Investing in your rental business means more than purchasing equipment, vehicles, computer systems or other assets. It goes further than investing in solid personnel. The best run rental companies in the country are the ones that invest in their businesses continuously; not only in the categories mentioned above but in the ongoing “wellness” of the operation. They invest in and implement “best practices” utilized by other well run rental businesses and are endlessly looking for ways to improve their operations. The return on these “investments” are higher than you can imagine. We see it time and time again and we really get pumped in helping improve rental operations around the country.
If you could invest in your company and get a return of 300% on a particular investment, would you do it? What if the 300% (or higher) return was well within the first year and the benefits were perpetual going forward? Sound enticing? We think any good business person would think so. But, you need to commit to improving your operation continually.
Some of the areas that need to be improved upon in many cases are the following:
- Financial reporting and analysis. We’ve seen and/or analyzed over 3,000 rental stores over the past 22 years. It still amazes us that many companies, about half actually, do not prepare or receive month to month financial statements (whether prepared internally or externally). How can you manage and run an efficient rental company while flying “blind?” If you don’t receive your monthly financial statement by the 10th of the following month, get a new accountant.
- Control maintenance expense. As rental fleets age, this is a very critical component to monitor. We have 13 points of analysis on this segment alone which indicate the direction a company should go regarding each individual capitalized asset.
- Know your key “metrics” and how they compare with prior periods each month, week and sometimes daily depending on the metric. Revenues, time utilization, dollar utilization, and payroll expense just to name a few.
- Know your CPA and banker well and surround yourself with competent advisors. Your CPA and banker need to fully understand your business. There are a lot of questions surrounding our industry right now and to have a good handle on all aspects of your business and the ability to communicate those to lenders and/or investors is critical.
- Focus on rental. We are not believers in supplementing revenue with tangent offerings or niches outside of core competencies. Whether it is truck rental, selling boxes or taking on new lines to “sell” and not rent, you are hurting your margins in doing so. Understand all the components of taking new routes to subsidize the top line.
- Be a leader and set a good example. People and workers do what their leaders/owners/managers do. If your office is a wreck, don’t expect the showroom to be spotless. Lead by example and it will trickle down to each individual employee.
When we “examine” a rental company in its totality, we see things even the most experienced operators don’t see in their business. We pinpoint areas of weakness or concern and provide solutions for implementation in order to correct and right those areas. We highly recommend working “on” and not simply “in” your rental business. But, much like the doctor who performs a physical, it is up to the “patient” to implement the prescription given.
An investment in improving your operations is even more valuable in trying times. Don’t put it off. Inefficiencies and areas of deficiency are more costly when the top line is substandard and lower than it should be. Our experience tells us that those companies that have good procedures and systems, along with other traits of well run companies are the ones that flourish the most when an economic recovery returns. The ones that simply try to weather the storm and stay afloat are the ones that struggle coming out of recessions. They don’t “invest” in their business like they should. We always say you’re either moving forward or backwards; never staying the same.”
Remember, keep improving and keep moving forward.