Last Updated on

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 to find the equipment that 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 a business. Plus, if you love throwing parties and have creative ideas, you can make suggestions that will increase your sales while helping hosts to create unforgettable parties. 

Business Overview

Party rental businesses offer the large volume or expensive supplies that are must-haves for larger parties. These are supplies that occasional party hosts couldn’t justify buying themselves, like tents, chairs, tables, lighting, decorations, linens, and more. Often, these businesses 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. Pickup after the event 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 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 during 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 to rent more party equipment, as a result. 

Industry trends

According to Current, several major trends are currently shaping the party 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, and they give rental businesses a chance to create setups that are unique and that 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. 

Who is the target market for a party rental business?

The target market for a party rental business will depend on the business’ area of specialty, if there is one. Businesses may specialize in wedding, birthday, 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 of these specialty areas to appeal to a wider potential market. Businesses may market directly to people who are throwing these parties, or they may market to event venues and event planners or managers. 

Skills, experience, and education useful in running 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 the chances of your business being a 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. A 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, organization is important in keeping track of supplies and in preparing orders. Attention to detail is also highly important. 

Networking skills. Networking is particularly important 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. 

Financial Overview

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 in 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. 

Common startup costs for a painting business include: 

  • Inventory
  • Delivery truck
  • Tables and chairs
  • Supplies, like cleaning equipment
  • Signage

Working capital

A party rental business will depend on working capital to cover operating expenses like inventory purchases. If too much working capital gets tied up in inventory and the business doesn’t book enough events to replenish that working capital, it will be difficult to keep the business operating. 

Insurance

Party rental businesses need several types of insurance to be fully covered: 

  • 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. 
  • Commercial property insurance protects the business against the financial loss of inventory and property after an event, like a fire. 
  • 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. 
  • Workman’s comp insurance helps to cover expenses like medical bills or lost wages if an employee is ever hurt while on the job. 

The cost of insurance policies will vary depending on many factors like the business’ location, 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. 

Common operational expenses

In addition to these startup costs, be sure to budget for the following common operational expenses. 

Rent

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’ inventory, it may be necessary to rent a large building or even a small warehouse, which can be expensive. Exact rental costs will depend on the building’s size and location. 

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 employee salaries, it’s important to factor in additional expenses like workman’s comp insurance, paid time off, and health insurance contributions. 

Marketing

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, social media and online advertising. Marketing expenses will vary according to the type of marketing and its volume. 

Business Licenses & Permits

A party rental business will need to hold any required business permits and licenses. These permits and licenses can vary based on the state and town where the business is located. 

 

How much can you potentially make owning a party rental business? 

Data on the specific income that 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, though startup costs for the smaller business will be more manageable. The number of years that a business has been operating and its reputation will also affect its income. Finally, a business owner who understands the equipment that is most in-demand and who understands how to source these types of equipment at the best prices can help to keep profits up for increased overall income. 

Things to consider before starting a party rental business

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.  

This is also a competitive industry. Customers will want new and quality equipment and supplies, so as a business owner, you’ll need to stay aware of evolving trends and be one of the first businesses in the area to offer trending equipment. 

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. 

Resources: 
American Rental Association

Close Menu