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5 Reasons Your Business Needs an Email List (Not Facebook)

Among the most common regrets of small business owners is not starting an email list for their company right away.

We all have lists to which we are subscribed. Maybe you subscribed to the email list for your favorite coffee shop to know when they are having deals. You might receive updates via email from your favorite sports team or even from a weather service.

What has become obvious as communication moves online is that you need to use email to get your message in front of your best customers .

Email is More Important than Social Media

It is a mistake to believe that building a social media following, like a Facebook group or a Twitter account, provides an adequate means of keeping in touch with your customers.

Social media sites can change their rules or disappear at any time, and you could lose your list of followers overnight.

In addition, the likelihood of your message reaching your fans on these sites is decreasing as the sites become more crowded.

Social media can be an effective way to interact with your customers, but it is secondary to email.

Why is Email so Great?

We have five considerations that make email stand out over any other form of online communication:

1. Email Gets Seen

How many times do you check your email each day?

Probably at least several times. Probably even dozens of times.

Do you at least look at the subject or sender of each email? Almost assuredly yes.

This means that you are seeing just about every email that comes to you, while you are missing updates to social media even if you check it often (a typical Facebook post by a business is seen by less than five percent of the business’s followers, even though they opted in to receiving updates from that business).

Without a doubt, if you want your message to be seen by customers that are interested in what you have to offer email is the way to get it in front of them.

2. You Own Your Email List

The wonderful thing about email lists, and what makes them indispensible, is that you own them.

If your website goes down you can still communicate with your customers who have joined your email list. If Facebook shuts down your page (and you lose all of your followers) you still have your email list.

3. Email Can Boost Your Offers

The customers who have joined your email list are hot leads. They are obviously interested in what you have to offer, and if you send out an occasional deal or promotion to your email list a percentage of them will probably jump at it.

If you build up your list over time you can get big results by offering the list a deal, even if the response rate is only a small percentage.

4. Email Can Build Trust

You should use your email list to build trust, not simply to pitch products.

Email providers make it possible to set up a series of auto-responders, meaning that each time new customer joins your list they can receive a series of emails that you set up ahead of time, on a preset schedule. This can help you to make contact with your subscriber steadily over time to build a level of rapport with them.

Let’s say you have a party rental business. When a customer joins your list you might have it set up to send them an email each week. One week they receive an email with a checklist of items to consider as they prepare to plan a party. The next week you send them an email about planning guest lists and what to expect for a rate of attendance. The following week they learn how to plan the number of tables and seats that they need for a given party. And so on.

The customer receives a valuable email that is useful to them without asking for anything in return. Your business builds trust with that customer and they come to see that you are the expert in your field. When the customer needs advice or products for their party, who do you think they will go to?

5. Email Keeps You Top-of-Mind

Finally, having a customer on your email list helps reinforce the top-of-mind positioning of your company with that customer.

Your services may not be needed on a regular basis, but when they are you will be the company that the customer thinks of first if they are receiving an email from you every couple of weeks. Also, the customer is more likely to refer you to a friend that needs your type of service if you are top-of-mind.

Read the next post in this series on how to set up an email list for your rental company

Choosing the Right Type of Business Phone

Years and years ago, when I was in high school and my mom was setting up my very first cell phone for my birthday, the phone company clerk asked her who the phone would be for. She answered “my son.”

The clerk either had a sense of humor or was wickedly mean, and entered “Your Son” as the name that the phone was under.

Years later, when returning business calls with the same phone the name that would show up on Caller ID when I called was…you guessed it, “Your Son.”

You can imagine how mortifying it was to return a call to a customer one day and have her answer “Hello, son!”

“Uh, I am returning your call to Picnic Table Rental…”

“Oh.”

Thus, I suggest you put a little thought into the phone line that you use for your side business.

Land Line or Cell Phone

Land Line

If you have a physical location for your rental business, one that customers visit to pick up their rentals, it makes sense to have a land line.

In most other cases, it probably does not.

Landlines are restrictive, especially if you work a separate day job and are making deliveries for your side business. It becomes difficult to answer a land line regularly or return calls to customers more than a couple times a day.

Personal Cell Phone

To run a side rental business from your home, which is a great way to start, it is feasible to have the business calls go to your personal cell phone (if you are comfortable with advertising that number). This saves you the cost of an extra phone just for the business.

It also gives you the freedom of being able to answer while making deliveries, or perhaps on your lunch break at work, or maybe even while you are at your day job if conditions permit.

You might think that it is necessary to answer the moment every customer calls, but most people are actually very understanding if you can not.

It will be fine if you ask them to leave a message with the pertinent information and then you actually return their call in a timely manner (which I would suggest means, at the very least, the same day).

For Picnic Table Rental we did it this way the entire time that we operated the company. All of the calls went to one of our cell phones.

My dad’s phone number was the one we advertised. When he was not going to be able to answer calls or respond to them quickly he had all of his calls forwarded to my cell phone.

