I have been seriously considering starting my own company. I keep coming back to starting a Construction Equipment/Machinery Rental company. My Father owns a small and very successful construction company. He has a good mechanical background and is very hands on with each job. I never had any interest in doing this or working for/with him. Now that his business is slowing down and he is starting to retire a lot of his equipment is sitting idle. Being able to utilize these idle machines would be a huge advantage and there would be little start up costs for me. Plus, my dad is a free consultant. Even though I grew up around construction sites and machines I really do not know a lot about them. I never had the interest for some reason. My background is in Sales and Advertising and I have more of an interest in running a business then in the creative or technical side of things. I have done some preliminary research and I feel that the Rentals industry is dominated by the big guys. Is there any room for the little guys just starting out? I live in a large metro area, so there should be demand and all the research I have done so far points to the industry growing at 8-12% clip per year nationally. Also, because I won't have to buy any machines starting out I can undercut the competition. I would like to present a business plan to my father in the next 3 months and hopefully get started at some point over the summer. Does anyone have any insights, general comments or a good starting point?
What makes you think he's just going to make his hard earned equipment available to you for free so you can rent it to some idiot to tear up??? Hope I don't offend you, but a reality check is in order here I believe. From your own admission of never wanting to work for/with him, my guess is he will probably laugh himself to death over this. I am purely speculating though.
I can see where Shimmy1 is coming from, but at the same time I think he is being a little harsh. Of course you wouldn't be able to use the equipment for free, but the best thing to do is just start buying your fathers equipment from him, and then just go to auctions and buy up a lot of small used equipment. As you said, I am sure your dad would give you advice, but hire someone with heavy equipment rental experience to run the equipment side, and you do the management side. There is a large market for D.I.Y'ers. If you have experience in advertising I am sure you would do fine. Also do a lot of research on equipment, and how the other companies are run, and improve on what they are doing wrong. Best of luck!
Why would I take offense to someone telling me I need a reality check? Especially when you have no idea the situation I am in or the relationship I have with my father. I came on here looking for help and information, so I could present this idea to my father in a well constructed business plan. That way he will take me seriously. And you know what? He might sit there and say "Son, its a good idea, but I am not willing to let you use my machines." Or he might say "That's a good idea, but I am going to need 10% of all profits till you pay me back for the machines you are using." The thing is, I won't know till I ask. Also, after paying for my college and M.B.A. I would have to say he is pretty supportive of me and wants me to succeed. Lastly, after I graduated from Business School, my father came to me and suggested this idea to me. So, this isn't some half baked idea I had. Those who don't ask are left wondering what if?
It would have been helpful if you'd have premised by saying "my father once suggested starting a rental fleet with his unused equipment." I have seen more than a few situations here in small town USA where the kid runs off because the grass is greener, comes back, sometimes dad hands him the keys, sometimes dad makes him a partner, sometimes he has to buy his way in. Then, sometimes the hotshot runs it into the ground or other times the sky is the limit. I speak from experience of a family operation. I started working with my dad in high school, spent 25 yrs helping him build a very successful business. Always drove junk, worked 80-100 hrs per week for almost nothing. Finally had enough. At 35, living in a two bedroom apartment with wife and 2 kids, hardly making enough to survive, I went on my own with some backing by a very good friend. I speak to my dad about three times a year since I left. He won't SELL me equipment he no longer needs or uses. I'm sorry if I was harsh, but I've seen and lived the bad side of a family operation.
Good attitude, sounds like you're doing your homework, keeping an open mind and asking for comments. I agree with your assessment of the rental industry, in the contractor market it is very much dominated by the big boys and nowadays moreso by the dealer rentals, CAT, Deere, Volvo, Komatsu. Pretty hard to compete when these guys have brand new iron subsidized by the factories, and lots of contracts give points on the bid for higher EPA tier ratings. All that being said, you gotta look for the niche. AsJGibson says, look at the DIYers, the weekend warriors. Offer good rates, your own hauling service, and maybe even some basic instruction and helpful operating pointers. Find a small core group of semi-retired operators and offer machines for rent with operator, should be fairly easy since your Dad will have all the insurance and bonding in place I would assume. Just something to think about.
If you want to pursue the equipment rental market then you need to have a good knowledge of general construction and what it takes to get all sorts of projects completed. This is a wide ranged market, as you'll have to focus in on a particular market you're going to serve to get this venture off the ground. What type of equipment are you planning on renting? Small equipment like skid steers, mini-ex's and hand tools; larger earth moving equipment or lifting/access type equipment? All have their place in the rental market and all require a specific knowledge of the equipment and how it's used on a job site. You'll need a yard, transport trucks and mechanics to service the equipment - never forget the old saying, "Nothing parties like a rental".:cool2
I think you need to fill out a job app. at united rentals!
Thanks for the helpful feedback. Off hand I know I would have access to two bobcats, a forklift, a backhoe, an excavator, two Mac Trucks, the current yard my Dad has and an assortment of smaller machines and tools. Once my dad is on board I would obviously have to do an extensive inventory. I have been thinking of getting a job with one of the bigger companies as that would give me a lot of needed experience.
hey, Have you checked your competition? what do they have ? I suppose you could never have enough equipment...seems like everyone needs something sooner or later so you might have to go to work for an equipment rental competitor for awhile to find out what the most popular rental equipment is and be sure it is the type of business you want to invest in before you spend your money.
Thanks. I have started looking into Sales jobs in my area for some of the bigger companies out there. I figure sales would give me a good background on what the market needs. Plus, I have a few years of sales experience, so hopefully I can transition into it pretty easily.
EXACTLY, about a year and a half would do it. With the degrees could start as a branch manager trainee
please keep us updated, i'm interested in how this turns out
Starting a rental company is not for the faint of heart. One it takes a bunch of equipment and money. Two people love to tear up your equipment and not want to pay for it, or rent it for a day and keep it for a week and not want to pay the difference. Also don't think that you can come in and undercut the big guys. They will put equipment on a jobsite for a lot less than what will make a payment. Also running older equipment in a rental fleet is asking for problems. That is just the begging. I have been working for my dads rental store since I was 11 when he bought it. That was 12 years ago. We now have over 70 pieces of equipment and it is growing daily. With all that said you can compete with the big guys. I do it every day, but being the cheapest is not the way to do it. I do it buy running newer equipment that is better maintained. And when there is a problem I can fix it now, when a customer needs something I can get it to them now. Also we offer more realistic delivery rates. If you have any other questions feel free to ask. To be in this business you have to love it and it be your passion. You will have to put up with a lot, and being the owner it is all your problem. Walter
Very good advice Wburke2010, spot on. :thumbsup Customer service is the key with rental. I rent pretty much exclusively from the local Cat rental store as I know the guys and know they'll take care of what I need with equipment ready to go. I hardly ever rent from the nationals as you never know what your going to get as far as the condition of the equipment - it's a PIA and a delay to get it rectified if the machine doesn't work.
First mistake that you made is by saying you can undercut the competition. Worst idea ever. I have lots of friends in the rental business who are competition to each other but constantly work together. If they don't have the machine i need, they will recommend there competitor. Just like in the excavation business , the only thing that undercutting will get you, is broke and a lot of enemies real fast. Charge a fair rate , and provide something that the other companies don't.
When a customer asks "I'm looking or the cheapest place" I say, "Then look for the guy who is doing the worst job, that's usually the cheapest'" I had a customer with a rental store and a customer walked in "Your rate is too high. I can get it from so and so for less" The reply, "Well I guess so and so knows what His stuff is worth"