How to Start a Car Leasing/Leasing/Equipment Hire Business in Nigeria
Car leasing and Equipment Hire business is so important in this modern world, because there is consistent need for them. So many people and businesses need equipment to carry out one or two things, and they don’t have enough money to buy the equipment for themselves, they have to hire it. However, rather than spending a millions of Naira on a piece of Equipment, many companies and businesses prefer hiring or leasing the equipment and paying a small amount of money on a daily, weekly, monthly or yearly basis.
Hence, the business of Car leasing/Equipment Hire tends to become a lucrative business in our society. So many entrepreneurs are attracted to the business because of sort of opportunities it offers like renting out expensive cars to top executives for a premium and they can also hire out their equipment like Tractor or bulldozer to Multinational companies in the business of Road Construction and this is a huge sum of money you know?. They can also allow group of people going for a long journey to hire their Bus for a trip or two or three days and calculating their fee for them on daily basis. If all the aforementioned leasing goes well, the company will surely have a good revenue for itself. For example, if you want to rent out an equipment (100Kva Generator) to a customer, it would cost up to 120,000 Naira per day, imagine you renting out such an equipment to a company for like 14 days? Wow. That’s a great deal.
REGISTRATION OF THE BUSINESS
In starting any business, you can’t overlook the idea of registering it. And in Nigeria, The Corporate Affairs Commission (CAC) is responsible for registering businesses. You will be the one to choose a distinct name for your business and then you will need the service of Business consulting firm to make your registration faster. They will submit your Business Name to CAC for verification, and after verification and confirmation, necessary documents that you need to have to certify that your business is now duly registered will be given to you.
Meanwhile, you may also need to register with other authorities that have one or two things to do with your Car Leasing/Equipment Hire business. For instance, Vehicle Owner Association of Nigeria and Equipment Hiring Association of Nigeria and so on.
LICENSING OF THE BUSINESS
In licensing your business after registering it duly. You will need to apply for a business license application in which a form will be given you to fill.
Licensing your business, give it a good recognition it deserve. It can be a state license or federal government license. Licensing of Car Leasing/Equipment Hire business is very easy, all you need to do is to look for a consulting firm that have a vast experience in this type of business. You can visit www.bullscapitalltd.com for more clarification on this.
PROCESSESS INVOLVE IN RUNNING A CAR LEASING/ EQUIPMENT HIRE BUSINESS
When you start bringing to reality the idea of running a Car leasing/ Equipment Hiring business, there are so many things you have to put in place. In the first place, you need to acquire some cars, as well as some equipment such as Bull dozer, Crane, Swamp buggy, Industrial Generator and so on.
After acquiring those cars and equipment, another thing you should put in mind is insuring those cars and Equipment. Insuring your Cars and equipment will protect you against the costs you will incur, if they eventually got damaged or wrecked. This is a significant part of process involves in starting a Car leasing/Equipment Hire business. There are so many packages offered by different insurance companies in relation to Car insurance and so on. Just find the right one for you and got insured and if you are not certain of the one that will be good for you. You can always get a consultant to guide you on how to do that. For more clarity on this visit www.bullscapitalltd.com.
Apart from acquiring Cars and Equipment, you quite know that, you also need to hire staff that will work with you in the company. Those Staff are to be under you tutelage. They are the ones that will be relating directly with your customers in leasing out the cars and hiring out the equipmet. They are to take proper records of cars lease out and the information of the client they are leasing the car too. (This is very important).
However, Equipment Hire companies normally have some documents that their customers will sign as an agreements to take out the items for rent. Some of them are:-
- Hold-harmless Agreement:- This agreement ensures that the customer agrees to hold your entity innocent if the customer is responsible for injuries or property damage sustained by your equipment.
- Indemnification Agreement:- This ensures that customers takes financial responsibility, if your company is sued for any form of liability when the car/equipment is in the client’s
- Conversion Warning:- This documents tends to clarifies that, if a customer don’t return the hired equipment as specified, your entity can consider it an act of theft and press charges against the client.
Note:- This documents usually referred to as waivers, should be drawn before doing any business with your client, so as to protect your entity against unwanted liabilities.
One of the major aspect of a successful Car leasing/Equipment Hire business is strong relationships with customers. If your company offered services that make your customers happy, they will definitely return to you again. Therefore, to market yourself to your previous customers, due attention should be paid to the accumulation, processing and structuring all the data you work with.
For instance, have an equipment booking software that will handle all customer’s information, emails and booking details, as well as providing you with easy access to this data through the centralized systems. Meanwhile, customer list is one of your best-valued resources in a business, and this data must be accessible and structured in a good manner.
Finally, knowing the exact rental preferences of your potential clients is not enough. You have to do research that will allow you to estimate the amount of the required Rental Equipment/Car. Having this in mind, you won’t spend excess money on the Car/Equipment at the beginning of your Car leasing/Equipment Hire business. More so, you don’t need to start with fleets of cars, you can just start with few cars and as times goes on, you will be adding more cars and more equipment. However, you have to purchase top-quality Cars and equipment in which your customer will be satisfy in their usage.
