Every week rental business owners and operators read about strong rental companies starting up new locations or acquiring existing rental companies. Of course, some of this can be welcome news to rental companies, especially if they would like to have a larger rental company purchase them. However, this is not good news to many rental companies that wish to continue to maintain and grow their current foothold in their market areas. “Consolidation” is not over and may be accelerating. There is increasing interest in equipment rental companies, which has been evident in recent stock market activity. So, the question some rental business owners and operators are asking is “what can we do to prepare for more, and perhaps stronger, competition?”
It is so important to focus on what makes your company different from your competitors: your niche. Even if you’ve been very successful in your business, the most successful rental companies periodically reinvent or redefine themselves. Some significant changes to what you are doing and how you are doing it could yield amazing results.
Some rental companies try to be everything to everybody, and in some market areas, this might be a successful approach, but when I work with my rental business owner customers, I often discover cases where a stronger focus or a different focus can lead to much more growth and profitability. I also believe that having a strong niche or multiple niches help to reduce the risk of increased competition.
Just believing you are different isn’t enough. Perhaps your staff should focus additional effort on ways to demonstrate what differentiates your company. At times, it is wise to advertise what you are doing differently, and in other instances, not advertising is best as these strategies are part of the company’s “secret sauce” or a part of a more comprehensive growth initiative that hasn’t been fully implemented yet. Examples might include expanding much more heavily into aerial equipment or battery-powered construction equipment, but there might be an availability shortage of the equipment from the manufacturer. If the niches are not temporarily confidential, be sure to get the word out. Don’t assume that customers, even ones who have been doing business with you for years, know all that you do. It is also important to prove to your community that the differences that set your rental company apart matter.
It is relatively easy to branch out with an associated business or jump into a different line of equipment. One of the strengths of independent rental companies is that they can pivot quickly once the due diligence is completed. This agility can also prove to be a negative if the new direction is not vetted properly. Sometimes the glamor and excitement of a new opportunity can cloud the judgement of even the most successful rental business operators. So, whether one is considering adding another location or embarking on another endeavor that would take considerable financial, time and energy resources, it is wise to be extra cautious. The new opportunity might turn out to be a drag on your company instead of propelling your company into the stratosphere. Obviously, no one knows your business better than you do, but consider getting an expert opinion from someone who has worked with a large number and wide variety of rental businesses.
The same is true when considering whether portions of your current business still make sense. Even though certain parts of your company were helpful in the growth of your business in the past doesn’t mean that they make sense going forward. Sometimes these parts of the business actually hold the company back by draining valuable financial and labor resources. Especially considering the rental industry’s tight labor market, it may be the perfect time to consider trimming these unnecessary or underperforming portions of your business.
Of course, some or most of one’s business may not need to be adjusted. You don’t want to change the recipe for success and destroy your “secret sauce.” Your company is likely where it is today because of some sound business fundamentals that still make sense going forward. Don’t change these fundamentals. Accentuate them. However, be certain to focus even more attention on what differentiates your company in your market area and consider new or expanded niches for your company’s future viability, growth and profitability.