A tool rental company can be an extremely profitable business. With the right business plan and marketing system, your rental operation can provide years of success, especially as retail tools get more and more expensive. Everyone from handymen to housewives are, at some time, in the market to rent tools.

Things You Will Need
  • Tools

  • Business plan

  • Proper location

Step 1.

Form a corporation. Contact your state's secretary of state to obtain the proper documents necessary to form an official business, such as a partnership, official proprietorship or limited liability company (LLC). By incorporating, you will have the ability to purchase tools and pay other expenses in your company's name and create a personal tax shelter. If you don't know which official business entity to form, contact an attorney or use a service that specializes in incorporating companies (see Resources).

Step 2.

Apply for a business license. Following state and local regulations, contact your secretary of state and local treasurer's office to obtain the proper application necessary to apply for a business license. A supporting agency such as SCORE can also help direct you to obtain the proper permits (see Resources).

Step 3.

Choose a product line. A tool rental company can offer just about any kind of tool. However, before you start buying inventory, you must decide which tools you would like to stock. Make a list of tools. Spend 30 minutes to an hour brainstorming, writing down as many tools as you can think of.

Step 4.

Do some market research. You must know which tools your prospects need. Learn the important demographics about your area. Look for the number of contractors, remodeling companies and other businesses within the trades. The number of building permits will also help reveal the number of individual home remodeling projects going on in your area. Contact your county clerk's office for local demographic data. There are also many demographic search engines to help you find data not found in your local courthouse records (see Resources).

Step 5.

Refine your product list. Once you have a strong idea of what types of prospects make up your target market, eliminate tools that won't fill a need in your area from your list. Keep the ones your prospects are likely to rent from you regularly.

Step 6.

Plan your business. With your marketing research in hand, write a business plan. This will help you map everything about your company including a summary, budget, profitability projections and a detailed marketing plan. A strong business plan can be written with the help of a marketing professional or by yourself with the use of a template or business plan kit (see Resources).

Step 7.

Find a location. Depending on which tools you plan to specialize in, find a building with ample showroom space, preferably in areas of high retail traffic or near commercial and industrial parks.Your location should include a garage to repair tools, store overflow inventory and vehicles and space for visible signage. Start by leasing your first space with the intention of buying or building later.

Step 8.

Obtain inventory. There are a few ways to obtain tools to rent. You may obtain credit with wholesalers or purchase them outright. You may also form a co-op or rental group. A rental group is simply a group of individuals that collectively rents tools it owns. Each member gets a cut of the profits. According to your plans, obtain the proper amount of tools. Stocking at least three to five models of each item is acceptable to start. Your need to add more may change as your business increases.

Step 9.

Prospect for business. Begin with direct mail. Compile a database of prospects and send each contact an introductory letter explaining your services and asking for their business. Media advertising is also a good way for tool rental companies to get exposure. Most media ad space is fairly expensive, however, it is a good idea to use at least two forms of media on an ongoing basis, depending on your budget. Network with qualified prospects such as contractors, landscaping professionals and gardening clubs---anyone you know that is need of tools. Advertise in their trade publications and newsletters.


Keep your inventory simple. Do not expand your product lines right away. Stick with what your prospects need until you see the right opportunity to grow.


Never operate without the proper business license.

Always carry liability insurance and hold yourself harmless for injury to your customers while they are in the possession of your tools (see Resources).

Research industry rental costs thoroughly. Be as competitive as possible.

Always require a valid credit card as collateral in case customers fail to return your tools. Require written contracts and have each customer provide you with his Social Security number, employment information and address. Do not rent to customers who refuse to provide you with this information or who do not agree to pay replacement costs if they damage or fail to return your tools.