Part V - Party Rental Business Growth and Expansion
You’re Almost Ready to Start Your Event and Party Rental Business!
What separates a good business plan from a great one? A good business plan will answer every question a potential investor or loan officer would want to see answered. But a great business plan is important for more than what’s happening now. It should also plot out what happens with your new party rental business in the future.
Over time, the success of your party rental business needs to translate into growth. The more consistent that growth is, the better. And if there’s one thing the first four parts of this series attempted to instill in you, it’s the importance of thinking and planning ahead. So let’s start thinking about the future and coming up with a solid plan for how your company should grow and expand.
A lot of small business owners never think about expansion or growth. They plan for what’s right in front of them, and opt to cross the growth bridge when they get to it. But there’s a lot of value in thinking about what the future might hold.
How will you scale up your rental inventory, your staff, and your vehicle fleet? What conditions need to be met in order for you to consider moving into a larger warehouse space, or taking on a second one? And how will you qualify the success of your party rental business and trigger this potential growth? Let’s do some more planning and find out!
Expansion Qualifiers: When is it Time to Grow the Business?
The first batch of questions we need to answer relate to measuring success. When is it time to grow your party rental business? How do you qualify success and the need to expand? What goals need to be reached? And what aspects of the business need to be expanded on first?
There are a few strong telltale signs your business is ready for expansion. It’s time to grow when ...
- You’re turning paying customers away because your schedule is too full
- The business has been profitable; you can afford to expand safely
- You have identified at least one need for expansion. For instance, you need a bigger staff, or more warehouse space, or another vehicle
- You’ve spotted business opportunities worthy of capitalizing on; new rental equipment customers need, or new areas of operation underserved by competitors
The most important of these qualifiers, and probably the most obvious, is your ability to afford expansion. You’ll need to sit down and calculate the costs of the expansion and be certain your business can shoulder the weight of the new expenses, now and later.
Next, you’ll want to strongly consider need versus want. Sure, you can afford to expand … but do you really need to? Is business running smoothly without expansion? Or is your business running into barriers or problems because it hasn’t expanded yet? Can you anticipate those sorts of barriers before they start to slow your progress?
Earlier in this series, we mentioned frugality turning into injury. You of course want your business to be profitable and to avoid wasteful spending. But at some point, not spending is going to do more harm than good. So it’s important to grow your business as needed, before you reach the point where your company is suffering as a result of penny-pinching.
Branching Out: Expanding Rental Inventory
Arguably the easiest way to grow your business is to expand its rental inventory. There are lots of reasons to expand your inventory, especially if your business is profitable and has space to grow into that new equipment.
Giving customers more options is almost always a good thing. It’s better to take your pick of ten bounce houses than three. Your equipment won’t wear down as quickly, either, since it won’t be in use as often.
Expanding inventory allows you to venture into new rental territory, too. If you predominantly dealt with commercial inflatables, for instance, growing into party tents is going to bring in a whole new set of customers while expanding your value for existing ones.
So let’s qualify this expansion. Your party rental business should expand its inventory when ...
- The business has been profitable and can afford more rental equipment
- Your warehouse has space for the new equipment
- You’ve identified a need for the equipment; you believe customers will rent this equipment and you’ll turn a profit from it, or your staff will benefit from its use
- Your staff is equipped and prepared for the new equipment
- Your vehicles are large enough to safely transport the equipment
Which Direction Should You Expand Your Inventory In?
If you answered “yes” to all three of those qualifiers, it’s time to start shopping for new equipment. But which way should you go? Do you expand on your existing inventory, or do you try to attract new customers with different types of rentals?
There’s really no right answer to this question, but we do recommend giving your party rental business a decent offering in one field before spreading into another. Build up an inventory with a little diversity in one specialization before attempting to tackle the other.
Let’s say you’re starting out with commercial inflatables. You’ll want at least four or five units, and a mix of styles—bounce houses, bounce house with slide combos, inflatable obstacle courses, sealed air inflatable games, etc. You may want to keep expanding in a fun direction and transition into party tents after your inflatable inventory is strong.
If you’re starting with party tents, you’d want a good collection of different sizes and styles. As an example, you might get a 10x10 pop up tent, a 20x20 frame tent, and a larger pole tent. You should also get folding tables, folding chairs, and maybe a portable dance floor. And once that inventory is healthy, you could start investing in commercial inflatables.
Of course, there are lots of variables here. You need to determine your customers’ interest in different types of rental equipment and identify their unique needs. But a lot of party rental companies offer both broad fields of rentals to their customers successfully. It’s worth considering as you contemplate future expansion.
Is it Time for More Warehouse Space?
