guys- New to the forum, I own a small equipment sales and service business, I have been trying to put a business plan together to see where I stand. A little background, we sell Stihl, husqvarna, Honda, scag, bluebird, Ariens, wallenstein. I want to start small with landscaping equipment, home use, commercial compressors, pumps, generators, demo saws, snow blowers. I have run across some info on how to figure your rental rates, equipment turnover, rental agreements. As a small engine repair establishment it sounds like a no brainer to venture into equipment rentals. As there is one place in town that currently rents equipment and its old and not taken care of. My business has a great reputation in town and i believe there is room for growth. Any help with finding used equipment, pitfalls of the business, general knowledge, school of hard knocks stuff that would help me out would be much appreciated. Thanks Kelly
One recommendation I can make is to repair and maintain your equipment. Nobody likes renting a machine that’s broken or doesn’t work right. I’ve had this happen many times.
I already have an equipment record program, I developed offshore, tracking Maint. records, also business models I have seen is to rotate equipment every three years. I would like to be able to get new equipment but starting out, I may have to use, used good condition equipment. I've got some buddies looking for equipment down on the gulf coast at private auctions mainly 400cfm compressors, trash pumps, gen sets etc. thanks for the input.
Keep in mind a lot of renters (probably most) could care less about how much they abuse your equipment. A 400 CFM compressor or a bigger generator is a different beast than small engines and will require specialized maintenance. Renters won't care if they let them warm up or idle for a few minutes before shutting off. If they have a problem with a rental, you'll have to give them priority if it doesn't work right. That could get you in a bind with your regular customers and your mechanics.
I know that several OEM's are pretty good at working with Rental companies. Companies like Wacker Neuson make it pretty easy to run new stuff. Nice thing about Wacker on their compact equipment is the warranty. The SSL and CTL's have a 3-4-5 year warranty and the excavators have a 5 year warranty. BC used to be pretty helpful l to rental houses as well, although I don't know if that is still the case. If you are competing against other rental businesses, running your used equipment while they run new, I have to think is going to make it hard to compete. Your upkeep will be more, and your ability to charge will be less. If your the only game in town, maybe that works. We had one rental company in my area that rented old used equipment, home owners seeking the least expensive option would go there. Construction companies would not, and that is a big portion of business to run off. Speaking from a construction company standpoint, being able to rent current, productive equipment is important. Lastly used equipment is expensive right now, not a great time to find a bargain on quality used equipment. If I were going to start renting dirt moving equipment, I would try hard to offer new equipment.
One thing to consider is. Whether you are renting new equipment or used equipment. Do you have the ability to support the equipment you rent? If you are competitive with your rates customers will be there. But if you can't support the equipment and quickly then you will lose your customers. All things new or used will break down. The ability to quickly get them back online will make the difference. With that being said. Having someone who can ascertain what is normal wear and tear or abuse is vital. You won't make any money if you are repairing damage out of your pocket. Some things to consider is having consumable parts on hand. Like filters,fuses, fluids, and other spare parts for normal maintenance. Again the ability to support the equipment is key. Companies like United rentals have a lot of equipment to swap with so they don't necessarily have to rent reliable equipment they can simply swap it out. Good luck to you and I pray for your success.
How much would you have to invest to move into this venture? Additional manpower, space under roof, parts, new equipment etc..... You know your market better than us so we’re just throwing general ideas out. I’d say pick a handful of things you already have and deal with, then start renting them to see how things go. Start keeping records of what people ask for. Also, research rental rates and see if you can make the numbers work for your vision. It could turn into a handy way to make a few extra bucks or turn into a rather large and profitable operation.....then again it could be a royal pain and a net loss. I’ve made enough mistakes I’ve become a numbers guy. If I can’t see a clear profit worth my investment (time or $) I will keep looking until I discover one I’m comfortable with.
Be very careful with auctioned equipment like compressors and gensets coming from areas with hurricanes/flooding. The electrical, electronics and generator windings will all be compromised and give you a lot of issues since they were most likely under water before going to auction. There's a lot of stuff from floodzones getting shipped up and going to auction in this area since no one is looking for it. As stated by others, customers and operators will be extremely hard on your equipment, so be ready for it. Also a lot of callbacks and callouts due to operator error or general ignorance of what they're using.
