This article “How to start a rental business in Nigeria”, will teach you about how to make money from rental business ideas. Nigeria is currently a country where money is constantly leaving your pocket; expenses are just inevitable. Every rational person in Nigeria is constantly looking for ways to increase the cash inflow into their purse.
There are several lucrative businesses in Nigeria to go into, and the rental business is definitely one of them. This article will discuss all the aspects of the rental business that you need to know about and how to start a rental business in Nigeria.
What We Covered In This Article
What is a Rental business?
When people hear of the rental business, the first thing that comes to mind is a picture of a business where you have properties in store ready and available for persons who do not have those items to come and pay a certain amount of money to be able to make use of your properties.
Simply put, a rental business is a business that offers products, equipment, or assets to individuals or groups temporarily for a specified fee. Instead of going all the way to purchase the items you need for a one-time event, renting is always best, and this is where the rental business comes in.
Is the rental business profitable?
That’s a yes. The rental business is one of the most profitable businesses to engage in in Nigeria. What’s more, 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.
Various Niches in the Rental business
There a quite several rental businesses that an individual can go into in Nigeria, Some of them include;
- Residential property rentals
- Commercial Property Rental
- Event Equipment Rental
- Vehicle Rental
- Construction Equipment Rental
- Power Generator Rental
- Musical Instrument Rental
- Party Supply Rental
- Industrial Equipment Rental
- Video Equipment Rental
- Camping and Outdoor Gear Rental
- Furniture Rental
Residential property rentals
This ls is a type of rental business in Nigeria where 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 rental niche is similar to residential property rentals. Still, the distinguishing factor is that in commercial property rentals, properties like Office spaces, retail stores, and commercial buildings 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. It involves renting out chairs, tables, tents, decorations, lighting, audio-visual equipment, etc.
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 business 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
It is no longer news that Nigeria has a very unstable electricity supply structure. Some individuals and companies have taken advantage of this situation to provide electricity generators to their customers for a fee to aid them in meeting their electricity needs.
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, like bounce houses, inflatable slides, and other entertainment equipment that are 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 the rental business, 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.
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.
Bridal/wedding wear rentals
Nigeria is a country where wedding bells ring with each passing Saturday. These events are another good way to make cool money over the weekend. Of course, very few people will want to buy a wedding/bridal dress because, after that day, the dress is almost useless to the bride. So, renting out bridal dresses is another rental niche that is quite creative.
Capital needed to start a rental business.
It would be a false estimate if I were to specify a particular amount of the minimum capital needed to start your rental business. This is because 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.
Benefits of rental businesses in Nigeria
The benefits of running a rental business in Nigeria are numerous, but here are a few of them below;
- Rental businesses are a means of making extra cash flow aside from your day-to-day job.
- Rental business is a field that is in very high demand because, in this part of the world, people are always moving or celebrating every week.
- It involves low capital investment as compared to other big business fields.
- In the rental business, you have recurring revenue from the expense you made once. Once you get the equipment, money keeps flowing in as your equipment gets rented out.
- The rental business also allows you to be flexible with your equipment in response to certain market trends.
- The risks in the rental business are largely reduced because you can always pass on the repair and maintenance costs to the customers in your rental fee.
How to start a rental business in Nigeria
Below, I have drafted a step-by-step process to guide you on how to start a rental business in Nigeria.
- Identify your niche
- Carry out market research
- Draft out a business plan
- Choose a business name
- Legal Requirements
- Location and infrastructure
- Equipment acquisition
- Marketing and promotion
- Pricing and terms
- Customer service
- Safety and maintenance
- Record keeping
- Launch and monitor
Identify your niche
We discussed the various niches available in the rental business in Nigeria, so the first step in starting your rental business in Nigeria is to identify the particular pattern of rentals you would like to go into. As the popular saying goes, “Jack of all trades, master of none,” you will have to pick out the specific rental business that you can handle effectively both in management and cost-effectiveness.
Carry out market research.
Before launching into the business world, conducting effective research on the market you are about to enter is wise. Identify your target market. Are your services targeted towards youths, children, married women, etc.?
You should also consider your location, the culture of the society you are living in, and how this will affect the demand for your products. You should also consider the existing competitors in the market already. Find their strengths and weaknesses and possible ways to match up to the competition.
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.
Your 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.
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. The name of your business should be such that it is available, and then you can register your business with the Corporate Affairs Commission of Nigeria.
Your rental business must be registered with the CAC 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.
Now, we will be going back to the business plan you drafted earlier. From your plan, determine the startup capital needed for your rental business and explore the different sources of funding you hope to use to meet this business project.
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 be chosen while considering the proximity to your target customers and accessibility for deliveries and pickups.
Another major thing to consider in starting your rental business is acquiring all the necessary equipment for the particular niche in rentals you want to go into. Ensure that the equipment acquired is of high quality and well-maintained.
If you have taken the steps outlined above, your rental business is almost ready. Let’s get to the icing on the cake, shall we? 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.
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.
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 is when you create awareness of the service you render. It can be done traditionally or online through the use of ads.
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.
Customer service is a vital piece of every business that should be kept from being toiled with. This service has to do with the way you relate with your customers. It is not enough to get customers; the goal is to keep them and, better still, get them to promote your business with their word of mouth.
If your rental business will thrive in the market, you should learn to provide excellent customer service to build a healthy relationship between the business and its clients. You should also ensure that prompt responses and replies are given to customers in cases of inquiries or complaints.
Safety and maintenance
This process is what will determine how long your equipment is going to last in business. People tend to mishandle properties that do not belong to them. So, to avoid the loss of always making 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.
In starting a rental business in Nigeria, record-keeping will help keep your business afloat and ensure that you only run into losses with your knowledge.
Learn to accurately record rental transactions, contracts, and financial transactions, including income and expenses.
Launch and monitor
Now that we have successfully run through how to start a rental business in Nigeria, your rental business is good to go. You can officially launch your business into the market and closely monitor its performance.
You must also learn to continuously assess and improve your rental business based on customer feedback and market trends to ensure that your business remains in line.
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.
Image Credits: All images on this website are sources from Getty Images, Pexels and Unsplash.