This was an easy and flexible system. Even if I was out of town during the week I could answer the business calls and help customers.

Separate Company Phone

If you decide to get a separate cell phone for the business you may be able to do so for relatively cheap.

You will have to weigh what you need – does it have to be a smart phone or can you get by with just get a basic phone? You can get either type of phone on a pay-as-you go monthly plan with unlimited calling for pretty low prices (between $30 and $50 a month).

If you need access to an online inventory system, calendar or scheduling system, or quick access to email then a smartphone is worth the extra cost. If you will only need the phone for calls, a smartphone is not necessary.

Web Phones

A fantastic option for business owners on a tight budget is a web phone number.

For this type of service the number one option is Google Voice. It is a free service that allows you to make and receive domestic calls and texts for free from your computer.

Google Voice assigns you a unique phone number. The best part is that any calls to your Google Voice number can be forwarded straight to your cell phone or any other phone number of your choosing, allowing you to advertise the Google Voice number as your business phone number that you can answer on your normal cell phone.

It is even more useful in that it allows you to set up a schedule. You can have calls forwarded from Google Voice to a specified phone for only specific hours of the day, and it can be forwarded to another phone at other hours of the day. For example, you can have the calls to your Google number forwarded to your cell phone during the work day and to your home phone in the evening.

You can even set up the system to call multiple phones consecutively. If Googe forwards a call to your cell phone and you don’t answer, it can keep ringing but switch to calling your work phone and then home phone (or whatever phones you list) until you answer one of them. The system even allows you to essentially put the caller on hold while you switch phones, say from your cell to your home phone, without hanging up the call.

Finally, Google Voice will use voice recognition software to transcribe your voicemail into text form. If you miss some calls from customers you will have a written list of their messages, hopefully including important information such as their name and phone number, in an easy-to-use written format. You can also listen to the audio of the voicemail if needed.

Choose and Begin

With the variety of options that have been made available over the past two decades there is very little barrier to entry when starting a side business. You no longer need an extra landline for your business. It is so easy to set up an inexpensive business cell phone or web phone that there is no excuse for not getting started now!

What type of business phone solutions have you tried? Has anything worked particularly well (or not well) for you? Share your story in the comments below.

6 Reasons You Need a Business Phone (and Not Just a Website)

The internet has made it incredibly easy for small businesses, including service businesses like rental companies, to serve customers without ever having to speak with them in advance. This makes the sales process more hands-off.

It may seem like a good idea to make the sales process easier, but it may actually be hurting your business.

Your Small Business Needs a Designated Phone
(Not Just a Website)

Having a designated phone number for your business, and being available to answer it, is a major point of concern for anybody starting a side business or small business. Do you really need it if your customers can fill out a web form for orders and email you with any questions?

Unless you are fine with losing sales, the answer is that you do need a phone. Here are six reasons why:

1. It gives your company a more “human” feel.

When customers can call you to get questions answered they will feel more comfortable working with you. It shows that there is a real human being behind your website, and people like to work with other people.

2. Some portion of your customers will not communicate through email or a website.

Regardless of the effort you put in to designing a great website, a percentage of customers will always prefer the phone. They may not be proficient with computers, or they may just strongly prefer the phone.

3. Internet communications can get lost or misdirected, and the sender may never know it.

If an email gets sent to your spam folder somehow, or the sender mis-typed your email address, you will not see it.

The customer may never get a response from you and they will blame you and your company for that. They will not know that the message never made it to you.

4. Talking allows you to provide better customer solutions

Speaking with a customer on the phone allows you to ask the necessary questions to get a full understanding of what the customer needs. You can then present a complete solution for their needs, with may involve suggesting products that they did not consider, or products they didn’t even realize existed.

In written format it can come across as “salesy” or “probing” to dig deeper into the complete needs of the customer. In a phone call it is much more conversational and comfortable.

5. You can improve sales by talking on the phone

If you are truly solving the customers’ needs by suggesting further services or products as a solution than what they had originally called for, you will increase your sales.

6. You Can encourage your customer to make a buying decision

Many customers will see the value that you offer and realize their own need for it, but if they are purchasing online many of them will decide to think about it and come back later to buy.

Except that most of them will never come back.

If you get the customers on the phone you will be able to discuss their needs, find a solution, and ask them whether they would like to commit to it.

There are various methods of “asking for the sale” or “closing the sale” and most of them are more effective than hoping your customer is ready to commit when they search for you online.

What strategies have you used to communicate with your customers?

How To Get Ideas for Rental Products

At some point it may just click.

You may be thinking about what kind of business you can start up on the side for extra income, and suddenly it is staring you in the face.

The idea for our party rental business started when we hosted a party and rented the tables from somebody else. The rental company owner mentioned that he was about to close down the business to move on to other things, and we realized it was a business that we could handle on our own, working evenings and weekends after our day jobs.

The same “light-bulb” moment might happen for you, or you may have to do a little bit of thinking and research first.

