Rental's Runnin' Rebel

Jan. 1, 2002
Most owners would be happy to sell their company, walk away with $10 million and say goodbye to the rental business. But not John Hoham. A year after

Most owners would be happy to sell their company, walk away with $10 million and say goodbye to the rental business. But not John Hoham. A year after he sold his southern California 10-location rental chain Foothill Rentals to British conglomerate GKN, Hoham was back in business with a single location in Las Vegas.

He called the company Rebel Rents, and although he named it for the University of Nevada Las Vegas Runnin' Rebels, some people thought it was a description of his feisty, independent personality.

Hoham didn't return to the industry because he needed the income. He came back because he genuinely loves the rental business.

“I made $10 million, isn't that enough?” Hoham says. “This business gets in your blood. I looked at the papers and thought to myself, ‘I'm going to look through all these ads and see where I fit,’ and decided I didn't fit anywhere else. I love this business. It's always changing. Every job is different, every phone call.”

Hoham's non-compete agreement only went as far as the California border, so he checked out other cities to see where he wanted to start a new rental business and eventually narrowed it down to Houston and Las Vegas.

“I liked Las Vegas and the economy was going strong there,” he says. “It was an area where you could pretty much see your market, it was all right there in that little valley and I thought ‘I should be able to do something here.’ There was some pretty strong competition, but we did pretty well.”

Hoham recruited his brother Bill, 15 years his junior, and several other former Foothill employees and began Rebel Rents in Las Vegas in 1990. He eventually built it up to four locations before coming back to California five years later.

An intrinsic business sense guided Hoham towards what would become the fastest-growing region in southern California. Between San Diego in the south and Riverside in the north, 12-location Rebel Rents concentrates on an outer ring to the south and east of the major population centers of Los Angeles and Orange Counties.

“I just felt that people need affordable housing and that these particular areas, the outer-lying areas, are affordable,” Hoham says. “People had to go here, it had to be. Not everybody is a millionaire and you need to be a millionaire to afford a place in L.A. or Orange County or San Diego. So we just looked around this inland corridor and we started buying stores and doing start-ups. Perris Valley Rentals had two stores, that was the first one, and from there the pieces all fit together.”

Hoham was certainly right in his assessment of the market area. Riverside and San Bernardino counties are now home to 14 of southern California's 20 fastest-growing cities, according to the latest census data, and demographic experts expect the population of the counties — currently 3.2 million, equal to Oregon's — to double within 25 years. Over the second half of the 1990s, local governments in the two counties approved more than 165,000 construction permits, averaging more than 90 new buildings a day, seven days a week — about half of which were residential. And with so much construction going on, the need for new highway construction will obviously follow. A Riverside County official estimates that the cost of highway improvements in western Riverside County alone will be about $9 billion over the next two decades.

The California expansion mode

After bringing Rebel Rents back to California in the beginning of 1995, Hoham shifted into expansion mode, buying two former Taylor Rental stores in the San Diego area and a former Rental Service Corp. location in Hemet, near San Bernardino. He later acquired stores in Escondido, Carlsbad, Santa Ana and Mira Loma and started a branch in Encinitas.

Hoham also entered the movie studio rental business, starting Rebel Studio Rentals in San Fernando, near Los Angeles. He also founded a ready-mix concrete company, which grew to a fleet of about 55 trucks. Feeling too spread out, Hoham later sold those two businesses as well as the Las Vegas rental centers, so he could concentrate on building his general rental network in a concentrated area.

Hoham built Rebel in a manner similar to the way he expanded Foothill Rentals during the 1980s after acquiring it from his father-in-law — expand and then slow down and integrate. As much as Hoham loves to grow, he is careful to ensure that integration keeps pace. After growing to 12 stores in about six years — thus becoming one of the leading, if not the leading general rental player in the southern California market — Hoham is now in the slow-down-and-integrate phase and it's during this period that Hoham's management technique and philosophies are taking root.

It's the people

It's not exactly a new concept, it's one that managers in the rental business all over will espouse — that you're only as good as the people you hire. But few people pay closer attention to making sure that he has the best and the brightest available than Hoham, who scoured the country in search of a management team that would allow his company to compete at the highest level.

Playing a major role in helping Hoham find and train top employees is chief operations officer and southwest regional manager James Burchard.

“We're always looking for a better talent pool,” Burchard says. “Our people are not just order takers. Those are the type of people we don't want. We look for performance, for people who are passionate about their jobs, people who want to come here and be part of growth, not just to pick up a paycheck. We want people who will help us get to the next level, not just want to stay the same. We look for people who will identify problems and look for ways to fix them, no matter what the job, from the people who wash equipment, and the yard guys and drivers and mechanics, to salespeople and managers.”

When Rebel was in an expansion mode, its management often didn't take the time to look at small things, to make sure it had the best people in all areas, and ensure its systems were the most effective. Now, however, Rebel has slowed down its expansion efforts to integrate and train and develop before expanding further.

