I think it's time to shed the “surviving” emphasis and begin talking more about “thriving.”
Yes, so much has changed in the last 12 months, but even though the emotional, social, and economic effects of the pandemic will linger for years, I believe there will be a sharp economic recovery in 2022 and a very noticeable economic improvement in the third quarter of 2021.
There are plenty of unknowns concerning new tax rates, deductions, and other rules and regulations; new administration government programs; the speed at which the coronavirus (and its effect on our lives and our businesses) will finally be behind us; and many others. It can be difficult to pinpoint exact strategies to directly approach each of these unknowns, but there are a number of things that we can focus on. Here are a few of my thoughts, opinions, and observations centered on the topic of equipment:
- Purchase core rental equipment needs early. With the likelihood that there will be vastly increased demand for rental equipment both nationally and internationally, it would be prudent to get your orders in sooner rather than later. Some of my clients have already noticed long delays in getting the equipment they need, which is the result of pandemic-related parts and components shortages. In my opinion, manufacturers of rental-quality equipment will not be able to keep up with the demand as many nations emerge from their economic, social, and personal pandemic nightmares at roughly the same time.
- Focus additional time and resources on asset management. Analyze your current and past financials as well as other valuable data that can be mined from your computer system. An analysis can help one to make better informed decisions dealing with a wide range of assets.
- It’s important to remember that one shouldn’t be overly focused on taxation and depreciation. Of course, these are very important, but generally one should not spend money on assets solely for the tax benefit. Instead, first determine if the purchase makes sense on its own merits without the tax benefit.
- Remind employees that renting to unqualified customers can ruin equipment, cause unsatisfied customers, and be very dangerous. Yes, great rental companies are focused on saying “yes” to customers; however, let your staff know that it's okay to decline the occasional rental when renting would cause a problem.
- Be careful not to blindly follow what you hear or see other rental companies doing. In my 50 years of being in the equipment rental industry and visiting literally thousands of rental businesses, I have found that every rental company is different. Each rental business has its own set of unique situations that strongly influences what course(s) of action make the most sense for that business. In other words, avoid the “one size fits all” mentality.
- Have your staff use the next couple of months to be extra diligent with preparing your rental fleet for heavy duty action. Many postponed projects will start again, and there will be even more need for rental equipment by contractors, municipalities, and others who will view the “rental option” as much more attractive than buying the equipment they need. Also, in my opinion, increased infrastructure spending will have a sizeable trickle-down effect even for the smaller equipment rental companies.
As we close out a rough 2020 and start the new year, I remain convinced that the equipment rental industry is one of the most resilient businesses on earth and that the men and women who work in this industry are among the most dedicated and hard-working. So, I have full faith that the well-prepared independently owned and operated rental companies will thrive (and not just survive).