Getting Ideas for Products

Finding the right product to rent out can be tough. Do you need to buy a product to rent out, or can you use something already lying around the house?

If you need to make a purchase, how much should you spend? And then how long will it take to start turning a profit?

A great product, or a “theme” of rental products, is probably easier to find than you expect. Here are five questions you can ask yourself to start coming up with ideas:

1. Have you ever needed to rent something that you could not find in your area?

When I graduated high school we needed a bunch of tables and chairs for my graduation party. We ended up renting them from a small party rental company, which was the only one in the area at the time. The owner told us that he was about to close the business to pursue other ventures due to some life circumstances.

This left an obvious hole in the market, and we jumped on it. We started up our own party rental business on the side and were able to turn it into a successful venture.

2. Do you live near a recreation area?

You may take for granted that you live near a beach, or near a chain or lakes, or a wilderness area that is popular for camping or canoeing or mountain biking or cross country skiing. Many people that visit these areas, however, come from far away and do not own the recreational equipment that they need for the visit. This provides for a clear rental market.

Even if there are established recreational rental companies in the area you may be able to enter the market by offering unique equipment that the others do not, or by adding value that other companies do not (such as free lessons with rentals of equipment).

3. Do you live in a tourist area?

If visitors are coming to your area, even if it is not for recreational purposes, they still have needs. They might need transportation to get around the city, such as bicycles. They may need a stroller for their kids.

What are some items that you use every day at home which might be difficult to travel with? These are great rental products.

4. Do you have equipment lying around that is only used occasionally?

Many of us own equipment that is only used occasionally. It might be yard equipment like wood splitters and lawn aerators, or even a trailer. This also applies to many of the tools that we own. It might even apply to kitchen appliances, like an ice cream maker, and to hobby items like home beer brewing equipment.

If you are not using a piece of equipment most of the time, somebody else might be willing to pay you to use it instead of purchasing it themselves.

5. Do you live near a lot of businesses?

This almost feels like an “underground” market because it is more of a business-to-business setting instead of business-to-customer and is not as obvious.

Many businesses rent their building, so they also rent many of the accessories inside to furnish it.

There is a legitimate model in renting out plants to businesses to add some life to their building. The rental fee for this service might include regular visits by you to care for the plants. Likewise, artwork and office furniture can also be rented to businesses.

Get Started

Asking these questions should give you a good start on determining whether you already own a product that can be used as the basis for a side rental business.

Looking for more rental product ideas? We recently released a free book with 50 rental product ideas to really help you jump-start your imagination so you can get your business started and off the ground.

For free instant access to this product idea guide simply click below.

Marketing Your Side Business Online, Pt. 2

In the first installment of our internet presence series we looked at the pros and cons of using social media as your main internet presence.

Now we are going to take a look at some free options for advertising your business on the web that are more substantial than a Facebook or Twitter presence.

Local Review Sites

We have all stumbled across directories of local businesses when searching for a company online. They are like phone book ads, but usually with more detail. These sites provide a platform for customers to review a company’s service, which makes them great if you are a potential customer researching the best company to do business with.

Examples of sites like this include Yelp, Manta, Hotfrog, Citysearch, Local.Yahoo.com, and Yellowpages.com.

What Is So Great About Review Sites?

Review sites are good for letting customers know that you exist, whether you provide great service, and how to get in contact with you.

A great perk is that it is usually free for your company to put a listing up on the site (although they try to get you to pay for extra capabilities in most cases).

These sites tend to rank high in the search engines, so having your business listed in a directory may help it to get found.

If you provide great service and garner positive reviews on these sites it will become much easier for your company to get found, and you may even gain a significant amount of business from traffic through these sites. We all trust the opinions of others more than advertising, which is why we look at reviews before watching a movie or reading a book, rather than trusting the movie trailer or book excerpt. Reviews have the power to develop great sense of trust in your customer base.

The Wrong Way to Use Review Sites

There may be a temptation to go on a review site and write reviews about your own business. Do not do this!

Soon after my wife and I moved to a new city we looked up some local restaurants on a review site. One of the closest restaurants scored all five-star ratings with seven or eight reviews. Each of the reviews was enthusiastic about the restaurant and the food.

Both of our meals were bland and not very good. It was a major letdown.

It did not take long for us to realize that the reviews about the restaurant were probably from people who were invested in it. Not only was our food bad, but whenever we walked by the restaurant was mostly empty. Not typical for a raved-about, highly rated restaurant.

The fake reviews left a bad taste in our mouths (pardon the pun) and we have not eaten there since.

Avoid writing reviews about your own company and embrace the occasional bad review that you might get from a customer. They will always exist. It is tough not to take it personally, but every single company gets the occasional bad review. There may be something in the review that you can take away to improve your business, and a negative review shows customers that all of the reviews were not written by you!

Why Review Sites Leave Something to Be Desired

There are some great benefits to review sites but they are not the end-all, be-all of your company’s internet presence.

