Having written dozens of profiles of rental companies, I am always fascinated by how companies got started. It is one of the first questions I ask and it usually brings forth some of the most interesting answers.

I've heard many stories about the great personal sacrifices people made to start their companies. Many sold or took out second mortgages on their homes to raise capital. Some actually lived at the rental center, in a small room or tiny apartment, even sleeping on a couch in their makeshift offices. In some cases, whole families lived on site, with both “mom and pop” working long hours to make the business go. I've heard stories of people who drove all night to get equipment for their customers, who worked 100 or more hours a week, who risked everything they had. Some even got started at their homes, renting equipment out of the garage and the back yard.

I heard some amazing stories about their original investments, stories that seem hard to believe in this day and age. I remember several founded in the 1980s, not all that long ago, on about $5,000. One multi-million dollar, multi-branch operation was started by two men who put up less than $5,000 each. Although they had limited capital, they had experience working for another rental company and good relationships with suppliers and manufacturers' reps that fronted them equipment with a handshake, saying “start paying me when you can.”

That goodwill and trust helped get them started. They eventually paid for that equipment and repaid those suppliers with loyalty, buying many times more than they received on faith in that first year. I wonder for every success story like that, how many times did suppliers go out on a limb for somebody who just couldn't make it, whose company didn't last the first year.

I may never know the answer to that question, but I doubt there are many people starting out in the rental business now with $5,000 and some borrowed equipment. Not $5,000, nor $10,000 nor $20,000 nor $50,000. Based on our research in this month's cover story, it takes at least $250,000 to start a rental business nowadays, even with small equipment in a small market with a small building, and a lot more in a bigger city or with large equipment.

No getting around it, these are some tough times in this business. Yet, people continue to start new rental businesses. Despite predictions of the demise of the independent, we regularly hear reports from around the country about entrepreneurs starting up in the rental business. Some are newcomers to the industry; others have rental experience. Of course you who are established aren't thrilled to see added competition, but the fact that they are starting up during these uncertain times indicates that this is still a profitable business where the chance of a strong return on investment is good.

Let's hope it stays that way.

mroth@intertec.com