If you have a background in construction, you may be considering striking out on your own and starting a crane rental business. Construction is booming in many cities, so there’s lots of demand for heavy machinery and equipment. Depending on which types of cranes you provide, you could earn thousands of dollars per day by renting out your machines. But starting a crane rental business has some downsides, such as high upfront costs. Here are four things you need to know or consider before starting this type of business.
Demand for Cranes in Your Market
One of the things you’ll need to determine before starting a crane rental business is the level of demand for cranes in your area. Is your city saturated with crane rental companies or is there a gap in the market you could fill? Call local crane rental businesses to see what their lead time is. If most companies in your area are booked weeks or months in advance, that’s a good sign there’s a need for additional crane rentals in your area.
You can also research construction projects in your area and see how many new buildings are slated for development. If your city is undergoing a big construction boom, there will likely be increased demand for cranes in the coming months and years.
Types of Cranes Used in Your Area
It’s also important to figure out which types of cranes are most commonly used in construction projects in your city. For example, If you live in a big city with lots of high rise buildings like Miami or Boston, there may be a need for more tower cranes. But you probably shouldn’t invest in a tower crane if you live in a smaller metro area without many tall buildings.
There are over a dozen types of cranes from carry deck cranes to crawler cranes, all with different uses. So you’ll have to narrow things down and figure out which types of cranes are likely to rent well in your area. Driving around your city and seeing which types of cranes are present at construction sites can provide some insight. Networking with local construction project managers can also help you learn more about their equipment needs.
Funding for Startup Costs
Another important consideration is how you’ll fund all the costs involved in starting a crane rental business. Cranes aren’t cheap and cost a minimum of $35,000. Larger types of cranes such as tower cranes can cost anywhere from a couple hundred thousand dollars to over a million dollars.
Although it takes a lot of funding to buy these larger cranes, they can rent for thousands of dollars per day, so the investment could pay off. But you’ll need a way to finance the crane purchase unless you have half a million dollars lying around! Explore your options and see if you can get funding from an investor or a construction equipment loan at a decent interest rate. If you can’t secure financing, your dreams of starting a crane rental business may be out of reach.
There are also some hidden expenses and ongoing costs you’ll have to account for in your pricing structure. Most cranes are kept in crane yards, so you may need to invest in a piece of land to keep your equipment on or rent storage space from someone else.
Most crane rental companies include a licensed operator to run the machine in the rental package, which is an added expense. You’ll also have to factor the cost of transporting the crane to local job sites into your pricing. And just like any other business, you’ll need to invest in business insurance and marketing to help spread the word about your company. Don’t forget to consider these costs before starting a crane rental business.
Would you ever consider launching a crane rental company? Why or why not? Share your thoughts in the comments section below!
Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.