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How To Start A Party Rental Business

How To Start A Party Rental Business

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How To Start A Party Rental Business

How To Start A Party Rental Business

If you’ve ever thrown a large-scale party, planned a wedding, or been in charge of a large corporate event, then you may already have experience in renting party equipment, like tents and tables. Starting a party rental business of your own will mean you can help other party hosts find the equipment they need. If you have great organizational skills and an awareness of the types of equipment needed in your community, you’ll be well-suited to running this type of business. Plus, if you love throwing parties and have creative ideas, you can make suggestions to increase your sales while helping hosts create unforgettable parties.


Business Overview

Party rental businesses offer a large volume of expensive supplies that are must-haves for larger parties. These are supplies that occasional party hosts couldn’t justify buying themselves, like tents, bounce houses, inflatable slides, chairs, tables, lighting, decorations, linens, and more. These businesses often have a comprehensive inventory of items for a host to choose from, allowing a customer to do nearly all of their supply shopping from one business.

As part of the rental service, a business will deliver and often set up the equipment. After the event, pickup is also included in the rental cost, though some customers may choose to pick up and drop off smaller pieces of equipment.

Industry Summary

The party rental industry is a booming business and is projected to generate $6.3 billion by the end of 2023 and grow at an annual rate of 8.3% from 2021 to 2026.  There are an estimated 10,341 businesses in this industry employing over 56,000 people.

Festivals and religious ceremonies account for 37% of the total market share, while corporate events make up around 10%. Some party trends for 2022 include going big with over-the-top decor, unique catering presentations, and unexpected entertainment like tarot card readers, dance performances, 360 photo booths, and fine art painters. Live entertainment is also popular, with options such as caricaturists, impersonators, belly dancers, fortune tellers, magicians, and more

According to Current, other trends are currently shaping the event rental business industry. Event hosts are increasingly turning to new, creative, and non-traditional venues. These non-traditional venues can include barns, warehouses, lofts, and different outdoor settings. They give rental businesses a chance to create setups that are unique and work with these different settings.

Party hosts are also increasingly focused on sustainability. Party rental businesses can embrace this trend by replacing plastic tablecloths with cloth ones, supplying energy-saving lights, and even using electric delivery vehicles to cut back on fuel use.

Target Market

The target market for a party rental business will depend on the business’s area of specialty if there is one. Businesses may specialize in wedding, birthday party, or corporate event rentals, and each will have a different target market. Some businesses take a more general approach or choose to offer products for each specialty area to appeal to a wider potential market. Businesses may market directly to people who are throwing these parties or market to event venues and event planners or managers.

Checklist To Start A Party Rental Business

If you’re thinking about starting your own party rental business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Research the party rental market and analyze competitors

Starting a new party rental business requires careful market research and planning. Here are some steps you can follow to assess if there is enough demand in your chosen area:

Competitor Analysis: Identify and analyze your competitors in the area you’re planning to open your business. Look at their offerings, prices, and service areas. Google Maps and Yelp are useful tools to find local businesses. If there are many party rental companies operating successfully, it may indicate a strong market.

Demographics and Psychographics: Identify the demographics and psychographics of your potential customers. Tools like the U.S. Census Bureau’s American FactFinder can provide a wealth of demographic data.

Surveys and Interviews: Conduct surveys and interviews with potential customers to understand their needs, preferences, and willingness to pay. Use online survey tools like SurveyMonkey or Google Forms.

Online Research: Look at online communities and forums (e.g., Reddit, Quora) for discussions related to parties and events. This could give you an idea of what potential customers might be looking for in a party rental service.

Events and Parties Data: Research the frequency of events and parties in your area. This could be from corporate events, wedding events, children parties, etc. Local event planning businesses, event venues, or community calendars might provide this information.

Local Economic Conditions: The local economic condition can significantly impact your business. Research local economic conditions, population growth trends, and average income levels by contacting your local economic development agency.

Regulatory Environment: Understand the local laws and regulations that might affect your business. Some cities may have restrictions on certain types of events or require permits for certain kinds of rental equipment.

SWOT Analysis: Finally, after gathering all this information, perform a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to get a clear picture of where your business stands in the current market.

