To some rental center owners, the current slowdown is a serious recession threatening to take a huge bite out of their business and jeopardizing their very survival. To others, it's a minor correction after several boom years. However it's affecting you, there is no denying that it's a time of challenge, during which rental companies must pay careful attention to costs and profits. RER spoke with dozens of rental center owners around the United States to find out what they are doing to survive and prosper.
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Quick response: As many rental people are quick to tell you, they all have the same equipment, but it's the service that counts. A contractor with a breakdown on a job site is always in a hurry. If you can't solve his problem quickly, he'll find somebody else who can. Bob Johnson of CJ Rentals, Central Point, Ore., is so confident in his service, he tells customers, “If we don't get back to you with an answer in 15 or 20 minutes, that means we didn't get the call.”
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Watch the receivables: Payments from customers tend to stretch out when times get tough. Incentives, such as a discount on the customer's next rental, could be offered to stimulate customers to pay on time.
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Refinance: Stretching out your payments may help you to get through tight times. Beehive Rentals in Eugene, Ore., was following a two-year payment schedule on most of its equipment purchases, but owner Dennis Hoglund was able to refinance most of it to pay it off over three years, thus reducing monthly payments by a half. “We expected the slowdown to come, so we structured ourselves so that we could re-finance and save money on payments,” said Hoglund. It may be too late but preparation is key.
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Reduce capital expenditures: Rental companies around the country have saved money by aging their fleet or buying used equipment. But while used equipment can represent a significant savings, this might be an optimum time to buy new. “There are a lot of deals out there with a lot of special financing, some very good incentives to buy,” says Dale Blackwell, Aba Daba Rents, Sacramento, Calif. “There are a lot of hungry vendors who are going out of their way to make it easy for us to buy.”
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Talk radio: Many smaller cities and towns have radio programs that spotlight businesses. One Oregon rental center owner was interviewed on a 20-minute segment about his rental business, offering advice to listeners on how to do different kinds of projects and the kinds of equipment available for rent. He was surprised by how many customers — new and returning — said they heard him on the show.
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Newspaper inserts: Marketing experts all say the same thing: Increase, don't decrease, advertising during a recession. It may be easier said than done, but many rental centers are following this time-honored marketing dictum. Brett Younker of Total Rental Center, Gresham, Ore., has found success with inserted ads in neighborhood newspapers. “You pay for the ad, but the delivery is free,” he says.
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Pigskin fans love to rent: Radio advertising is a popular medium with many rental companies, but it must be carefully targeted to be effective. Talk radio is one method; football games are another. Seattle-based Star Rentals is one of many rental companies who have found football fans receptive, enjoying positive response from ads on Washington Husky and Oregon Duck football broadcasts.
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Hire a marketing consultant: The days of just advertising in the Yellow Pages are over. More and more rental companies are contracting with marketing consultants to help them get more for their advertising dollars, by tailoring an advertising program to highlight their service capabilities and target the right customer base.
“Rather than cutting advertising, take a hard look at where your dollars are being spent now and see if there aren't more effective ways to use those dollars,” adds Thomas Fouts, of Bledsoe's Equipment Rental, Olathe, Kan., and Lee's Summit, Mo.
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It's in the logo: Some rental companies find one of the most effective ways of advertising is to make sure their equipment looks good, with new paint jobs. If your shop personnel have time on their hands, put them to work painting and re-decaling equipment. Make sure you have your logo on all equipment so that your name is always in front of the customer.
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Buy a turkey, rent a chainsaw: Some rental centers have found success with grocery store receipts. “The key to a good coupon is to give them ‘real’ value,” says Fouts. “One or two dollars off is not going to motivate people to come to your store.”
Fouts recommends using a sliding scale based on the dollar value of the rental contract, ranging in value from $3 to $15 off any rental. Discounts could go considerably higher for more big-ticket items. He uses similar coupons in direct mail coupon books.
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Now playing… Fouts also recommends advertising in the slide shows between movie showings at movie theaters.
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Stay in contact with your customers: While some smaller businesses are disappearing down the street from your rental center, your business is still very much alive and well and open for business. Maintain contact with your customers. Touch base with those that you may not have seen for awhile. Let them know that you are still open for business.
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Continue seeking out new customers: Actively pursuing business from new customers can help make up some of the slack during slow times. Offer specials for first-time renters.
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Try direct mail: Direct mail can be an effective marketing technique, not only for flyers, but even for rental catalogs. “I direct mail my catalog as a marriage mail with the telephone directory,” says Fouts. “The catalog I [send by] direct mail is printed in newsprint for cost savings and also contains a coupon page.”
