How to Start a DVD Rental Company
DVD rental companies today compete with TiVo, Hulu, YouTube and piracy, as well as with the local corner video store. By the same token, there are now more options than ever before for starting a movie business. You can choose to specialize in hard-to-find DVDs available at a local store, buy a franchise such as Blockbuster or Hollywood Video, set up an automated DVD rental kiosk at a local grocery store, or attempt to compete with Netflix or Blockbuster mailing services.
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Instructions
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Plan your business's finances. Calculate the potential size of the local market that you can reach with your store or kiosk, and attempt to determine how much those customers spend on DVD rentals per month. Assume a very competitive marketplace, with Netflix and on-demand video services taking the lion's share. Determine the pricing structure that the market allows you to charge. Then calculate your costs for real estate rental or space for your kiosk in a local store, the costs to purchase 300 to 500 initial DVDs and continuously upgrade your inventory, inventory management software, employees, insurance, taxes and franchise fees. Franchises can cost from $4,000 to $20,000 in fees plus operating cash. If you plan to purchase a store, which might run $50,000 to $500,000 depending on location and features, examine its finances carefully to determine whether it can be profitable.
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Apply for the proper permits and licensing for your area. In addition to a state business license, you may also need to obtain zoning permits from the city, franchise licenses from your franchise owner, and distributors' licenses for renting the movies you carry.
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Finance your business. With a small DVD kiosk you may be able to finance the operation out of your own savings. For larger businesses you may need to obtain loans through your bank, potentially with the assistance of a Small Business Administration guarantee. Or you may be able to obtain investment capital from friends, family or small investors. In all cases, make sure that your business is not undercapitalized. You'll need to have enough cash in the bank to pay all expenses, including your own living expenses, until the business is profitable enough to fund itself.
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Invest in your inventory of DVDs and the software necessary to manage them. Choose your inventory according to your customers' needs that are not currently being fulfilled. If you live near an ethnically diverse neighborhood, consider specializing in hard-to-find foreign films in their original languages. You might specialize in anime or adult films or only in the latest new releases. With a franchise the inventory management software is often included, but for your own independent store you may need to invest in software and hardware that can provide antitheft capability and track which customer has rented which DVD, when it's due, and how much to charge which credit card if they don't bring it back.
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Market your store. If your kiosk is in the local grocery store, advertise a two-for-one rental deal in the grocery store's weekly circular. Advertise your cheap Sunday rentals on your local college campus, or your Spanish language movies on the local Spanish-language radio station. Make sure customers know why the service you provide meets their needs better than your competitors do.
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