If it’s not already a cliché, it should be. Almost every industry is finding its way through this “new normal” and defining what that might mean despite high interest rates, high material and service prices, and tough employment challenges. And it’s an election year–that seems to always put a dent in the level of confidence while making plans.
Rental reconnected with a handful of rental business owners profiled through our Rental Snapshot column, by Alexis Sheprak, about their year, their challenges, solutions, and expectations for 2025.
In February, the American Rental Association (ARA) indicated that the equipment rental industry had a positive outlook with an anticipated 7.9% growth in 2024. Tom Doyle, ARA vice president, program development reinforced the strength of the ARA Rentalytics quarterly forecast. As he stated in the announcement, “rental should benefit with tailwinds from interest rates, inflation, improving supply, a preference to rent, and government and private spending.” Adding, “Rental venue is again forecasted to increase.” Rentalytics is a paid subscription service from the ARA.
In fact, things turned even better than projected; their second-quarter forecast report indicated a 9.7% increase.
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Survival Advice
Rental published a "Business Survival Guide" in 2023. The advice found in the issue still holds up:
- Review your fleet size and turnover. Is it time to consider selling some equipment?
- If shifting to larger equipment, don’t make the jump without a lot of forethought.
- Lean on software providers for help when implementing new software. Take advantage of user conferences and trainings.
- Track missed rentals. Is it time to diversify with specialty equipment?
- Communication is key. Feedback by and to employees can be helpful in improving the company culture.
- Use this feedback to discover inefficiencies within your company and workflow.
- Talk with your contractor customers to better understand their struggles and pain points.
- Is it time to open a satellite location in a more suburban area?
- Review your digital presence and consider solutions like online equipment reservation and pickup scheduling.
- Check out the American Rental Association for helpful resources.
“Business has been better than expected. We entered the year cautiously optimistic and have met or exceeded our goals,” says Meghan Boland, operations manager at B.E.R. LLC (Boland Equipment Rentals). B.E.R. are located in Hackensack, New Jersey. Rental profiled B.E.R. in April 2023.
On the other side of that coin, Troy Greenleaf, owner, of Mainely Equipment (formerly known as General Rental Center) saw a slow start revenue-wise. They left events and moved solely to equipment rental in 2020. While planned, the pandemic expedited the change. They also stopped providing snow removal service this year, which they had in the last few years to bolster cash flow in the winter months. General Rental Center is located in Maine. General Rental Center decided to end their snow removal service noting it was outside their normal service and not as profitable as they had hoped. Rental’s profile of Greenleaf was published in the August/September 2023 issue.
Andrew Heesacker is the president and CEO of Arvada Rent-Alls and former director of Region 7 on the ARA National Board. Arvada Rent-Alls is located out of Denver, Colorado, on what Heesacker calls “the front range.” They serve the area, into the mountains, and up into Wyoming. Roughly 70% of their business is from small to the largest contractors in the country, the remainder is homeowner/general tool. Heesacker’s Arvada Rent-Alls has two locations in the Denver area with a third coming summer next year (2025). Rental’s profile of Heesacker was published in the March 2023 issue.
Yet, “2024 kind of started a little funky,” says Heesacker. But, he admits, “the last four years have been funky.” Like many others, COVID turned everything upside down. General tool was busy with homeowners at home, but the supply chain was a challenge. Anecdotally, however, things are on the rise with vendors now having equipment sitting.
As a small independent rental store, he explains that they had to be strategic and intentional early in these funky years. When they had to put in orders almost a year in advance, they now are finding equipment available in the area or arriving within a month. “It’s been like a roller coaster,” describes Heesacker. “An aggressive down and then we’re back up and in our seats in another way. That’s been very challenging.”
All three of our rental business representatives seem to agree, high at the top of their concerns were the outcome of the election, the economy, and any slow-down of construction due to high interest rates.
“It’s created a soft 2024 for us, he says. Though the election year brings its own challenges, there’s optimism. “I think we’re starting to see a little bit of stabilization,” says Heesacker. “There’s been rumblings of interest rates may be going down in Q4, hopefully.”
“Unfortunately, I think the overall cost of everything, along with the consistently high interest rates and uncertainty around the presidential election have caught up with us a little quicker than I had hoped,” says Greenleaf. “At the halfway point, although revenue is only down slightly, the overall climate feels much slower, and we seem to have a lot of inventory on the lot that normally would be out on rent this time of the year.”
Greenleaf anticipates that things will continue to slow economically for the remainder of the year and most likely into the next. “Potential interest rate cuts by the Fed could help, but only slightly, and most likely not make a dramatic difference, if at all, until spring of 2025,” he says.
Ultimately, it’s the rising cost of doing business. With the increased average cost of equipment over the last 3 years and interest rates, the cost of purchasing has increased even further. Greenleaf has attempted to increase rental rates to accommodate but he says they’re not able to increase them enough to offset and stay competitive. Adding, “Managing a high overhead, and utilizing the inventory that you have is tricky under normal circumstances—even more so in the current economy."
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Other Challenges
Hiring. Even though they’re a small shop, Greenleaf hasn’t been immune to hiring challenges. He explains that General Rental Center has been lucky to add two quality employees in the last three years. “Although that is a big win for us, we could definitely use more help,” says Greenleaf. “I spend a lot of time performing day-to-day responsibilities instead of managing my business as a result, which limits progress."
Wages and payroll also play a part here, both elements posing a big challenge for Heesacker in the Denver area. "Our payroll percentage is on the higher side of things because we do believe in rewarding our people as much as possible and sharing in the success of the business," he says. To stay competitive, he explains that it's almost out of your control as the market almost dictates what you can do to find and keep quality employees.
Supply & Lead Times. All three of our business owners have experienced better lead times recently. This improvement has allowed B.E.R. to take action on decisions much faster and improve downtime which increased utilization. Both Greenleaf and Heesacker are now seeing that most manufacturers either have equipment and supplies in stock or a lead time within a month—a drastic difference from what it was a year prior.
Culture. Another core issue for Heesacker is the culture of the rental business and the mental health of his employees. "That's one of the biggest challenges when talking about culture is people's general mental health," he says. With so many potential issues from home, in the country, and/or around the world, things can be stressful for anyone. "As an employer, that line of how involved we are in people's lives is a gray area...I think it's up to us, owners of rental companies and large rental companies and businesses in general to really be more involved with that," he says.
When Rental connected with Heesacker, his company was conducting their one-on-one meetings. Arvada Rent-Alls has just over 30 employees, leaders and management meet with every single person for about an hour each. "It's a lot but it's very important, especially with younger folks, providing career tracks and opportunities. We try to get road maps for people...and making sure those employees have those tools."
2025
Regardless of the unknowable economy and all challenging factors for equipment rental companies, Boland is planning for continued growth. “We are taking it one month at a time to see what the economy does and try to react as quickly as possible,” she says.
“The best advice I can give any small business owner these days is just be yourself,” suggests Greenleaf. “This industry, in particular, can be very set in its ways. We tend to do things a certain way, or follow industry standards, as a regular practice, sticking to what works. Which is fine, but we should always be looking for a better way, a better product, a better service. Think outside the box. Think critically. What we have always done may not even be a good way, much less the best way.”
Greenleaf points out that the pandemic was the catalyst for dramatic change for many of the rental industry but change doesn’t need to wait for a crisis. “It is a choice, we just need to make it. I would highly recommend putting a system in place to promote improvement, in every aspect of your business.” Among his suggestions are to include employees, at all levels which should promote empowerment and ownership and increase your chances of success.
“What have got to lose? What do you have to gain?,” he says. “You will never know unless you try.”
