Hope is not a plan: Bigger isn’t always better
By Adam Snook
By Adam Snook
There’re always parallels to be drawn in sports and business. Teamwork, collective goals, planning, leadership – the list goes on. If there’s one thing that another game seven loss by the Leafs teaches us, it’s that bigger isn’t better. Now, I know Montreal is no small-market team, but something about the way they are constructed and, most of all, the way they play reminds me of the differences between big corporate behemoths and small businesses.
When you break down the failures of the Leafs (and there are many), it’s the same list that you’ll find dragging down most behemoths in any industry. Too top heavy, not hungry enough, not agile enough, complacent. I’m sure there’s others you could add to the list. Montreal on the other hand was quick, efficient and nimble with changing their plans according to what the game demanded. They’re like the small to medium size business owners who are taking market share from the behemoths.
Like the Leafs, most publicly traded companies have massive overarching structures to try to sort through in order to get anything accomplished. All of the money ends up going to the top line players or C-level executives and the role players down the line aren’t able to make the decisions needed to react to the changing game or market conditions. The Habs, or small businesses, on the other hand, have talent spread out at all levels and lines. It makes it much easier to change your game plan on the fly when you have decision makers at all levels. Nimbleness and agility are a small business’ greatest asset against top-heavy or plodding competition.
The big companies, like the Leafs, have all their cream at the top. There’s little to no motivation or hunger when you’re guaranteed millions and it’s not based on performance. The guys on the bottom lines are only going to be so motivated when they know that their hard work rewards those above them regardless of their effort or performance. Small operators, like the Canadiens, have to have talent at all levels. We know that if we don’t have people capable of filling in on every line at every position that we’re very likely to get blown out. We also know that being a small, tight-knit group of well-compensated, happy team members we can compete with and beat anyone of any size when it comes to service.
Big operators know that the money is always there to pay the bills. Need more? Have an offering, hit up a P/E group, leverage your billion-dollar fleet. No problem. There’s no drive to hammer sales and get that equipment out at better rates. The metric is strictly utilization, a lazy man’s way to measure success. The Leafs have been built the same way for decades: money is no object. Small operators know that if we don’t hustle every day there will be no money in the bank. Second mortgages on your house only go so far to keeping you in business. Hopefully, we’re also learning that keeping rental rates up means that we can make more off renting less.
Last on my list is complacency. Just like over-paying for talent has gotten the Leafs in trouble for years, the behemoths are complacent in their business models. Instead of driving revenue growth at elevated rates and pushing utilization based on service they prefer to make acquisitions. When top-line growth is all you’re worried about to satisfy shareholders or investors you need to keep feeding the machine, no matter what the cost. When we’re looking to grow as small businesses, every purchase matters. We make cost analysis into a science. If it’s not immediately accretive, we move on to something that is. Our dollar utilization should be outstanding if we’re doing a proper job of this.
Teamwork is what will keep the independent operators thriving in an ultra-competitive market place. That means working with other rental companies, and preferably other independent ones. Keep your dollars supporting the guys on the same level as you. Ultimately a healthy team of locally owned independent rental companies can not only compete with, but also defeat their bigger, slower competition. Go Habs!
Adam Snook owns JustBins, a Regina-based provider of waste disposal solutions. His background includes building First Choice Rentals, an Alberta based equipment rental and oilfield service provider.