RENTAL OPERATIONS
Steve Mau has owned his rental and retail business in Brainerd , Minn . for 22 years .
A rental-first perspective
I visited Steve Mau at his business Brainerd General Rental near Brainerd , Minn . This is Minnesota Lakes country . This area stretching about 40 miles north is cabin country , with vacation homes and “ up north ” resort getaways surrounded by woods and lakes . With lots of activity around renovating cabins and landscaping around vacation homes , it ’ s a good place for a rental business – at least for six months each year ; it is Minnesota .
Mau ’ s business is divided roughly 70 % rental and 30 % retail ; Brainerd General is also a retail dealer for Toro , Yanmar and ASV skid steer loaders . “ Our principal focus is the rental market , but we supplement that with sales ,” said Mau who has owned the business for 22 years . “ We are talking to the same people . Our customers rent , but they may purchase someday , too .”
During and after the pandemic , the equipment rental business experienced significant gains , according to Mau . People stayed at home , invested in staycations , moved to or bought second homes , and rented a variety of equipment in the process . “ We are in a vacation destination ,” said Mau . “ People moved up here , then wanted to make upgrades .”
Professional contractors needed equipment too ; they still do . “ We rent equipment to a lot of landscapers and contractors whose businesses are growing ,” said Mau . “ Landscapers are renting Dingos , trenchers , stump grinders , plate compactors , overseeders . Plus , excavators with different attachments or even just attachments themselves . We find that businesses in the half million dollar to $ 3 million size are our bread and butter . Businesses larger than that own a fleet of equipment .”
Should you rent ?
Bridges of 3B Outdoor in Louisiana does recommend the rental business for OPE dealers but doesn ’ t want to oversimplify the opportunity . “ It depends . The rental business is capital intensive , and very heavy on the front end ,” he said . “ It ’ s a little more difficult right now , with the cost of money . You need to have a five-year plan .”
To rent equipment such as sod cutters and aerators , what Bridges calls “ weekend warrior equipment ,” you have to pay for that upfront when you buy . When you get into bigger equipment like skid steers , Bridges said you can get zero-percent financing . “ You have the flexibility to use other people ’ s money .”
I asked John Reynolds , owner of the Bunnell , Fla . businesses Flagler Power Equipment and JB Rent-All , the same “ would you recommend rental ” question . “ Maybe ,” he said . “ An equipment rental business operates very differently from power equipment sales . You need to have separate dedicated folks to run it . It is a big investment but can be profitable if run well .”
The ARA tracks rental penetration in markets , and Nickell says that it ’ s currently at a record high of 56 % in the construction market . “ Complexity of repair is a real problem with ownership of some equipment ,” he said . “ Insurance is expensive for owners , some equipment is difficult to move around , job sites are unique and require different machines . All that means rental activity is increasing .”
Advice & tips
If your customer base is a lot of landscapers or construction pros , you are probably missing out on the business . “ They are probably renting already from a business near you ,” said Nickell . He
Customer communication is key for both DIYers and pro contractors renting large equipment .
24 OPE + July 2024 www . OPE-Plus . com