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How to Start a Party Rental Business

How to Start a Party Rental Business

How to Start a Party Rental Business

How to Start a Party Rental Business

How to Start a Party Rental Business

If you’ve ever thrown a large-scale party, planned a wedding, or been in charge of a large corporate event, then you may already have experience in renting party equipment, like tents and tables. Starting a party rental business of your own will mean you can help other party hosts find the equipment they need. If you have great organization skills and an awareness of the types of equipment needed, you’ll be well-suited to running this type of business. Plus, if you love throwing parties and have creative ideas, you can make suggestions to increase your sales while helping hosts create unforgettable parties.

Business Overview

Party rental businesses offer a large volume of expensive supplies that are must-haves for larger parties. These are supplies that occasional party hosts couldn’t justify buying themselves, like tents, bounce houses, inflatable slides, chairs, tables, lighting, decorations, linens, and more. These businesses often have a comprehensive inventory of items for a host to choose from, allowing a customer to do nearly all of their supply shopping from one business.

As part of the rental service, a business will deliver and often set up the equipment. After the event, pickup is also included in the rental cost, though some customers may choose to pick up and drop off smaller pieces of equipment.

Industry Summary

From 2013 to 2018, the party supply rental industry has undergone steady growth. According to IBIS World, the industry experienced an annual growth of 4.5 percent during that time, and the number of businesses increased to 12,583. Industry employment also increased to 54,606, and in 2018, the industry brought in $6 billion in revenue.

The industry’s growth correlates with the increase in disposable income and corporate profit from 2013 to 2018. With more disposable income and profit, more people and corporations host parties and events, and they’re more likely to make those events larger and rent more party equipment as a result.

Industry Trends

According to Current, several major trends are currently shaping the event rental business industry. Event hosts are increasingly turning to new, creative, and non-traditional venues. These non-traditional venues can include barns, warehouses, lofts, and different outdoor settings. They give rental businesses a chance to create setups that are unique and work with these different settings.

Party hosts are also increasingly focused on sustainability. Party rental businesses can embrace this trend by replacing plastic tablecloths with cloth ones, supplying energy-saving lights, and even using electric delivery vehicles to cut back on fuel use.

With the constant development of technology, there’s always a demand for the latest technological party equipment, like lighting and AV supplies. Rental businesses that can clear out old equipment and invest in new technological equipment will probably see more bookings than companies that have outdated equipment.


Target Market

The target market for a party rental business will depend on the business’s area of specialty if there is one. Businesses may specialize in wedding, birthday party, or corporate event rentals, and each will have a different target market. Some businesses take a more general approach or choose to offer products for each specialty area to appeal to a wider potential market. Businesses may market directly to people who are throwing these parties or market to event venues and event planners or managers.

Checklist for Starting a Party Rental Business

If you’re thinking about starting your own party rental business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Write a Business Plan

After coming up with the idea, the next step in starting your business should be to write a business plan.  Writing the plan forces you to consider and research important aspects of the business, such as who the competitors are and what makes your business different, pricing, and whether the business can be profitable. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related: How to write a business plan

Step 2: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a party rental business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 3: Name the Business

Finding the perfect business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming a party rental business

Step 4: Select your Location

A rental business will need a physical location to store equipment, and customers may also place orders or even pick up smaller supplies at this location. Because of the size and volume of a business’s inventory, it may be necessary to rent a large building or even a small warehouse, expensive. Exact rental costs will depend on the building’s size and location.

Related: Choosing a business location

Step 5: Register for Business Licenses and Permits

There are no licenses required specifically for party rental businesses; however, there are general business registrations, such as a business license, sales tax permit, Employer Identification Number (EIN), and Occupancy Permit, among others.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a party rental business is another.  Funding to start a party rental business can be difficult.  In order to get a loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% towards total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

Party rental businesses rely on active marketing to bring in new customers, especially since customers may only throw occasional parties, so repeat customers result in only occasional repeat business. Marketing can include print marketing, direct mail, radio, online marketing, social media platforms like Pinterest, Instagram, and Facebook.

