Genie offers tips for building a successful rental business in new white paper
Whether you’re new to the industry or have been around for a while, every rental store owner’s goal is to build a business that will grow and expand over time. To do this, it is important to establish a solid foundation of business principles and best practices that will help you and your staff be successful. Some will call it your mission statement, others will call it your business plan — whatever you chose to call it, it is the standard in which you are building your business on and which others (your customers and your competition) will judge you on. To be successful in the rental industry, consider using these tips as guidelines for developing your business:
IT’S ALL ABOUT THE PEOPLE
Your biggest asset in the rental industry is not your equipment fleet, it’s your team members. Hire people willing to work with you, and for you, to build the business. Then, train them well and give them opportunities to grow and expand in their roles and within the company.
INVEST IN A STRONG SALES FORCE
Your sales team is the face of your rental company – both to your customers and to your competition. It is important to employ a sales staff that is willing to show up, follow up and follow through with what your business says it will do. It is human nature for people to do business with people they know and trust, and your sales team is both your offense and defense – forging new relationships, as well as nurturing existing ones. A sales team is also your eyes and ears in the community. Invest in a staff that will keep you up-to-date on what’s going on locally. It’s not just about being an expert on your customers and their projects, but you should also expect your sales team to be knowledgeable about who is doing what and where in their sales territory. You should also give your sales team opportunity to net-work and connect with other businesses, organizations and associations, as well as with industry leaders. Sales is a relationship business so the more relationships your sales team has, the more they can find out what you need to know and how you can be a part of what is going on.
IT’S NOT ABOUT PRICE
Because there will always be another rental store that offers your customers cheaper rental rates, it’s import-ant for you to compete on the merits of your business – not on price alone. “Sell” your customers on how your rental business is different from the competition. Rental store shopping is never an apples to apples comparison, and it’s your job to prove that to your customers. This includes talking about the equipment in your fleet (the brands you carry, the fleets’ age, etc.), your relationship with the equipment manufacturers, service and support before/during/after the rental, financing and payment options, jobsite equipment delivery, equipment maintenance and replacement programs and so much more.
KNOW YOUR CUSTOMERS
The best way to gain a customer’s loyalty is to get to know them, to care about them and to champion for them. This includes learning your customer’s business: What they do, how they do it, their values and principles, how they got started, how they have grown, what other businesses do they work with, do they rent from other rental stores and why, and how they plan to grow in the next 5, 10 and 20 years.
Once you have these insights, you can partner with them to increase their opportunities – give them ideas of what upcoming projects to bid on, invest in equipment that will help them do their jobs better and introduce them to others in your network that might be able to help them (accountants, marketing support, insurance agents, etc.).
Relationships are a two-way street, and your relationship with your customers should be built on you knowing them.
WHAT TO CONSIDER WHEN GETTING INTO THE AERIAL RENTAL MARKET
Whether you’re a start-up or an established rental business, if you are thinking of getting into the aerial rental market – equipment that includes boom lifts, scissor lifts and telehandlers – there are more things to make decisions about than just what equipment to order. Delivery vehicles and training are two important factors you need to consider when purchasing aerial work platforms for your rental fleet.
When selecting aerial equipment for your rental fleet, the first question to ask is: Can the equipment be picked up by the customer, or do we need to invest in a special delivery vehicle?
Smaller aerials, such as material lifts, electric slab scissors, one-person personnel lifts and towable booms, are built compact and lightweight enough to be transported with a standard pick-up truck. These models can easily be picked up by your customers at the beginning of the rental and returned at the end of the contract.
As you grow your equipment model sizes, you need to grow your delivery vehicle options. Because of their size and weight, larger aerial units will need to be trailered for transportation, requiring more than a customer’s pick-up truck with a hitch. At this point, your company needs to decide whether to invest in pick-up trucks and trailers or more specialized delivery vehicles, such as box trucks or semis with flatbed trailers.
As you are considering the type of delivery vehicle to invest in, here are a few of the questions you need to ask:
• What size of delivery vehicle do I need?
• How many vehicles do I need?
• Who will drive the delivery vehicle?
• Will the driver need a CDL or other special permit/license to drive the vehicle?
• Will the vehicle need special permits or licensing to be on the roads?
• How much will insurance be on the delivery vehicle? On the driver?
