Hope is not a plan: Find a niche, find profits
By Adam Snook
Having specialized knowledge adds a competitive edge to your business.
By Adam Snook
We’ve all been watching the race to open and acquire more specialty branches by the consolidators. Whether it’s power and HVAC, trench shoring, pumping, heat or even floor care, they’ve seen that a focused stand alone can generate better ROI than their average general rental location.
There’s always been independent operators who had a focus on a single product line. Most notable were the aerial rental specialists. The largest ones were then bought up by the consolidators, who proceeded to add full line rentals and take the “specialty” out of the business. The idea being that cross-selling customers and sharing overhead among multiple lines would lead to a more profitable operation.
Now the rush is on to bring specialized knowledge and experience back to the rental industry and charge a premium for it. That should tell all of us something.
That “something” should have been pretty obvious all along. If you’re competing against Home Depot for the price-conscious retail or small contractor customer with your rental business, you’re probably going to lose.
The logic of being able to charge more for specialized knowledge shouldn’t come as a surprise to most of us. There are mechanics’ shops that specialize in transmissions, diesel engines, hydraulic systems and so on. They tend to charge more than a general repair shop, but you’re willing to pay it because you want the job done correctly and there’s a cost associated with the knowledge to do it correctly.
Here’s a story I’m sure some of us have heard about just this topic:
There was a huge ship engine that no other marine mechanic could get fixed. So they called in an old veteran mechanic to look at it. He tapped it with his hammer in the right spot and the engine started running.
A few weeks later when the bill came to the ship owner for $5,000 he called the old mechanic in a rage. “Why did you charge me $5,000 for five minutes of work?!” The mechanic replied, “It’s not the five minutes I’m charging you for. It’s the 60 years of knowledge and experience.”
So if you want to thrive instead of just survive, look for your niche or specialty.
It’s not easy, but there are opportunities if you look for them. I recently had lunch with an old supplier who mentioned that the boom in pot grow operations has led to opportunities for dehumidifier rentals and service contracts. Reach out to the people who have boots on the ground all across Canada and see what’s moving in other areas.
For some of you it might be as simple as expanding your service departments to take on more outside repairs and become warranty depots for other manufacturers. Maybe it’s getting into portable toilet rentals if there’s not a lot of competition in that area where you’re located. It’s not always going to be clean or glamorous work, but little in the rental industry is.
Be creative, there’s a lot riding on it.
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.