From listening to music streaming services and commuting on hire bikes to accessing online platforms through a Software-as-a-Service (SaaS) subscription model, the rental economy has exploded in recent years.
In this advice-packed instalment of our video series Business Class with James Sinclair, entrepreneur and business owner James Sinclair looks at how SME owners can make the most of hire business opportunities.
Along the way, he talks about his party hire company, the challenge of building customer loyalty and the competitive pricing strategy he adopted to secure repeat business and long-term contracts.
James also shares another revenue-increasing strategy, which saw him supply the consumables – for example, the coffee beans – to be used in his rental coffee-making machines. The result? Regular orders from customers who use his products every day.
Managing the costs associated with a hire business
Keep watching as James focuses on tips to increase your profit margins, such as adding value when you offer a professional service alongside the items you have available to rent.
In his example featuring audio-visual equipment and a specialist technician, he demonstrates how the customer benefits from a speedy set-up and expert on-site support, while the business benefits from receiving back well-maintained microphones, speakers and projectors. What does this mean? The equipment has good resale value.
And talking of resale, now’s the time to support your understanding of depreciation in accounting. In other words, how the value of your physical assets – whether it’s a bouncy castle, a coffee-making machine or a car – reduces over time.
This is where James shares his formula for pricing rentals – which is aimed at recovering your initial costs in a set amount of hires – and the KPIs that will help you achieve that all-important return on investment.
So whether you’re hiring out equipment, offering a long-term property rental or launching software through a SaaS subscription, press play to benefit from James’s insights into managing the costs associated with running a hire business.
Find more of our Business Class with James Sinclair videos here.