How To Start A Tent Rental Business – Business Plan, Profitability and Cost Analysis

Tent rental Business supplies tents on rental bases to various types of events such as weddings, parties, exhibitions, and trade shows. This type of business comes under the party supplies industry. In some Asiatic nations, this business is also called Tent house business which means, it’s a place where you can rent out various party supplies such as tents, chairs, stages, and other catering items needed for an event.

Why Should You Consider Starting a Tent Business?

Events that were planned outdoors give a special ambiance to the guests; it feels more natural at the same time they were economical when compared to events that were held at convention centers or banquet halls.

When we look at a business perspective, starting a tent rental business has the following benefits

• The upfront cost for starting a tent and party supplies business highly varies, you can either start it with low investemt of $10,000 or invest more than $2,00,000 making it a Large to medium scale business
• Requires less number of workers to assemble and transport the equipment 
• As most events occur throughout year this business enjoys yearlong orders
• High flexibility pricing option as per occasion, Providing other services like seating, décor and music band gives more profitability to owners
• Depending upon the scale of the event and season you can either choose a smaller or large crew
• If you were able to organize and manage things you can make it as a part time business
• Tents are generally made up of durable fabrics, hence they were known to last for longer duration with minor repairs. Which means, they were mostly one time investment

Market Scenario of Tent Rental Business

Tent rental business comes under the party and supplies industry. When we look at global party supplies market, it is expected to reach $20,291.7 million dollars by 2027 from just $12,657.9 million dollars in 2019. Although 2020 had seen a significant drop in the party supplies industry around the globe, it is soon going to be picked up again to normal pace.

For example, BusinessWire reported, Party and event segment in Canada had seen a drastic drop of 28.5 percent in 2020 but it is expected to bounce back and surpass its peak 2019 revenue by 2023.

On other hand, the wedding market is one of the potential sources for tent rental market. According to Statista, outdoor weddings in U.S had increased from 57% in 2019 to 68% in 2020. So, taking into these figures and market demand starting a tent rental business is still a lucrative business idea.

Business Opportunities in Tent Rental Business

Almost all events that were hosted outdoors require tents. Although, the main motto of having a tent is to protect guests from external elements. Today, their main purpose is more than that. Tents now come in different sizes and shapes, and they were also highly customizable as per customer needs making them a perfect go to option for any kind of event.

Here are some market opportunities where tents are highly preferred

• Weddings
• Graduation parties
• Family gatherings
• Exhibitions
• Local business expos
• Countryside festivals
• Camping
• Music festival events
• Used in Construction sites

How much Profit does tent rental business make?

Let’s take a simple example if you purchased a pole tent of 30’x40’ size for $4,000 and you quoted a price of $300 for renting the tent per day; then it would take around 13 to 14 orders to cover up the initial cost of purchasing the tent. On other hand, the profitability of a tent business varies on several things like expenses, fuel, and wages to workers.

Here are the top factors that can influence tent rental business profit

• Type of Occasion
• Type of Tent
• Season
• Customer service
• Delivery Location

Type of Occasion

When we consider the occasion, tents that were ordered for events like weddings and grand occasions have high profitability as these types of events normally require more than just a tent setup. They need extra accessories like lighting, chairs, cutlery, and other things to add up the décor. Although these accessories initially cost you high, they can contribute to your business continuity.

On other hand, if your rental company is also providing party supplies like chairs, tables, altar and lightening you can make an additional profit of $200-$500 per wedding. However, keep in mind to buy these supplies initially, you may have to spend thousands of dollars as an upfront cost but in the long run, they help you make more profit.

similarly, occasions like exhibitions, expos, or small festivals rent a tent for a longer duration like 3-5 days. These events generally don’t require décor or other supplies, they just need a tent set-up. Hence the profitability also depends upon the number of days the event is carried out.

Season

The profitability of the Tent business highly depends upon the season. Take, for example, wedding season that starts in spring and ends in early fall (starting from June till October) are considered one of the best marriage seasons and has a high demand for marriage supplies; So, the prices vary in these months compared to rest of the seasons.

