Reversal of Fortune

Feb. 1, 1999
It's a story that has been played out hundreds of times in just about every rental market in the United States and Canada. The owner of a well-run independent

It's a story that has been played out hundreds of times in just about every rental market in the United States and Canada. The owner of a well-run independent rental center sells his business to a consolidator and becomes a regional or branch manager for the big company.

While the names, faces and places change, the story line stays the same. Every once in awhile, however, man bites dog.

Such is the case with Tom Nickell. Last year, the 45-year-old rental veteran left his post as the Atlanta-area manager for the Rental 1 chain to start an independent rental business in suburban Newnan, Ga., about 30 miles southwest of metro Atlanta. Many would view it as a step down, but, in Nickell's estimation, it makes perfect sense.

"I became dissatisfied with the corporate side of this business, especially the way they are handling this consolidation," Nickell explains, as two cold hamburgers sit uneaten on his desk, victims of yet another delayed lunch by a busy entrepreneur.

By focusing on increasing market share with lower rates on big-ticket equipment, the consolidators miss the point, he says. In October 1998, Nickell Equipment Rental & Sales opened for business in a remodeled nursery, ready to take advantage of some of the opportunities the big boys are missing.

"When I call on jobsites, a lot of times I do it as a secondary supplier," says Nickell. "I come right out and tell the customers, 'I am here in case Hertz or Prime or RSC can't supply you. I am right down the street and I can get it to you fast.' It is amazing how much business you can get just by stopping by a jobsite.

"Consolidation has changed the business. Independents used to be able to sit back and have a pretty good business just by taking care of the customers that came to them. You have to go out and get the customer now."

The concept of taking the big companies' leftovers is often termed bottom-feeding. Nickell calls it relationship-building, and it is theessence, he says, of the rental business.

The idea is to prove to the customer that Nickell and his three-man staff are a knowledgeable equipment source and a valuable resource for any contractor that cares to pick up the phone. Once that type of relationship is established, the business will follow.

"The consolidators have a hard time maintaining those kind of relationships," Nickell says. "Several years ago [at Rental 1], a customer came right out and told me, 'Every time I go into one of your stores, there is a different manager than the time before.' A lot of people out there prefer to do business with the same face each day."

Nickell assembled a basic package of light construction equipment and hand tools to go after small and mid-size contractor and homeowner business. Nickell has a few small industrial accounts, although no piece in the inventory is big enough to require a commercial driver's license to be delivered, saving the overhead of a tractor-trailer, insurance and a driver.

"The big companies deal in big equipment and have to have the big trucks and specially licensed drivers. Those kind of expenses hardly make it worth their time to take a concrete saw down to a jobsite," Nickell says.

"Most of the big companies have done a good job handling larger equipment, but they are already struggling trying to deal with smaller equipment. Very soon, I think, they will start streamlining back to renting only the bigger stuff."

As a small company, Nickell feels he has an advantage serving contractors in the short-term market. "I don't know if there is any other business where so many things could fall through the cracks, from calling and placing the order to getting it input correctly into the computer, to testing the equipment before it goes out, to giving the right directions to the driver, to physically delivering the equipment," he says. "With big companies trying to get equipment to three or four places on the same truck, it doesn't take but one thing to go wrong and their whole schedule is behind."

Don't misunderstand Nickell's enthusiasm for naivete. He is cognizant that the $600,000 in business he is hoping for in the company's first 12 months won't even register on the consolidators' radar screens. And he doesn't argue that loyal customers are hard-pressed to ignore some of the discounted rates offered by better-capitalized big players with more iron to move.

Nickell knows that to compete with the late-model inventory offered by consolidators, independents are going to have to turn over equipment more often than in the past. To do so, he uses technology, available at comparatively cheap prices versus years ago. Nickell Equipment is a fully computerized operation, which allows for easy, reliable monitoring of equipment usage and return on investment.

Another technological advantage is direct-connection cellular phones/radios, which allow Nickell to spend almost half his day visiting jobsites rather than chained to his desk.

"Fifteen years ago, when I was managing my father-in-law's rental store, I was uncomfortable leaving the store because if something came up, I felt as if I was missing an opportunity," he says. "Now, I can be connected instantaneously. If someone has a question, I can answer it right away."

By putting the customer first - not shareholders, bankers or other interests - Nickell believes his business and others like his can succeed in today's competitive market. It is the same customer-friendly business philosophy his in-laws, Wayne and Sue Stringer, used while growing the family's Jacksonville, Fla., rental center in the early 1980s.

"We have a can-do philosophy," Tom Nickell says. "If a customer calls with an unusual request, it becomes a challenge for us. That's the way my people approach it."

"Several years ago [at Rental 1], a customer came right out and told me, 'Every time I go into one of your stores, there is a different manager than the time before.' A lot of people out there prefer to do business with the same face each day."

Nickell assembled a basic package of light construction equipment and hand tools to go after small and mid-size contractor and homeowner business. Nickell has a few small industrial accounts, although no piece in the inventory is big enough to require a commercial drivers’ license to be delivered, saving the overhead of a tractor-trailer, insurance and a driver.

“The big companies deal in big equipment and have to have the big trucks and specially licensed drivers. Those kinds of expenses hardly make it worth their time to take a concrete saw down to a jobsite,” Nickell says.

“Most of the big companies have done a good job handling larger equipment, but they are already struggling trying to deal with smaller equipment. Very soon, I think, they will start streamlining back to renting only the bigger stuff.”

As a smaller company, Nickell feels he has an advantage serving contractors in the short-term market. “I don’t know if there is any other business where so many things could fall through the cracks, from calling and placing the order to getting it input correctly into the computer, to testing the equipment before it goes out, to giving the right directions to the driver, to physically delivering the equipment,” he says. “With big companies trying to get equipment to three or four places on the same truck, it doesn’t take but one thing to go wrong and their whole schedule is behind.”

Don’t misunderstand Nickell’s enthusiasm for naiveté. He is cognizant that the $600,000 in business he is hoping for in the company’s first 12 months won’t even register on the consolidators’ radar screens. And he doesn’t argue that loyal customers are hard-pressed to ignore some of the discounted rates offered by better-capitalized big players with more iron to move.

Nickell knows that to compete with the late-model inventory offered by consolidators, independents are going to have to turn over equipment more often than in the past. To do so, he uses technology, available at comparatively cheap prices versus years ago. Nickell Equipment is a fully computerized operation, which allows for easy, reliable monitoring of equipment usage and return on investment.

Another technological advantage is direct-connection cellular phones/radios, which allow Nickell to spend almost half his day visiting jobsites rather than chained to his desk.

“Fifteen years ago, when I was managing my father-in-law’s rental store, I was uncomfortable leaving the store, because if something came up, I felt as if I was missing an opportunity,” he says. “Now, I can be connected instantaneously. If someone has a question, I can answer it right away.”

By putting the customer first – not shareholders, bankers or other interests – Nickell believes his business and others like his can succeed in today’s competitive market. It is the same customer-friendly business philosophy his in-laws, Wayne and Sue Stringer, used while growing the family’s Jacksonville, Fla., rental center in the early 1980s.

“We have a can-do philosophy,” Tom Nickell says. “If a customer calls with an unusual request, it becomes a challenge for us. That’s the way my people approach it.”

It’s not just lip service. He will even skip lunch to prove it.

Newnan, Ga. Owner: Tom Nickell.

Founded: 1998.

Locations: One.

Employees: Four.

Annual revenue: Projected at $600,000.

Customer breakdown: Mostly light contractor and homeowner equipment.