SOURCES OF FUND AND FUNDING OF THE BUSINESS
In sourcing for fund for your intended business, if you have plan to borrow money, then you need a convincing and well-researched business plan that will help you in getting a loan from the bank.
Basically, apart from you using your own Funds to start a business, the more assured source of funds for a business is Bank. And no bank will borrow you money without asking for a good business plan to prove that, you know what to do with the funds, if they give you.
Then after you might have commence the business with loan; you will also need to be funding the business in some aspects and this can be gotten through what we call Plough back profit (That is, investing the profit you made in a business back to the business to keep the business going).
NEED FOR A BUSINESS PLAN
Having a business plan is so pertinent to any business. Business plan is a general documents that contain you vision for the company, it describe your target market and how you will be planning to reach them. Also, the costs you will be incurring on the business will be there. Your return on investment will also be assume inside the business plan.
Inside your business plan, the list of things your business needs for start-up will be listed and their total cost will be determine. When determining the cost involve in doing the business, it will include Cost of acquiring the Cars/Equipment, Cost of renting your office space and fitting & fixtures inside the office and so on. This will give you a clear picture of what your business is made up of.
However, the content in your Car leasing/Equipment Hire business plan will appear thus:-
- Executive Summary
- Product and Service Offerings
- Vision Statement
- Mission Statement
- Business Structure
Role and Responsibilities
- Chief Executive Officer
- Equipment Rental Manager
- Admin and HR Mananger
- Marketing and Sales Executive
- Client Service Executive
- Equipment Operator etc
- SWOT Analysis
- Market Analysis
- Market Trend
- Target Market
- Competitive Advantage
- Sales and Marketing Strategy
- Sources of Income
- Sales Forecast
- Pricing Strategy
- Payment Options
- Publicity and Advertising Strategy
- Financial Projections and Costing
- Sustainability and Expansion
MARKET SIZE AND MARKETING STRATEGY TO BE USED
In making your business known to the masses, then you need a good marketing plan. You can make use of different available channels to reach so many people. The oldest ways of marketing is through Radio and television, which you definitely pay for.
Another ways of marketing your business with lesser expenses are through Handbills, Posters, and billboards (which will be mounted in different locations where several people used to pass).
You can as well make use of this market strategy called Commission base system, this is deducting 5% commission on any contract between you and your customers. That is, if a customer comes to hire your equipment or you lease out your car; you will give the representative of the clients a 5% commission of the amount he suppose pay for the Lease. This will foster the relationship between you and the client and from this you will build a network of customers around you.
In knowing your market size, you should be deliberate about who you want your customers to be and how can you meet their needs. And this will help you in determining, the type of Cars and Equipment you have to buy. You will take a look at the customer base for the type of business you want to go into. Are your focus on Government officials, Schools, Social events or religious organizations and so on?
WEBSITE FOR YOUR BUSINESS (ONLINE-PRESENCE)
Another way of Marketing is via your Company website and Social media handle. Website is a very good channel of marketing; you will be updating the site on a daily basis, to give your prospective clients new updates on your business. Having a website of your own, give your Car Leasing/Equipment Hire business a good online presence and your customers can easily have access to you via your user-friendly website.
Most times, your potential clients make use of internet outside of business hours. So, when they are at the comfort of their home, they can go online and see through your website to know what you offers. Also, in a situation where someone is coming from abroad to Nigeria and want to apply for your Car leasing business. What he just have to do is to visit your business website in which you have provided access for your clients on 24/7 basis and apply.
Meanwhile, a rental booking application designed in relation to the needs of your business, have the ability to collecting and processing data on your clients from various locations.
LOCATION OF YOUR BUSINESS
Before you commence a business, you must look around to know where you can start the business, the area in which your target clients can be easily accessed. For example, if your plan is to lease your cars to Top government executives; then you have to locate your Car leasing company in a place closed to Government office residential areas or probably Government official office. E.g. Alausa Ikeja in the case of Lagos State Government officials.
Likewise, if you want to hire out your equipment to companies into Road Construction, then you have to locate your Equipment Hiring Company in a place close to Road Constructions companies’ area.
In conclusion, when you laid out your expected costs and projected revenues via Business plan, then, you will have a better idea of what financial commitments you will be making.
You must also make sure that your website is capable of keeping customers information and can be easily accessible to your customers anytime of the day. Meanwhile, when your company have a properly designed web-based system for its Car leasing/Equipment Hire business, you will enjoy the following benefits:-
- Improved Maintenance of your Cars and Equipment
- Having effective invoicing system
- Equipment theft would be decreased to lowest rate
- The workload of your staff will be minimized
- Your business will be easily accessible
- The data of your clients will easily accessible.
About the Writer
Olusipe Abiodun Yinka is an Audit Associate in Bulls Capital Limited. He has a National Diploma in Accounting from Abraham Adesanya Polytechnic, Ijebu-Igbo, Ogun State; as well as a Degree in Accounting from Alex Ekwueme Federal University, Ebonyi State. He is a creative copywriter and a Trendsetter. Apart from writing, Olusipe is also an entertainer.
In case you need our service in relation to this post, please call 08023200801, 08075765799, email: email@example.com. Alternatively, you may complete our request for proposal form hereunder.