Equipment leasing business entails leasing of equipment, or in other words, equipment rental for a fee. The equipment is used for a given time frame and returned upon completion of usage.
You charge a specified cost for every equipment you lease. You lease or give out the equipment while the other party(s) is said to rent the equipment from you. That is basically what it is.
Across all budgets, people choose to rent equipment because of its significant cost savings implications as compared to buying of equipment.
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Sometimes, they may decide to buy the equipment at its present market value or extend the tenure of usage. These are core means of making money in this business. As you can see, equipment leasing business is highly profitable.
The Target Market
To identify your target market, move around. Your target market is a function of your locality. Generally, however, your target market would comprise of hotels, burial sites, mortuaries, logistics companies, parks and all kinds of events centers.
The Market Structure
The equipment leasing market in Nigeria is booming but is not saturated. At least, you don’t see equipment leasing services at every nook and cranny yet.
However, it is competitive since it is a lucrative business. Hence, a study of such existing businesses is highly recommended. You should also estimate your potential returns on investment (ROI) and make costs estimates to cover losses/lapses.
Modes Of Equipment Leasing In Nigeria
There are basically to sides to equipment leasing business: Operating (Service) Leases and Financial Leases.
Operating or Service Leases
In the former, the task of sustaining and/or protecting the equipment is vested in the equipment owner while under use by the lessee. The lessee has paid for this upfront while paying the rental fee.
Financial or Capital Leases
In financial leases a.k.a. capital leases, there is no provision for equipment sustenance by the owner. This kind of leasing works best for long-term leasing which useful life of the equipment equates the period of usage by the lessee. Hence, the lessee incurs the cost of equipment protection, sustenance, and maintenance.
Types Of Equipment To Lease In Nigeria
The list of equipment which you can lease in Nigeria is endless, but here are a few common ones:
5. Electrical/electronic equipment
6. Decoration equipment
7. Generating sets
8. Lighting points
9. Office Copiers
11. Medical Diagnostic Equipment
How To Start
Conduct A Feasibility Study
A feasibility study is the hallmark of business successes these days. It is with it that you get to know what the exact needs of your potential clients and customers are.
It also exposes the level of competition in the market as well as your present and perceived competitors and how to tackle them. It gives you an idea of possible strategies for sustainability in the business. Hence, start with this first.
Write A Business Plan
After your feasibility study, write a detailed business plan for this business. If not for anything, it will help you to access loans the banks and other financial institutions.
However, that is not the hallmark of a business plan. It is to give you an outlook for the business, the business structures, functions, aims and objectives, core values etc.
Equipment leasing business is capital intensive and requires a somewhat high start-up capital. However, this depends on the scale you want to operate the business at. But you should know that generally, equipment is costly, especially if you are buying new ones.
Some of the equipment may break down in the process, naturally. Hence, the need for backup/replacement. Since you will be serving an unspecified audience size, you need to stock a variety of this equipment and in large numbers too.
Given these possibilities, therefore, starting an equipment leasing business will require roughly N500,000. You can expand this capital base with time.
The proper organ if the government set aside to register businesses in Nigeria is the Corporate Affairs Commission of Nigeria (CAC). Locate CAC office in your town to get your business properly registered.
That way, your business stands out in the eyes of clients and competitors as a valid entity. This, of course, has numerous positive multiplier effects.
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You must not be located by the roadside before you can make headway in this business. Wherever you site the business is ok but ensure that the visibility is clear. Mount a signpost with your business name inscribed boldly on it and your services clearly spelled out.
Your office space should be spacious and large enough to accommodate the equipment, with a leftover space with a few table and chairs for logistics and accounts.
You need staffs and vehicles to handle the various aspects of this business. This includes functions like loading and offloading, packaging and movement of the equipment to and from the destination.
Hire a receptionist or secretary to handle the accounts. Get a driver to move the handle the equipment transportation.
Marketing equipment business does not require any special advertisement effort other than the routine advertising strides.
Engage in online/offline publicity, distribute fliers at events, give out business cards, run Facebook Ads, and use word of mouth. Any method you know can get the word out about your business, use it.
First, study your market to know exactly what they want. Do not go about buying and stacking chairs and canopies when what is in regular demand is musical equipment. You will be running at a loss.
Additionally, establish a functional communication link with your customers, your employees, and business partners.
Spending money stocking irrelevant goods, especially at the early stage is also, not advised. Start small and grow your business as your patronage grows. That way, you are going to sustain the business and make a lot of profits.
Equipment Care and Maintenance
Remember, no equipment, no rentals. Hence, the need to take appropriate care of your equipment cannot be overemphasized.
These include scheduled and routine servicing, cleaning, greasing, oiling and other maintenance measures. Give your equipment Cosmetic repairs and fix all broken parts on time.
Create A Waterproof Agreement
To avoid unnecessary issues with your customer, provide an agreement stating the terms and conditions of rental/leasing.
This should have the cautions, penalties, duration of lease and conditions of return well spelled out clearly. With this, you save yourself from unnecessary embarrassments and issues with your clients and customers.
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Summary & Conclusion
That has been it on how to start equipment leasing business in Nigeria. Now that you have learned, go ahead and implement these guidelines.
It is then you will be able to reap the full benefits of this business. kindly leave a comment below if you need more correspondence.
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