We're all in this together. Contractors, equipment dealers and rental companies are in the same boat ? if they don't work and pull together, the boat either sinks or loses the race. Consequently, it pays to develop and keep close working relationships with your partners.
Some of you have consistent work and it is business as usual. Some are hurting bad and doing what they can to keep the boat afloat. Still others are in the middle, thinking 2008 will be down some, but you're prepared for it. If I had to guess, it looks like 2009 could be a rougher year all around, and it will pay to start preparing for that contingency.
Initiate the relationship
One way to prepare is to review and adjust equipment needs to cover your 2009 work schedule. Regarding equipment, you have four scenarios:
- You have excess equipment and intend to reduce your investment.
- You have excess capacity, but would like to keep your equipment.
- You plan to reduce your fleet and rent as necessary until the market corrects itself.
- You plan to enter rent-to-buy contracts when work picks up.
With these choices, it's easy to see why you may want to establish relationships with both your equipment dealer of choice and the rental company you would most likely use.
Forming these relationships may not be as easy as it sounds. First of all, equipment suppliers must want you as a customer before they make any deals for you. And of course, you have to be a good customer who pays your bills and keeps your word when working with these vendors. If you can look in the mirror and tell yourself you meet those criteria, then you have a pretty good chance of accomplishing your goal.
To get the relationship started, make an appointment to stop in and meet the CEO or sales manager. He or she will be glad to see you and provide a tour of the facility. Listen to what the business has to offer; I'm sure you will find programs or services you weren't aware of. If you don't have a credit application on file, you may want to complete one. If you can give them a small amount of business and pay your receivable on time, you will put yourself into a preferred class of customer they may be willing to work with in the future.
What equipment partners can offer
Times have changed and dealers and rental companies have changed with them. Both offer more services and are flexible regarding deal structure. They want the business and they want the loyalty. Give them that and you will receive benefits their other customers don't get.
Dealers can do one of three things for you: buy your equipment, take it in on trade or get it ready for sale to another third party. If there is a need, they may even buy your equipment and rent it back to you, keeping in mind it may not be available when you need it.
Dealers can also assist with the sales process by estimating the value of your equipment; providing an inspection report for potential buyers; cleaning the unit up; making the repairs to ready the unit for sale; and even providing financing for the new owner. When it comes to purchases, dealers can make your equipment investment transactions a lot more pleasant. Even if dealers are not buying from you or selling to you, they add a lot of value to equipment transactions.
Rental companies, on the other hand, may not offer the "sales transaction services" of a dealer. They primarily provide a service to cover short- or long-term equipment availability when ownership is not an option for a contractor for the work required. Rental companies take the ownership burden off your shoulders and balance sheet. They maintain, store, move, insure and, most importantly, pay for the equipment. Not a bad deal when your backlog is inconsistent.
Even if you understand the rental environment, there are still reasons to get acquainted with your local rental company. They want to do business with customers who pay their bills and keep their word.
Tour the rental yard and learn about the various units available and where they fit into your scheme of things. You should also understand the rental rates and how they are applied. Most importantly, you should say hello to the rental managers and buy them a cup of coffee or bring a treat so they remember you when it comes time to allocate equipment or discuss rental rates. Believe me, in this case, a little goes a long way.
A win-win situation
Good times or bad, you are in a partnership with your equipment dealer and rental house. Work together and you all make money. Be loyal and you will get more consideration for special situations when you need it.
Going forward into 2009, you may need all the help you can get. Consequently, you need to find the time to take an equipment exec out to lunch.
Garry Bartecki is director of dealer/distributor services at BDO Seidman, LLP of Chicago, as well as a consultant to the AED. He has also worked as an independent CPA and consultant to equipment dealers. He can be reached at (312) 616-4677 or firstname.lastname@example.org.