Likewise, expos or events that occur throughout the year regardless of the specific season doesn’t get influenced by the season and the prices will be normal

Type of tent that was ordered

Frame tents and pole tents are the most common types of tents. Each has their own pros and cons. From an owner’s perspective, frame tents are expensive to purchase but give high ROI, whereas, from a customer perspective pole tents are economical. See below the highlights of Frame tents and pole tents

Frame tent

• Expensive than pole tents due to additional equipment’s required for construction
• Requires trained crew
• They take longer time to set-up
• provide more free space without any restrictions
• works in almost all type of surfaces

Pole Tent

• Budget tents
• More customizable
• Look and feel of a pole tent is more attractive than a frame tent
• More customizable than frame tents
• The center pole serves as an elegant décor item that it can be adorned with lights, flowers which is missing in frame tents
• Not well suitable in concrete or asphalt surfaces

Customer service

Some tent rental companies just provide tents, whereas, others provide a full range of services from supplying tents, catering service plus waitstaff. If you were able to provide large-scale service, you can make more profits than simply providing a tent.

Take an example, if you were able to provide 5 waitstaff for 100 guests party, each with $25 per hour and if the event lasts for 4 hours then each waiter gets $100 at the end of the event. So, the entire crew makes $500 at the end of the day. Now, if we consider 15% as a tip on the overall bill it makes $575. As a supplier, if you take 10% as commission you would get $57 which is good enough to fill gas for your car!

In another scenario, if you have connections with any party band you can refer them to your customer. Just assume you get a small referral bonus of $30-40 just for referring a musical band for an event the amount is good enough to cover some necessities. But you must know well about the reputation of the service before recommending it to anyone

Delivery Location and Time

It is common for tent rental companies to charge based upon the delivery location. Usually, companies will deliver for free within a 10-15 miles radius. But if the event location is more than the given distance then an additional delivery charge will be applied. This could be starting anywhere from $25 and go up to $75 depending on the distance

In addition, most tent rental companies deliver free of cost during normal business hours like 8:00 am to 5:00 PM or 9:00 AM to 5:00 PM Monday to Friday. If it is above or less than the specified time or if it is a weekend, then additional charges will be applied. In the initial stages of the business, you can provide offers or discounts on delivery and time duration this can help you to initially build a customer base.

Business Plan for Starting a Tent Rental Company

Let’s learn some basic things that were required to start a tent rental business

1. Creating a Business Plan

Your business plan should cover information on how you are going to operate your tent rental business. Generally, it should cover information about your estimated budget, the scale of your company, the estimated number of employees, forecast of sales, profit margin, list of assets and liabilities,  location of your business, and marketing strategy.

2. Registering Your Business as a Legal Entity

Based upon your business structure you either chose to register as a sole proprietorship, partnership, or LLC. The registration fees, tax, and ability to raise funds highly depend upon the type of business that you were registering. Generally, registering under LLC or Partnership is more chosen as it protects you from being held personally liable.

3. Obtaining Funds – Raising Capital

The initial investment required to start a small to medium-scale tent rental company would cost around $120,000 to $150,000 this covers basic things from registrations, permits, licenses, equipment, land, promotion, branding, and miscellaneous expenses.

Having a strong business plan can attract potential investors as well as provide solid data for banks to give you loan. However, if you are not sure how to work around this matter it is always better to reach out to a business consultant

4. Getting EIN

Any business that retains employees require EIN (employer identification number) also known as Federal Tax ID number; it is a unique 9-digit number that identifies your business for tax purposes, EIN is important for several reasons like, it helps to open a business bank account, filing for taxes, as well as ensures no delays in permits and licenses.

As Tent rental companies generally have to deal with a lot of permits, licenses, and insurance and moreover it requires a good amount of money to raise capital getting an EIN is important.

5. Buying Tent and Necessary Equipment

The major portion of the investment in tent rental companies goes to, Tent and their equipment. On average a 20×30 tent costs around $5,000 for the entire setup. Which covers tent top, poles, stakes, sidewalls, vinyl bags, and ratchets.

In addition to pole tents or frame tents. It is common that tent rental companies also purchase low-cost tents like small canopies, pop-up tent which costs around $350-$500. These are especially used for kiosks, trade shows, and additional units for larger tents.

