There are several lucrative businesses in Nigeria to go into, and the rental business is definitely one of them. In this article, we will discuss rental business ideas, the aspects of the rental business that you need to know about, and how to start a rental business in Nigeria.
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An Overview of The Rental Business in Nigeria?
Nigerians are active in so many niches of work, life and creativity. However, the high prices of most products and equipment makes it hard to achieve personal goals sometimes. A great alternative to this is renting equipment or products. Rental businesses offers products, equipment, or assets to individuals or groups temporarily for a specified fee. This gives people access to otherwise expensive equipment they might not be able to buy on their own.
How Profitable Is The Rental Business?
Statista lists the value of the country’s car rental market at $0.73 billion. In comparison, Statista valued the country’s vacation rental market at $.052 billion in March 2024. This begs the question, ‘How feasible is it to start a rental business in Nigeria?
Let’s look at a hypothetical scenario. You spend ₦200,000 as an initial investment on buying three dozen chairs and two dozen tables. Your target audience is likely interior designers and event planners. On average, you charge ₦20,000 to rent a dozen chairs and ₦30,000 to rent a dozen tables. If we assume that you rent out all your equipment three times a week for events, that comes to ₦360,000 per week and ₦1,440,000 per month.
A high demand for rented equipment and products makes this business highly profitable. Furthermore, it doesn’t require any special skill or talent, making it a venture that can be undertaken by anybody in Nigeria, depending on the capital available to you at the time. The business is also expanding, with studies showing an increase in users by 2029. Source for
How to Start a Rental Business in Nigeria
To start a rental business in Nigeria takes several steps. This article will guide you through a step by step process on how to start a rental business in Nigeria.
Carry Out Market Research.
Before you start any business venture, ensure you carry out effective research on the market you’re about to enter. Will you belong to any particular niche? Who are your services targeting? Where are you located? Who is your competition in that market? Understanding these factors will help you make the best decisions for your business.
Identify Your Niche
The first step in starting your rental business in Nigeria is to identify the niche you would like to go into. You have to pick out the specific rental business that you can handle effectively both in management and cost-effectiveness. Some popular niches in the rental market include:
Residential Property Rentals
Within this niche, residential properties like apartments are rented out to individuals and families seeking temporary accommodation. Residential properties for rent can include duplexes, story buildings, bungalows, and single-room apartments, as the case may be. These properties are given out for a specified period for a stipulated amount.
Commercial Property Rental
This niche is similar to residential property rentals. However, the distinguishing factor is that commercial property rentals deal with office spaces, retail stores, and commercial buildings that are rented out to businesses and entrepreneurs.
Event Equipment Rental
Nigeria is known for events ranging from birthday parties, naming ceremonies, thanksgiving events, housewarming events, and wedding celebrations to conferences. Event equipment rentals deal with renting out event-related equipment such as chairs, tables, tents, decorations, lighting, audio-visual equipment, etc.
Vehicle Rental
This rental niche deals in car rental businesses, where customers can rent cars for a short period for travel or transportation purposes.
Construction Equipment Rental
This rental niche involves companies renting out various construction equipment and machinery. Some of the equipment these rental companies provide includes Excavators, concrete mixers, bulldozers, etc. These equipment are rented out to construction companies and contractors for specific projects.
Power Generator Rental
Due to Nigeria’s unstable electricity supply, some individuals and companies provide electricity generators to customers for a fee.
Musical Instrument Rental
Musical instrument rental deals with renting out musical instruments to individuals, event organizers, musical schools, etc.
Party Supply Rental
This niche in the rental business specializes in renting out party supplies that make events fun for kids. These supplies could include bounce houses, inflatable slides, and other entertainment equipment used in children’s parties and events.
Industrial Equipment Rental
The industrial equipment rental niche involves renting out heavy machinery and specialized equipment used in big manufacturing, agriculture, and mining industries.
Video Equipment Rental
In this niche, some companies or individuals rent out projectors, video cameras, and other audio-visual equipment to event organizers, filmmakers, and photographers.
Camping and Outdoor Gear Rental
This rental business deals specifically with providing camping equipment like sleeping bags, tents, and outdoor gear for rent to individuals and groups planning an outdoor event.
Furniture Rental
This particular niche in the rental business is basically about renting out furniture temporarily to individuals or companies who need it for some time in exchange for a fee. Furniture that can be rented includes sofas, beds, dining sets,s, etc.
Draft Out a Business Plan.
The next step to take is to put your business idea into writing. This step is a crucial part of the starting process, as mistakes in the business plan can significantly affect the business outcome.
A comprehensive business plan should include details like your business goals, target market, services offered, pricing strategies, marketing approach, and financial projections.
It should also include the estimates of your startup costs, operating expenses, and expected revenue. Your business plan is like a framework on which your business is erected. Before starting, get the assistance of a professional in drafting your business plan to aid the smooth execution of your rental business.
Source for Funding
From your business plan, determine the startup capital needed for your rental business and explore the different sources of funding you hope to use to start this business.
Depending on your plans and preferences, finance sourcing can be from personal savings, partnerships, or even bank loans.
Location and Infrastructure
The next step to take in starting your rental business is to choose a suitable location for your rental business. You need to keep in mind that the location of your business should consider the proximity to your target customers and accessibility for deliveries and pickups.
Business Registration and Permits
Choose a business name.
Your business will have to be identified by a name, so the next step is to pick a unique and memorable name. Ensure that your business name is available by searching the CAC portal. This will help you avoid any issues during your business registration.
Legal Requirements
Your rental business must be registered with the Corporate Affairs Commission as a sole proprietorship, partnership, or Limited Liability Company (LLC). You should also obtain all necessary permits and licensing for your rental business to operate.
Costs
Starting a business comes with many startup costs. The amount of capital needed to start a rental business in Nigeria varies depending on the particular niche in rentals, the location, and the scale of operations of the rental business that an individual wants to go into. For your retail business, these costs could include:
Equipment Purchase
The most important thing to consider when starting your rental business is the equipment. This is your product, and so you must ensure that whatever equipment you purchase is of good quality and well maintained.
Safety and maintenance of your equipment is also necessary. This process determines how long your equipment is going to last in business, as people tend to mishandle properties that do not belong to them. To avoid the loss of extra expenses to repair or replace equipment damaged by clients, safety and maintenance guidelines should be implemented to govern the use of your equipment when rented out.
It is also smart to ensure that you regularly inspect the equipment you rent out immediately after it is returned to ensure that they are still in good working condition.
Purchase an Insurance Plan
With the steps outlined above, your rental business is almost ready. However, after setting up your rental business, take a comprehensive insurance cover for your equipment against theft, loss, or damage. This insurance reduces the financial effect of the loss in the event of any unplanned occurrence. You can also impose a refundable caution fee on customers on the condition that the equipment is returned without harm.
Staffing
Competent hands are needed to aid the flow of your rental business. Experienced and competent staff should be employed for equipment maintenance, customer service, and administrative duties if necessary.
Pricing and terms
Charges for different rental equipment differ depending on the equipment, the time frame, and the quality of the equipment to be rented out.
Marketing and Promotion
In this 21st century, if you are serious about making sales in any field, you must actively engage in marketing and promoting your products. This promotion creates awareness of the services you render. It can be done traditionally or online through the use of ads.
Final Thoughts
If you are speaking of lucrative businesses in Nigeria, then the rental business is a sure bet. When you start a rental business, at the end of the month, you are sure to make a significant amount of money because Nigerians love to party. You had better make up your mind and get your cash flowing in.
