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How to Start a Party Rental Business

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Published on January 17, 2022

Updated on August 12, 2022

How to Start a Party Rental Business

How to Start a Party Rental Business

After staying at home so much for the last couple years, people are ready to party! You can help the good times roll by renting out tents, bars, bouncy houses, karaoke machines and more as part of your party rental businesses. US party rentals represent a $5 billion industry that’s growing as the pandemic recovery continues. With your own party rental company, you could snag a share of that market, make good money, and have your own party to celebrate!

You’ll have to do more than buy some bouncy houses, however, to start your party rental business. It will require some homework first, but luckily this step-by-step guide lays out all you need to do to get the party started on your successful party rental business. 

Fast Facts

Investment range

13,550 - $49,100

Time to build

1 – 3 months

Industry trend

growing

Revenue potential

$52,000 - $780,000p.a.

Profit potential

$26,000 - $156,000 p.a.

Commitment

flexible

Step 1: Decide if the Business Is Right for You

pros and cons for party rental business

Pros and cons

Starting a party rental business has pros and cons to consider before deciding if it’s the right path for you.

Pros

  • Grow As You Go – Start small with a few items and add to your inventory
  • Good Money – Good revenue, high profit margins
  • Flexible Hours – Start part-time and still make money

Cons

  • High Startup Costs – Many items to purchase
  • High Risk – Kid’s party items or tents could fail and cause injuries

Party Rental Industry trends

The US party rental market is worth $5 billion and growing as it recovers from pandemic-driven shutdowns. Recovery is expected to continue in the coming years.[1]https://www.ibisworld.com/united-states/market-research-reports/party-supply-rental-industry/

Trends in the industry include:

  • Demand in 2022 is expected to have a go-big mentality, with high-end big impact items being sought. Outdoor events are expected to be more common, presenting an opportunity to specialize in tents, outdoor furniture, and other items.
  • Rental décor, such as decorative backdrops, is becoming more common, in addition to more functional items.

The industry is also experiencing some challenges, which include:

  • Since outdoor events are trending and indoor activities for groups are still somewhat on hold, the party rental business is experiencing higher than usual seasonality.
  • The continuing uncertainty caused by the pandemic offers a challenge for party rental businesses as people may continue to postpone events or cancel at the last minute.

How much does it cost to start a party rental business?

Startup costs for a party rental business range from about $13,000 to $50,000. Costs include purchasing rental items, renting a storage facility, and making a down payment on a truck to transport the items. Your costs will depend on which items you already have, and which you’ll need to start your business. 

You’ll need a handful of items to successfully launch your party rental business, including: 

  • Tents, tablecloths, bar, bouncy houses, karaoke machine, games
  • Truck, such as a box truck, to transport large items

Learn more about starting a box truck company from this Step By Step article, or read about starting your own karaoke business

Start-up CostsBallpark RangeAverage
Setting up a business name and corporation$150 - $200$175
Business licenses and permits$100 - $300$200
Insurance$100-$300$200
Business cards and brochures$200 - $300$250
Website setup$1,000 - $3,000$2,000
Items to rent$5,000 - $30,000$17,500
Storage facility rental deposit$2,000 - $5,000$3,500
Truck to transport items down payment$5,000 - $10,000$7,500
Total$13,550 - $49,100$31,325

How much can you earn from a party rental business?

Tent rental averages about $500 per day, while bounce house rentals run about $300 per day. You’ll need workers to assist with setup, so your profit margin, if you’re running your business from home, should be about 50%. This will assume that your average event price is about $1,000.

In your first year or two, you could work from home and do an average of one event per week, bringing in $52,000 in annual revenue. This would mean $26,000 in profit, assuming that 50% margin. As your brand gains recognition, sales could climb to 6 events per week. If you have acquired more items, your average event price might be $2,500. At this stage, you would rent an office space and hire additional staff, reducing your profit margin to around 20%. With expected annual revenue of $780,000, you would make about $156,000.

What barriers to entry are there?

There are a few barriers to entry for a party rental business. Your biggest challenges will be:

  • The cost of your rental items, a storage space, and a truck
  • Stiff competition from established companies

Step 2: Hone Your Idea

Now that you know what’s involved in starting a party rental business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Why? Identify an opportunity

Research party rental businesses in your area to examine their products and services, price points, and customer reviews, as well as what sells best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a bar and barware rental business. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as outdoor events. This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

Your products and services will depend on what you decide to specialize in and what items you’re able to acquire. Your services will at least include delivery, setup and pickup of items.

