There are several crossroads in the growth of a rental company, or any business for that matter. One important turning point is getting past the first year or two and becoming profitable, a rung on the ladder many companies never achieve. Also, for a long-lasting family business, the ability of the entrepreneurial owner to pass the business along to the next generation is no small achievement.
These landmarks were achieved by Fairfield, Calif.-based All Star Rents long ago. It is now passing through another critical test for so many rental companies — growing from a small independent local company, or loosely connected collection of rental centers, into a regional player with the infrastructure of a multi-location company that can accommodate and facilitate growth. For All Star, whose market area extends from just east of the San Francisco Bay Area inland to Sacramento, to Marin County north of San Francisco, northeast to Chico and farther northeast into Sparks, Nev., the company's fast growth has propelled it into a strong competitive position in a vast Northern California and Nevada territory. And the company moved its headquarters from its smallest branch, Vallejo, to its largest after acquiring a company in nearby Fairfield.
When a company grows 60 percent in four years, a lot of things happen fast. In the world of business, it's rarely realistic for a company to foresee in advance all the infrastructure and organization required to manage that growth. That leaves the company with a lot of catching up to do.
CEO Ken de Vries took a major step toward managing growth in 2001 when he hired former RentX regional manager John Wooten to improve procedures and solidify the company's organization structure. Wooten brought with him a wealth of knowledge about bringing disparate branches together, managing fleet, implementing safety and training programs, marketing and using software to analyze performance and enhance profitability.
Wooten's presence enabled de Vries to concentrate on equipment purchases, financial matters and major buying decisions involving property and equipment. Wooten also brought direction to the company handbook and inaugurated a series of 16 standards of measurement to accurately appraise the performance of branch managers.
Prior to hiring Wooten, de Vries took another major step in bringing cohesiveness to a far-flung collection of very loosely connected branches. With most of the company's branches acquired through separate acquisitions of small rental companies with different names, those branches continued to operate with their original names and stand-alone computer systems. A common name would bring more benefits than just savings on stationery. The original name — Vallejo Rent-All, which sounded like a local business — gave way to All Star Rents.
Originally the retention of the Vallejo name and those of other rental centers the company acquired made sense. “Those names had intrinsic value in their communities,” de Vries says. “But as our business grew and we started sharing inventory, it became more cost-effective to have one name, to decal and paint and advertise under one name. A lot of our growth has occurred in the five years since we became a more regional rental company than a local one.”
Wooten was charged with helping create a cohesive system that would enable the company to improve utilization and enhance its potential. “There wasn't a lot of central management and leadership,” Wooten says. “It wasn't unusual for one store not to refer a rental to another store. There just wasn't a lot of cohesiveness and they couldn't develop it for lack of a computer system. One store didn't even know what the other store had. So they were more likely to just refer to the other local guy who they knew.”
de Vries also came to realize that to survive while competing primarily with national companies, improved efficiencies and economies of scale were essential.
“The cost of everything goes up, so it almost necessitates growing because your facilities and your overhead costs are going up so dramatically that you need to increase volume to get the percentage of overhead on each transaction down to a manageable level,” says de Vries.
The company needed more than just Wooten to bring it to a higher level.
“Our structure is behind our revenue growth and we're trying to run and catch up to that and it takes the right people to make that work,” adds Wooten.
One such person is the recently hired fleet manager Mike Layton. Like most independents, All Star has an older fleet than most national rental companies. And with lead times on new equipment acquisition stretched out considerably, All Star is forced to buy larger items such as reach forklifts, boomlifts and earthmoving pieces from equipment auctions.
“We buy late-model machines that national companies are selling,” says Wooten. “They're still good items but with that comes a little more maintenance than on brand new pieces. But the return on investment is huge because you're buying an $85,000 reach fork for $30,000 and it's still in good shape. We have a full paint booth, we can paint it and decal it so it looks good and the investment is still less than on a new piece.”
Wooten says the addition of a fleet manager has reduced turnaround time on down equipment tremendously. “Mike can take a problem and fix it that day and get the parts ordered or whatever needs to happen and that piece of equipment is up in three days as opposed to two weeks,” says Wooten.