The cost of marriage mail, according to Fouts, is far less than an actual mailing, and you can still target certain areas. “The key to whatever you do with marketing is consistency and repetition. Don't let that suffer a temporary recession.”
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Utilization analysis: When business is hot, it may not matter, but multi-location companies should pay careful attention to equipment utilization per branch for each asset. What moves well in one part of town catering to large contractors might stay on the shelf in facilities that attract small tradesmen or homeowners, and vice versa.
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Share the wealth: You don't have to be a national chain to maximize revenue by sharing equipment between branches. Ken DeVries of Vallejo, Calif.-based All-Star Rents says that the new computer system his company recently obtained has made equipment sharing between branches easy and is saving his 9-location company thousands of dollars monthly. “You have to use the technology that's available to take advantage of economies of scale,” DeVries says.
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Train your sales force: Many rental companies are re-examining how they use their sales force, both on the inside counter as well as outside sales staff visiting customers on job sites. Now is the perfect time to make sure this sales staff is really explaining the company's capabilities to customers and potential customers. Many feel that their outside sales staff is, by nature, well-trained in this area, but that it's now time to get their inside sales staff to the same level. “We'll do internal training to bring up the caliber of inside sales people so that they will be real coordinators and not just order-takers,” says Devries.
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Educate the contractor: Now more than ever contractors are likely to consider rentals because of their own budgetary concerns and the economic drain of making payments on under-utilized equipment. Sharpen up your educational outreach to show your customers how you can save them money. In addition to promoting your own company, explain the overall value of rentals.
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Cut perks, not people: Larry Pedersen of A Tool Shed, Campbell, Calif., was determined not to cut staff unless absolutely necessary and didn't want to cut back on vital areas of customer support and service. So he decided to start cutting down on certain services that made life easier for the A Tool Shed crew but didn't really affect customers. He started with coffee service for the employees at the various branches, and the hiring of a cleaning crew to tidy and mop the offices and bathroom. Next to go were the landscapers that cut the lawns at the rental centers and the tire repair service.
“Now we're fixing our own flats, mopping our floors and cutting lawns,” Pedersen says. Most employees would rather scour sinks than want ads. Besides, they can get better coffee at Peet's.
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Maintain morale: While cutting perks has some advocates, cutting back the investment you make in your employees during a recession can cause panic. Maintain the programs you offer to your employees. Continue to offer them training opportunities in all areas of your business. Happy employees will reflect with good customer service and project your business as a healthy one.
“Keeping morale up is very important when the outlook gives a very bleak impression,” says Anita Bjork, rental manager of Newman Rental Service, Indianapolis, Ind. “We realize that this operation is a team effort.”
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Watch capital expenditure by department: If you have a small rental business, use that to your advantage. Examine your capital expenditures for each department of the business and limit spending in each area without going to extremes. This strategy may prevent you from making costly cuts in labor that will eventually affect customer service.
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Starbuck rentals: If you offer a coffee area for your customers to fill up, you don't necessarily have to offer gingerbread latte, but clean cups, creamer and sugar containers are essential. An unsanitary-looking coffee area leaves a wary and unpleasant impression in your customers' minds.
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Clean those restrooms: Messy coffee areas are one thing, but unsavory restroom facilities are far worse, for obvious reasons. Make sure they are kept clean and check them repeatedly each day.
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Junkyard blues: Rental companies often fail to consider the importance of general appearance. Those that primarily market to contractors and deliver equipment rather than have customers come in to pick it up tend to overlook the impression customers get when equipment boneyards with piles of no-longer-used broken-down equipment and piles of old tires are visible from the street. People form unconscious visual associations in their minds. What is better: sloppy yards with broken-down, junky equipment or freshly painted, clean machines?
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Cut back on overtime: Many rental companies allow service personnel to work overtime as they see fit, if it enables them to be more productive and get more work done. But not now. Companies throughout the country are saying no overtime allowed unless absolutely necessary and approved by a branch manager, or if the worker is stuck on a service call.
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Financial counseling services: Many of your employees haven't been through a recession before, especially the younger ones. It wouldn't hurt to sit down and offer them a little financial counseling. “Many of them don't plan in advance, they maximize their credit cards, they live paycheck to paycheck,” says A Tool Shed's Pedersen. “I know it's hard to save money when you just got your overtime cut and your Christmas bonus was reduced, but even if it's $5 a paycheck, we advise them to put more money in their 401 (k) accounts. That account will appreciate rapidly when the economy turns around.”