As your rental inventory grows, your storage space is going to adversely shrink. And at some point, you’re hopefully going to grow your business to the point where more warehouse space is necessary.
You never want to pack a warehouse to the very brim before moving. You should start considering a move when your storage space has reached approximately 60 percent capacity, and definitely move before you reach 85 percent capacity or more.
Why not use up every square inch of storage space before expanding? Your new warehouse will likely be situated in a different location as your first one. And building up a new warehouse means you’re free to expand into new operational areas, since your rental equipment will be centralized someplace new. As your business grows, that first location might need to store new rental equipment to keep up with all of the services of your other location.
Alternatively, you might simply upgrade to a larger warehouse in one centralized location. That’s arguably a better idea, if you don’t intend to spread your services further than you already provide for. Just be sure your new warehouse is large enough not only for your current needs, but for as much of your future needs as you can reasonably, conservatively expect.
How Overworked is the Staff at Your Party Rental Business?
All of this growth likely means your customer volume has substantially increased as well. You’ll need to increase the size of your staff to keep up with all of this demand. But as your company grows, are you fulfilling your staffing needs beyond manual labor?
As your company grows larger, handling more customers and more profits, you should consider hiring more experienced staff to take on some of the more specialized workloads. Your company might consider hiring:
- Maintenance staff focused on cleaning and repairing rental equipment
- Sales staff to handle incoming phone calls, emails, and online reservations
- Marketing staff to manage the website, advertising, social media, blogs, and more
- In-house accountants
- Experienced staff managers to help keep everyone productive and efficient
This is all especially true if you expand into a second location and offer services to a new set of customers. You’ll want to make sure your staff grows to handle both your new customer base and your existing one.
Growing Your Vehicle Fleet
Chances are, you’re starting out with just one vehicle … maybe two if you have more money to spend than most. And there’s only so much that one vehicle can handle on its own, especially as your rental inventory, warehouse space, and staff continue to grow.
Buying more vehicles is fairly straightforward, especially since we already discussed the process at length. But how will you maximize the value of this second vehicle?
Two vehicles means you can split up your staff into two different teams, and either haul lots of equipment to one setup site, or set up for two different customers at once. And if you’re working on one site, you’ll want to make sure your team at the other site is working hard and representing your company well in their interactions with customers.
Designate a trusted lieutenant to take charge of your other teams, and coach those teams carefully on work ethic, customer relations, and general etiquette. Make sure you choose someone to lead these teams whose shown dedication to the team, a strong understanding of how your company does business, and who employees are willing to follow. Every company has some sense of politics under the hood, and employees don’t usually appreciate management picking favorites based on their personal relationships.
How Far—Literally—Can Your Party Rental Business Go?
We talked a lot about your party rental business expanding up, but what about expanding out? Can your business handle customers outside your existing area of operations? How far away can your party rental business go?
After a few months of operation, you should have a strong sense of how far you can and should travel for business. You’ll have seen the expenses of travel, the strain it puts on yourself and your staff, and the time investment required to drive from point A to point B. All of this considered together should give you a good idea of what would be required to expand into new locales and grow your general customer base.
If you think your party rental business can serve a broader area, put it to the test. Drive to these expanded areas and explore them. Investigate the marketing efforts involved. If you’ve been networking with adjacent professionals, ask them about operating in those areas.
Are you finding strong SEO keywords for these areas? Are you getting calls from people who live there already? And what sort of investments, financial and otherwise, would be required to bring your services to those communities?
You might want to consider doing a little of this legwork early, as you’re working on your business plan. Your business plan would benefit from expanded information as you showcase your plans to evolve and grow your business. And you might just discover that some areas are worth targeting right now.
Done Planning for the Future? Let’s Start Your Party Rental Business!
With this, you should have compiled lots of information regarding the smooth creation, operation, and future expansion of your new party rental business. And while you surely have more research to do, you should now be ready to get started drafting your party rental business plan.
Starting a new business is exhausting, stressful, and even sometimes painful. It’s also beautiful, exciting, and one of the greatest journeys a person can venture forward on. Is it all worth it? absolutely.
Your business will hopefully bring joy to countless people. You’ll relieve the stress of nervous couples, exhausted parents, and anxiety-shaken event organizers. You’re about to embark on a beautiful exploration of your local community from a vantage you’ve never had prior. That you can do all of this while earning money is just icing on a very incredible cake.
The staff here at Tent and Table would like to congratulate you on taking these huge steps. We hope this journey of yours is memorable and fruitful. And should you have any questions about your rental equipment, or should you need any equipment, please don’t hesitate to call us at 1-716-832-8368. We’re here to help, and we’re looking forward to hearing all about your successes!