For one thing, you have no control over the site. They can change their rules or their focus and dump you from their listing tomorrow. They could even close down completely.

Review sites also do not convey professionalism. The information that you can list about your business is limited, and it is not regularly updated.

When I search for a company online and I only see a Yelp listing in the search results (not an actual company website) I assume one of a couple things:

  • The company is not savvy enough to have a basic website of their own. Can I trust them to be competent at the services that I need?
  • The company could have gone out of business. Their website might be down and only their Yelp listing is left up. Is the information on Yelp still current?

Review sites leave some gaping holes in the market’s understanding of your business and offerings. You need a more robust site that can be updated regularly, like a blog.

Free Blogging Websites

A step up from both social media and review sites, and a step closer to your own real website, is a free blogging website.

When I was first thinking about starting a blog I joined WordPress.com and started a free blog. This particular blog was about a hobby of mine, home brewing beer, and I wrote about it every single day.

Over time my writing improved and I learned how to use the different functions of the blogging website – adding pictures, adding links, formatting the text, creating new pages, etc. I was able to customize much of the website’s design to make it look like the blog that I was envisioning.

My family and friends followed along, and it was a fun time. The best part was, this was all free.

Then one day I learned that I could post an affiliate link for products, such as a link to a book on Amazon that told Amazon who had sent the customer to them. If the customer bought the book after clicking on my link I would get paid a small commission, at no extra cost to the book buyer.

I realized that this was a great idea – I showed people which books were helpful for learning about a topic, they bought the book at the normal Amazon price, and I got a small commission. There are bloggers out there that make a full time living off of this.

BUT, it is not allowed by most free blogging platforms.

I logged on to the site the next day to write a new post only to find that my blog had been disabled and I was blocked from using it anymore.

Examples of Free Blogging Sites

Examples of sites like this are WordPress.com (WordPress.org is different) and Blogger.

Think of these platforms as shopping malls – you can rent out a store in the mall and customize it to your store’s needs, but you do not own the mall itself. WordPress or Blogger does.

The mall is providing the real estate on which you set up shop. In internet terms, this means that they are the “host” and they are hosting your site.

This is different from “self-hosted” websites in which you pay a company to host your site and you have full ownership and control over the site and what goes on there.

The Upside of Free Blogging Platforms

Free blogging sites are a great place to start if you are building an online presence. They give you somewhere to send your customers to learn more about what you offer, and you control the content and most of the design.

These platforms also teach you a lot about the “behind-the-scenes” of what goes into a blog. It is better to learn about blogging and website design on a site where you have little to lose – if you “break” the site you can easily get assistance from the site host. If they can’t fix the site and it is lost, at least it was free!

Downsides to Free Blogging Platforms

There are in fact downsides to free blogging platforms.

The first is the same as all of the online tools that we have talked about in this series so far – you do not own the site. If the host platform decides to change its rules it can drop your blog from its site. The host can also go out of business, and your site is lost forever.

There are two disadvantages to these blogging platforms in regards to search engine friendliness. First, you do not get a totally unique URL.

If this site were hosted on WordPress.com you would have to type in www.smartrentalbusiness.wordpress.com to get to it. Every blog hosted by these sites includes the platform’s name in the URL. This makes it very long and cumbersome. Not ideal when you are trying to tell customers how to find out more about you.

Second, it is rare to see a site which is hosted on a free blogging platform show up in a search engine. If you host your site on one of these platforms your website traffic will either come directly from people that you refer, or possibly from people who are surfing the blogs on that particular platform. It is not likely that you will be seeing people from the world’s largest internet traffic source – Google.

Finally, there are drawbacks to free blogging platforms when it comes to website functionality.

As I learned the hard way, you cannot post affiliate links. For some websites this may be no big deal, but for others it is a significant source of profit.

Also, you cannot add “plugins” which are free pieces of software that you can easily install on a website to add features to the sidebar, track your traffic, display your social media posts, and much more. This really limits what you can do to customize the site and utilize it fully.

The Final Word on Free Blogging Platforms

In general free blogging platforms are a great tool for learning how to blog and build websites. They can be a great short-term solution when you are starting out, especially if you are unsure of your market or the viability of your business.

Long-term, these sites are not as useful. They have significant limitations which prevent you from getting the most out of your company’s website.

Next: Real Websites

In the next installment of this series we will take a look at the ideal online presence for your company: the self-hosted website. I will show you how to set it up and how to get started, and I promise that it is not as difficult or as expensive as you probably expect.


Has your company utilized review sites or free blogging platforms? Share your successes or failures in the comments below.

Marketing Your Side Business Online, Pt. 1

How do you find businesses when you need a particular service or product? Do you pull out the yellow pages and thumb through them, looking for something relevant? Or do you quickly Google what you are looking for?

These days most people are searching the internet for products and services. Phone books are nearly extinct. We keep our phone book in the car – to use for kindling when to start bonfires (really).

