Setting up a plany hand tool hire company

[Kirk line]

So...this past year my back has pretty much had its day so I have decided to move in to the field of "Plant Hire" as well as small kit like wacker plates and disc cutters etc... I also want to have a shop front that sells PPE and work wear as an extra income.

Ive pretty much got the business plan all sorted, im just going thought it and tweaking it most nights and adding to it so im pretty much there with that.

-What I need to know now is about the paperwork side of it and what I am able to charge as a deposit.
-Insurance

And whether anyone knows of the best way to get an investor but not from the bank.

Cheers

 

[Mark T Jones]

Hi kirk line

Your competitors can (openly or covertly) give you much of the detail you need

Also look at CPA

There are plenty of insurance brokers who can quote you

With regard to investment, it will really depend what you have to excite an investor. It isn't a sexy industry, on the other hand it isn't particularly complex (so won't need much explaining. What they need to know is how you are going to run/grow the business to give them a good return

 

[Kirk line]

Thanks for the reply, not sure what the cpa is so I will check it out.

I know it's not an exciting market as just a hire business but I plan much more to generate a much bigger income.

Would you know where to look for inverters or is it a case of keep browsing Google till something crops up?

Again, thanks for your help

 

[Paulsou]

Can i ask what experience have you got in the hire industry? It can be hard work but can be rewarding if you are hiring the right items!

 

[Kirk line]

I have been working in the construction industry for about 12 years now and have been hiring large and small plant myself and have extremely good knowledge as to what's on the market and what to charge.

I currently have one 3ton excavator and a few wacker plates that I hire out on the side of my full time job bit I want to start a proper company and make this full time.

There is a lot of money to be made in this industry and it's about taking the plunge and going for it with or without an investment.

 

[Paulsou]

I wish you good luck with your new venture, i have been in plant and tool hire for many years, i have seen many changes, at the moment the hire market is struggling, very cut throat, it is very hard work for little money! You can get all info you need by joining the CPA (construction plant association) or you can get in touch with HAE (hire association europe).

 

[Kirk line]

It's good to talk to someone who is already in the business. What part of the country do you trade? Do you not find that as the construction industry has picked up dramatically that business is better?

I did find that that the price range is huge in difference for example a 1.5 ton 360 ranges from £60 - £130 +vat per day....I suppose you have to take an under average price

 

[Paulsou]

I have been through the ranks in the hire industry from driver up to director of my own hire business, at the moment i work full time as a hire controller for a national independent company and at same time i run an events hire business in evening and weekend hiring marquees and inflatables, im doing this so the business do not conflit with day job, the hire rates on plant are the same now as they were 5-10 years ago, and companies are still cutting prices to get the big companies, you will get from £175 to £230 per week but this will work for you if you are dealing with small builders, you do need to make sure everybody you hire to have got plant hired in insurance. If you got the outlay then invest in some small tools, plates, disccutters, floorsaws etc you will get more return on your investment quicker.

 

[Kirk line]

I think for the size I am aiming to start at will be more appealing to general builders and home owners rather than large companies.

Any advice I see as good advice at the moment thank you.

 

[Paulsou]

Where are you based, what part of the country.
Do yourself a favour and get in with as many hire companies as possible, and open accounts for rehire, i started my hire business back in 2003 without hardly any funds, in 1st year i had income of 140,000 running by myself with 75% of hires as rehire, this can be good earner for starting up, aslong as you keep on top of the paperwork!

 

[Kirk line]

I'm in Gloucestershire. What do you mean by accounts for rehire?

I have around £15,000 to invest.

 

[Paulsou]

If you can get a credit account with other hire companies you can hire a piece of equipment from another hire company which you pay for in 30days and you can hire to your customer and request payment straight away or within 7 days at a profit, but only do this to your customers you know, this is known as rehire, this is a good way of helping your cashflow. Hire companies do this all the time, if they dont like to let their customer down because they have not got the kit they will just rehire and charge little bit on top!

 

[Kirk line]

I see, I will definitely look in to it. I need to get my contract/invoice/hire paperwork sorted but hopefully looking at taking the plunge within the next few months.

Thanks for your advice and anything else you can share will be great. I will update on my progress.

Cheers

 

[Paulsou]

Always willing to help, just send me a message and will help where i can, i can advise what best equipment hires out and where best to buy equipment, i have been in game a long time, worked for many hire companies with different procedures etc. In meantime goodluck.

 

[Mark T Jones]

I would certainly take up paulso on that great offer.

Until 10 years ago, the core of my business was providing finance to the plant industry (mostly large plant, but a fair smattering of small).

2 things always came up

1. Stock levels - the accepted cliche was that a good hire company had a big yard with nothing in it. In a nutshell, you need enough plant to meet customer demand, whilst keeping it active 70% of the time. Hiring in will help a lot, but getting this balance requires a lot of experience.

2. Credit control. Private punters will pay on the nail, commercial clients will expect credit terms - to put it mildly, builders aren't famous for prompt payment! End-to-end credit control should be a key priority.

 

[AndreasTTH]

Hi all I was just wondering how Kirk has got on presuming his venture i too am looking into starting a tool hire company with a partner who has been in tool hire before (only a employee) any information would be highly appreciated.

 

[bodgitt&scarperLTD]

Hi all I was just wondering how Kirk has got on presuming his venture i too am looking into starting a tool hire company with a partner who has been in tool hire before (only a employee) any information would be highly appreciated.

