The return of former owners, who sold their rental companies to consolidators and now have reached the end of their non-compete agreements, has been much discussed.
I don't expect huge numbers of former owners will return to the business. Obviously some already have, such as James Horsley, the subject of this month's cover story. But I think Horsley is probably the exception rather than the rule. That doesn't mean there won't be 25 or 50 or more. I can't put a number on it and maybe, compared to what has happened historically in other industries, the numbers will be high.
But there are too many reasons why returnees will be limited and the story of Horsley is a perfect example. Horsley, an excellent rental businessman, considered the idea, but was really uncertain about it and if it wasn't for an unusual series of events, might not have returned. As the article explains, he still owned the properties of his former rental centers and when acquirer NES vacated one facility, Horsley had to fix up the property. Turns out his former branch manager, who was briefly unemployed, was handy with drywall and other tasks so he helped Horsley with the repair work. People began stopping by asking them when they were opening up again, and the rest is history.
Horsley was in the right place at the right time and former employees were available. But I suspect that before this happened, as he was making a kind of pros and cons list in his mind, the “cons” were considerable. He'd already had the experience of working 90 hours a week to start a business. Most people don't want to go through that twice, unless they have to. He was lucky enough to be able to hire a group of former employees he trusted.
Another, Jim Ziegler, went into partnership and his son and daughter-in-law are running his new rental center. Young Michael Ziegler grew up in the rental business and worked for the original Rental City, the Boulder, Colo.-based firm his father owned. He'll have the benefit of his father's expertise and resources and should do a fine job.
Many of those who sold their companies are now in their 50s at least and have made some money. That doesn't mean they no longer are willing to work hard, but they may lack the hunger of a young entrepreneur who risks everything to start a business, where it's either succeed or go work for a 7-11. If they can work out a good situation, as Ziegler and Horsley did, where they can succeed without that kind of breakneck pace, then why not? Some former owners either didn't make enough money from the sale of their business to play golf for the rest of their lives, or don't have the temperament to do so. As Horsley told me the first time I spoke with him following his return to the rental business, “I found out I really enjoy working.”
For many, the rental business is fun. I remember the first time I spoke with Robert Buckner when he owned Buckner Rental Service in Houma, La., which he later sold, only to return a couple of years ago with Redfish Rentals, which now has five branches in that state. I don't recall the exact quote, but Buckner essentially said there were few things he enjoyed more than getting his tools out and tinkering on a backhoe.
So there will be some returnees who can work out the right kind of deal and who really love this business. People who have the spirit of the Champion Rentals employees I describe in this month's cover story, who enjoy helping their customers build their businesses and find work, who will even follow a customer home to help him or her if they have concerns they won't be able to handle the job. I'm not advocating that as a business practice, but it's a reflection of how people who succeed in rentals often really love the business.
And in this more competitive era, in which the capital demands are far greater than they ever were in the past, former owners who return will have to be equipped with that kind of passion for the rental business or it will get the better of them the second time around.
