Thursday, August 21, 2014

Home Magazine Leasing lessons

Leasing lessons

Features - Equipment, Industry News

How to get the most out of your rental equipment.

Lee Chilcote | August 12, 2011

dreamstime.comMany lawn and landscape companies spend upwards of $10,000 per year on rental equipment. Whether they’re digging a trench, cutting sod or just looking for an extra truck for a job, these business owners need good, reliable equipment delivered on time. There’s nothing more aggravating than renting a skid-steer that breaks down hours after it’s been unloaded – leaving workers stranded and idle until a replacement arrives.

“When we first started renting equipment, it was a nightmare,” says Tom Rowand, Jr. of R & D Landscape & Irrigation in Jacksonville, Fla., who spends an estimated $15,000–$20,000 annually on equipment rentals. “We rented three pieces of equipment and they all broke down on the job. Everyone was frustrated.”

Yet rentals are essential to lawn and landscape companies’ business, especially at busy peak times, Rowand says.

It doesn’t make sense to buy costly equipment you don’t use all of the time. Renting by the day, week or even month allows them to take on additional work without breaking the bank.

The keys to getting the most out of rentals, contractors say, is to develop a good relationship with your dealer, have systems in place to ensure that the rental equipment works well and is there when you need it and only rent equipment after you’ve exhausted other options.

Companies that adhere to these guidelines can survive the ups-and-downs of today’s economy by flexibly expanding their capacity, while also growing their bottom line.


Building relationships
Landscapers that purchase a substantial volume of equipment rentals can often negotiate the terms and pricing with their dealership and save big.

“Especially with the construction industry being as slow as it is, rental yards are open to negotiation, so we’ve taken advantage of that,” says Tom Heaviland, owner of Heaviland Enterprises in Southern California. “In this economy, if you’re not negotiating with your vendors like your customers are negotiating with you, then you’re crazy.”

“We have a fixed contract, but we still try to negotiate, and most of the time we’re pretty successful,” Rowand says. “We’ll call them and say, ‘We’ve only got $200 in our budget, can you rent it to us for that price?’ Most of the time they’ll say yes.

“You can also get a good deal when you rent for a longer period of time,” he adds.

Building long-term, mutual relationships with rental companies can also help circumvent problems such as broken equipment, late delivery or hidden fees.

“We’ve been doing business with our rental yard for 35 years, and have a great relationship,” Heaviland says. “I know we can count on them to deliver and pick up equipment on time, it will be in good condition and won’t break down on us.”

To Heaviland, this reliability is worth its weight in gold. “It’s rental stuff and gets the heck beat out of it,” he quips. “You don’t want it to break down and hold up your progress – but if it does, you need them to respond promptly and deliver another one.”

While Rowand’s relationship with his rental company isn’t perfect, he continues to work with them because they have the largest inventory and deliver on time.

“We work with what you might call the Wal-Mart of rental companies, and although we usually give them a week’s notice, sometimes I call the day of and they have what I need,” he says.

There when you need it.  R & D employees ensure that their equipment arrives in good working condition by personally picking it up and using a rental checklist before it leaves the yard.

“If they deliver it to you, then you’re at their mercy,” Rowand says. “So we inspect it, note any damage, check the oil level and fuel level and test it to make sure it’s running properly. That system has helped us out immensely over the years.

“Probably 60 percent of the time, there is something wrong with the equipment when we go to pick it up. The equipment is not checked out properly.”

Because Rowand has an established relationship with his dealer, they’ve come to expect the extra scrutiny. “They understand our process, and don’t just think we’re difficult.”

Heaviland has even negotiated with his dealer to allow him to keep equipment on site for free when he’s not using it. “We’ll keep it for five days, but they’ll only charge us for three days, if we call it off during the days that we’re not using it,” he says.

Gary Mallory, CEO of Heads Up Landscape Contractors in Albuquerque, N.M., says it’s important to have a company culture of using equipment efficiently. “Like a war battalion with a tank, crews love having equipment on site, just in case something comes up,” he says with a laugh. “Foster a culture of returning equipment immediately. If you have four to five pieces of equipment out and you don’t need them, in this economy it can bite you.”

Mallory also tries to rent a single, multipurpose piece of equipment rather than three separate pieces, and warns landscapers to beware of extra fees. “Watch out for hidden costs like delivery charges, environmental fees and wear and tear costs.”

Lawn and landscape companies should be strategic about what kind of equipment they decide to rent, says Darin Zuccaro, owner of Yardscapes in New Port Richey, Fla. “The two main items we rent for installs are front loaders and sod cutters,” he says. “Because the sod cutters are always breaking down, it’s more efficient for me to rent them, because the dealer fixes them and I don’t have to wait a week.”

Deciding when to rent
Timing is everything when it comes to equipment rentals. By maximizing use of rental equipment, you can cut overall costs.

“If we rent a sod cutter, then we’ll arrange for a supervisor to take it to more than one crew, so it’s not just being used for three hours and sitting on a job,” says Rowand. 

Timing your rentals well can help you to maximize efficiency, Mallory adds. “We don’t want equipment sitting on site that we only need one day a week,” he says. “Sometimes it’s better to rent an item for three single days, rather than three weeks.”

Doing the math can be tricky, he says, but it’s an essential part of bidding a job right and managing your costs effectively. “It can go the opposite way, too,” he says. “If a job takes longer, you could end up paying the higher daily rate.”

To avoid needless rentals, Mallory sometimes barters with other contractors. “If we’re doing re-vegetative seeding, we have to rip up the ground,” he says. “Yet if another contractor is on site creating a parking lot, they can rip it up for us using equipment they have. And vice versa, we’ll also sometimes dig trenches for electricians.”

Zuccaro preps his crews to do as much as they can by hand before they rent equipment. “Be smart – only rent when you need it,” he says. “


Renting vs. owning
Renting equipment can actually be more cost-effective for lawn and landscape companies than buying it – even if it’s something they already own.

“Ironically, most of the stuff that we rent are pieces of equipment we already have, like sod cutters,” Rowand says. “For instance, if we have three crews that are doing sod cuts on a busy day and we only have one sod cutter, we’ll rent two.” When  deciding to buy instead of rent, make sure the equipment isn’t just going to sit.

“A lot of people in our industry love seeing steel in their yard, but they really have to look at purchasing equipment unemotionally,” Mallory says. “I know people that own 12 skid loaders, but only need them for three months out of the year. That’s not wise.

“The truth is that many companies own too much equipment, and don’t rent often enough.”

On the other hand, Mallory says companies should also make sure they maintain their equipment so it doesn’t go down unexpectedly, resulting in an unplanned rental. “If you’re not able to invest in your equipment, you could end up being forced to rent,” he says.

Owners should also treat rentals on a case-by-case basis. “You can have minimal downtime if you rent, but the landscaper has to be smart enough to know when to use it,” says Zuccaro.


The author is a freelance writer based in Cleveland.  

x