Shifting from offering portable toilet rentals exclusively to a diversified business model is a uniquely exciting and possibly daunting proposition. Adding one or more new products or services for your customers is an exceptional relationship builder. It encourages them to depend on your company to meet more of their business needs. That empowers them to bypass the time-consuming task of taking bids from new vendors and avoid the many uncertainties that come along with that process.
Options for New Revenue Lines in Toilet Rental Businesses
Adding one or more new products or services for your customers can be a very effective way to grow revenues and assets. It can also allow you to stay in your comfort zone in terms of purchasing, marketing, sales, service, maintenance, and administrative management routines.
How? Buying and renting upgraded toilet models for special events, or even handwashing or sanitizing stations, or clean water tanks, is similar enough to providing toilet rental service that it can make an ideal, familiar-feeling, option for growth through diversification.
Other frequent choices for adding product or service lines include renting luxury restroom trailers, shower trailers, laundry trailers, or waste tanks. Slightly further afield are renting trash bins, rolloff dumpsters, or storage containers. For ambitious entrepreneurs, a fuller move into events services can include renting signage, barricades, fencing, stages, lighting equipment, and even tables, chairs, linens, dishes, kitchen trailers, and much more.
Modes of Diversification
There are different ways of diversifying: Vertical diversification can involve adding unfamiliar products or investing in other enterprises that have little or nothing to do with your industry. Horizontal diversification means laterally adding rental products that are closely related to your current offering(s). For example, upgraded toilet units, hand sanitizing units, or other products or services that will appeal to the market you already serve. This might include adding upgraded toilet units.
Either of the above-described form of diversification can grow a business and increase profit margins. But, it can also be expected to present some potential challenges, like consuming more resources than intended. So, do your research to ensure that the rental product you consider adding offers a strong value to the market you choose to target.
Benefits and Risks of Adding New Rental Product Lines
Adding revenue streams can help offset seasonal fluctuations in demand and strengthen the business model, making it more sustainable. Of course, like any growth strategy, it also presents potential issues to be weighed before investing in new inventory or service structures. Some key benefits and risks of diversification include:
Benefits of Diversification
- Stabilized Income: When one income source is impacted by seasonal slow-downs, added revenue streams can help cover operating expenses and maintain cashflow.
- Funded Growth: Growing a business can deplete operating funds. Adding income streams can help support the business while undertaking other strategies for growth.
- Gained Synergies: Adding product or service lines that are related to your existing ones generates synergies from familiar work types that can cut overall labor costs.
Risks in Diversification
Even adding a familiar service or product type brings some amount of potential for adverse effects that can reduce the value of the added income source.
- Financial Risks: A new product or service that costs too much in resources can undermine the viability of the business, and can weaken it financially.
- Operational Stressors: Added workloads to manage a new product line are inevitably time-consuming, may be confusing to perform and account for accurately.
- Quality Issues: A common concern during any growth initiative is that it redirects human resources, causing regular service for core income production to be neglected.
- Brand Integrity Concerns: Brand identity can be diminished by split messaging to promote different products and customers may be unclear on what the business does.
Efficiently Managing Multiple Rental Product Lines
First, select a new rental product or service that fits appropriately with your existing lines of business. Evaluate it carefully from all sides, from acquisition cost to maintenance needs, to storage issues, and so on.
When adding a new product or service, implement a performance tracking system to monitor the financial performance of the new line to ensure that it is profitable. Run data reports to measure the Cost of Goods Sold for every product line. Establish limits on how much a revenue channel can be allowed to cost the company.
If you discover that a questionable amount of resources are being funneled into operations for the new product or service, promptly analyze the situation and intervene as necessary to modify strategies and alternatives.
Your findings may lead only to minor adjustments in strategies or to pivoting to entirely new plans, to reconcile goals and actual impacts of integrating new products or services into budgets and routines.
Before You Start a New Product or Service Line
Do your research to ensure that the product or service you want to add to your business model is the best possible fit with your team and your budget for the growth initiative. Include rigorous market research, planning, and product testing in your due diligence work. Above all, shore up your core revenue channel, as needed, to maintain quality during the introduction of your new line.