It all started with drywall.
James Horsley, co-founder of Lone Star Rentals in 1982, sold the five-location company to National Equipment Services in 1997. After two years as an NES official, Horsley left the company. After taking some time off and devoting himself to other interests, he began to think about future business ventures when NES closed down its north-central Houston branch whose property he still owned.
Horsley needed to fix up the building no matter what he was going to do with it, and in March 2002, he began the work. Around that time Steve Whatley, former branch manager, had left NES. Whatley contacted Horsley and told him he had experience repairing drywall and would be glad to come down and help Horsley fix up the old place.
As they labored, something curious happened. The two men found that the branch, which had been Lone Star's original start-up location and had been the site of a rental center since the 1940s, still drew customers. Every day as Horsley and Whatley worked, people would drive by in their pickup trucks and come in and ask when they could rent equipment. Often they would recognize Horsley and Whatley and immediately they would ask: “When are you opening up again? When will you have equipment available for rent?”
Soon the two men began to consider the possibility. It wasn't just that people were looking for equipment. It was that many specifically remembered the way Lone Star used to do business and its quality of service. They would talk about not being able to find the inventory that they required on a consistent basis, or well-maintained equipment that didn't break down. And the more they talked, the more Horsley and Whatley talked about how they knew they could provide the kind of service these contractors — many of whom were former Lone Star customers — were talking about.
It's not as though Horsley had never entertained the idea. “I did a little research,” he said. “In January and February of last year I ran five years of budgets out to see what the costs of fleet would be, the cost of personnel, and what rental rates were like. The people I sold to were having a bit of financial trouble and there was always the thought in the back of my mind that I might get some facilities back and then what do I do with them?”
Horsley considered the possibility of a return to the rental business, although he knew he didn't want to work as hard as he did when he started Lone Star.
“When we first started Lone Star, my partner Jack Fulton and I were open from 6 in the morning until 7 at night, seven days a week,” Horsley says. “The first day we took off was Easter in our second year because we were just too tired to go to work. But I don't have that in me again. I was 29 then, now I'm 51. Dugan Hill [Horsley's mentor and boss when he worked for Grace Equipment, now RSC] once told me that a man's got one effort like that in him in a lifetime. This time around, I'm not trying to conquer the world, but I'm trying to build a nice business here in Houston and earn enough customers so that it is profitable.”
He didn't want to work 90 hours a week, but he didn't mind working hard with the right people. And just as former customers began coming around as Horsley and Whatley were fixing up the branch, former employees began to call as well, saying: “I hear you and Steve are fixing the place up? When are you opening? Can you use me?” Horsley quickly realized he could fill his staff with trusted former employees who knew his style of working and already had strong relationships with the customer base Horsley would want to pursue.
“Enough people called in the first two weeks after I started working down here that made me confident that I'd be able to staff it and not have to hire new people and rookies and spend all the time and effort to train them,” Horsley says. “That gave me a lot of courage to go ahead and do it. It was a confluence of events; it all just came together. Maybe it was fate.”
Re-connecting with Whatley was a major factor in igniting Horsley. “During the process of fixing the place with Steve, we got better acquainted with each other again. I always thought Steve was a winner and after working with him for a month down here I knew he was a winner. So we were able to get together.”
Whatley, a veteran of 27 years in the rental industry, laughs as he recalls the day Horsley made the commitment to launch the business. “We were talking on the phone, and James said ‘If you commit, I'll commit.’ I said, ‘If you commit, I'll commit.’ From that day on, we've both been committed.”
Horsley made the decision to go ahead April 1 and opened for business a month later. “We decided to go, we started getting our name changed and contacting vendors and negotiating prices and interest rates and financing and all that in between painting and patching drywall holes,” Horsley says. “But, ultimately, finding those former employees was key because the people were the most important asset.” Horsley was also encouraged that many of the major manufacturers he had dealt with in the past started to call him and offer deals.
Horsley selected the name Champion Rentals after the subdivision in which he lives. And of course he likes the meaning of the name, which implies a company willing to compete and excel at what they do. “We would like to be known as champions in this industry for our market area,” he says.
Horsley assembled a staff of 13 former Lone Star employees. Horsley, Whatley and outside salesmen Eddie Calhoun and Phil Murray set to work contacting former customers to let them know they were back in business. Accounts receivable manager Donna Smith says, in the first few months Champion was opening 40 to 50 credit applications a month.
“People we were familiar with were coming in and asking to open accounts,” Smith says. “They were happy to be doing business with us and that made it so much easier.”
From the beginning, Champion targeted its business at commercial construction contractors and industrial facilities, with the emphasis on small- to medium-sized locally owned companies.
“That's the niche we service the best,” Horsley says. “You take an Exxon or a Brown & Root that we used to cater to in the Lone Star days, when we had multiple stores and a lot more fleet. We may get some business out of them, but we really don't have enough inventory and capability to service accounts like that. But with small- to medium-size locally owned contractors we can work together, whether it's owner to owner or salesman to owner, we can build a rapport and establish a relationship. I tell the sales people I'm looking for people with 100 employees or less.
“We can work together with that size customer. For me to be successful and profitable, they need to be successful and profitable. As long as we keep that philosophy, both of us can grow.”
The Champion staff believes it can service that type of account with the condition of its equipment, and its ability to go to any length to obtain an item a customer desires. Even its back office staff is an asset. For example, Smith assists subcontractor customers by helping them to collect from their customers, teaching them how to file lien notices and even doing it for them on occasion.
