Rental start-up advice or business plan

[jeff@jeffhutman.com]

It is exciting to enter such a progressive and promising world of Segways.

My name is Jeff, and I am opening a Segway rental business with the support of Potomac Segway (Austin Colby - Hagerstown MD).

Austin's advice was to query the group here, for some of my start-up and business planning questions.

Thus, I would appreciate any help and/or advice: business plans, market strategies and demographics, financials such as P&L, breakevens, projections, operating costs and expenditures, etc. -- anything would be appreciated.

While I have somewhat unique plans and marketing concepts, there is much to be learned from an established business, no matter how dissimilar.

Hopefully somone feels secure enough, and proud enough, of what they have learned and accomplished, that they will want to share with me so that I might learn from them.

Thank you so much, in advance!

-Jeffrey Hutman

17016 Taylors Landing Road
Sharpsburg, MD 21782
jeff@jeffhutman.com
(301) 432-0660

[Timezkware Tim]

I'm not in the rental business, but I can tell you one thing, for sure. I would strongly advise doing the proper instructional demo before letting anyone rent.

The threat of collision (mostly by inexperienced gliders like renters) already has some local juristictions banning their use in areas and incorrectly labeling Segways as "dangerous". This is very, very bad for Segway's image, to say the least.

Tim

[Florida Ever-Glides]

Jeff,

First of all, if you do Segway 'rentals', your on your own as far as I'm concerned. A very risky venture to say the least. Broken machines (which are very expensive to repair), injuries, and 'finger pointing' as to blame, is a part of the rental game. Be prepared, your city may not even approve your business. Rentals have shown the 'potential unsafe' and 'horseplay' side to Segway riding. And, after repair costs, you probably won't be pleased with your year-end numbers.

Secondly, the handing over of years of business experience and trade stratigies and financials to a stranger has nothing to do with being secure or proud, it's stupid. For that kind of information one would usually pay a consultant thousands of dollars.

I have helped dozens of people with answering general questions mostly regarding safety issues with the customer.

The best advice I could give you is DON"T do rentals. You won't be doing yourself or the industry any favors. Dealers are in the business to sell/service Segways. They really don't care what YOU use them for.

I just spoke to a woman who started a Segway rental business a few months ago. She is currently 'dying on the vine'....

Whichever you decide, please go the extra 'ten miles' to keep it safe. Bad accidents = bad press. This hurts everyone here.

[Timezkware Tim]

Jeff,

First of all, if you do Segway 'rentals', your on your own as far as I'm concerned. A very risky venture to say the least. Broken machines (which are very expensive to repair), injuries, and 'finger pointing' as to blame, is a part of the rental game. Be prepared, your city may not even approve your business. Rentals have shown the 'potential unsafe' and 'horseplay' side to Segway riding. And, after repair costs, you probably won't be pleased with your year-end numbers.

Secondly, the handing over of years of business experience and trade stratigies and financials to a stranger has nothing to do with being secure or proud, it's stupid. For that kind of information one would usually pay a consultant thousands of dollars.

I have helped dozens of people with answering general questions mostly regarding safety issues with the customer.

The best advice I could give you is DON"T do rentals. You won't be doing yourself or the industry any favors. Dealers are in the business to sell/service Segways. They really don't care what YOU use them for.

I just spoke to a woman who started a Segway rental business a few months ago. She is currently 'dying on the vine'....

Whichever you decide, please go the extra 'ten miles' to keep it safe. Bad accidents = bad press. This hurts everyone here.

I was hoping that you would show up with some frank words of wisdom, Tom. Thanks!

Jeffery, take a look at this thread (below). This is an example of how quickly things can go wrong in the rental business:
http://forums.segwaychat.com/showthread.php?t=13460

Tim

[jeff@jeffhutman.com]

Thank you for the (not-so) welcome.

To clarify, I was not asking for trade secrets, and I failed to include "guided tours" in my description. Not just "rentals." My apologies.

