Scaling SMEs with Rental Agreements

Small and Medium-sized Enterprises (SMEs) continue to play a pivotal role in the global economy, but scaling an operation is no walk in the park. Scalability is often impeded by insufficient funding, limited resources, and difficulties in scaling infrastructure and processes. Believe it or not, something as seemingly mundane as legal document negotiations can significantly impact an SME’s growth strategy.

One underutilized tool SMEs can use to help scale their operation is a rental agreement for business assets. Renting business assets for a predetermined period of time can serve as an effective means of minimizing capital investment and diversifying investments, and it’s something the big dogs have been doing for years.

There’s no such thing as a “one-size-fits-all” when it comes to rental agreements. Terms of agreement vary based on what type of asset is being rented and how long you rent it for – and both can be negotiable. Negotiating a lease agreement is largely about weighing the pros and cons of rent versus own and then identifying terms that are both sustainable and scalable.

Researching the type of agreement you need is critical. Extensive research and analysis of RV rental agreements can help SMEs identify strategies to leverage the legal terms in an agreement to their benefit. This includes tax benefits, capital cost savings, lower monthly costs, lower overall spending on equipment, and a lesser amount of spent capital.

Pursuing a Letter of Intent (LOI) is a recommended first step to have as a bargaining chip before engaging in any serious negotiations. An LOI outlines in writing the basic terms of agreement and can prove to provide significant leverage if you put in the groundwork for the basis of your negotiations. Even though an LOI does not serve as a legally binding contract, it demonstrates good faith efforts to reach an agreement between parties, which usually prevents the other party from taking action towards renting out an asset to another party once negotiations have started.

In the eBike sharing market, for example, Sunstar IBIKE has been using its wide-ranging network of strategic partnerships to grow business around the world while helping others scale their operations via RV rental agreements. It has helped well-known, reputable companies internationalize their commercialization strategies by providing them with all of the necessary tools at the local level to operate a fully functioning and highly profitable eBike rental system.

For example, it has successfully assisted companies such as Carvelo, Dott, and Bava by facilitating the sharing and leasing of its systems to support their commercial growth initiatives. Notable milestones achieved include:

Ultimately, understanding and properly leveraging the nuances of an RV rental agreement can make a world of difference in determining the direction and success of your expansion strategy – whether at home or abroad.