To the Champion staff, the service challenge means helping contractors to do their job profitably. “Do you make jobs profitable by giving the cheapest price or having the lowest overall cost? Contractors have figured out the answer pretty quickly. We tell customers that if they make a few more phone calls, they'll find a cheaper rate. But if they want a reliable, dependable partner that will help them get their job done on time and make a profit, they should call us.”
Salesman Calhoun is legendary at Champion for going above and beyond to serve customers. They tell stories about the time he was uncomfortable renting a chain saw to an older woman who wanted to cut branches off her roof by herself so he followed her home and did the job for her. She turned out to be a purchasing agent for a large school district.
Champion will also help its customers line up work. Recently, for example, a man with no experience wanted to do some major construction on his home by himself. Sensing that the man didn't have what it took to manage the job himself, which involved complicated permitting processes and other challenges, Calhoun helped the customer line up a contractor — a Champion customer — to do what turned out to be a $135,000 job. It turned out well for the homeowner, the contractor and for Champion.
The staff believes its attention to detail and ability to provide the little things goes a long way. The Champion staff spends a lot of time with each customer making sure they get the right equipment for the job.
“We do the little things,” says Calhoun.
Horsley adds: “It means anticipating problems. If somebody is doing a concrete pour and they order three trowels, we'll send an extra at no charge to back it up. Rammers jump up and down 600 times a minute. If they need a couple of rammers on a job, it's cheaper for me to send a third as a backup than it is to run a mechanic out there or have them dissatisfied.”
Just don't say no
If there is one golden rule Horsley insists on, it's to never say no. “That's the one word we have banned from the counter,” Horsley says. “We can say: ‘We don't have one available at this time, when would you need it?’ There's a lot of things you can say without having to say the lazy man's answer which is ‘no.’ Our job is to find out ways to do the deal, not to find reasons not to do it.”
To Horsley, every customer represents an opportunity and it is up to the company to take advantage of the opportunity that's right in front of them.
“That's what separates rental stores, from one to the next,” says Horsley. “Everybody has similar equipment, but it's really the people and how they relate to the customers. How badly do they want to do the deal, how badly do they want to take care of the customer? If a customer walks in the store, it's because he needs something. If he calls us, it's because he wants us to help him. So if we don't take care of them, we dropped the ball.”
Another Champion advantage is small-company accessibility and quick decision-making. “If the creek is rising and you have to call New York to make a decision if you can buy a pump to go on the job, the creek is going to rise whether or not they get the pump from us,” Horsley says. “It's a matter of are you going to do it or is somebody else going to do it? The customer is going to get the pump and I figure he called me because he wants me to provide it. If he didn't want me to do the job, he wouldn't have called me.”
Second time around
Having already had the experience of building a multi-location regional company, Horsley's ambitions are smaller the second time around. When he started with Lone Star, Horsley and partner Fulton had a plan to get big fast. “We felt that in order to make any real money, we needed to build a business as fast as we could and turn volume. Now, I'd be very happy to have one big profitable store.”
When Horsley started years ago, he was looking for a career. Now, in a sense, he is looking for a retirement vehicle where he can continue to earn a living doing something he enjoys. “I was in the business, I built the business and I sold it because it was time to get out and take some time off,” he says. “I had some time to think and I don't want to spend my retirement on the golf course or fishing every day. I grew up in the equipment business, I've been in it all my adult life, I like it and I want to have fun doing it. We're going to build as big a business as we can with that attitude. I want to deal with people who are fun to deal with, both from a manufacturer standpoint and a customer standpoint, as well as employee standpoint.” To keep up that family atmosphere, James' wife Ping, an experienced accountant, joined the staff to keep up the company's books.
Now willing to put in a good 40 hours a week, rather than 70 or 90, Horsley figures that experience and wisdom will be a major helper. “We learned a lot about how to buy, about what manufacturers we can deal with,” he says. “We learned a lot about managing people that we didn't know when we first started. We learned the benchmarks of this business as far as the revenue to cost relationship, and how to organize a business so that it's profitable. We accumulated knowledge over many years of mistakes. Hopefully, we won't have to reinvent the wheel and make all those mistakes again.”
One of the lessons Horsley learned the first time around was the proper objective in running a rental business. “What is our objective? To make a profit? To grow fast? It's to create customers. If you create enough customers, the volume will come. Create customers, eliminate waste, and hire, train and motivate the best people. Those are the three objectives. Keep it simple.”
To Horsley, the battle against waste is ongoing and includes eliminating wasted time and energy, “such as a mechanic having to walk 20 feet extra every time he needs another bolt, or having too little of something so you're always having to run across town to get it.”
For James Horsley, success the second time around means incorporating lessons he learned when he first started. He remembers something that happened years ago when he had just opened Lone Star.
“I sent a pump to a job and it broke down, then sent another and it broke down, too,” he recalls. “Finally I drove a pump out myself and the customer chewed me out for 30 minutes. Then he pointed to a crane and told me it cost him $500 an hour to keep that crane operating on his job site. He said: ‘What do I care if your pump costs me $20 a day or $25? All I care about is if it works.’ He taught me that quality and reliability are more important than price.”
It's a lesson Horsley never forgot.
Michael Roth can be reached at [email protected].