Your "liability, access, and repair" points are well-received, but have already been considered and addressed to my satisfaction. Thanks.

And BTW, I am “a consultant that gets paid thousands.” And I have subsequently offered such valuable insights and documents (deemed non-proprietary) for free.

Funny, I don't feel "stupid" at all. But rather proud of my dignity for helping another reach a dream, proud of my hard-earned professional acuity, and secure with my future, and business judgement.

It can't hurt to ask -- might be someone else out there like that.

So, thank you for your free input of negatives -- they're very valuable too! (Unfortunately it all sounds very damaging to the "Segway reputation” for quality, maintenance, longevity, and dealer/manufacturer support.)

[Florida Ever-Glides]

I'm not trying to be negative, but their are pitfalls in this industry that could hurt a lot of other businesses. But since you're a high paid consultant I'm sure you already know all of this. Sorry for insulting your intelligence...

I doubt that you'll find any likely businesses who have 'sweated' over the years, and are successful, that will hand over their business plan, but good luck...

[pam]

There are some places that do rentals, but the majority of businesses with this in mind are actually guided tours. For several reasons. One is that the technology is so new that people seem more likely to steal the darn things. We had a guy on the east coast of Florida lose 2 to Fake IDs and so on. Another is that if you're on a guided tour, you can see what is going on with the units, and can forstall any problems due to inexpert or deliberately wild riders.

The other issue is that there are probably a very limited amount of insurance carriers who will insure you. If you sustain a major loss, either due to theft or to someone using your vehicles inappropriately, it might well affect the other rentor/tour agencie's insurance costs (and this is what I think Tom is referring to when he says
"but their are pitfalls in this industry that could hurt a lot of other businesses." - I'm guessing he's concerned about the potential cost to him, as another rental/tour agency, should his insurance costs go up precipitously.

Regardless of that, as I'm sure you're aware, you're going to need to insurace, and you're going to need to sell the idea to the town or city you'll be doing business in. You'll have to follow all the licensing requirements. You'll obviously need a storefront. You might want to set up a training protocol for people who would rent from you, as most would not know what to do, nor how to protect themselves.

I would suggest strongly that if you're going to rent without tour, that you find some of the dealers who are doing it and talk to them. Segway of Long Beach rents, I think that Segway of Orange County (both in California) rent. Segway of New Mexico rents - some of these dealers you will find advertise in both this forum and in the buy and sell forum.

Good luck in your ventures. Welcome to the Chat!
Pam

[Florida Ever-Glides]

Pam,

Thank you. Sometimes you have a better way with words than I do. The pitfall I was referring to has partially to do with what you said, and when issues happen like the one now in Manhatten Beach, CA it effects all of us. The banning of Segway use as a result of a careless rental can spread throughout the country. I'm not worried about my town so much, it's not fair if a restrictive ordinance is the result of reckless renters....

[Mr_Laurenzano]

Jeff give me a call any time. I just folded up a rental biz, like to know why?
805-550-2075
Tony Cenrtal Coast Segwave Rentals.

[jeff@jeffhutman.com]

Thank you. I do appreciate the advice on the pitfalls involved.
Much like other industries (ww rafting/kayaking; horseback riding, in-line skating, skate boarding, bicycling, snowboarding, skiing . . .) all these issues/hurdles have been successfully overcome through proper research, training, and management (and a good law team.)

[Gihgehls]

sorry to derail your topic jeff- I've already PM'ed you about this, but you should really considering changing that username of yours before it gets indexed by malicious bots.

[julesdarcy]

Jeff give me a call any time. I just folded up a rental biz, like to know why?
805-550-2075
Tony Cenrtal Coast Segwave Rentals.

I'd like to know why too, seeing as your sharing.

[Timezkware Tim]

Yeah, we'd all like to know. :D

[nickyboy]

Looks like there's a couple of us going in the same direction. I'm looking into starting a rental business over here in the UK. Segway's are not legalised for street/pavement use so will need to do things kind of different to our cousins across the pond.

If anyone has any advice I'd love to hear it, good, bad or indifferent.