Overall, if you were planning to start a small scale tent rental company, getting 2-3 wedding tents of 20×30 or 20×40 size and 3-4 trade show tents is a feasible option.

You also need certain extra accessories like drop cloths, ratchets, rain gaters, tent jacks, wheel cart movers which can cost you around $2,000 – $3,000.

6. Getting an Insurance policy for your Tent rental company

Party and Tent rental businesses involve risks such as damage to equipment while transporting or damage to your client’s property. In some cases, your staff may also get injured during work. In order to overcome such risks and make sure they do not impact your business, getting an insurance policy is necessary.

Here are some of the common insurance policies that you may need to consider

• General Liability
• Property insurance
• Commercial auto coverage
• Workers’ compensation

7. Finding a Suitable Location and Storage Area

Location plays a key factor in tent rental business. Your location should be feasible enough to deliver the tent as per the agreed timeline. At the same time, it should be economical and should have ample space to store your equipment.

In general, Large or mid-sized tent rental companies get retail spaces that can accommodate an entire huge inventory. However, for smaller tent rental companies buying a retail space can be expensive.

In such cases, preferring storage units were economical. Small storage units with 5×10 or 5×15 or medium storage units with 10×10 or 10×15 were good enough to store almost all your tent inventory.

When you were looking for space consider these three factors

• Dimensions of the storage unit
• Feasibility of the location
• Ease of accessing the unit

Among the tent inventory, poles take up wider space. either you need more head space or ground length which means you have to pick a storage unit that can accommodate either.

At the same time, your unit should have ample room to easily take out the accessories without any damages and put them back once the job is done.

8. Gathering Resources – Workers, Inventory and a Commercial Vehicle

Your tent rental company needs at least 2-3 workers along with you. Especially, when you were dealing with wedding tents of large size you need extra manpower so that you can distribute the work more efficiently as well as be prepared when you have multiple orders.

You need to have an extra set of inventories ready with you so that you can plan and manage multiple orders. If you are also supplying things such as chairs, lighting equipment, cutlery, and linen cloths make sure you have a dedicated staff to manage all these things or keep a detailed checklist to keep track of the total no of items in your inventory

You also need to have a commercial pickup truck for your tent rental company. The truck should have a good tailgate length that carry few chairs, tables, and tent equipment. At the same time, the cabin should be able to accommodate space for your crew.

9. Promoting Your Business

The promoting part of your tent business has a lot of weightage on how well your business gets successful. These covers branding, marketing, and sales strategies. When you are in the initial stages, you have to put a lot of effort to figure out which type of marketing suits you best and gets the ROI quickly.

The marketing methods should be efficient enough to reach your target customers at the same time they should also be economical. Overspending too much money for the promotion part can often leave you in debt. So always choose a wiser option.

Here are some quick marketing tips for tent rental companies

• Set up your Own website
• Be active in social media channels
• Stay connected with local tent rental companies
• Get a catchy name for your business
• Be prepared and advertise about your services before festive seasons
• Take advantage of local newspapers and news channels
• Make sure to have a brand identity to your crew and vehicle and mention website, email or phone number of your tent rental company on it.

10. Making your Tent Retal company a Preferred Option for Customers

Top-quality equipment, superb customer service, and timely delivery are key things to make your tent rental company a preferred choice for the customers. If your customers were satisfied with your service there is a chance that they refer your service to their friends and family so that, you would automatically get new clients without spending extra dime. On other hand, if you ignore these key points there might be a chance that next time the customer may go to another tent rental company.

Tent Business Cost Analysis Estimation

Let’s do a rough breakdown for starting a small to mid-sized tent rental company. The values listed below were just assumptions trying to include possible expenses and revenue in running the business

Considering the forecast above we can assume by the end of the 2^nd year we can settle the loan amount and by the mid of the third year, we can expect a return of investment.

Although it sounds like a time taking business you should know the fact that you were investing a huge amount of money and tents and party supplies were known to last for long years, so they were one-time investments with very few repair costs.

If you were able to maintain consistent quality, good customer service, and utilize the market properly there are high chances that you will receive a more number of orders and keep getting customers back.