your company’s mission and perception, it’s essential to continue with the big picture thinking and understand how an addition will impact other areas of your business.
Depending on what type of rentals you are interested in, the effect will reduce space, increase inventory and expense, and impact employee costs. If you want to add chairs and tables to stock, not only do you need more warehouse space, you will need manpower for delivery, set up, and maintenance.
The fact is, quality linens cost money, and they require upkeep. Renting linens to a customer who is willing to pay an average rental price, the linens must be adequately cared for, and now we have staffing issues. Linens are not something we can add because your people have time on their hands, linens take time to spot, treat, wash, and when you don’t have a $40,000 commercial press, a lot of time to hand press.
Remember that not every client will want their DJ or florist to provide tables and chairs so, you may be paying rent on the additional warehouse without income. If you don’t have a delivery person on staff, you may be adding to your payroll to deliver the items you added.
In short, when considering adding rentals, be sure to map out your space and staffing needs to ensure it can still be a profitable venture for you.
Bear in mind: Rentals are Not a One-Time Purchase
Rentals are an expensive proposition, and it is so important to keep in mind, tastes, and styles change. Clients are very conscious of trends, and manufacturers play into that. That is why rental companies are continually having sales to free up space for new styles.
As a rental company owner, we continuously evaluate requests from clients to bring in new colors, new sizes, and contemporary styles. It is crucial to assess the life of the item and whether it will be of interest to a larger group of consumers to make our money back.
When we are approached by venues, DJs, and florists who are interested in owning linens to increase their sales to individual clients, and it may seem that we are trying to protect our rental income when we point out the things they need to consider. We are trying to give them food for thought and help them make a beneficial and profitable choice.
Think of Alternatives
Perhaps a solution would be to create a strategic partnership with a rental company that carries the selection you want with the quality your clients expect. Work out a way for you to offer these selections in your business. A mutually beneficial agreement will create business for both of you and give the client the opportunity to have a “one-stop shopping” experience. Make sure the partnership works for both of you, agree on pricing, and you will be able to make a profit from the start.
Work on your business instead of in your business.
We are human, and we tend to look for the easy way out or a simple solution to a more significant issue.
Adding rentals to a business is certainly something we need to consider, but it will not be the only answer. Evaluate your pros and cons before making your choice. It is more important to understand who your company is and what you stand for. Understand who your ideal client is. Work your company’s Mission Statement and create a detailed set of goals that follow your vision.
Find that thing that sets your business apart and expand on that idea. Understand what your key client’s need is and how you can solve that core customer’s problem. We must continue to solve our client’s issues to remain relevant.
Do your research to find those companies similar to yours that are wildly successful and try to determine their secret. Chances are, a successful company is not wandering far from their brand or branching out to include products that don’t fit their mission to be the best at what they do. Work harder to be the best at what you do and less time trying to be something you’re not.