What do you do when you have idle equipment collecting dust?
Well, you either let it eat away at your profits or find ways to put it to work.
Many construction businesses have turned to renting out their idle equipment to save costs and make a profit.
If you’ve been looking to start this process at your company and make the most of your idle equipment, this article will be helpful.
We’ll be breaking down the renting process into 6 key steps, equipping you with the knowledge you need to succeed, so let’s get started!
In this article...
Create an Inventory of Idle Equipment
You first need to know what equipment sits idle and what you can rent out.
Inventory all your assets to identify idle equipment.
Idle equipment has a low utilization rate and high costs associated with it.
So in theory, it should be easy to identify machinery that is costing more than it’s earning.
However, the more assets you have, the more complex it gets.
You need good construction inventory management to get quick answers to key questions:
- What you own
- Where it’s located
- Who’s been using it and how
The last question is particularly important when determining which equipment you’d be renting out, and it’s frequently the most difficult one to answer.
The construction industry’s traditional reliance on Excel spreadsheets for managing operations carries a part of the blame. That’s because spreadsheets lack data visibility and real-time insights.
Moreover, as evidenced by this Reddit user’s thread, manual updates of several sheets can be time-consuming, creating frustrations while not guaranteeing accuracy.
On the other hand, asset management solutions give construction businesses the necessary reliability and flexibility, including easy creation of separate asset lists.
Here’s what this process looks like with the GoCodes asset management features.
You can easily adjust the asset list view by setting up multiple filters and sorting criteria, and make full use of the data.
Software solutions’ big advantage comes from centralized, real-time data, which includes everything from basic location-tracking to asset maintenance logs and performance readings.
These readings help dispel any doubts on whether it’s best to rent out specific machinery or try to find a place for it on the construction site after some process-related tweaks.
Ultimately, it’s up to you to make the best decision for your business based on available data, and once you’ve made a detailed equipment inventory, it’s time to move to the next step.
Make Sure Your Equipment Is Well-Maintained
Regular maintenance on all equipment is a must, and if your machinery has been sitting idle for a longer time, you need to double-check everything before renting it out.
The maintenance efforts should be based on these key considerations:
- Is the equipment in working condition?
- Does it meet all regulatory requirements?
- Can it be put to good use by potential renters over a longer period?
By keeping this in mind, you ensure the longevity of your machinery, as well as the safety of future operators.
At the same time, the quality of the rented assets and the work performed directly reflects on your reputation, resulting either in long-term collaboration or renter dissatisfaction.
Offering a high-quality service and a satisfying customer experience encourages new rental agreements, and paves the way to future profits.
To go back to the practical bit, here are a couple of points you should keep in mind while preparing your idle equipment to hit the construction equipment rental market.
Firstly, the chances are your idle equipment hasn’t been the priority when it comes to maintenance, so the starting point is to consult the logs and make sure the equipment is up to date with its scheduled maintenance.
It’s good to approach the maintenance from the renter’s perspective, and avoid issues on any of these four levels:
| Exterior | Inspecting the asset (including tires & tracks) for any visible damage and noting the damages that were a prior condition |
| Operations | Examining the functionality of steering, brakes, and hydraulic systems |
| Fluid Levels | Checking all fluids, particularly oil, coolant, and hydraulic fluid |
| Documentation | Reading through the maintenance records and inspection logs, checking for recurring issues and general condition |
Maintenance records and reports are vital because they increase the chance of your equipment getting rented quickly.
Future renters will reasonably expect access to key maintenance information. Additionally, you are more likely to rent out the asset if it has been recently maintained.
The checklist below provides an overview of essential maintenance tasks, but you should adjust it based on the specific asset and its history.
Once you’ve crossed off everything from the list, including the finishing touches such as cleaning the machine and packing up user manuals, your previously-idle asset is ready to go.
Now you can be sure you’ll deliver an excellent customer experience, and confidently name your price.
Determine Your Rental Prices
Once the equipment is ready, you need to determine the rental prices for each piece.
So, what’s the guiding principle here?
For starters, consider your company’s needs and expectations. After all, you aim to not only break even but also make a profit.
However, the prices you charge should be based on your competition and market demand.
Otherwise, your idle equipment might stay with you longer than you’d like.
Since companies prefer to rent assets close to their location, your first step should be to compare local prices, from home improvement stores to rental businesses specializing in construction equipment.
Next up, check popular online marketplaces like DOZR, EquipmentTrader, and Eqpme that can give you a quick overview of the current rental prices per day, week, and month.
You can see above that Eqpme’s search interface allows you to filter the equipment based on city, equipment type, and fuel type, and the visual of the listings makes browsing convenient.
Don’t forget that these online spaces also give insights on specific types of equipment, and how in-demand they are.
There may be a lot of competition for a crane rigged up with a superlift, but the common equipment isn’t lacking interest either, due to many potential renters needing it for everyday operations.
Equipment rental software provider Quipli illustrates this with the example of average forklift rental rates and overall demand.
That’s because these platforms draw in customers of different profiles and needs.
