Construction sites are on the rise in Kenya, both in towns and the suburbs. Starting a construction equipment leasing business is a profitable venture that can fetch you high profits. Among the equipment you need are a concrete vibrator, mixer, and a concrete hoist machine. With many people constructing houses, the demand for these types of equipment is high in the market. If you are thinking of starting a construction equipment leasing business, this is what you need to know.
Carry out a Feasibility Study
Before purchasing the equipment so that you can get started with the business, it is important that you first study the market. This will help you to determine the viability of the business and also identify a good business location. Talk to people in the construction industry and get to understand the equipment are in demand.
Write Construction Equipment Leasing Business Plan
A business plan is a road map for any business. If you have done a feasibility study, it is easy to write a business plan. The business plan should state the equipment you need, their prices, their demand, market segmentation, business strengths and risks.
A business plan will help you to maneuver in the business and overcome business risks. It will also help you to project business revenues and determine if the business is profitable before venturing into it. You can hire an expert to write one for you.
Read more: How to write a business plan.
Acquire Business Licenses and Permits
You need to acquire business licenses to operate a legal business in Kenya. You can obtain business licenses from the county government offices or the county council offices. The cost of business licenses varies with the type of business and County. For a construction equipment leasing business, the price ranges between Ksh 5,000 and Ksh 10,000.
You may also need to insure your business equipment. When you lease this equipment, you have limited control over how it is used. As such, they are likely to get damaged more often. Also, your business equipment is at risk of getting stolen. You can insure them against theft.
Read also: How to start a timber business in Kenya.
Cost of Starting Construction Equipment for Hire Business
The cost of starting the construction equipment for a leasing business depends on the size of your business and the type of equipment you want to lease. As rule of thumb, it is best to start small and grow your business over time.
To start a small venture, you need at least a concrete mixer and a vibrator which will cost you Ksh 250,000 and from there you can grow your business gradually.
Requirements for Starting Construction Equipment Leasing Business
To start construction equipment for hire business, the items you need depend on the size of your business. These are some of the equipment you need and their prices in Kenya.
- A concrete mixer – Ksh 350,000
- Concrete vibrator with shaft (Honda) – Ksh 60,000
- Concrete hoist machine – Ksh 400,000
- Trappers – Ksh 100,000
- Wheelbarrows (5 in number) – Ksh 25,000
Is Construction Equipment for Hire Business Profitable?
Yes. There are a high number of Kenyans constructing houses both commercial and residential. This creates a demand for construction equipment. The following are construction equipment hire rates in Kenya.
- A concrete mixer (400 liters) – Ksh 4,000 per day
- Concrete vibrator – Ksh 1,500 per day
- Concrete hoist machine – Ksh 4,000 per day
- Trappers – Ksh 100 each for 21 days
- Wheelbarrow – Ksh 100 per day
If you have all this equipment, your daily revenues are at least Ksh 9,000. If you are located in areas with lots of construction activities, you can be leasing your equipment for at least 20 days a month. The cost of hiring concrete mixer in Kenya is around Ksh 12,000 per day.
Essentially, it means you will be making roughly Ksh 180,000 in a month. If you deduct your expenses, you will be left with roughly Ksh 100,000.
Read more: Real estate properties to invest in.
Where to Buy Construction Equipment in Kenya
There are many shops that sell equipment in Kenya. You can visit the Industrial area in Nairobi and you will find many retailers selling them. To get better service, it is better you buy new equipment for longer service. You will also get a warranty so that you can get a free repair in case of a breakdown within the warranty period.
How to Market Construction Equipment Business
One of the best ways to get customers is through working with people in the construction industry. For instance, reach out to constructors and masons and let them know that you lease such equipment.
Agree with them how much you can pay them a commission for every successful referral. This is a great way to get your business off the ground when it is new. Build a name in the industry and with time, you will not need customer referrals to get jobs.