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Sum of the parts: Charles Snyder, former CEO of American Equipment, points out that during a recession, customers are also likely to spend a lot more fixing up their own equipment, thus providing rental companies — especially those that are also dealers — with a large amount of after-market business in the service and parts end. Now might be a perfect time to reorganize your parts department, make sure it's running effectively and economically and that it's stocked with everything you need.
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Join the party: Getting involved in organizations is always good advice in any profession, especially so in the rental industry. David Harris with American Rent-all Center recommends those new to the industry become active in local associations. He says knowledge from those who have more experience is an immeasurable tool.
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Expand and explore: Finding new business is never easy. Lawrence Keeley of Admar Supply, Rochester, N.Y. wants to branch out a bit. “Try to address different geographical markets. Try to supplement some of the lost business by expanding product lines. Move to different parts of the state where you don't have a large presence, and see if you can steal more business that way.” Not every company can, but if your company is looking to make an acquisition, multiples currently are lower than they've been in years. A strategic acquisition can prepare your company for market dominance when the economy picks up.
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Your best bet: The 80/20 rule: In difficult times it helps to really focus on the best customers. After all, a basic tenet is that 80 percent of a company's business comes from 20 percent of its customers. “You want to find ways to rent or sell to your best customers,” says Mike Disser of Albany Ladder, Albany, N.Y. “Expand your product base and work to better understand their business to better satisfy their needs.”
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Offer something special: Offering a product or service others don't keeps Washington Air Compressor, Hyattsville, Md., out of the red. Sharon Bohlender, marketing manager, says, “stick to your niche. It is our belief that companies that offer specialty services will survive the recession in much better shape by promoting services and equipment that is unique to their company.”
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Plan well: Whatever the state of the economy an outline is necessary, even more so during a slow down. “If you don't have a budget and don't manage your costs, you're in trouble,” says Michael Parkin of Exeter Rent-All, Exeter, N.H.
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Focus on goals: Parkin read some tips in a recent issue of The Wall Street Journal that suggested “create a positive agenda and refocus on strategy.” A clear re-focusing and definition of company goals can keep employees positively focused.
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Advisory and focus groups: Starting an advisory committee of select loyal customers can deepen those customers' commitment to your company if they feel like part of your organization. And it's a great way to find out what your customers are thinking and expecting from the rental companies they do business with.
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Cook a barbecue: Several rental center owners invite key customers for quarterly or bi-annual barbecues and add a great personal touch by cooking the barbecue themselves. If you're not a great cook, well, it's a barbecue! You can always cater it. And a keg or two of beer can mask culinary deficiencies.
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Bring it online: More and more manufacturers are putting their parts and inventory catalogs online. Having Internet access available will enable your counter and service staff to service customers more quickly and efficiently. Electronic warranty service is growing in popularity as well and is a time-saving way of processing claims.
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Keep your staff well-informed: During recessionary times, rental companies, like many businesses, are often distracted by talk of the down-turned economy. One rental manager notes the importance of keeping the focus on the business at hand. One way to manage this is to keep staff well informed.
“We have incorporated more staff meetings,” says Newman Rental Service's Bjork. “In our meetings, we inform employees of where we believe our industry is headed and put forth as much facts and data as possible. We gather information from newspaper articles, the Internet, magazines and our customer base. We have found that an intelligent staff is not only more supportive, but also more likely to give objective viewpoints and suggestions.”
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Make contact: Establish ongoing contact with building organizations in your area. Developing a relationship with the leadership in these organizations will help you stay abreast of the current development in the vicinity of your rental business and help them remember you when they have equipment needs.
“We receive data regarding home development and proposed subdivisions,” Bjork notes. “And we do have a sound and loyal customer base with contractors.”
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Check out and check in: Before a piece of your inventory leaves your store, make sure that you are aware of its condition. When that unit is returned, make sure it is in the same working condition. “The idea is to control one's costs in every aspect of the business,” says Marlyn Lepori, rental manager for Zimmerer Kubota & Equipment, which has five locations in metropolitan Ft. Worth, Texas.
Rental centers should also look for outside experts to analyze the check in and check out procedure to look for ways to make them more efficient and customer friendly.
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Look for tips: If any of these tips give you ideas to improve your rental company's performance, we're doing something right. More importantly, you are doing something right. Unless your rental company has reached perfection, now more than ever, you should be constantly asking yourself how to do things better. Look for the experiences of others to give you ideas along the way.
