As the corona virus took hold and businesses shut down across the globe, many were forced to get creative to survive. One hard hit industry is health clubs forced to shutdown due to the inability to maintain social distancing for their customers. Many have suffered dramatic losses, and some may not reopen. However, some are getting creative allowing them to stay in touch with their customer base and generate revenue for their businesses. One common thing they all have is a substantial amount of assets from treadmills to stationary bikes, weights, and other workout equipment sitting idle.
Julie Guttormson owner of an exercise facility in Wyoming decided to rent her workout equipment to existing customers who wanted access to equipment at home but didn’t want to spend the money needed to purchase it. This offered a great solution for people dealing with stay at home orders that wanted to continue their exercise routines. Within two weeks 70% of Julie’s equipment was rented with a waiting list for some of the more popular items. She extended her business offering by including online classes that the renters could attend. This type of creative thinking provided a winning approach to a difficult situation.
S&P Global Ratings is forecasting a steep global recession with global GDP reduced by 2.4% in 2020. They expect the economic contraction and reduced capital expenditures (capex) by key end markets to curtail demand for original equipment. Rental of equipment is an option that many companies are turning to as sales of big-ticket items slow in the face of the pandemic.
Companies ask “how do I learn what is needed to build a rental business as part of my product offering?” Clearly there are many considerations and requirements that need to be addressed when managing a fleet of rental assets. Having the right resources to maintain a fleet of rental equipment is critical in maximizing profit for this business. Working with a partner who understands all of what needs to be considered and effective tools to meet those demands is extremely helpful when expanding into this line of business. NetScore’s Rental Management software provides the tools NetSuite users need to manage the entire rental process. Our team of experts has helped numerous companies take the necessary steps to build their rental business and manage it effectively.
Building a rental asset pool is the first step which generally involves creating a separate (can be virtual) warehouse where rental assets are managed. This removes the items from your saleable asset pool and allows you to easily manage the rental and return process. It also facilities the ability to depreciate the assets for those companies wishing to do so.
Scheduling and reserving items is an important aspect of rental management especially for companies who deal in longer term rental contracts. Having a scheduling tool that lets you view rental requests and reserve assets is critical for demand planning. Being able to take deposits against reservations helps ensure customers are committed to the future rental. This is also needed when you rent equipment that periodically needs to be removed from the rental pool for maintenance.
Managing rental assets on contract for long term rentals means you need to be prepared to manage situations like equipment failure, routine maintenance, and the need to replace equipment in the field. Having the ability to swap out equipment during the rental and updating the contract to show the replacement is a complexity that needs to be dealt with.
Maintaining your equipment and capturing maintenance costs helps you get a true picture of the profit generated by a rental asset. Keeping track of maintenance records, cost of repair, preventive maintenance, and other items needed to keep your rental asset pool operational is important. This is especially important for equipment that needs to be calibrated or certified such as medical equipment.
Billing can be complex for rental contracts that span longer periods of time and requires generation of invoices on a billing schedule. Keeping track of each rental contract and generating invoices can be a time-consuming process. Having an automated billing engine that manages this process can simplify this process for long term rentals. With NetScore’s billing engine, invoice generation can be automated and can consider discounts for individual items or for the entire rental contract.
Accounting for your rental business requires the need to properly recognize revenue, capture costs, and even depreciate your rental assets. NetScore’s rental management solution handles everything needed to properly account for your rental business and manage it with your NetSuite financial solution.
While there is a lot to consider in managing your rental business, our team of experts and software solution will ensure your rental business will deliver the desired results. If now is the time to explore how you can expand your business model to include equipment rentals, reach out to NetScore Account Executive to get things started.