Networking is an important element in a party rental business’ success. Establishing and maintaining connections with local event planners and event venues can bring in new business and open up new opportunities

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a party rental business. A few of these include:
– General liability insurance protects the business if customers or event attendees are ever injured because of the rental equipment. This insurance can cover costs like legal fees and will generally be required when setting up events for corporate and municipal customers.
– Commercial auto insurance covers the expenses, like legal fees and medical bills, that can occur if a company-owned vehicle is ever in an accident.
– Worker’s compensation insurance helps to cover expenses like medical bills or lost wages if an employee is ever hurt while on the job.

The cost of insuring a party rental business will vary depending on many factors like the location of the business, the value of its inventory, and the number of employees. To get the most accurate idea of what insurance will cost, request quotes from multiple insurance companies. When comparing the quotes, be sure to think about factors like coverage limits and exclusions, premiums, and deductibles.

Related: What types of insurance does a party rental business need?

Step 10: Hire Employees

A business will need at least a few employees to take and prepare orders and to deliver and pick up equipment. According to Payscale, sales clerks make a median rate of $10.27 per hour, with some clerks earning up to $14.82 per hour. Payscale also reports that delivery drivers earn a median income of $14.32 per hour, with some earning up to $21.58 per hour.

In addition to budgeting for salary expenses, a store’s budget also needs to include worker’s compensation insurance, paid time off, and health insurance contributions for employees.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business


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

Because party rental businesses require large amounts of inventory, starting these businesses requires a significant initial investment. To keep costs down, try focusing on a certain specialty, like inflatable toys for parties or supplying just decorations for weddings. Expect to spend about $25,000 to start up a smaller, specialized business, and as much as $300,000 or more for a more extensive and comprehensive supply business.

Some common startup costs include:
– Rental inventory such as party tents, chairs, tables, etc.
– Delivery truck
– Tables and chairs
– Party rental software
– Supplies, like cleaning equipment
– Signage
– Working capital to cover the first few months of payroll, lease, insurance, marketing, etc.

How much can a party rental business owner make?

Data on the specific income you could expect with a party rental business isn’t available, but keep in mind that your income will depend on many factors. A smaller business intended for backyard parties won’t bring in the same income that a larger business that caters to weddings and corporate events might see.

It’s important to realize that the party rental business can fluctuate, especially since it’s closely tied to disposable income and overall economics. This can also be a very seasonal business, with events occurring more frequently around the holidays or during times of good weather. Branching out into multiple event types, such as corporate holiday parties and weddings, can increase your bookings, but it also means that you’ll need to invest in and store more equipment.

What skills are needed to run a party rental business?

While you won’t need a business degree to start a party rental company, certain skills and experiences are useful and can increase your business’s chances of success.

Understanding of party and event trends. A party rental business owner needs to have their finger on the pulse of party and event trends. This awareness can help to keep a business’ inventory current and appealing to potential customers.

Party planning experience. While not a requirement, a business owner with party planning experience can better understand the target audience and the challenges and pain points they face.

Knowledge of party equipment. Strong knowledge of party equipment, from AV technology to tents to folding chairs, will allow a business owner to identify the types of equipment that will be most in demand and to wisely make inventory purchases.

Customer service skills. Great customer service skills are important, especially since emotions can run high around special events. A business owner needs to be able to communicate clearly and quickly solve problems.

Organization skills. With large volumes of inventory, being organized is important in keeping track of supplies and in preparing orders. Attention to detail is also highly important.

Networking skills. Networking is essential in this industry since connections with event planners, business owners, and event facilities can lead to potential bookings.

Management experience. Nearly any party rental business will require multiple employees, so experience in hiring, training, and managing staff is valuable.

Are there grants to start a party rental business?

It’s extremely rare to find a grant to start a party rental business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a party rental business?

The NAICS code for a party rental business is 532299.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

American Rental Association

How to Start a Party Rental Business

How to Start a Party Rental Business

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I have over 21 years as an entrepreneur, educator, and business advisor, where I worked with over 1,600 entrepreneurs to help them start and grow their businesses.

As a small business advisor, I got fed up with clients finding inaccurate and outdated information when they were researching how to start a business online, so I launched StartingYourBusiness.com to be a trusted resource.

I'm constantly adding and revising this site, but if there is a question you have about starting a business or need help finding something, please ask!