Getting In Front of Your Market

It is clear that you are going to need an internet presence for your company if you want to be in contact with the customers in your market. This presence can take many forms – social media like Facebook and Twitter, free blogs, review websites, and official websites.

You can use some or all of these platforms to promote your business. This multi-part blog series is going to look at each one and show you what is most important to spend your time on.

Let’s just look at social media for now.

Using Social Media To Promote a Small Business

There is a huge variety of social media sites available now – Facebook, Twitter, Instagram, Pinterest, and so on.

Facebook and Twitter are by far the largest, so those are probably the two that most companies will focus on, but you need to go where your market is. If your target customers are hanging out on Google Plus, use Google Plus.

Companies in some industries, like the party rental business, will probably benefit greatly by posting pictures of  their work at weddings and other events on Pinterest, because that is a site that many people visit when planning a party. If customers can see and begin to visualize the benefit that your company can provide their party it will be easy for them to want to do business with you.

The consideration of whether your target market is largely using a specific social media platform is the most important factor in deciding whether to spend time using that platform.

The Benefits of Social Media

Connect With Customers

The obvious benefit to social media as a platform for advertising your business is that it is (can be) free. It is hard to beat free.

Another great feature is that social media is great for generating discussion with your market. This discussion is perfect for getting to know your customers and what they desire. Ultimately, this makes you more in tune with the needs of your customers and more able to give them what they want.

Connect With Suppliers

Social media also connects you with the suppliers for your industry. You can follow the companies that distribute the products that you use, and this allows you to stay up to date with trends in the market and new product availability.

Collaborate

Finally, social media can help you to connect with other people in your industry. If you own a canoe rental business you can connect with other canoe rental owners across the country (and world) to see what is working for them, and to gain new business ideas or approaches from their experiences.

The Downside of Social Media

Social media may seem to be a realm of infinite possibility, but there are certainly difficulties with advertising your business via these channels.

No Control

The first problem is your control over the platform. You do not have any. If you use a Facebook page as your home web page you are putting your company in somebody else’s hands. Facebook can suddenly change the rules and decide to drop your company from its site, or Facebook may suddenly close down and disappear all together. If this happens your platform and base of followers is gone. The same is true for any social media platform.

Decreasingly Free

Advertising on social media such as Facebook used to be free and easy. It was almost as if Facebook offered to advertise your company for free on the side of a truck that it would drive around past all of your target customers all day long.

These days, Facebook still advertises your content for free to a small extent, but it is almost as if they are driving the truck around in the countryside at 2:00 am. Almost nobody sees your content, even if they opted-in to receive it from you by joining your group. That is, nobody sees it unless you pay Facebook a bribe to drive the truck around near your customers.

As social media sites go public and have to pay investors a profit you can expect more of this. Sure, you might have 100,000 Facebook followers, but only a small fraction of them (think 2-4%) are going to see your post unless it gets a ton of “likes” and comments, or unless you pay Facebook to “boost” each post. This model can work really well if you have money to spend on advertising and know the monetary benefit of reaching a given number of customers. If you are starting out and have a low budget however, it is difficult to make work and is probably a waste of time.

So Many Voices

The other major hurdle with social media is the problem of getting your company seen.

It is easy for a company to get lost in the sea of other companies and people on a social media platform. Their search process is not as refined as a search engine’s, like Google, so customers have have a difficult time tracking you down when they search the social media site for you.

Once the customer does find you, there is no guarantee that they will see the content that you post to the site.

As we discussed, customers will probably only see Facebook posts that you pay to promote.

Twitter, the other major social media site, is similar. Twitter still shows everything that you tweet out to each person that follows you, but the large volume of tweets mean that your content gets pushed down out of sight very quickly. If you customer is not checking their feed right when you post they are not likely to see it at all.

This leads us to the problem of what to post to social media. People go on sites like Facebook and Twitter and Pinterest to connect with friends and family and to see interesting stories, not necessarily to learn about businesses. To earn a spot on your customer’s social media feed you will need to find a way to post engaging content that is both entertaining and provides value.

The Verdict on Social Media

Your business should have a presence in social media, but it should not be your only presence online.

Tools like Twitter and Facebook are great for connecting with your market and for presenting your company’s story in a way that others can start to trust you and desire to do business with you.

Social media can also connect you with others in your industry that you can collaborate with.

If you put all of your marbles into one basket like social media, however, you leave yourself open to getting burned by rule changes or shifts in the internet marketplace.

So, where can you look to start building an online presence outside of social media? We will take a look at some other free options in the next installment of this series, which is now available Here.

Have you had any success marketing your business on social media? Share your experience in the comments below!

The Case for Running a Rental Business From Your Garage

For the new entrepreneur looking to start up his or her first rental business it can be a crippling mistake to think that one must have a physical storefront for customers to visit.

My father and I ran our party rental business, Picnic Table Rental, out of our garage for years by delivering products directly to the customers. I am convinced that this is the best possible way to start a rental business, for four reasons.

