In today's economy, it's harder than ever to maintain a healthy balance sheet. It's not surprising that many equipment rental companies are pondering their futures. For some, what they find in the crystal ball might be signs of improvement in the long term; for others, the outlook is less positive.
The fact is, a lot of rental businesses need help to get back to a place of financial stability. In some cases, debt restructuring is the best route to take, but it must be done with the help of a trained professional.
Recently, Rental Product News entered into a partnership with Mike Farley of EquipOne, an organization that assists equipment rental business with debt restructuring. Mike is a regular contributor to our website, writing weekly installments for his Financial Forum with Mike Farley column. If you haven't already, I encourage you to check it out. In the meantime, following are what Mike says are the biggest mistakes rental businesses make when it comes to debt restructuring:
- Believing you must be in financial trouble to request a debt restructure from your financial institutions. In fact, it's better to do it before things get dire.
- Taking the "I never want to let my banks know that I'm having financial difficulty, so I'll try and ride it out" approach. Being truthful and forthright is always better.
- Being too optimistic when forecasting cash flow and/or painting too rosy a picture for the banks. Instead, be realistic.
- Failing to investigate all the opportunities available for restructuring debt, or requesting short-term restructure. There are many possibilities.
- Neglecting to deal with all financial institutions involved, and underestimating how much time it takes to forecast, build/make a proposal and presentation, prepare the required documents, plus the amount of follow-up required for debt restructuring. In other words, do your homework, and do it early.
These are just a few thoughts Mike has outlined in his advice to equipment rental businesses facing economic hardship. If you'd like to sample more of Mike's wisdom, see Financial Forum with Mike Farley at www.RentalProductNews.com. Also, don't miss our new weekly eNewsletter, RentalWATCH, featuring Mike's latest contribution as well as a selection of news and features as they relate to the rental industry. As always, I'd love to know what you think. Please don't hesitate to get in touch by emailing firstname.lastname@example.org.