Layton wears a variety of hats, but his key contributions have been in the area of standardizing and refocusing training for the service staff, the creation of field mechanics to be quickly deployed to service in the field or at a branch, the development of All Star's service truck fleet, and the managing of more than a dozen tractor-trailers for delivery with more being planned for.
“We're refocusing our training and our experience so we can spread it around the company,” Layton says. “Shared knowledge is shared power.”
Part of the investment in company infrastructure has been much greater attention to training of the service staff. “Our growth has exceeded the knowledge of a lot of our mechanics,” says Wooten. “We have a great mechanics' staff, but not all of them are knowledgeable on all the fleet we bought over the past four years. We have guys who are great with trucks, and all of a sudden we've got reach forklifts and booms. There's a learning curve there. So we're always planning lots of training.”
But to Wooten, training doesn't stop at sales staff and mechanics. “One of my big goals is training for the whole company,” says Wooten. Next up on his training radar, he says, is inside sales and manager training.
Another piston in the company's growth engine has been the increase in the outside sales staff. When Wooten joined the company in 2001, there was only one outside salesperson. Now there are eight, including a sales manager to hire and train sales staff. “Our sales manager, Todd Finale, is the perfect guy, hiring and recruiting all of our sales people,” says Wooten. “We just recently got fully staffed up to our goal of seven sales people companywide, so he's real busy riding along and training.”
Training for the sales staff is not formal but conducted more on a ride-along basis. Part of Finale's role is training sales staff to communicate effectively with different types of customers who may range from a small contractor working out of his pickup truck to purchasing agents with large corporations.
Finale says the typical All Star Rents customer is changing. “We used to be mostly homeowner, with some small contractors,” Finale says. “Now we're getting some big heavy hitters, big contractors as we do business all over northern California. They find they get a bit more personal attention with us.”
For an independent regional company to compete, the ability to respond rapidly in case of equipment breakdown is critical, and one of All Star Rents' major goals is for service personnel to be on the jobsite working on the machine within an hour.
“Because of the structure of our business, with each branch a separate profit center, our managers are really running their locations like their own business,” says Wooten. “To compete against fleet that might be newer, we have to go above and beyond and then beyond that. We set expectations for responding to down equipment, and that's that the mechanic leaves within 15 minutes of something being called in down. They have to leave the store within 15 minutes, or 30 minutes if they have to load up a replacement.”
Wooten points out that a typical jobsite contractor is running on costs of $300 or more per hour. “To be down for three or four hours is costing him huge money,” he says. “It doesn't always work out, but just the fact that we can be there at the jobsite within 30 to 45 minutes and have the piece of equipment up within an hour of his call blows a lot of customers away. And if we can't fix it right away, at least we're communicating with the customer and letting them know how soon we'll have it ready.”
The hiring of fleet manager Layton has helped focus the service staff. Layton moved Corky Thornton, senior mechanic, from the Fairfield store into a field service vehicle. Not only does Thornton go to jobsites in response to emergency needs, he also trains mechanics at the branches.
“We might have a problem at a particular store where the mechanic doesn't know how to fix something,” Wooten says. “Corky can go there, help him fix it, and teach him at the same time. So we have a fixed piece of equipment and a mechanic who has learned something.”
Servicing equipment in a timely manner is also important from a safety perspective. “We have incentives for the branches for servicing equipment in a timely manner,” says de Vries. “It's tied to our safety program. We give incentives for servicing and maintaining equipment and keeping it safe.”
Safety has become an important concern for All Star. The company now measures eight safety factors on a companywide basis monthly. “It starts with timely equipment maintenance, which has a strong safety aspect to it,” Wooten says. “Just because you change the oil doesn't mean it's necessarily a safer piece of equipment. It's preventive maintenance, especially with vehicles and lift equipment. We do timely employee training, we hold safety meetings, we do facility inspections. Every month the managers are held accountable to certain criteria in those areas, and every branch-level employee is held accountable in different aspects.”
Wooten works closely with de Vries in many areas and fleet planning is another area that takes up a lot of attention, analyzing return-on-investment reports and cash projections for the company's 10 branches.
