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Type of business
will you buy an existing video rental business or start up from scratch
who will be your customers. Will you target a particular category of customer or will you aim to stock something for everyone
where will you be located. It can be helpful to be near an off-licence, take-away or convenience store where potential customers might stop off on the way home from work
will you offer an online reservation facility or even online rentals - whereby your customer can rent a title via your website and post it back to you when it's due to be returned
what will your opening hours be. Weekends and evenings are likely to be busy times
Your products
will you offer sales of new videos (called "sell through") as well as rentals
will you sell second-hand videos (surplus or slow moving stock)
will you stock consoles and games to rent or buy
will you sell snack items such as soft drinks, confectionery or ice cream
what other items will you sell (for example portable DVD players, audio books, mobile phones, blank tapes, cleaner tapes and so on)
how will you monitor tape/DVD utilisation
Pricing
how will you set your rental charges and new sale prices
will you have special rental offers such as two for the price of one or extended period rentals, say for five days
will you charge a membership fee
will you offer members insurance cover in case they lose or damage a tape/DVD
how often will you review your prices
how will you keep track of cash and make sure dishonest staff don't steal from you
Competition
Specialist rental outlets face competition from many other businesses such as garages and online retailers which offer video rental, as well as from outlets which supply new videos such as:
major record and stationery stores such as HMV or W H Smiths
online rentals and retailers, and mail order retailers
second hand shops
In addition, people watch films at the cinema and on TV, and some people are prepared to watch 'pirate' videos.
This makes it essential that your proposed video rental outlet has a 'unique selling point' (USP) - in other words something special that will attract customers to you.
Merchant Services
Alliance & Leicester Commercial Bank provide a fast, flexible service specially designed to meet the needs of your business and your customers. For flexibility, reliability, ease of use and cost efficiency, our card processing services are highly competitive.
Quality standards
Consumers have become used to high standards of presentation and service and the national video rental outlets such as ChoicesUK and Blockbuster operate from stylish premises and offer a very professional service. It is important that your video rental outlet does not look run down and scruffy. You should make sure that:
the premises are bright and clean
displays are orderly and packaging is kept in good condition
'dump bins' containing secondhand titles are not allowed to become too untidy
point of sale leaflets and magazines are attractively displayed
advertisements for forthcoming features are removed at regular intervals
library cases (for customers to take rental copies home in) are replaced frequently
You might consider providing staff with T-shirts printed with the name of the shop and your logo.
Advertising your services
You must make sure that your potential customers know about you.
There are a number of things you can do to promote your video rental outlet:
advertise in your local newspaper and any other local publications such as a Directory or Leisure Guide
launch your own website, highlighting any special features of your business and perhaps even offering online rentals
include your name, logo and contact details on your membership cards
leave promotional details of your business with other local businesses such as electrical retailers, off-licences or take-aways. You can do the same for them
distribute leaflets to local caravan parks to cater for the holiday trade
Estimating demand
You will need to find out whether there is going to be room for another video rental outlet in your area. First of all, check out the competition. Count how many existing outlets in your locality offer video rentals. Don't forget to include outlets such as garages or c-stores. As well as local competitors remember that you will also be competing against online retailers such as Amazon and Tesco that have moved into the rental market. They can offer a huge range of titles at very competitive prices.
Catchment area
Your customers might be:
people working in the area who pick up a video on the way home
people who live in your area
people who drive past your premises and who take the opportunity to call in because it is easy to park
You should note down the different types of potential customer living and working in your area. This will also help you to determine the type of videos you should stock. For example, if you are located near a residential area you might want to make sure you stock a good range of family and children's titles. If most of the people living nearby are students and young professionals you might focus on blockbusters and some award winning foreign titles.
Why will customers choose your rental outlet
Because the average rental charge per tape is low (for example, $1.00 to $3.00 depending on how current the title is) you need to attract a significant volume of customers if you are to make enough money to cover your costs, overheads and drawings. You should check out your competitors to see:
the range of titles on offer. Notice whether the most recent titles always have 'on-loan' stickers on them - this could indicate an opportunity for you to stock enough copies of new releases so that people don't have to wait to see them
the prices charged and any special offers
what other items are available such as games, sweets, ice creams and so on
Your research might immediately show you that there is a gap in the market for a new video rental outlet offering a different range of services. You might decide to follow the example set by online video rental businesses and offer customers a monthly package. For a fixed fee they could select a certain number of titles each month which you would post out to them. You would provide customers with prepaid envelopes in which to send them back. You might also consider stocking more titles to sell rather than to rent. Whichever services you decide to offer, be wary about competing mainly on price; it is difficult to offer a professional service if you are operating on very low margins.
Your customers will be members of the public of all ages, although you may find that a significant proportion of your customers fall into a certain category, depending on your location. For example, if you are located near a big residential estate your customers may include many families and children.
Videos and games for retail sale or rental are classified by the British Board of Film Classification (BBFC) as follows:
Uc, U and PG. The title is suitable for general viewing
12, 15 and 18. The titles are not suitable for viewing by persons who have not reached the specified age
The classification must be clearly shown on the packaging and age-restricted titles must not be supplied to anyone under the specified age. The Video Standards Council (VSC) website contains more information about the classification system.
Handling cash
It is likely that most of your customers will pay you in cash and you should put in place good systems to make sure that cash is fully recorded and that dishonest staff cannot steal from you.
Special offers and discounts
Many video rental outlets have a policy of discounting and you might decide to offer something similar. Popular promotions include:
two titles for the price of one
two titles for a special price
more than one night's rental included in the price
second and subsequent nights at a discount
discounts for weekday rentals
You should make sure that your special offers and promotions boost demand for your slower moving or older titles. New releases and blockbusters should not be included in promotions as they are likely to be in high demand without any special incentives.
Waiting list
When a new film is released for rental, especially if it is a film which has enjoyed great success in the cinema, it is likely to be in high demand and you will probably not have enough copies to go round. If you operate a waiting list system you will keep your customers coming back to you to pick up the film they've booked and you may be able to rent them something else while they're waiting.
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