It’s not about surviving—it’s about thriving. It’s mid-2023, and the rental market is beginning to come down off the high of the past few years. Right now, the mindset around the industry is cautious, yet optimistic. It’s hard to know exactly the direction we’re headed. What we do know is that profits are returning to a more baseline level. After both the exceptional growth and the buying frenzy we experienced in 2020, 2021 and 2022, companies need to slow down, focus on strategy and truly assess what factors will drive growth. There are a few actions you can take to boost your business’ success in the current rental climate.
Take a more measured approach
Take a good look at your fleet size and the level of turnover. Have your newest machines aged quickly due to record levels of utilization over the past few years? For example, you might have a piece of equipment that's been used in five years like it normally would have been used in seven years. It might be time to consider selling some equipment. Used equipment values have been high, so selling is a safe option, but at some point, those values are going to recede.
Make sure to evaluate the equipment you’re buying, too. The supply chain issues that have plagued the rental industry are beginning to ease, allowing you to be more selective in what you buy. In the past few years, it wasn’t uncommon to buy any equipment you could get your hands on. Now, you can be more strategic, buying what will bring the most value to your business.
Partner with contractors
Contractors are experiencing uncertainty, just like you are. Talk with them, get to know their struggles and work together to determine how you can address their pain points. Ask questions like, “Where do you see your business going? What equipment are you considering renting versus buying? Are there any categories of equipment that we don’t currently carry that you’d be interested in renting?”
Rental companies who’ve dabbled in specialty equipment have seen great success. Many specialty segments have low rental penetration and ample growth opportunity. Consider diversifying your offerings into segments you’ve never explored to reach a broader scope of contractors.
Consider your location
People continue to leave bustling cities for suburban markets, which means that’s where the biggest opportunities lie. The opportunities for remote or hybrid work schedules allow for more flexibility—and people are taking advantage of it.
Restaurants and small commercial buildings are popping up left and right to serve these exploding suburbs. If you’re located in one of these areas, it’s your time to shine. If not, kick around the idea of opening a satellite location in the suburbs. It would allow you to win more business and benefit from being in a lower-tax area. Another benefit of a satellite location is the ability to move inventory to and from other markets based on utilization.
Adjust your way of thinking
Labor shortages are another major issue affecting the current rental climate. It’s not changing anytime soon—and it’s not specific to the rental industry, either. You’re seeing it in construction, retail and other trade-focused industries such as plumbing, electrical and landscaping.
Be proactive in finding solutions outside of hiring. One solution is to locate inefficiencies within your current workflow, then improve upon them. When your current team or strategies are more efficient, it becomes less imperative to add team members. You can work to further engage current employees, as well, since engaged employees often operate more efficiently. Lastly, ensure you plan for the slow times. We all know that business ebbs and flows, so setting aside funds and creating a strategy for those times will serve you well.
Spread industry awareness
Generally, young people aren’t aware of the career possibilities within the rental industry. If we can spread awareness though, they might realize it’s the perfect fit. Why? This generation has grown up with the sharing economy, so they’re already open to the concept of rental.
Fortunately, the rental industry is growing twice as fast as the construction industry and, the path to career growth is faster, making it easy to have that initial awareness conversation. There are new rungs on the ladder each week, allowing the chance to move up without waiting for people to retire. The opportunity for growth should be a major factor for anyone choosing a career, and the equipment rental industry has those opportunities.
Build up your online presence
Consumers, including contractors, increasingly prefer to do business online. They might choose a rental company based on an online experience alone. If your company’s online experience isn’t up to par, potential partners might quickly move along to the next option.
The good news is your online presence is a factor you can control. Create a seamless experience by making it easy to see what equipment is available and by offering both online equipment reservation and pickup scheduling. Make it as easy as possible for the contractor to do business with you. This doesn’t mean face-to-face rental transactions are a thing of the past, though. It’s about providing different options for customers’ differing rental styles.
It’s impossible to tell exactly where the supply chain, workforce, inflation and utilization will settle and what the new “normal” will look like for rental companies. You’ve worked through challenges before, though. There have been times of growth and times of survival. If you are willing to adjust or implement new strategies, you’ll put your rental business in a better position to thrive.
Take these steps for a successful transition into the new normal of business. It’s easy to continue to do what you’ve done over the past few years—and had success with—but with a changing climate, you need to change alongside it to truly thrive.
