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Equipment Rental icon Equipment Rental Sales Business Plan

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Equipment Rental

Company Summary

ER began its operations on May 2, 1997 with little capital investment. The company combined 10 years of experience in the sales and rental field to generate a large customer base. After eight months of operations at the present facility, the company has increased its customer list by 100% and its vendor list by 75%. ER takes pride in having brought several new items to this area that were otherwise unknown, such as the spreader/grader and Ramrod products.

2.1 Company Ownership

ER was founded in Memphis, Tennessee in May 1997 to sell and rent heavy equipment, small home use machines, and construction equipment. The company was formed by Mr. David James and Mrs. Sally James. ER is a Tennessee S-Corporation, with principal offices located in Memphis, TN.

2.2 Locations and Facilities

The company has one office currently in Memphis, TN.

ER is located 1/2 mile from the Interstate (I-65) with easy access and a large turnaround area for larger vehicles used in pick up and delivery of equipment. ER is not inside any municipal jurisdiction which would restrict the type of business being conducted. The location also benefits from easy access to hotels (1/2 mile), banks (less than 1/4 mile), groceries (1/8 mile), repair shops (1/4 mile), service stations (1/8 mile), and a parts supply house (1/3 mile).

Currently, there are no environmental concerns, but the company hopes to be able to have a repair shop located on the premises at which time any environmental concerns will be seen to. ER’s current hours of operation are from 8:00 a.m. until 5:00 p.m. However, the company does receive after hours calls and provides assistance as needed. Work hours have sometimes extended from 5:00 a.m. to later than 6:00 p.m. as needed.

2.3 Past Performance

The following is the company’s past three years of performance since start-up.

Past Performance
1997 1998 1999
Sales $49,000 $57,000 $100,000
Gross Margin $32,830 $42,351 $86,500
Gross Margin % 67.00% 74.30% 86.50%
Operating Expenses $33,810 $39,330 $69,000
Collection Period (days) 0 0 0
Inventory Turnover 4.00 4.00 4.00
Balance Sheet
1997 1998 1999
Current Assets
Cash $3,500 $1,500 $2,500
Accounts Receivable $6,000 $7,000 $9,000
Inventory $8,000 $14,000 $19,000
Other Current Assets $2,500 $5,000 $6,000
Total Current Assets $20,000 $27,500 $36,500
Long-term Assets
Long-term Assets $5,200 $6,400 $8,000
Accumulated Depreciation $0 $0 $0
Total Long-term Assets $5,200 $6,400 $8,000
Total Assets $25,200 $33,900 $44,500
Current Liabilities
Accounts Payable $5,500 $7,000 $9,000
Current Borrowing $8,000 $9,000 $9,500
Other Current Liabilities (interest free) $4,000 $3,400 $3,700
Total Current Liabilities $17,500 $19,400 $22,200
Long-term Liabilities $10,000 $12,000 $10,000
Total Liabilities $27,500 $31,400 $32,200
Paid-in Capital $0 $0 $0
Retained Earnings ($2,300) $2,500 $12,300
Earnings $0 $0 $0
Total Capital ($2,300) $2,500 $12,300
Total Capital and Liabilities $25,200 $33,900 $44,500
Other Inputs
Payment Days 60 45 45
Sales on Credit $0 $0 $0
Receivables Turnover 0.00 0.00 0.00

2.4 Future Facilities

There is 1/2 – 1 acre of additional property directly to the north side and is available for the construction of a storage/equipment yard if necessary. Mr. James has worked with a steel building construction company and is able to purchase items to construct a building at cost or at a sufficient discount that it would not be necessary to use the greater portion of the loan for building needs. The estimated cost of building is expected to be between $10,000 and $13,500. ER has access to a main highway with concrete entrances to and from the property.