Remember that while research and analysis are critical, they are just the first step. Running a successful business also requires excellent customer service, a well-maintained inventory, competitive pricing, and effective marketing.

Step 2: Write a business plan

After verifying that a market exists for your party rental business, the next step in starting your business should be to write a business plan.  Writing the plan forces you to consider and research important aspects of the business, such as who the competitors are and what makes your business different, pricing strategy, and whether the business can be profitable. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related: How to write a business plan

Step 3: Secure funding

Depending on the size and scope of your business, you may need to obtain funding for inventory, storage space, delivery vehicles, and other operating costs. Armed with a business plan, here are some common sources of funding:

Friends and Family: Some entrepreneurs may turn to friends and family members who are willing to invest in their business.

Bank Loans: Traditional bank loans are often used for starting businesses. These could be term loans, lines of credit, or equipment loans specifically for purchasing rental inventory. Should the loan be considered too risky for the bank, or the borrower has lower credit or collateral available, the bank can look to the Small Business Administration (SBA) for a loan guarantee. The bank will typically only loan between 75% – 85% of the total project.

Equipment Financing: Some equipment vendors offer financing and leasing options. This could be a cost-effective way to finance your rental inventory, particularly if you need large amounts of costly items like tents, stages, or high-end event furniture.

Related: Finding the money to start a business

Step 4: Register the business

If you’re planning to start a party rental business, there are several legal steps you need to take. While the specific requirements can vary from state to state, here are the general steps you’ll need to follow:

Choose a Business Structure: The business structure you choose will affect your legal liability, tax obligations, and administrative requirements. Many small businesses start as a sole proprietorship or partnership, but some choose to form a Limited Liability Company (LLC) or corporation to protect their personal assets from business liabilities, and for potential tax benefits.

For party rental businesses, an LLC is often preferred because of its liability protections and simplicity relative to a corporation.

Related: Comparison of business structures

Register Your Business Name: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

Related: Tips for naming a party rental business

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain Business Licenses and Permits: There are typically very few requirements for party rental businesses, but one, in particular, is special permitting for certain types of rental items (like large tents or inflatables).

Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, and Employer Identification Number (EIN).

Related: State guides for general business licensing

As you go through these steps, remember that every state has different requirements. You may want to consider getting professional legal and accounting advice to ensure you’re meeting all the necessary requirements and making the best decisions for your specific situation.

Step 5: Begin sourcing equipment

Finding reliable suppliers is critical for a party rental business, as the quality, availability, and cost of your inventory can directly affect your customers’ satisfaction and your bottom line. Here are some tips to help you find suppliers:

Of course, a simple internet search targeting “party rental equipment suppliers” or “wholesale party supplies” is a great way to start.

If your budget allows, one of the best ways to find equipment and supplies would be to attend industry trade shows and events, such as The Special Event Show (TSE), International Live Events Association (ILEA) events, or the American Rental Association (ARA) annual trade show. They are an excellent opportunity to network with potential suppliers, review their products firsthand, and initiate professional relationships. Speaking of networking, joining industry associations and engaging with other business owners can often yield invaluable advice and recommendations.

Online platforms are another crucial source to find suppliers; websites like Alibaba, Global Sources, or Thomasnet offer an easy way to find potential suppliers worldwide. However, do consider the additional implications, like customs and extended shipping times, for overseas suppliers.

Once you’ve identified potential suppliers, diligently research their reputation, reliability, service terms, and product quality. Negotiating terms is a critical part of the process, so don’t hesitate to discuss pricing, delivery schedules, minimum order quantities, or return policies. Last, remember that finding the right suppliers may take time and involve some trial and error.

Step 6: Develop a marketing strategy

Most party rental businesses are mobile-only operations, so developing a well-thought-out marketing plan is critical.

A crucial first step is creating a strong online presence – it should be easy to navigate, with detailed information, pricing, and clear images of the rental items. Online marketing can extend to utilizing SEO strategies to improve visibility on search engines and employing social media platforms to engage with potential customers and showcase your products in use. Paid online advertising, especially through Google Ads or social media platforms, can help reach a larger audience. It’s also worth considering email marketing campaigns to keep past and potential customers informed about new products, special promotions, or seasonal offerings.