While integration of the company's branches has been a major project in recent years, they are still operated as separate entities with their unique balance sheets, with each manager responsible for the profitability of his branch. While each piece of equipment is owned by a particular branch, machines do float among branches to be deployed where the need is greatest, with the branch that rents the piece sharing its revenue with the branch that owns it. The owning branch is also responsible for preventive maintenance.
All in the family
While All Star Rents is taking that next step up to becoming a regional player, it is still a family business. Ken de Vries is CEO; his wife, Heather, is chief financial officer and heads up accounts payable and receivables and overall headquarters office organization; his brother Don is partner and manager of the sellable merchandise division of the business; his sister Nancy Fregoso is the event specialist at the company's Chico branch and her husband, Pete, is the manager. De Vries' daughter Kathryn works part-time for the company's head office while attending college.
The company was founded in Vallejo, about 30 miles east of San Francisco, in 1962 when de Vries' father, Ted, acquired a small, half-acre lot from legendary rentalman Bob Elmen, who would go on to develop one of the industry's largest independent rental chains from his base in South Dakota.
Ted de Vries had been looking into several business possibilities at the time when he became attracted to rental. “He was intrigued by the concept,” de Vries says. “Where else can you sell a piece of equipment over and over and over again? He did have a lot of foresight back then when the industry was in its infancy.”
Ted established the company in Vallejo and later added several branches through acquisitions. He was well-known and highly respected in the rental industry, having served on the California Rental Association's board of directors for more than 20 years and serving on numerous American Rental Association and CRA committees. Ted de Vries was honored and inducted in the ARA Hall of Fame in 2004, shortly after his death.
de Vries, like many second-generation rental people, grew up around the rental center, working part time and on weekends from the time he was in junior high school. However, de Vries did not follow the conventional path into the rental business, preferring to pursue other interests and find his own path. After his college studies, de Vries worked as a full-time ski patrolman, casino bartender and crewed on yachts in the Caribbean for some time before deciding he was ready “to get a real job.”
de Vries came back to the company full time in 1982 at the age of 32. He and his brother Don managed the Vallejo store and when the company acquired the Davis store, Don went to manage it while Ken managed Vallejo. When the Novato store manager retired, de Vries took over that one as well and when the company acquired the Placerville, Sparks and Fairfield branches, he took over those too, eventually managing all the locations.
Ken and Don have another brother, Rick, a partner in the business, although not active in it. The family has regular meetings to catch up on developments in the business and discuss significant decisions such as acquisitions, although Ken has the authority to run the company and make major decisions on his own.
“I'm very fortunate and blessed that my family has given me a lot of trust, they believe in what I'm trying to achieve and have empowered me to make decisions,” says de Vries. “And if anything, we over-communicate. We figured out long ago that if we pooled the family assets and resources, we could accomplish more than if we were to act individually.”
Big buildings
All Star's oldest branch, Vallejo, is one of its smallest. Set on a half-acre lot in a residential district, one of the city's oldest, the branch parks its trucks on the street during the day because there is no room on the property, and brings them in at night. Ted de Vries bought some of the surrounding property so he would be the owner if residents complained.
But those days will soon be gone for Vallejo. All Star recently acquired a 2.9-acre lot, with a large steel building that was formerly a steel fabrication facility. The building is about 22,000 square feet, or half an acre under roof. Conveniently located near the intersection of three freeways, the new Vallejo facility will be the company's largest and will serve as a hub store, complementing hubs in Fairfield and Sacramento. After obtaining all the permits and remodeling, de Vries hopes the new Vallejo facility will open this spring.
The company also recently acquired a new facility in Placerville and is working on permitting and remodeling for it as well.
All Star Rents is growing fast and is in transition. It is growing its facilities, the size of its equipment, its internal infrastructure and revenue at a fast pace. It is professionalizing its systems. Next on the horizon might be computerized central dispatching, GPS for delivery trucks, and a possible upgrade to its computer system.
In an era when the regional company is rumored to be a thing of the past, All Star Rents is headed down the many California interstates straight toward that destination. Just as owner de Vries was empowered by his father to take the lead and make mistakes, so is he empowering his people to take leadership, to make mistakes and ultimately to take risks that will lead to growth.