Welder Dave, great point, worked offshore for 25 years so have been on the side of abusing the equipment... ive got two full time mechanics one has been in small engines for 25 years and the other has been working on diesel's his whole life. With the volume at the shop and the employees I currently have is one of the reasons I feel it's a good time to try to increase my revenue generation. I will have times of the year where I can monitize my mechanics and service my rental equipment twice a year and evaluate how viable the piece of equipment still is for the rental fleet. Again looking for input and or shoot holes in my thought process. Thanks Dave
What other OEM's would you suggest? Keep in mind I am looking to start with smaller equipment. Thanks kelly
Agreed on the state of the equipment, I do have folks in the area who can inspect the equipment, as far as price point on equipment, these are private auctions that must get an invite. I've been to a couple and equipment is pretty much sold for scrap value. The flood zone issue is pretty easy to identify, I've been seeing that since Katrina... figured it might be a way to break out into some of the larger rentals with out great out lay. But I am leaning toward more initial out lay with specific equipment buying new. One other rental in town who has crap and I known for it.
Junkyard Looking to begin this venture with a partner who has a storage facility, so we have room to store equipment rental rates I've seen the formula they suggest and I have been tracking national rental rates. No Home Depot's or big box stores with 140 miles of our little mountain town.
This would concern me. Is there enough demand to support a rental business long term?
I have been struggling with this as well, that's one of the reasons I want to start with light construction and landscaping equipment work out the bugs. The remodeling and second homes being built here right now is one market, they are going to approve a 700 house subdivision outside of town along with all the infrastructure that goes along with it. So as far as big equipment goes, I was only thinking a token skid steer a couple telehandlers as these pieces of equipment cross over into many different applications. Again guys keep throwning darts at this thing. All is appreciated. Kelly
Companies like Atlas Copco, Doosan, Magnum light towers are ones I see around here. What makes WN attractive is their business model is very much centered around rental companies. They cover generators, light towers, trash pumps, ground heaters, compaction and compact heavy equipment under the company. You can cover all of these areas using multiple OEMs of course, but having most of your needs meet by one company would seem to be a benefit. Especially when you can send a tech to one OEM to get schooled on maintaining the equipment. I have no idea what they are like to work with or anything like, but if I were starting a rental operation what they bring to the table, appears to be pretty attractive.
I'll echo KSSS on all the brands he listed. Basically our Wacker Ground heaters leave for the winter season and we don't see them until spring (but then they sit the rest of the year). All the Magnum light towers are gone now that we barely see any sun. Spring/Summer is all the Wacker plate compactors, jumping jacks, trench rollers, water trailers and trash pumps. Air compressors are steady year round, but are extremely high demand around the first freeze for all the sprinkler blow outs. Generators are always on rotation. The majority of small stuff I named off is all Honda or Kubota powered, so that would be an easy transition, and keeps parts easy. Light towers, generators and plate compactors seem to have the best ratio of being on rent versus down for repairs. Just rattling off what's popped into my head over lunch.
Service sells. The rental shop chain I used to wrench for was more expensive than the huge rental outfits. That said, a lot of companies prefered to rent off us simply because of our response times. If something broke we were there to fix it either before the day was over or first thing the next morning. Many customers told us that they would often wait several days for the mega rental outfits to come and fix their stuff.
Kubota is probably the best engine for small gens and light towers. Dead simple and reliable. Seen a couple hit 20k hours with no major repairs.
Called around and found one of the small local outfits that still charges normal rates for light towers... so we'll see if we start switching them out cause the SB and UR mobe fees are about the same but they have been a bit cryptic on just how exactly they are actually going to figure the OT on these units right now avg. 14-16 hours a day on em'
Light towers can be bought pretty cheap. I seldom need one, but bought one on Iron Planet out of North Dakota when the oil fields cleared out. It was a WN with 4K hours. Got it for a 1K dollars. Pretty handy as bigger generator as well.
I looked at RB auctions 5-6 years ago and they had a dozen of them went from 200 to 550 each... they didn't even look beat up... I wish I would've bought some back then... Oooops, I just noticed I stuck my previous post in the wrong thread...
I know some of my landscaping OEM's have rental programs I want to tap into, most interested in Honda. Gonna call my Rep today and see if they have rental programs. Ariens and gravely would be another easy one since I am already set up with them. Insurance? How can I figure out what my rates would be? I figure get a list of equipment, then get quotes. Is there a formula I can put a quick and dirty cost analysis together and be close? What other hidden costs am I to figure in?