Offline marketing strategies can be just as valuable. For instance, networking with local event planners, caterers, venue owners, and other industry professionals can lead to referrals. Participating in local events, bridal shows, or trade shows can increase visibility and allow potential customers to see your products firsthand. Direct mail campaigns can be implemented, such as postcards or flyers, to specific neighborhoods or demographics.

It’s essential to remember that marketing isn’t a one-size-fits-all process. What works best will depend on your specific business, your target customers, and your local market conditions. You’ll likely need to experiment with different strategies, track your results, and adjust your approach as you learn what works best for your business.

Related: Low-cost ideas to market a new business

Step 7: Prepare to launch

We’ve gone over the common steps someone would need to take to start their business, but every business is going to have different needs. There are a few other items that will likely be needed, that I’ve included below.

Business Insurance: Given the nature of the party rental business, it’s critical to have appropriate insurance coverage. This can include general liability insurance (for accidents or injuries involving your rental items), property insurance (to protect your inventory from theft or damage), and commercial auto insurance (if you’re delivering equipment). It’s advisable to consult with a knowledgeable local insurance agent or Coverwallet or Hiscox, to ensure you have adequate coverage.

Vehicle: If you don’t already have an adequate vehicle, you will need something to transport your rental equipment to the customer’s location. The type of vehicle you should buy for your party rental business depends on the size and type of equipment you will be transporting. A large van or box truck may be suitable for transporting larger items such as tents, tables, and chairs, while a smaller van or pickup truck may be sufficient for smaller items.

A business vehicle can be financed with a business loan, but will likely have higher interest than getting a vehicle loan.

Bookkeeping: Keeping accurate financial records is crucial for any business, and a party rental business is no exception. Implementing a reliable bookkeeping system from the start will help you track income and expenses, prepare your tax returns, and make informed business decisions. Consider using accounting software like Wave Accounting (FREE) or Quickbooks.

Contracts: A standard rental agreement contract is an essential tool for a party rental business. This contract should outline the rental terms, payment details, liability waivers, cancellation policies, and any other terms and conditions. Other industry-specific contracts might include vendor agreements (if you’re working with third-party vendors) or venue agreements (if you’re delivering equipment to specific venues). It’s advisable to work with a business attorney to develop customized contracts. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful as well.

Business Bank Account: Opening a separate bank account for your business is crucial for separating personal and business finances, which is important for tax and legal reasons.

Storage Space: Ensure you have a secure, clean, and organized place to store your equipment. This not only prolongs the lifespan of your inventory but also makes it easier to manage your rentals and prepare for events.

Accepting Credit Cards: Offering multiple payment options, including credit cards, makes it more convenient for your customers and can potentially boost sales. You can set up a merchant account or use a payment service like Square or PayPal.

Hiring Employees: If your business expands beyond what you can handle alone, you’ll need to hire employees. Even if you’re starting small, it’s wise to have a plan in place for finding and training reliable staff. This could involve hiring delivery drivers, customer service representatives, or even event setup and teardown crews.

Be prepared for the additional responsibilities that come with having employees, like payroll taxes and worker’s compensation insurance.

Remember, these are common considerations for many party rental businesses, but every business is unique. Be sure to consult with professional advisors and carefully assess your specific needs and circumstances. Finally, never underestimate the importance of excellent customer service. Your reputation is one of your most valuable assets, and satisfied customers are your best source of new business.

This material is property of StartingYourBusiness.com

Greg’s Tip: One common pitfall that I’ve seen from many new party rental businesses is the failure to obtain a deposit from the customer. It’s essential to understand that taking a deposit at the time of booking is crucial because if a customer cancels at the eleventh hour, your business may miss out on the chance to secure another booking.

Greg's Business Tip

Common Questions When Starting A Party Rental Business

How much does it cost to start a party rental business?

The total cost to start a party rental business can vary greatly depending on your location, the size and scope of your business, and the type and amount of rental equipment you plan to carry. A basic startup could cost around $10,000 to $50,000, but a larger-scale operation might require an investment of $200,000 or more.

The startup costs include several key items:

1. Rental Equipment: This will be your primary investment. Depending on what you plan to rent out – from chairs, tables, and linens to tents, dance floors, and specialty items like photo booths or inflatables – the cost can range from a few thousand to well over a hundred thousand dollars.