[Timezkware Tim]

Looks like there's a couple of us going in the same direction. I'm looking into starting a rental business over here in the UK. Segway's are not legalised for street/pavement use so will need to do things kind of different to our cousins across the pond.

If anyone has any advice I'd love to hear it, good, bad or indifferent.

I guess that means gliding on private property. I'm sure there's a market for that, especially where one can't drive a truck or car.

For whatever it's worth, here's some basic advice from someone who doesn't have a rental biz:

Even if you don't want to follow a strict budget, you really need to write a business plan so you know what your limits and priorities are.

Understanding your market(s) is neccessary if you want to succeed. You must become the customer.

Who or what is your competition? How can you differentiate your business from them?

People like value, no matter how expensive something is. A wealthy couple I know who likes to eat at very expensive restaurants frequent one in particular because they offer "extras" like free valet parking.

People will abuse rented objects. Tom mentioned something along this line earlier. Understanding that is key when you write your business plan.

If your renters don't go through the proper training, renting out to just ONE casual prospect in a hurry with a £20 note is irresponsible. If someone gets hurt, even on private property, and it gets in the press, it's a bad thing for all of us, especially the person who got hurt.

Good luck. Come on back and let us know how things go. :)

Tim

[nickyboy]

I guess that means gliding on private property. I'm sure there's a market for that, especially where one can't drive a truck or car.

For whatever it's worth, here's some basic advice from someone who doesn't have a rental biz:

Even if you don't want to follow a strict budget, you really need to write a business plan so you know what your limits and priorities are.

Understanding your market(s) is neccessary if you want to succeed. You must become the customer.

Who or what is your competition? How can you differentiate your business from them?

People like value, no matter how expensive something is. A wealthy couple I know who likes to eat at very expensive restaurants frequent one in particular because they offer "extras" like free valet parking.

People will abuse rented objects. Tom mentioned something along this line earlier. Understanding that is key when you write your business plan.

If your renters don't go through the proper training, renting out to just ONE casual prospect in a hurry with a £20 note is irresponsible. If someone gets hurt, even on private property, and it gets in the press, it's a bad thing for all of us, especially the person who got hurt.

Good luck. Come on back and let us know how things go. :)

Tim

Thanks for the input.

Gliding on private property is exactly it.

This incurs additional costs etc so the business plan (and sticking to it) is clearly important.

I have had a brief discussion with the UK imported who will allow me to come in on his public liability insurance (I will be classified as an official dealer, of which there are currently just a handfull). As Segways are not common here (to say the least) , a lot of insurance companies don't understand the issues.

I have researched the competion, and know where they are (currently only 2) and what their costs are. I am at least 100 miles from the nearest.

The abuse to machines is a big worry, I'm hoping that some of the rental guys might give me some examples. I plan to keep all rentals under supervision. I see that vast majority of rentals as 5 - 10 minute glides, probably like a go kart track scenario.

Training is key, as you say, so I need to look at this element of time against the rental. Not enough training could spoil the experiance as the renter will not get the full benefit.

I'm looking towards 1st Qtr 2007 as a start up, finances willing. Also, as I write, there are not any Gen 2 machines in the country. I want to start with these, as my research (via these pages) seems to indicate they are the way to go for 1st timers.

I sure will let you know when it all happens.

Thanks again for the input, it is much appreciated.

[Timezkware Tim]

Thanks for the input.

Gliding on private property is exactly it.

This incurs additional costs etc so the business plan (and sticking to it) is clearly important.

I have had a brief discussion with the UK imported who will allow me to come in on his public liability insurance (I will be classified as an official dealer, of which there are currently just a handfull). As Segways are not common here (to say the least) , a lot of insurance companies don't understand the issues.

I have researched the competion, and know where they are (currently only 2) and what their costs are. I am at least 100 miles from the nearest.

The abuse to machines is a big worry, I'm hoping that some of the rental guys might give me some examples. I plan to keep all rentals under supervision. I see that vast majority of rentals as 5 - 10 minute glides, probably like a go kart track scenario.