How much should you charge for party rental items?

Tent rentals cost about $500 per day. Bouncy houses run about $300 per day, but can be more depending on size and features. Other items vary in price. You’ll need staff to help with delivery, setup, and pickup, so if you run the business from home you should aim for a profit margin of about 50%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the price you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the type of events you decide to specialize in. It could be companies if you decide to do corporate events, or parents if you decide to do birthday parties. Either way, the target market is going to be more established people who can afford party rental items so you can find them on Facebook or LinkedIn.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

  • Central location accessible via public transport
  • Ventilated and spacious, with good natural light
  • Flexible lease that can be extended as your business grows
  • Ready-to-use space with no major renovations or repairs needed
Should you start a party rental business

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

  • Short, unique, and catchy names tend to stand out
  • Names that are easy to say and spell tend to do better 
  • Name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “party rentals” or “party tent rentals”, boosts SEO
  • Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

  • Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your offerings in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider finding and hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running. 

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to party rental businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your party rental business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

  • Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
  • Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
  • Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
  • Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
  • S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online. It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

  • Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
  • SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
  • Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
  • Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
  • Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option for funding a party rental business. Alternatively, you could use a combination of personal funding and friends and family funding. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Licenses/Permits

Starting a party rental business requires obtaining a number of licenses and permits from local, state, and federal governments. Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

woman is opening bank account and checking  credit card information

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account. Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your party rental business as a sole proprietorship.

Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

  • General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
  • Business Property: Provides coverage for your equipment and supplies.
  • Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
  • Worker’s compensation: Provides compensation to employees injured on the job.
  • Property: Covers your physical space, whether it is a cart, storefront, or office.
  • Commercial auto: Protection for your company-owned vehicle.
  • Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
  • Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You can use party rental software, such as Quipli, Good Shuffle, or Booqable, to manage your scheduling, orders, tasks, billing, and payments.

Online Marketing

Some of your business will come from the casual online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Schedule Now”. This can sharply increase purchases. 
  • Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers. 

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your party rental business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your party rental business could be:

  • Luxury party tents for your big event
  • Let the good times roll with your own bouncy house 
  • Outdoor event seating and tent rental for your summer bash

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

  • Flyering – Distribute flyers in your neighborhood and at industry events 
  • Post a video – Post a video about your party rental items. Use humor and maybe it will go viral!
  • Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
  • Seek out referrals – Offer incentives to generate customer referrals to new clients. 
  • Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
  • Payper-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
  • Influencer marketing – Pay people with large followings to promote your party rentals. You can find micro-influencers with smaller followings and lower rates.

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a party rental business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in party rentals for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in party rentals. You’ll probably generate new customers or find companies with which you could establish a partnership.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero
  • If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Step 12: Build Your Team

You will likely need workers to fill various roles. Potential positions for a party rental business would include:

  • Rental Assistants – delivery, event setup
  • General Manager – scheduling, staff management, accounting
  • Marketing Lead – SEO strategies, social media, other marketing

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

As the pandemic recedes, people are ready to have fun, and you can help! With a party rental business, you can help create memorable events of all types and grab your own little slice of this $5 billion industry. 

You can make good money and spread joy at the same time. You can start by specializing in a certain item and then expand over time to become a one-stop-shop party rental business. Now that your homework is finished, get ready to launch your new party rental business and bring in some cash!

Party Rental Business FAQs

How much does it cost to start a party rental business?

The costs to start a party rental business include the items that you will rent, a storage space rental, and a truck to transport items. You could start small for about $13,000, but costs could be as high as $50,000.

How can I finance a party rental business?

Financing options include personal or family and friends funding, or you might be able to qualify for a bank loan or an SBA loan. To do so, you’ll need a good business plan. If you have a unique concept, you could also try crowdfunding. 

Do I need a license to start a party rental business?

You may need various business licenses and permits at the state and local levels. Check with your local governments for requirements, or visit MyCorporation’s Business License Compliance page. 

What’s the best kind of party rental business to start?

There are all types of party items that you could rent. You could rent tents and furniture for outdoor events, which are very popular right now. You could instead focus on things like banquets and wedding receptions and rent tablecloths, dinner and glassware, and other items.