• What days and hours will I offer delivery services?
• Who will service the delivery vehicle?
• What kind of fuel does it require?
• Do I need to charge higher rental rates to cover fuel, insurance, oil changes, tires, etc. on the delivery vehicle, or should I add a delivery fee to the rental contract?
It is always prudent to start with smaller equipment that will not only minimize the capital investment you need to make in your aerial fleet but also with your delivery vehicles. This will help you get started in the aerial rental market and allow you the opportunity to grow and expand your business over time.
Who better to provide you with training on your new aerial equipment than the people who actually engineer, build and manufacture the lifts?
Whether in-person or online, it’s important to utilize the manufacturer’s training programs to train your team to operate, sell or maintain your aerial rental fleet to its full potential. Genie, for example, offers the Genie Lift Pro online-based aerial work platform training program, or for instructors, in-depth product training for salespeople, and service training for technical personnel – all designed by the people who know the equipment best.
And, don’t just pick and choose who to train. Train every-one on your staff, from outside and inside sales people to your counter and back office personnel, service tech-nicians and parts team. The more your staff knows about the equipment they are renting, the better rental partners your company will be to your customers.
DEVELOP A DIFFERENTIATION STRATEGY TO SET YOUR RENTAL STORE APART FROM THE COMPETITION
In today’s rental industry, competition in the aerial marketplace is intense, with many rental options available for prospective customers. That’s why it is so important for your rental company to develop a differentiation strategy that will set you apart from your competition.
Why does a rental company need a differentiation strategy?
The four primary reasons for having a differentiation strategy are:
1. Without a strategy, the major difference between rental companies becomes price, a.k.a. rental rates, which is the last thing you want when you are trying to run a successful, profitable business.
2. A well-defined strategy, will help to attract the customer base that you want.
3. Should enable you to retain your loyal customers.
4. And most importantly, your rental business can be more profitable.
At the end of the day, if you don’t have a differentiation strategy, your ability to be successful will be limited to your ability to offer the lowest rental rates.
So, how can you differentiate your rental business from you competitors?
You need to start by looking at your rental company and how you perform, or don’t perform, when it comes to the following list of reasons why people rent from a particular rental company over another:
• Fleet size and equipment availability – Are you a “one-stop shop” where your renters can get everything they need? Or are you a specialized shop with expertise in one type of equipment?
• Particular brands of equipment
• Equipment features/benefits – Is the equipment “state-of the-art”? Will it do the job required?
• Condition and reliability of the equipment
• Age of the rental fleet
• Delivery and pick-up process
• Responsiveness to equipment downtime
• Employee knowledge/expertise about the equipment and its applications
• Training on how to safely operate the equipment
• Competitive rental rates
Interestingly, there is one topic — rental rates — that consistently shows up towards the bottom of the priority list when customers are selecting a rental company. This indicates that, if you successfully differentiate yourself, and pay attention to the other reasons listed above, price, a.k.a. rental rates, will not be the deciding factor when a renter decides to rent from your company.
How do I develop a differentiation strategy for my business?
Once you have analyzed how your rental company differentiates itself, then it’s time to develop a strategy that enables you to use those attributes in your favor. Here’s how to do that:
1. Conduct a survey of your competition to answer these questions — What is their market strategy? How do they differentiate themselves?
2. Meet with your key customers and find out what’s important to them, as well as how they measure your performance.
3. Perform a SWOT analysis of your business to answer these questions — What are your strengths? Weaknesses? Opportunities? Threats?
Once you have gone through these steps, you need to analyze all the information you’ve gained through your discovery process to determine what your particular strategy is going to be. In the end, your strategy will answer this one important question: What do you need to provide to your customers, and the marketplace, to make your business the rental company of choice?
Putting a differentiation strategy into practice
Once you have determined your particular strategy, you need to decide what needs to be changed or added to your current business practices to allow you to successfully implement the differentiation strategy. Maybe you need to expand your rental fleet and/or modify your rental fleet mix? Add people? Provide more training opportunities? Bolster your repair/maintenance/product support capabilities? Simplify or improve your customer-related processes and procedures? Improve delivery/pick-up capabilities? Improve responsiveness to customer problems/issues?
