Innovative Rental Solutions?
As the coronavirus pandemic swept across the globe, businesses of all types faced unprecedented challenges. Health clubs, in particular, were hit hard due to the necessity of maintaining social distancing, leading to widespread closures. Many of these establishments experienced significant financial losses, and some are at risk of never reopening. However, a number of businesses have turned to innovative solutions to maintain connections with their customers and generate revenue. A key asset they all possess is a variety of workout equipment, from treadmills and stationary bikes to weights, now sitting unused.
A Creative Approach to Equipment Rental
Julie Guttormson, the owner of a fitness center in Wyoming, exemplifies this creative approach. Recognizing the need for her customers to continue their exercise routines during stay-at-home orders, Julie decided to rent out her workout equipment to them. This not only provided a solution for her clients who didn't want to purchase expensive equipment but also generated revenue for her business. Within two weeks, 70% of her equipment was rented out, with a waiting list for the more popular items. Julie further extended her offerings by providing online classes for the renters, creating a win-win situation for everyone involved.
The Bigger Picture: Economic Impact and Adaptation
The broader economic impact of the pandemic has been severe. S&P Global Ratings forecasted a steep global recession with a 2.4% reduction in global GDP in 2020. This economic contraction and the reduction in capital expenditures by key markets have curtailed the demand for new equipment. Consequently, many companies are now exploring equipment rental software as a viable alternative to selling big-ticket items.
Building a Successful Rental Business
For companies considering adding rentals to their product offerings, the question is: how do you build and manage a successful rental business? There are numerous factors to consider when managing a fleet of rental assets. It’s crucial to have the right resources to maintain this fleet effectively to maximize profits. Partnering with an expert who understands the complexities and has the tools to manage these demands can be invaluable.
NetScore’s Rental Management Solution
NetScore’s equipment rental management software provides NetSuite users with the tools needed to manage the entire rental process efficiently. Our team of experts has assisted numerous companies in establishing and managing their rental businesses effectively.
Building a Rental Asset Pool: The first step is to create a dedicated warehouse for rental assets, either physical or virtual. This helps manage the rental and return process separately from saleable assets and allows for depreciation of these assets if desired.
Scheduling and Reserving Equipment: Effective rental management involves scheduling tools that allow for viewing rental requests and reserving assets, which is crucial for demand planning. Taking deposits against reservations ensures customer commitment and helps manage equipment that requires periodic maintenance.
Managing Long-Term Rentals: For long-term rentals, it’s essential to be prepared for equipment failure, routine maintenance, and replacements. The ability to swap out equipment during rentals and update contracts accordingly is a necessary complexity.
Maintenance and Cost Tracking: Maintaining equipment and capturing maintenance costs provide a true picture of the profit generated by rental assets. Keeping detailed maintenance records, repair costs, and preventive maintenance schedules is especially important for equipment that requires calibration or certification, such as medical devices.
Automated Billing: Managing billing for long-term rental contracts can be complex, requiring the generation of invoices on a schedule. An automated billing engine simplifies this process by generating invoices, applying discounts, and ensuring accurate financial tracking.
Accounting for Rentals: Proper revenue recognition, cost capture, and asset depreciation are essential for rental businesses. NetScore’s solution integrates these accounting needs with netsuite asset management, providing a comprehensive solution.
Conclusion
Managing a rental business involves numerous considerations, but with the right expertise and tools, it can be a highly profitable endeavor. If you're considering expanding your business model to include equipment rentals, reach out to a NetScore Account Executive to get started. Our team of experts and our robust software solution will help ensure your rental business delivers the desired results.