Being as I am writing this in the month of December, and it will be January when most of you will be reading it, I thought that this month’s cover story by Larry Kaye is particularly timely as year’s end is when many examine what they want for their business in the year ahead. One of the main points Kaye talks about is having a business plan. As he writes, if you don’t have a business plan, you will be completely surprised when you go out of business!
Still, business planning is easier said than done and not all business owners are really good at it. It’s particularly important now because for the most part the rental industry is doing well and expectations seem to be that the coming year will continue on a growth path. There’s of course the old business adage that if you’re not moving forward you’re going backwards, or, more to the point, if you’re not growing, you’re shrinking because others around you will be growing and leaving you behind in the dust.
But as Kaye explains, growth without examining all the factors involved, doesn’t necessarily work. If you decide to add inventory, what do you add? Do you just get more of what you already have? Or do you have enough of that and you want to try something new? If you do that, you have to make sure your staff is properly trained on new equipment segments, or at least have a good idea of how to train them. If you buy more equipment, do you have enough maintenance staff and enough service bays? Do you then also need more delivery trucks, more mobile service technicians and mobile service trucks? There are a lot more costs than the cost of some new machines, even if you do get a 10-percent off show special at the Rental Show in New Orleans when you’re walking around hung over after a night out on Bourbon Street.
I remember talking with one rental center owner in a relatively small town who noticed over a period of time that all the growth was developing on the west end of his town, and his branch was on the east end and for various logistical and traffic-related reasons, deliveries were very time-consuming from east to west. I asked him why he didn’t open a branch on the west side of town where all the growth was and he said property was too expensive to buy and he couldn’t find a decent place to rent or lease. I asked why not a small branch that would primarily be a place to store equipment for delivery and even that was difficult. What about investing in more delivery trucks and having drivers start earlier in the morning? He said he really couldn’t afford that option.
So basically he was in the east, the dynamic growth was in the west but he couldn’t seem to figure out a solution to the problem. I lost touch with him and don’t know what he did. He seemed willing to just stay the course because all the solutions seemed problematic or expensive. He needed to be in a different location but property was too expensive; new trucks, drivers and gasoline cost too much, and on and on.
The reality is he was not the first in the rental business to encounter this type of problem. I know many of you have because I’ve heard about such issues over the years. I have always been impressed by how so many rental companies figure out ways to solve these dilemmas. Many of you have limited capital but amazingly figure out ways to get things done.
I recommend the SWOT analysis that Kaye writes about. I also recommend brainstorming with trusted staff, or with peers you might know in the rental business, or even suppliers you do business with. I know when someone asks me to help him figure out a problem, I feel a bit flattered by the confidence and I take it as a challenge to help the friend or colleague figure out a solution what might be a challenging puzzle.
So as the new year comes into focus, I suggest making a list of goals so you have a roadmap of where you want to go and another list of problems you need to solve. The solutions, I trust, are out there.
