One thing is true about owning a party rental company: it is (beyond) expensive! Event rental companies can all agree that we have legitimate costs associated with this enterprise. In order to stay in business and thrive, your party rental company will have to cut costs and raise prices--something that causes cringes.
Start effectively managing costs for your party rental company with these steps:
- Track company finances with monitoring and budgeting.
- Hire the right party rental team.
- Expand inventory cost-efficiently by purchasing gently used goods.
- Consider a commercial space.
Let's get started:
Monitoring and Budgeting
Tracking the expenses of your party rental company is an important first step. The numbers do not lie. Having a solid accounting team and software on your side is one way to know where to trim the fat. Do you have a bookkeeper and a CPA who knows how to help you have he most favorable tax return? If not, they are worth investing in. QuickBooks Online is the leading software for small businesses needing to manage profits and losses.
- What is a fixed cost versus a variable?
- Can you cut down on costs with a certain supplier without sacrificing quality?
- Are you spending too much in one area while seeing little return?
Your event rental management software should also work in tandem with tracking your profits and integrate with your accounting software like QuickBooks. Cue Goodshuffle Pro; a powerhouse inventory management program that not only shows you the performance of your collection on your dashboard and each individual item, but a wonderful feature is that it integrates and syncs so seamlessly with QuickBooks Online. The two programs communicate quite well which makes your bookkeeper's job more efficient and stress-free, even if it is just you, thereby saving you the owner, or employee, billing time. You will also see what you need to do better to be more profitable.
Hiring the Right Team
As your party rental company grows, you will need to hire more and more staff, seasonal help, hire outside service providers, and contractors. Aside from your inventory, your team is one of your greatest investments and assets. You need to hire trustworthy, reliable, and efficient labor. Additionally, you want them to be excited about working for your party rental company, thereby giving you the greatest output as a result. This is not just a one-sided relationship. You will also need to give to them as well.
It takes time to search for, hire, train, and work with each staff member -- so choose wisely. You could easily end up with a problem employee who is unprofessional, unreliable, and uncommitted to being part of the team. This reflects on your business and sabotages your brand. Since labor will likely be your highest cost on your balance sheet, you must carefully vet during the selection process and work at boosting morale.
You might also need to hire people to work different shifts so you can avoid overtime and be sure to stay in compliance with your local and state's labor laws. Minimum wage goes up and can be more costly in certain states, cities, and counties. Be sure to stay abreast of these changes and how to be one step ahead. After all, a lawsuit would be an even greater cost!
Acquiring Gently Used Goods from Other Party Rental Companies
This applies to inventory and office supplies and equipment. Sometimes other rental companies shutter their businesses and are looking to quickly unload their tangible assets. There are also things like auctions where you can purchase things like pallet racks, dollies, or other ancillary items for a much lower price than retail. As long as the previous owners took good care of these items—it might be better than purchasing brand new.
Important Pro Tip -- be sure to inspect anything you purchase. Sellers aren't always realistic about the conditions of inventory and assets. Negotiate the price down if you feel you still want the item, but you notice wear, or damage. Also, sometimes event rental furniture, or other rentable items, might be good to buy from some other event rental business, or private seller.
To have a commercial lease, or not? (In some cases, we know some businesses that have outright purchased warehouses--you go if you can do that). We've seen some rental companies that only deal with clients online. No matter what you will have to incur some overhead to store your inventory.
If you do have a commercial lease, try to find an area that is nearer to popular areas, but maybe not in popular areas. Rents are higher in those populated, more desirable areas, but may see more traffic. Likely you will need a warehouse with a showroom and that means a place with plenty of room to grow. Also, there are some districts where lots of warehouses are located so it might be best to find a place there. Keep in mind there are other costs associated with a brick-and-mortar storefront including insurance, signage, parking, utilities, and more.
If you do opt for online only, there's a chance you may not be able to fetch certain prices. Your photos of your merchandise must reflect exactly what the customer receives, or you might receive some negative feedback, reviews, or wrath from the customers.
Curious how Goodshuffle Pro can help you to run your party rental company cost effectively?