Training is key, as you say, so I need to look at this element of time against the rental. Not enough training could spoil the experiance as the renter will not get the full benefit.

I'm looking towards 1st Qtr 2007 as a start up, finances willing. Also, as I write, there are not any Gen 2 machines in the country. I want to start with these, as my research (via these pages) seems to indicate they are the way to go for 1st timers.

I sure will let you know when it all happens.

Thanks again for the input, it is much appreciated.

When I suggested to study the "competition", I meant whatever other transport means people are using now, not just other Segways. My friend lives on several acres in the North Valley (hills and pastures) that he monitors by Cushman cart. A Segway could do the job faster and cheaper.

I'm no expert on training, but 20-30 minutes is not an unreasonable amount of time to train a renter. Perhaps Segway Inc has a standard. In any event, it would be prudent to have a regular training session for everyone to insure safety and avoid nasty litigation when something goes wrong.

Again, good luck, Nick.

Tim

[Desert_Seg]

...I see that vast majority of rentals as 5 - 10 minute glides, probably like a go kart track scenario.

Nickyboy,

We have this same "rental" scenario running in two (2) locations here and it is quite popular. SOme advice:

1. Get some form of handlebar guard (I recommend the Segway produced versions.

2. Create a course layout that keeps rider contact to a minimum.THIS IS IMPERATIVE for both safety and to keep your units in good condition much longer.

3. Create a "start / stop" area in which every rider gets trained, starts the course and winds back to end it.

4. Helmets, helmets, helmets.

5. Pricing is very critical. Find the pain point and price just under it. You will likely also be able to sell units so we provide GPRS CC machines.

In more than 1.5 years of operation we have seen three (3) accidents. One was caused by a kid hotdogging it and the other two were Gen1 turn related issues (they turned the turn ring in the wrong directio).

This is a good business that has been fun but it is very hard work...

Steven

[nickyboy]

Nickyboy,

We have this same "rental" scenario running in two (2) locations here and it is quite popular. SOme advice:

1. Get some form of (I recommend the Segway produced versions.

2. Create a course layout that keeps rider contact to a minimum.THIS IS IMPERATIVE for both safety and to keep your units in good condition much longer.

3. Create a "start / stop" area in which every rider gets trained, starts the course and winds back to end it.

4. Helmets, helmets, helmets.

5. Pricing is very critical. Find the pain point and price just under it. You will likely also be able to sell units so we provide GPRS CC machines.

In more than 1.5 years of operation we have seen three (3) accidents. One was caused by a kid hotdogging it and the other two were Gen1 turn related issues (they turned the turn ring in the wrong directio).

This is a good business that has been fun but it is very hard work...

Steven

Steven,

Thanks for the advice.

I certainly take on board the handlebar guard and "start / stop area", these are things I had not considered. I think the insurance implications will probably einforce the helmets issue.

I really do appreciate you guys taking the time to be of assistance.

Nickyboy

[Florida Ever-Glides]

Liability exposure for an importer is far different that it is for a rental operation. In America I don't think you can just ride on someone else's liability insurance. You should pay careful attention to setting up your business and workmans compensation insurance.

Good luck....

[Desert_Seg]

Tom,

In many countries, including in the US, the importer of a product assumes a liability risk just for having brought the product in. It is not uncommon for distributors (aka importer) to allow their dealers to be on their general import for resale coverage.

Nickyboy may (I don't know insurance regs in the UK) only have to get a rider (add on coverage) to cover the rental portion.

Even more important is that he get a great liability statement for the riders to sign!

Steven

[Jet]

Segway Tours of San Antonio just posted recently saying thanks and 2700 tours in 18 months.... so

2700 x $60 = $160K = $100K/pa
-
Cost of machines - say 10 machines pa x $5K = $50K


$50K -
Insurance
Rent
Phones/Computers
Lawyer
Accountant
Hired Help

Good luck - and I really mean it. It's tough.