“We're looking to expand and grow more, but before we do that, we're going to have to adjust and identify the people who can get us there,” says Burchard. “We're looking for the elite people and that's time consuming and there's a lot of training and molding that goes into that.”

“We're looking for problem solvers,” Hoham adds. “We want people who can think through problems.”

Although training plays an important role in the process, there is an intrinsic feel for the business that Hoham and Burchard want and they look at employees at every level of the company to see if that quality is there. “Rental people are a different breed, it's not something you're bred into, you either know it and have a feel for it and you're good at it or you don't,” Burchard says. “Some guys can play basketball, some guys will never play basketball. You can teach them all the mechanics but they just won't have the skills. We believe it's the same way in the rental business. It's a different beast that can do this. It takes a certain temperament, a different type of person.”

Even as Rebel looks for people with that innate rental temperament, training is an important part of the company's development process. Getting everybody in the company integrated to cohesive procedures is a challenge for every rental company, and in the case of a young company such as Rebel that has grown quickly, the challenge is exacerbated by the fact that many of its people worked at different rental companies before joining Rebel.

“We've found so many people that came from other organizations that are improperly trained,” Burchard says. “I'm not saying we do everything best, but some people come from other companies and we put them in positions where we think they will perform and we find out the capacity isn't there. And we found out that we expect a lot more from our people than most of these other companies. Our managers don't just manage — they go outside and help customers, they work on the wash racks and the bays, they can do every facet of our business. Our managers are hands-on and they perform every function day to day, whether it's writing contracts, answering phones or arranging transportation.”

Rebel also includes, as part of its training, time spent on the counter — every employee has to spend time on the counter to understand how the company functions. “When we hire anyone, even the most seasoned salesman, before we turn them loose in the field, we want them to become acclimated to our counter procedures,” Burchard says. “They need to know what's expected, how to work with our counter guys. We feel if we bring our salesmen in to see what takes place behind the counter and answer the phones and work with our customers, they'll have a better understanding in the field when they call in.

“Some customers will insist on a Deere or a Komatsu, or a blue machine or a yellow machine. Some salesmen call in and relay the customers' demands and stress out and get upset if the counter person doesn't react immediately. The sales guy may not understand that the counter person might have two people in front of him, two lines on hold, with a broken-down truck on the freeway and the Department of Transportation all over them. He may not have time to explain, but if the salesman has worked the counter, he's more apt to be a little more forgiving and try to help out rather than get upset.”

A passion for the business

When Hoham and Burchard talk about finding elite rental people and people with a passion for the business, a lot of what they're looking for relates to pride in one's work, in doing a job well no matter what the job. They feel that with every task in a rental company, no matter how mundane, there are always ways to do it better and more efficiently. They seek the kind of personality that looks to see how a job can be done better, that analyzes problems within an overall system and thinks about ways to solve problems. They also want to find personalities that really care deeply about customer service.

“A lot of people say it, but they don't really implement it,” says Burchard. “You can tell when you call some rental companies on the phone. Let their counter people answer the phone and you can feel it, you can hear it in their tone, that they don't really care, they won't really make that extra effort. But we will.”

Indeed, Hoham has searched thoroughly. Kevin Lancey, chief financial officer, was working for a software company in Florida when Hoham recruited him to join Rebel. Lancey had worked for several rental companies in the past. As an executive for Stanley Works, which bought and then sold 65 Taylor Rental stores, Lancey sold two of those stores to Hoham, which is how he popped up on Hoham's radar screen.

Hoham recruited Burchard, who, although he started with Hoham in the 80s in the Foothill days, later worked for several Fortune 500 companies where he received extensive management training. Hoham also recruited rental veterans such as Ted Donnelly, who worked for various California rental companies such as Sam's U-Rent, Acme and BJ's Rentals, and now handles a variety of administrative duties, credit, risk management and insurance.

Another rental veteran is Doug Fleury who worked for several Florida rental companies before joining Rebel, where he works on training, inventory management, competitive studies, driver training and a wide variety of tasks. Many other Rebel managers have extensive industry experience, such as regional manager Rick Webb, a 20-year rental veteran who manages the Santa Ana branch and oversees all Orange County operations, and Perris manager Vince Graves, an industry veteran since 1969 who helped with several Rebel acquisitions.

A central point

Another important cog in the Rebel wheel is inventory manager Jim Hamilton. Sitting at a desk in a small office at Rebel's Temecula headquarters, Hamilton's primary task is moving inventory around so that any time a branch has a need for a piece of equipment not currently available at that facility, he can find the quickest and most convenient way to get it to him. “His first goal is to find an under-utilized piece of equipment that can move in and take care of the job,” Hoham says. “If he can't find that, he just moves it from the closest location to cut down on the expense of travel.”