1. Low Costs

The clear advantage to storing rental products in your garage is the cost savings. No rent payments, so you can keep more of your profits while you grow the business. Also, you remove the burden of missed rent payments for the storage space during any slow seasons.

With our business we decided to keep growing beyond what our garage could hold, so we eventually rented out a large storage facility and the business moved into its own building. For the first several years, though, the business did not have to bring in money each month to cover the rent for storage.

2. No Posted Hours

Not having a store that needs to be open at specific hours each week saves a lot of time and allows you to run the business on the side if you are already working another full-time job.

Customers can simply call to set up delivery for a rental and their calls can be returned during lunch break or in the evening. In my experience customers were fine with this setup, and it is much more efficient than keeping a building staffed all day.

3. Time Flexibility

Running a business from home not only removes the commitment of staffing a physical location each day, it also allows for a flexible working schedule.

At Picnic Table Rental If we wanted to take a vacation for a weekend it was easy to let inquiring customers know that we did not have any inventory available on those particular dates. With no store to staff and no deliveries planned, we were free to go on vacation.

Occasionally we would still deliver some rentals for that weekend when we went on a short vacation. Instead of delivering the items one day and picking them up the next, we would arrange with the customer to have the product delivered on Thursday evening and picked up on Monday evening while only charging them for one day. This allowed us to still bring in money for the business while also getting a weekend away.

4. No Commute

In the years when the business was run from our garage it was glorious to walk out of the house to the garage, load up the truck, and leave for a delivery.

When we rolled in late at night after a busy day we could park the truck and go to bed without having to stop at a storage facility first.

If we needed to do some cleaning or maintenance on our products we could fit that in between other tasks around the house.

These are small conveniences that I did not fully appreciate until we had a paid storage facility that was a fifteen minute drive from the house.

Keeping a Side Business a Side Business

In the end, running a rental business from your house offers conveniences that keep your side business manageable and prevent it from overwhelming you and your schedule.

What do you think? Is running a business out of your garage a good or a bad idea?

There Is No More Competition

We were driving down the highway, towing a trailer full of tents and picnic tables, on the way to deliver products to the next customer. Suddenly we saw the truck for another rental company going by in the opposite direction, and my brothers and I would boo (only half jokingly) because the other company was competition and competition had to be beat.

Except in today’s marketplace competition does not really exist.

How Business Used to Be

In the past the concept of doing business implied that your company was competing in a specific market of a specific size with a few other companies. When you gained some of the market share, the other companies would lose some.

You could beat out the competition by having better advertising. Maybe your price was even a little better than their’s. At the end of the day you needed to be the biggest dog in the market to make the best profits.

How Business Has Changed

Widespread access to the internet has obviously changed the game. In the past it was easier to get away with bad service if you were the well-known company in the market. Now the customer can instantly look up reviews about your company before they decide to do business with you.

This searchability is a good thing. Suddenly customers are able to find companies that serve a very narrow, specific niche. If I feel like throwing an 1800’s-themed party I can probably find a place to rent rustic costumes and furniture.

Instead of spending big money to advertise to millions of people on tv, only a very small fraction of whom actually want your product, you are able to market exactly to the people that want what you have to offer.

Instead of a few companies competing against each other for a general market, there are many companies that each specialize in a very specific niche within the market.

What Replaced Competition?

“Competition” is a term used loosely in today’s market. Collaboration is becoming a much stronger force, so treating any perceived competition as the “bad guys” may be a big mistake. The key is in knowing what each company’s target market is.

An Example of Rental Collaboration

Let’s say that you decide to start a party rental business, focusing on high-end parties. You rent out fancy linens, dinnerware, serving platters, and equipment and atmospheric decorative pieces for ballroom dancing. You name it Fancy Party Rental.

Your “competition” may be another party rental company, but they may focus more on middle-income families who would like to rent tables, chairs, and tents for graduation parties and family reunions. Their name is Everyday Table Rental.

In this example there may be some overlap in the products offered and the potential clients. You are both in the party rental market, but you mostly serve two different niches within that market. There may also be great opportunities for the two companies to collaborate to offer complete solutions for events like outdoor weddings and fundraisers.

While talking to a customer you recognize that they need your linens and table settings for their wedding reception, but they also need more tables and chairs. You can let them know about your recommended vendor for tables and chairs, Everyday Table Rental, whom you have a business relationship set up with.

You may even be able to offer to handle the details of setting up business with Everyday Table Rental for the customer, once you know exactly what the needs are, so that the customer does not have to worry about coordinating the two companies on their own.

Both companies can win in this situation. You might have an agreement set up so that Everyday Table Rental pays you a fixed percentage of any sales that are made when you recommend them to a customer. You get paid the commission for recommending Everyday Table Rental, and they get a new customer. This agreement would go both ways. Everyday Table Rental would also be watching for situations in which they can recommend your business and get paid a commission for doing so.

Collaboration Grows the Market

As the saying goes, “A rising tide raises all ships.”

