Rental businesses are one of the many nice businesses to do as they are gaining gradual attention in Nigeria. Ranging from Car rental services to house rentage to chairs and table rentals to sound equipments rentals and the list is endless.
There’s quite a large category here. The basic reasons why rental services are very lucrative and profitable are:
1. Rentage fees cover multiple times of maintenance fees
2. Some rentage materials are quite too expensive to be purchased for individual or private usage so people prefer to rent such items other than to buy
3. Some rentage materials have rare individual needs and as such, buying those materials for irregular usage or one-time usage would be unecessary luxury and extravagant spending which isn’t welcomed by too many people in Nigeria.
Stressing on the last point, a wedding reception might need between 500 to 2000 chairs or more to contain well wishers, family and friends comfortably. On the average and from the little knowledge I have, each chair costs between N100 to N150 for rent and about N2,500 to purchase for good grades. Inarguably, people would prefer to rent because after the reception, there wouldn’t be need for these chairs again if they were purchased perhaps in thousands or even a few hundreds. Leveraging on this fact, makes rental services a very profitable business in Nigeria.
Buying about 1000 pieces of chairs for a start should cost you about 2.5 million Naira though you could still get it lesser with quantity bargaining. With the rentage charge of N150 for each, you’d be making N150, 000 with each complete rent for a single day, sometimes people pay for two days rent, some other users too rent for an entire weekend. Assuming you’re getting at least 1 rent contract each passing weekend, it’ll take you just 4 months to cover your capital and begin to make profit. What maintenance can you possibly think for chairs that require spending? None other than cleaning and patching up or replacing a few broken or severed ones and of course defaulters pay damages for broken ones if your inspection is thorough and you’re able to find out.
Let’s then look into a few things you must do if you’d like to start a rental business in Nigeria.
How to Start a Rental Business in Nigeria
1. Choose a Category
Yes, like I mentioned there are quite a host of categories to deal on. Rental business isn’t restricted to just one popular material or equipment type. So many things can be up for rent. Building and construction materials like shovels, spades, trowels, pans, bevel, plumb lines and so many materials for construction and measurement can be placed for rent, Cars could be rented for in-town errands, appointments and services, there are houses for rent too, chairs and tables for events and occasions, sound systems, music gadgets for large gatherings, photography equipments, video coverages and production equipments etc are all good forms of renting business in Nigeria and people are building mansions with it. So decide on and choose a category to work with.
2. Research on Category Relevance in Your Intending Establishment area
Now you know your category, perhaps you decided to launch a car rental business, inasmuch as in Nigeria it’s largely a good niche for rental services, you’d still need to determine if your intending area of development has need for such services or would welcome the idea. If majority of occupants in the said vicinity are all car owners already, this might be a bad experience for you because the area would not be favorable but if majority of inhabitants living or staying there are a mixture of existing car owners and quite average working class persons who really do not have automobiles but are discernibly fit to man or drive one both in the financial and physical aspects, then it’s a perfect sign for you.
3. Find a Good and Cost Effective Purchasing Source
Perhaps you decided on occasion chairs and table rental services, despite the fact that you’d be looking for best quality and grades to purchase because they would last long enough for you and survive regular public usage yet still you do not want to afford them in a costly manner, so you’d have to look for cheaper sources to purchase from in Nigeria but still of the very same grade qualities because although profit is guaranteed in less than a year of commencement, the more expensive you buy them, the longer time it’d take for you to retrieve your capital before you can start making profits.
So experiment with bargains and try to buy them at the cheapest rates possible while still maintaining your grade taste.
4. Determine a Feasible but Non-negotiable Rental Charge
This aspect requires keen attention as its a very sensitive aspect. Because there are a couple other persons in the business already in the Nigerian system before you, in effect that spells competition. The only quickest and easiest way to survive this competition and transcend expectations is to make your services affordable at a price charge quite less affordable than what your competitors offer. For instance since you know your competitors rent at N150 per chair, you could choose to rent at N130. You wouldn’t know what your result would be until you start having tons of requests from people around because it’s obvious you’re dealing cheaper so you’d be dragging in much attention.
5. Draft a Plan on How long it’ll take You to Recover Capital
Here is where a business plan comes to play. For every business to function properly and exceed every limiting factors, a business plan is mandatory to operate with. It may not be as big as a law book but but definitely something that lets you put your thoughts, expectations and aims in writing, which would guide you to focus. Along with your Business plan in Nigeria, draft a practical projection of how long it’ll take for capital expenditure to be retrieved, this assists you in knowing just when to expect to begin reaping so that you do not get turn overs within one month after launching and you remember to go buy a Car or private ride or make some other luxury expenditure. Good business management in Nigeria and generally requires that you spend only from profit and the law of start-ups suggest that even from your profit, you try to invest a few more funds into your infant business.
6. Have Plans for Expansion
This is the case when you’re intent at the future of your business. If you’re dealing on chairs and table rentage for instance, you’d notice that these same people who come to rent chairs also have need for sound equipments like sound amplifiers, karaoke players, music loaders, giant speakers etc. From the profit of your current category, it would be wise to try to invest into these other related aspects as well even if it means going to take a loan for it because you have seen first hand it’s relevance and you’re certain that positivity is yours and that you’ll earn more with multiple investments.