Whatever you need to make adjustments to in order to successfully implement your differentiation strategy, make sure that you emphasize the importance of your team to your company — having the right people is the key to success in every business, but this is particularly important to success in the rental business. You need to hire people that are qualified and well-trained in their vocation, and then select people to be on your team that are extremely customer-focused, with an aptitude for resolving problems/issues and have a desire to create a positive experience for your customers.
And finally, make sure your strategy is written down, thoroughly communicated and fully understood by every employee and customer. By living out your differentiation strategy every day, it will become ingrained in your company’s culture and every employee will just do naturally and instinctively.
WHAT TO CONSIDER BEFORE YOU ADD NEW EQUIPMENT TO YOUR FLEET
Investing in new product categories, or extending the size range of your current fleet of equipment, is a great way to expand your business’s reach with existing and new customers. A new piece of equipment that differentiates you from your competitors can quickly increase your revenues and grow your business.
However, if you add a machine that doesn’t get utilized, you could end up losing on your initial investment and your rate of return if those dollars could have been used to purchase equipment that would have netted a bigger return.
Before you add products to your fleet, here are factors you need consider before making a purchase:
Before investing in new products, you need to identify what you’re trying to accomplish with a new product: Are you trying to expand the business you do with existing customers, or are you trying to grow your reach into new markets? For your existing customers, the best place to start is by spending time with them on their jobsites. What other equipment are they currently using on their projects? And, are those machines rented or owned?
If you’re looking to expand into other markets, be sure that the bulk of your existing rental fleet address a new market’s equipment needs so you do not have to purchase too many specialty units to gain measurable market share.
Conduct market studies
Doing market research on your operations territory area and analyzing the data will help you to identify new customers and develop profiles potential opportunities to expand into new markets. The profiles should include what equipment customers in these customers are currently using, what industries they serve, do they prefer to rent or buy and so on. You should also do similar profiles on the government agencies you interact with, the past, present and future projects happening in your area, as well as your competition.
This type of market data is invaluable to your company because it can help fill in the gap between what you know and don’t know about new customer and market opportunities. With that information, you will be able to make better decisions about what equipment to keep in inventory, what equipment to buy (new versus used), what industries have growth potential and which ones are saturated and other such insights. This data can also help you determine where your company’s growth potential is and where the competition has an advantage.
Best machine for your customers
Once you’ve identified the needs of your customers, or the new markets, classify what equipment is available to address these requirements. For example, if your customers install wind turbines, they are going to need some kind of lift that can get them high into the air. The options available include a large self-propelled boom lift or truck-mounted boom lift. Each has its unique qualities — a self-propelled lift is easier to maneuver on a site but requires a trailer for transporting, while the truck-mounted lift is easy to transport but not as versa-tile. Which type do you add? That question needs to be answered by identifying your customers’ preference, as well as by looking at potential other rental applications. You need to consider whether the large self-propelled boom lift is likely a great fit for refinery work, whereas the boom lift may be more limited.
Of course, if you have a several long-term commitments in a particular market, looking at other potential applications may not be necessary.
Adding equipment to your rental fleet that will quickly pay for itself is an easy decision. However, anytime you’re acquiring a machine, usage needs to be a consideration. Start by determining how quickly you’ll be able to recoup your initial investment — if it costs “X,” and you can rent it for “Y,” how many weeks/months does the machine need to be on rent before it’s paid for? Are you able to forecast enough potential customers to achieve that number?
Fitting the fleet
Depending on the type of machine you’re looking to add, you may have to add resources to support it. For example, if you’re adding a machine with new technology, will your service technicians be able to work on the machine? If not, how do you plan to get them the training they need, or will it be more cost-effective or convenient to outsource the service and repair.
For larger machines, you need to consider how you plan to transport a unit from the yard to the jobsite. Do you have a truck and trailer that handle the weight and size of the machine? If not, will it still be profitable to add a piece of equipment if you also need to add a truck and trailer for moving it? You also need to make sure you have room for the new machine on your yard.
Adding new equipment to your rental fleet is not a decision that can be made quickly. Knowing that each of these factors can significantly impact your overall return on invested capital (rROIC), be sure to carefully consider all the pros and cons before making your purchasing decision.
With a well-thought out strategy, a strong team in place and the right fleet mix in your rental yard, you will be on the right path to differentiating your business from the competition and becoming the “rental store of choice” for customers.