When companies within an industry collaborate they are not simply sharing a piece of the pie that represents the market. They can actually grow the market, making the pie bigger.

Work done well gets attention. The party-goers from our example above are going to see the wonderful setup at the wedding they will ask about the suppliers. They might learn about Fancy Party Rental and Everyday Table Rental for the first time. They did not know that the rental market even existed beforehand, but now they have seen what you can do and they can’t wait to do business with you in the future. The market has grown.

Have you seen a great example of collaboration between two companies in the same market? Share your story in the comments below!

 

 

Pricing Rental Products, Part 3: Pricing Strategies

In Part One of this series on pricing rental products we talked about determining the minimum price to charge for rentals.

In Part Two we talked about how prices affect the perception of your business in the market.

Now, let’s talk about some pricing strategies that can be used to both add value for your customers and increase your profit. Even if you already have an established rental company these strategies can be used to take your business to the next level.

Pricing Strategies

Add-On Strategy

A great way to both offer a low price on a popular item and maintain a healthy profit is to price add-on products strategically. The concept here is to price a very popular product on the low end of the market’s price range but make up for the loss in profit by charging a little more for products that are commonly rented together with the main product.

An obvious example of add-on pricing in a sales environment is the computer printer industry. Companies will practically give away their printers knowing that the customer will be buying high-profit extras such as USB cables and ink cartridges as a result of buying a printer.

The low up-front cost leads to stronger profits over time because the low-priced product gets customers to choose to do business with you, and by default they buy the higher-profit products from you as well.

The same can be applied in a rental business. Say that you find that many of your customers, when renting a tent, will also rent sidewalls to enclose the tent or lights for inside the tent. Your company may be able to offer the tent for a lower rental price by increasing the profit margins the sidewalls and lights.

Losing Money to Get Business

A similar strategy to the add-on pricing strategy is referred to as the “loss leader” strategy. This is a temporary strategy that involves selling a product at such a low price that you are actually losing money on it, but it leads extra customers into your business to spend money on other products.

It only makes sense to sell at a loss for a short period of time, so you might use this pricing strategy as a promotion to get customers when you are first starting your business, or during a slow time of year.

Grocery Specials  by Taber Andrew Bain CC BY 2.0 via Flickr

Grocery Specials by Taber Andrew Bain CC BY 2.0 via Flickr

This is a common strategy at grocery stores. They will advertise one or two products for an exceptionally low price that cannot be found at other stores, because it is a money-losing product at that price. Customers see the ad and come in to get the great deal.

While in the store, the customers notice other great deals and remember products that they need to buy. In the end the store ends up profiting more from the extra customers and selling more of other products, even while taking a hit on the profit of the marked-down item.

Reward Customers for Larger Orders

In our business the primary product was fold-away picnic tables that rented for $15 a day (at that time). Our average sale was for 3 picnic tables for one day, a total of $45. Many customers would also add an $8 banquet table to hold their food for the party buffet, leaving an order total of $53.

We managed to increase our average sale by offering a free banquet table for every four picnic tables rented.  This worked for a couple of reasons.

  • The customer often looked at this as spending only $7 to get an extra $15 picnic table.
  • The company was looking at it as getting paid extra to include a less-popular item for free. Also, many customers bumped up their orders by multiple picnic tables just to get the free banquet tables, so average sale prices went up noticeably.
  • Everybody gained value, and everybody won.

Another Illustration

When you buy a restaurant gift card around Christmas time there is usually a deal, such as “buy $100 in gift cards get a $25 gift card free!” This is a brilliant marketing idea for restaurants.

Why?

In this deal you can assume that the restaurant’s typical gift card sale is around $50. By giving away $25 in gift cards for every $100 they still manage to raise their typical gift card sale to $75 (when you account for giving away $25). The restaurant increases their average sale by fifty percent and you get a free meal out of it, so everybody wins.

Charge Less for Longer Rental Durations

The longer an item is rented out, the better the deal you should give the customer. This is a common business practice, and it makes sense. Your product is not going to make any money sitting in storage, so renting it out for a longer period of time is saving you hassle. It is a lot easier to rent out one product to one customer for three days than to find three customers to rent the product for one day each.

The level of discounting depends upon your product and the market that you are targeting, but the general idea is that a customer who rents a product for an entire week is paying less than seven times the daily rental price. You might give them a half day or full day free for renting your product for an entire week. This can help to bring in more money up front and it increases the percentage of the time that your  product is being rented out.

Are there other pricing strategies that you have seen or used? Share them in the comments below!

Pricing Rental Products, Part 2: Perception of Your Business

In Part One of our series on setting a price for rental products we looked at how to find the minimum price that you should charge in order to at least break even between what you spent to buy the product and the income you receive from renting it out.

Now that you have determined your minimum price point, think about how your prices will affect the perception of your company by customers and also how it determines the type of customers you interact with.