Yeah i would also just pay attention to how your equipment is handled by the rentors. Maybe it is worth it to set out some contracts where you talk about the terms of use - they should return the equipment in so and so state. Otherwise, you will end up with a pile of a no-good-to-use equipment in no time.
I have one rental company 14 miles south of me, another 20 miles north. Their prices are not out of reason. I always rent from a company 80 miles away. I have a track record with the closer companies of dead machines being delivered. I saw 3 occasions of the same broken mini excavator delivered to three different renters. It had a broken dipperstick. Twice they feebly attempted to weld a patch over the break. Not once did they grind in weld prep. The same rusty break, still painted, no weld prep. Each time, the machine was non functional in the first few minutes of use.
To be honest, a website tells a potential customer what you offer, but a phone call is needed to confirm a machine is available at that time. I choose to travel farther because the down time of a broken machine makes the whole situation a failure. I consider repairing a machine the most important consideration. I have a friend used to have a vacation home near me. The loved to run equipment. I learned the hard way everything he touched got broken, I suggested our continued friendship required him to rent, not borrow. He had a 9 ton Japanese excavator. He called me the first night he had it, "the shiny thing in the front" broke. I went to look. It was raining, and dark, but the bucket cylinder rod was indeed bent 30 degrees & broken. He had been smashing ledge. I noticed a black triangle on the dipperstick. That seemed curious? Then I realized it was not paint! I was looking through the dipper at the dark sky. He had broken the dipper also. Next morning he called to say he had chained it up so it wouldn't get any more damage. I asked: "Why, it just sits there until the come get it." "They can't come until tomorrow. I'm going to use it as a bulldozer to dig out boulders in the lawn." An hour later: "Where do I get hydraulic hoses made?" He had pushed several boulders at once, a big one had fallen behind the blade ruining a hose. I saw the same machine later at a different rental customer's property. The cylinder had been replaced, the dipper was scabbed together with a bunch of random rusty hunks of rusty steel obviously picked off a scrap pile & used in the shape they were. Welds looked like bird turd. The blade frame, both sides were repaired in the same manner. The pedal that controlled the right track wouldn't move. The linkage was frozen! Several minutes with penetrating oil was required to free it up. This poor machine hadn't ever seen a grease gun or oil can! These are the things a reputation is made of. Rentals get abused. Nobody wants to pay top dollar renting a non functional machine. They have to be fixed before next rental.
What's really bad is when the rental outfit tries to deny there are/were problems with the equipment you rented. I've had this happen twice. First time was when I rented a sod cutter. It would only run with half choke and half throttle and was a pain to get started. I got the job done but it was very frustrating because the blade wasn't oscillating fast enough. They tried to say it was checked out and ran perfect when I picked it up. BS! I asked them to start it and show me, they didn't. They just tried to argue with me it ran perfect. The other time was renting a small Mustang skid steer (36" wide) to fit through a gate to get into a back yard. It had absolutely no power and almost stalled every time you tried to fill the bucket. I was getting fed up and opened the tailgate to see if there was something obvious wrong. First thing I noticed was the air filter indicator showing red. It was right there. A plugged air filter could be the problem. I took the air filter out and tapped it on the tire. It was completely packed with a white powdery substance. I kept tapping it on the tire to clean it as best I could. I got the job done albeit slow and took the machine back. The idiot there claimed it had been fully serviced before I took it. I said lets go look at the air filter and I'll show you, machine is right there. Nope not having it. Machine was under powered to begin with and almost useless with a plugged air filter. By chance I heard from someone who worked on the renovations at the hockey arena where more seating was added. A bunch of concrete was removed and the contractor had rented 2 of the small Mustang skid steers to load the broken concrete. They had the machines for a couple weeks and it certainly explained why there was so much of the white (concrete) powder in the air filter. When the machines were returned, nobody bothered to even look at them. They just put them back in the yard for the next rental. I think it was Blackwood Hodge and they went under not long after that. If that's the way they did business, no wonder they went under. If you're going to do rentals, you NEED a good full time mechanic that keeps the equipment it prime working condition! Nothing irritates a customer more than equipment that doesn't run or work right.
I’d stay the hell away from Telehandlers let other people handle that headache and they are headaches. Constantly tear up and a complete bitch to work on often.