2. Vehicle and Transportation: If you plan to deliver and pick up items, you’ll need a reliable vehicle. A used cargo van or small box truck can cost anywhere from $10,000 to $30,000. You’ll also need to account for the cost of fuel and vehicle maintenance.

3. Business Registration and Licenses: The cost for this can vary by state and local area, but expect to pay a few hundred dollars for your business registration and necessary licenses and permits.

4. Marketing and Advertising: Budget for marketing materials like business cards, flyers, and a website. Online advertising can also be beneficial. Allocate at least $1,000 to $2,000 for initial marketing efforts.

5. Office and Storage Space: If you don’t have space at home, you may need to rent a storage facility or warehouse. The cost will depend on the size and location, but could range from a few hundred to several thousand dollars per month.

6. Party Rental Software: This includes point of sale and booking software, as well as bookkeeping software. These can range from $20 to $100 per month or more.

Related: Best party rental software

7. Initial Supplies: This would cover things like fuel for delivery vehicles, cleaning supplies for equipment maintenance, etc.

8. Operating Expenses: In addition to these initial expenses, you should also have three to six months of operating expenses as a buffer. This would cover rent, utilities, employee wages (if any), insurance, vehicle maintenance, and any loan payments. This can also vary widely, but it’s not uncommon for a small business’s monthly operating expenses to be in the $2,000 to $10,000 range or more.

Again, these are rough estimates. It’s important to do your own research and create a detailed business plan to estimate your specific startup costs accurately.

How much can a party rental business owner make?

Data on the specific income you could expect with a party rental business isn’t available, but keep in mind that your income will depend on many factors. A smaller business intended for backyard parties won’t bring in the same income that a larger business that caters to weddings and corporate events might see.

To help estimate potential revenue in the rental industry is the ROI (Return on Investment) formula. For example, if you purchase a chair for $20 that can be rented out for $5 per event, after four rentals, you’ve recouped your initial investment. Every rental of that chair afterward is profit (minus any maintenance or replacement costs). If you have 200 chairs and they are rented out once every weekend, that’s $1,000 per week, or $52,000 per year, from chairs alone.

Remember, though, you also need to subtract your operating expenses, like storage, transportation, insurance, marketing, and any employee wages, from your gross revenue to calculate your net income. So if your annual expenses are $20,000, and your gross revenue from rentals is $52,000, your net income would be $32,000.

This is a very simplified example and actual results can vary greatly.

Some party rental businesses, especially larger ones with a wide variety of popular rental items and efficient operations, can potentially net six figures annually, while smaller or less efficient ones might make far less. It’s important to do your own calculations based on your specific business model, costs, and market rates.

It’s important to realize that the party rental business can fluctuate, especially since it’s closely tied to disposable income and overall economics. This can also be a very seasonal business, with events occurring more frequently around the holidays or during times of good weather. Branching out into multiple event types, such as corporate holiday parties and weddings, can increase your bookings, but it also means that you’ll need to invest in and store more equipment.

What skills are needed to run a party rental business?

While you won’t need a business degree to start a party rental company, certain skills and experiences are useful and can increase your business’s chances of success.

Understanding of party and event trends. A party rental business owner needs to have their finger on the pulse of party and event trends. This awareness can help to keep a business’ inventory current and appealing to potential customers.

Party planning experience. While not a requirement, a business owner with party planning experience can better understand the target audience and the challenges and pain points they face.

Knowledge of party equipment. Strong knowledge of party equipment, from AV technology to tents to folding chairs, will allow a business owner to identify the types of equipment that will be most in demand and to wisely make inventory purchases.

Customer service skills. Great customer service skills are important, especially since emotions can run high around special events. A business owner needs to be able to communicate clearly and quickly solve problems.

Organization skills. With large volumes of inventory, being organized is important in keeping track of supplies and in preparing orders. Attention to detail is also highly important.

Networking skills. Networking is essential in this industry since connections with event planners, business owners, and event facilities can lead to potential bookings.

Management experience. Nearly any party rental business will require multiple employees, so experience in hiring, training, and managing staff is valuable.

What is the NAICS code for a party rental business?

The NAICS code for a party rental business is 532299.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

American Rental Association

How To Start A Party Rental Business

How To Start A Party Rental Business

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