Common wisdom says to price your products lower that your competition to attract more customers. This might be the best idea in some situations, but not in all.

How Do We Compare to the Others?

Soon after we started Picnic Table Rental a couple of competitors showed up offering the exact same products as our company. We quickly realized that our prices, and the services that were included in the price, were going to be very important in setting our company about from the others.

How did we do this?

First we figured out what the direct competitors were using for rental prices on similar items and positioned ourselves against them.

Determine Competitor’s Pricing

Dig around online and see if you can find prices for direct competitors. If you cannot find prices online (which is likely, because most companies prefer to get you on the phone to discuss your needs) try calling them up and asking them about their costs as any potential customer would. It will be helpful to know the highest price, lowest price, and average price of competitors in your area.

Local Comparisons Are Best

You may have to look outside of your area for comparable companies in order to determine typical prices. Keep in mind that there can be dramatic variation in prices depending upon your location and the demand for the product.

As an example, if you would like to rent a stand up paddle board for a day on the lake you will only pay $9 per hour in some parts of the country, but others area have a typical charge of $45 per hour for the same product. This is why the best price comparison is with similar companies in your region.

When we started Picnic Table Rental, before we had competition, we were able to compare prices to a company that had operated in our region in the years previous. We also looked at similar companies in other cities within a couple hours of our market and kept our prices within the same ballpark range as theirs.

When direct competition showed up in our market we had to decide how to price our products in relation to theirs.We found that the number and type of customers that we interacted with was related to how our products were priced compared to the competition.

Perception of Your Company

Low Prices and Company Perception

Let’s say that you price at 30 percent lower than the lowest-priced competitor. Does this indicate that your service is a great deal, or does it indicate that you provide lower-quality service with cheap products and fewer perks? You may be perceived as a great value, or you may be perceived as the low-end, low-service company in the market.

Low-end companies are not able to offer as many extra services as the high priced companies (maybe high-end companies can offer free setup and delivery, but you cannot, for example) and you will have to serve more customers to make up the lost profit that higher prices would bring.

If you go with the low-price strategy it is important to brand your company as the “best value” company for what you are offering. Your cost of doing business must be low, but the value of the service that you offer your customer needs to be more than what is expected for the price. Customers should be pleasantly surprised by their overall experience with you or you will have a reputation as the cheap and crappy company that offers the lowest prices.

Think about your everyday decision making. Do you typically book the cheapest hotel room in a city, or the cheapest airline? Most people go with at least the second-cheapest option to avoid a dirty hotel or a barely-safe plane unless the cheapest option also has a reputation for great service. The perception of quality is a battle you will fight if you price your products on the low end.

Low Prices and Customers

Another consideration is the customers that you will interact with. Experience both from running a rental business and a retail business has shown me that customers who want the cheapest price are usually the most difficult to deal with. You might expect that a customer paying $150 for running shoes would be much more picky than a customer who comes in to the store with a budget of $50, but it is exactly the opposite.

The customer who is willing to pay more is generally one who understands the value of what you are offering, and they are willing to pay for that value. The customer who comes in with a very low budget may not understand that value, and they just want a product for the lowest price.

Lowest-price customers can also be more difficult to work with because may not trust your advice, seeing you as a salesperson trying to make an extra buck, even if you are simply trying to find the right solution for their needs. You are trying to get them into a shoe with the right type of support, and they simply want a shoe that is half-off, even if it is not the right shoe for their feet.

In many ways it can be more desirable to find and work with one high-paying customer than with two or three low-paying customers.Pricing low is not always a bad idea, but you should be aware that it does come with its difficulties.

High Prices

Pricing higher than your competition may give the impression that you offer high-quality service and products. When faced with a variety of options most customers will assume that the most expensive is the highest quality.

By pricing your products on the high end, and providing great service to match the price, you can establish the perception of your company as the expert or leader in the market. When a customer looks at the options they will ask which services the other companies are not offering to get their prices lower than yours. This is a great thing, because the customer is using your company as the standard by which to measure the competitors.

The difficulty with higher-priced products is finding customers who are willing and able to pay the price. You must be able to educate the market on the need for and benefit of your high-priced product. You will have to explain to customers the benefit of paying the higher price to work with you, and the customer needs to be able to trust you or she will not be able to justify paying a premium to do business with you.

On the bright side, higher prices with a stronger profit margin mean that you will not need to serve as many customers as the lower-priced companies to earn an equivalent profit.

How We Managed Perception

At Picnic Table Rental we actually priced our main product, picnic tables, on the low end of the price range compared to similar companies. We differentiated our company by offering many related products that our competition did not have, such as tents, banquet tables, and chairs, and this helped to make up the difference in lower picnic table prices.

We also utilized some pricing strategies that increased our average sale and made our customers happier.

In Part 3 of this series we will take a look at various pricing strategies you can employ to enhance both your sales and the customer’s perception of your company. 

Do you have any interesting experiences dealing with companies that offer very high-end or low-end services? Share them in the comments below!