The party rental business is one of the easiest businesses to grow if we’re talking about more inventory. But as you’ve probably heard before, most operators fall into the problem of growing too fast. This results in stretching yourself thin for storage space, delivery staff, and sales staff. Before you know it you’re missing calls, your equipment is molding because you didn’t get to dry those 2 units that got rained on, and customers are starting to complain because you delivered late and left the water slide at their house for 3 days.
So how do you know when you’re actually READY to grow?
Here are 5 signs that you’re ready to grow your bounce house business or party rental business to the next level
1. You Are Turning Away Business Due To Availability
If you’re getting calls every day for items that you have, but they’re already booked, then that’s a big sign that you need to get more. Whether it’s water slides, chairs, or snow cone machines, the easiest way to grow is to get more of something that you already have.
That said, one of my biggest regrets is buying too many variations of something that we already had, for example themed units and different styles of water slides. If something is booking like crazy, get more of that same exact thing!!
2. You Are Getting Multiple Requests Per Day For Items You Don’t Have
The biggest mistake we made when growing our party rental business getting into new equipment because we thought there would be more money in it… or because we got calls for stuff we didn’t have and we felt like we were missing out.
In most cases, one of 2 things ended up happening when we got into new equipment:
- Barely anyone rented it so it just took up space that could have been occupied by a more profitable item like a water slide.
- Interactives (Wrecking ball, Joust, Wipeout)
- Nerf Wars
- The equipment got rented but we had no experience with it so it ended up sucking up more time, resulting in less profit and A LOT of headache which ended up throwing off the rest of our operation.
- Tables & Chairs
- Photo Booths
That’s not to say that you absolutely shouldn’t get into interactives or tents. But there are some things you should actually put to paper so you get your emotions out of it and work with cold hard facts:
- How many requests did you ACTUALLY get for items you don’t have? Does it just feel like a lot because you don’t have it? Try to tally the calls and if you’re only being asked about it a couple times per week/per month then maybe it’s not worth occupying precious space.
- If you’re wanting to get a new item so that you can get into bigger events (schools, churches, corporate events), how much revenue will this new item potentially bring you compared to your best selling unit? Would it be more profitable than buying a duplicate of your best seller?
- Do actual research in your area to see what potential demand there is for the new products using Google Trends or Google Keyword Planner.
- Speak to someone who has experience with this product to learn what possible challenges you may face and additional equipment/training you may need.
- For example, there’s a chance you may hit an underground gas/power line when staking in a tent.
- Some tents can be set up on hard surfaces while others can’t.
- Some tents can be extended to make larger tents while others can’t.
- Some tents require 3-4 people to put up.
- Chairs & tables can be very time consuming to clean.
- Photo booths are electronic devices used in more upscale events so they should be transported in a clean vehicle and handled delicately. Will your staff treat them as such or will they throw them in the back of the truck like they do your inflatables?
- How often do things go wrong and how easy are issues to resolve?
- Inflatables can easily be repaired either permanently with a patch or temporarily with FixMyTear.
- Photo booths often have problems with the computer or the printer. Be prepared to have extra chords, extra printer, extra laptop, and a spare of anything that could go bad so you don’t end up ruining someone’s wedding which you can get sued for and lose very easily.
- Pole tents can dip if it rains or if the soil is soft.
- Frame tent parts can brake so you need to have spares on hand.
If you think this sounds intimidating that’s because it should. We learned the hard way that doing more of what you already know is much better than adding something that is totally different than what you already deliver a high volume of.
3. You Can Handle The Logistics Of Growing
It’s really important to either have or have a plan for managing the following:
- Additional vehicles to deliver your new equipment.
- Additional staff to be trained and retained so that you can fulfill your new orders and clean your equipment during the week.
- Routing software to be able to route multiple trucks over multiple days.
- Ability to handle a larger volume of incoming calls, emails, and text messages for your new equipment.
- Ability to pay for additional marketing so you begin to compete in your market for the new equipment.
4. You Have Space Or Can Get More Space
It’s easy to get so excited about growing your inventory that you forget to consider where all this new equipment will be stored.
- If you’re in your garage then it makes sense to consider a nearby storage unit just make sure you have 24/7 access as many places limit your access after hours. Storage units are great alternatives to warehouse space because they are cheaper and you can leave any time. We had 8 different storage units before we took the leap and moved to our warehouse.
- If you’re already operating from a storage unit then you need to consider many different factors before making the jump to a warehouse. Some things you should really look for in your dream warehouse are:
- Close to your home: This is HUGE and makes going to “work” and putting out last minute fires much easier.
- High ceilings: Great for cleaning and installing pallet racking.
- Parking spots: Make sure you have at least 4-6 parking spots that you can use for your trucks, trailers, and cleaning.
- Neighbors: It’s really helpful to have neighboring businesses who are closed on weekends so you don’t have to worry about complaints when your trucks are blocking the whole parking lot.
- Office space: You’ll need somewhere you can set up a desk for you or your potential sales staff (you’ll need them sooner than you think).
- Water source: A bathroom sink just won’t do. It really helps to have somewhere you can hook up a water hose.
- Bathroom: Your staff will appreciate it.
- Ample circuits: You’ll need enough power to keep up with a few blowers at a time.
- Rent: When we moved to our warehouse our rent was $1,600/month (plus utilities). At that time we had just finished out a season where we made approximately $150K/year. Our annual rent was $19,200 so that was about 13% of our gross sales. This is one example but you can a similar equation as a benchmark for your operation.
- Avoid metal warehouses because they may let water into your units.
- Bay door: This will be very important for loading delivery vehicles.
- Lease: Ask for a free month they’ll usually say yes. Also make sure to find out if your rent will go up every month?
- Other considerations: Can you put a sign up front? Will you have access to high speed internet? Is trash/water/sewer included?
- You can find commercial listings on Loopnet.
5. You Are Profitable
This is one that’s easily overlooked because we dump all of our money into growing our business. I know this can be overwhelming, but there are 3 main numbers that helped us keep our finger on the pulse of our business:
- Profit percent: What percent of your gross sales is actually profit? (Make sure you pay yourself first!!!)
- Payroll percent: What percent of your income goes to payroll?
- How much are your monthly expenses on average?
We used a spreadsheet to look at these numbers every month and that helped us determine whether our business was heading in the right direction before the end of the year so that we could correct course if we needed to and still be profitable.