Kevin Forestell, the CEO of the online equipment rental juggernaut, DOZR, pointed that out in one interview:
“Rental companies can also provide equipment contractors need, when they need it, but may not have more specialized machines. DOZR users are definitely on the platform to find uncommon equipment and they also tend to save money over traditional rentals whether they’re renting common or specialized machines.”
A quick overview of the average initial costs of standard construction equipment, as well as the typical range of rental prices, gives you all the information you need to join the fray.
The bottom line is to offer competitive prices based on different sources, but also make sure that the rental pays off.
List Your Idle Equipment
The next step is to advertise that you have some equipment up for rental.
Promoting your equipment may seem challenging at first, but it is actually quite manageable.
You have a couple of options when it comes to listing your idle equipment and doing so increases the number of rental inquiries and overall equipment visibility.
Whether you list it on rental marketplaces, share on your company’s social media channels, or use in-person advertising, peer-to-peer connections and networking play a huge role in how you position yourself and your equipment.
Other than enhanced visibility, there are two more major advantages of listing equipment in online marketplaces and other sharing economy contexts.
When you think about it, entering the market is important, but the ability to connect with credible renters is even more so.
In a nutshell, relying on independent third parties means having a safety net.
The renting company gets the green light only if the platform can verify its workers have the required training to operate the machinery.
It boils down to making sure that:
- All involved personnel have the training to operate the asset safely, and, if need be, cover the cost of any damage
- The asset in question is suitable for the renter’s job
- The asset is given and returned in a satisfying condition
That way, the risk of serious malfunctions is reduced, as well as potential dissatisfaction on either side.
And there’s also a matter of convenience. Marketplaces and sharing networks often look to streamline the renting process by offering additional services such as insurance packages, or delivery and pick-up.
All these benefits serve to bring in more companies, and a large, vibrant community means plenty of chances to make full use of your idle equipment.
Forestell drives this point by explaining how mounting costs of ownership can turn into profit.
No matter if you prefer to market your idle equipment through your own business connections and communication channels, or opt for the visibility and convenience of online rental platforms, advertising your listings remains a crucial step in the rental process.
Define Rental Policies Through Documentation
Your listings will attract attention due to your advertising efforts, so once you have interested parties, it’s time to draft the rental agreement.
The rental agreement formalizes the deal and should be as detailed as possible.
In other words, it should not have any loopholes that could hold your company liable for damages or injuries during the rental period.
In this way, you gain legal protection and reduce the possibility of any misunderstandings, or disputes over injuries, damages, or rental fees.
Clear terms and conditions save time and money in the long run and ensure a positive rental experience.
And remember: even if the online platform you use has rental policies in place, those won’t cover everything relevant to your company.
In drafting the rental agreement, construction businesses should be assisted by their company attorneys or external legal consultants, but here are some key considerations to include:
- total rent cost
- billing policies and timeline
- duration of the rental
- machinery pick-up and drop-off
- required certification/training for operators
- acceptable wear and tear
- course of action in cases of larger maintenance issues
- fuel surcharges
- insurance
- security deposits
- penalties for damage, loss, and late returns
Penalties for late returns and security deposits help offset some common risks, but having a comprehensive insurance policy is crucial in helping businesses handle the costs of damages, serious breakdowns, and loss.
For example, here is how CAT Rental Store advertises its equipment protection package.
These scenarios center primarily on external causes, but still give peace of mind to their customers.
Likewise, clear and comprehensive rental policies help attract and retain renters, and the little extra time in preparing them leads to substantial cost savings down the line.
Inspect Equipment After Every Return
The final step happens once your equipment is back and involves checking whether everything is in working order.
While thorough maintenance is a natural part of companies’ efforts to extend their construction equipment’s lifespan, it’s not the only reason why you should inspect all assets as soon as they’re returned.
The construction company that owns the rented assets should check their condition immediately upon return to identify any damages and conduct repairs if needed.
In this way, the equipment remains in good condition, but you’re also making note of any damages that may have been caused by inadequate use during the rental period.
Depending on how serious the damage is, and taking into account the stipulations of the rental agreement, you could have the basis to seek penalties.
Moreover, detailed records and photo logs taken during the inspection would be vital for proving the validity of your claim, if brought into question.
Renting out heavy machinery entails risks, even if the workers are familiar with proper operation or maintenance protocols.
Javier Escalante, a Business Development Manager at the European software provider B’Smart, notes that the renters’ overall attitude plays an important part too.
That becomes more important if your equipment will be rented for a longer period.
But thinking outside of the apparent damages and more toward big-picture preventive maintenance helps cut down the problem at the root.
It’s worth pointing out that this approach applies regardless of whether you plan to rent out a specific piece of equipment again or continue using it internally.
And if you aim to continue renting out your equipment, maintaining accurate and up-to-date records helps you identify which equipment types or individual pieces receive more inquiries, and are worth investing in maintenance-wise.
Conclusion
Turning idle equipment into profitable assets by renting it doesn’t have to be hard.
It takes only six steps as outlined in this article.
As a result, you’ll save some money, build new connections with other businesses in your industry and make a profit on things you already own.
If you’re thinking of embarking on this journey, or are already on the way, save this article as a reference point—we’re glad to help you out!