It's quite possibly the worst time ever to be contemplating this venture, to be frank.

Building work has slowed right down and all the signs are that it will contract further.. This means that competition will increase, both from established tool hire places dropping rates but also from small builders and the like looking to hire their mini digger out cheap to mates to cover the finance. A great barometer of this is Facebook ads, and I've noticed a massive upswing. Every man and his dog will be trying to hire out the cement mixer, whacker plate etc.

Despite new kit prices recently climbing to new heights, secondhand plant and tool residuals have recently dropped off a cliff. A digger that would make £18k during COVID when everyone wanted work doing and you couldn't get a new one for a year is now struggling to make £9k. This does present an opportunity to buy in at a more sensible price if your workshop skills are up to par, which they will need to be to run a tool hire place. As well as your paperwork/record keeping skills. Join the CPA, use their model terms and conditions for hirers and take advantage of their compliance paperwork.

However, be aware that for years the big boys have made their money from buying 100 units at a time, brand new, at a price you and I can only dream of. Any money made from hiring has been a bonus for them, with the real money being made selling them off at 1000 hours. So even if you buy that digger for 9k, the big boys will have the same machine that they only paid 10k for brand new. They'll be dropping prices to keep it out on hire now that selling it for more than they paid for is no longer an option.

If you're going to do it and don't have a million to spend plus very thick skin and reliable, slightly rough staff, I'd look at the more specialist gear. For example, groundscare equipment for years was very expensive to rent. Farols recently entered the market in a big way with their acquisition of Turfleet which has brought prices down a bit- but again, they are using their buying power to save thousands per unit which isn't an option for the little guys. Find yourself a niche whereby it's not ****wit builders renting your gear would be my advice. Renting a hedgecutter to a homeowner is a much better proposition than renting a mixer to a thicko builder with only a site address and rental address for the builder.

What kind of area are you looking to service? City? Rural?

 

[IanSuth]

Hi all I was just wondering how Kirk has got on presuming his venture i too am looking into starting a tool hire company with a partner who has been in tool hire before (only a employee) any information would be highly appreciated.

No idea but there is a story i have told before.

I grew up on a small farm, my dad was old school friends with a groundwork contractor and a muckaway firms owners. Then a guy moved in next to us, bought a huge house so he could use was was billed as stables for extra storage and a repair workshop for his hire firm. As a 14/15 year old i used to earn pocket money repainting whacker plates, rollers and small dumpers. His biggest issue were the state things came back in - completely covered in concrete or tarmac that had been left to dry on, dented, engines with no oil in etc etc.

The 4 of them also spend a night in the cells once - a site was shut due to main contractor going bust - some of his kit was on site. The gates were shut and locked and his kit was unable to be retrieved by talking to people (all enquiries via the administrators at xyz address etc) so they broke in at night and loaded it all on beavertails, had just finished when PC Plod arrived.

In the end charges were dropped but they spent overnight in cells and the trucks were locked in the pound (with the equipment) and a storage / release fee charged !!!

In a depressed market be very very very careful who you hire to as you need a lot of days hire to cover the cost of lost equipment/bad debts if a big firm goes down at the top of your supply chain

 

[AndreasTTH]

Hi bodgeitand scarper, so the idea wasn’t to buy mixers big machinery ect but to focus on the domestic market mainly gardening equipment, mowers rotorvators, and also we would be operating in and around oxford my partner lives in the central Oxford area as myself lives on the outskirts more rural Oxfordshire, so we have a divers catchment area of which to operate from. We are very keen to give it a shot what things would you recommend doing/investing in?

 

[bodgitt&scarperLTD]

Hi bodgeitand scarper, so the idea wasn’t to buy mixers big machinery ect but to focus on the domestic market mainly gardening equipment, mowers rotorvators, and also we would be operating in and around oxford my partner lives in the central Oxford area as myself lives on the outskirts more rural Oxfordshire, so we have a divers catchment area of which to operate from. We are very keen to give it a shot what things would you recommend doing/investing in?

For domestic users you need to invest in domestic type things, which you've already listed. Trouble is you will need to make a lot of hires of hedgecutters at £30 a day to make ends meet. The battery revoloution has also lead to homeowners buying a lot more of those type of tools of their own.

A business user hires machines that they don't need often, as and when jobs come up. Hiring a mini digger at the start of an extension contract, for example. A domestic user with a regular need (lawn for example) will either buy the mower or call a gardener.

I'm not sure that kind of hire market has the potential it did a decade ago.

 

[IanSuth]

For domestic users you need to invest in domestic type things, which you've already listed. Trouble is you will need to make a lot of hires of hedgecutters at £30 a day to make ends meet. The battery revoloution has also lead to homeowners buying a lot more of those type of tools of their own.

A business user hires machines that they don't need often, as and when jobs come up. Hiring a mini digger at the start of an extension contract, for example. A domestic user with a regular need (lawn for example) will either buy the mower or call a gardener.

I'm not sure that kind of hire market has the potential it did a decade ago.

Yes the rise of the middle of lidl parkside x,y or z handheld tool has meant of lot of sheds cluttered with stuff used once every year or 2 as cheap enough to be an impukse buy.

Also the rise of men's sheds where people share stuff (there one ones in Oxford, Thame, Faringdon and Blewbury i know of