Hamilton's function enables the company to function with much greater efficiency than many companies where managers and counter people from various branches are constantly calling around looking for machines to fill particular needs. “Even with as much equipment as we have and with a computer in front of me, it becomes second nature to know where everything is,” Hamilton says. “When somebody needs a piece of equipment, I'll just know that it's just about to come off a job or that it will be available in the afternoon. We handle it from a central point.”

Centralization has become a theme for Rebel Rents, which moved into its new headquarters in August. The centralization of all administrative offices has added to the company's enhanced organization and training capabilities. Large service bays enable Rebel to operate a central location for major maintenance jobs and a large parts warehouse has enabled the company to centralize parts distribution for its 12 branches.

Centralization also extends to Rebel's philosophy of doing business. Even though each branch is a profit center in terms of revenue, all expenses are seen as shared. “We don't allocate trucking out of one store, the costs are all one big pool,” says Burchard. “We don't break it down so that each store has to pay for fuel, oil, trucking or transportation costs. And we organize it that way so we can all give assistance to each other. If we were going to break it down the way so many companies do, then it creates a situation where each store fends for itself. Then you have a guy delivering all the way from San Diego to Riverside to a job site that's two blocks away from our branch. That kills you in transportation and it kills you in customer service. So his truck is busy for four hours on a delivery that could be handled in 10 minutes and if he has a customer who needs something right away, he might not be able to help him, he may have to say “my earliest truck will be back in three hours.

“This way we know that when a customer calls us and needs equipment delivered immediately, we think in terms of the nearest truck, not which branch is going to get credit.”

These procedures support a philosophy Hoham tries to instill in his entire staff, which is to never say no to a customer. “We look at every avenue to try to facilitate a customer,” says Burchard. “We never say no as far as when they need a piece of equipment and the piece of equipment they need. We're emphatic about that.”

The Rebel staff will do everything possible to facilitate the rental. If they are unable to find the desired equipment in the Rebel fleet, they will re-rent from a cooperative competitor rather than simply turn down customers and leave them to fend for themselves.

“We'll take care of the process for them so they don't have to deal with it,” says Burchard. “But we never like to leave the customer saying, ‘Sorry, we don't have it, go find it yourself.’”

The expected work ethic is a high one at Rebel, where delivery trucks are typically on the road at 4 in the morning and run well into the evening when necessary.

Along with the high standards and diligent work ethic Rebel leadership expects of its employees, comes a degree of trust and responsibility not always seen in today's rental industry. A store manager really manages and has complete authority to approve deals and rates.

“Although we don't match ridiculous rates, our store managers have authority to make decisions on rates,” Hoham says. “He's responsible for the operations of the business and the results. He doesn't have to call 13 people to get it approved, it's over when he approves it.”

Still, when questions arise that require owner input, one of the strengths of Rebel is that decisions can be made quickly. Hoham is communicative and easily accessible via cell phone and radio at all times. As Hoham says, decisions can be made immediately without meetings or committees.

In short, John Hoham is a throwback to the old days of hands-on owners who truly love the rental business. It's his life as well as his livelihood. Back in California for seven years, back in business for 12, Rebel Rents, on a pace to gross about $25 million in rental volume in 2001, has already doubled the size of his previous company, Foothill Rentals. Always on the move, this Runnin' Rebel must be doing something right.

Michael Roth can be reached at [email protected].

An RER Capsule

Rebel Rents
Temecula, Calif.

History: John Hoham sold Anaheim, Calif.-based Foothill Rentals in 1989 and founded Rebel Rents in Las Vegas in 1990, named after the UNLV Runnin' Rebels. Rebel entered the California market in January 1995 with the acquisition of Perris Valley Rentals, a two-location company based in Perris Valley, Calif. Rebel opened a Temecula branch in February, and acquired two Taylor Rental stores in El Cajon and Santee, Calif., in March. Rebel acquired a branch in Hemet from Rental Service Corp. in August 1996. Rebel acquired MacArthur's Equipment Rentals in Escondido, Calif., in May 1997 and Freedom Materials and Equipment Rentals in Temecula in June 1998. It added branches in Highland and Mira Loma in 1999 and acquired Carlsbad Village Rentals in Carlsbad later that same year. It later opened branches in Encinitas, Murrieta and its corporate headquarters in Temecula in April 2001.

Equipment: Rebel Rents is a general rental specialist ranging from small tools to backhoes, wheel loaders, excavators, forklifts, scissor lifts and boom lifts. Its top revenue producers include Komatsu loaders; Benford rollers; UpRight and Terex aerial work platforms; Bobcat skid-steer loaders; Mitsui air compressors; Target concrete saws; Ditch Witch trenchers; Multiquip pumps.

Revenue: After grossing $17.1 million in rental revenue in 2000, placing Rebel at No. 56 on the RER 100, the company was on a pace at press time to gross about $25 million in rental volume in 2001.

Philosophy: “All the rental companies can get the same equipment. It all boils down to people. We're always looking for people who are problem solvers, who can think through problems.”
— John Hoham