Topic: When’s a good time to purchase your tools vs rent and vice versa? There are a lot of factors to consider and we delve into them all!
Guest: Tim Allen, American Rental Association
3 Points for Success – Tim Allen:
- Be prepared. Plan ahead and reserve equipment when you’re going to need it and, on the flip side of that, don’t rent the equipment before you’re ready so you’re not paying for equipment that isn’t being used.
- Try to work together as a team with the equipment rental store. They’ve probably seen solutions that you may not be aware of. It’s their job to really stay on the latest cutting edge. So try to make sure that, you know, when you’re talking to them instead of always asking for a specific piece of equipment.
- Know the value of everyone’s time. The equipment rental yard, just like the contractor out there, is really trying to maximize and leverage their time.
Carey Bros Pros Tim Allen Edited.mp3
James [00:00:00] Hey, so good to have you with us for another episode of CareyBrosPros. I’m James.
Morris [00:00:06] And I’m Morris.And, you know, as professionals were always looking for ways to give our pro listeners great information that’ll help them work smarter instead of harder. On this edition, we’re gonna talk about saving you money by learning a little bit about tool rental.
James [00:00:22] That’s right. And chances are good whether you have a big company or a small company, you’ve had the opportunity to rent a tool, some more than others,.
Morris [00:00:31] Some more than others.
James [00:00:33] You bet. And our guest today is with the American Rental Association. He is Tim Allen. Tim, welcome to CareyBrosPros.
Morris [00:00:42] Hi, Tim.
Tim [00:00:42] Well, thank you for having me. It’s an honor to be here.
Morris [00:00:44] We’re glad to have you. Tell us a little bit about the American Tool Rental Association.
Tim [00:00:49] So American Rental Association came to be back in the 50s. It was a group of eight or nine members, as I recall, that recognized that working together, they could do better than trying to get this market going on their own. And from there, has just continually grown and is quite, quite a strong association these days within the neighborhood of 10000 members.
James [00:01:14] And the purpose is. I mean, you know, the trade associations have multiple purposes that are both of benefit to consumers and to members, education, that sort of thing. What’s the primary mission of the American Rental Association?
Tim [00:01:29] Well, it’s helped the members grow their businesses. It’s also going to help with government affairs. Got some education pieces to it, business resources. It’s a pretty darn comprehensive organization.
Morris [00:01:43] You know, some calls them rental stores. I calls them tool rental stores because I go in there for tool when they’re for tools.
James [00:01:50] But truth be told, when you walk in, there’s hairs every. Yeah, I feel like you’re ready to get a tuxedo to go to a wedding.
Morris [00:01:56] There’s a 75 gallon coffee pot in there.
James [00:01:59] Right.
Morris [00:02:00] You know, and a punch bowl you can swim in.
James [00:02:02] Right. Exactly [laughs]
Morris [00:02:03] And then hanging next, the fish bowl or 300 glasses packed in Styrofoam. And right next to that is a jackhammer. Yeah. And I was wondering what they use jackhammer, what the glass is for.
James [00:02:15] Right.
Morris [00:02:16] What do you do? Break the concrete. Drink to it. Zach.
Tim [00:02:20] Well, you know, that’s certainly one way for us to go about it for sure.
James [00:02:23] Yeah. Yeah. But the truth is that a lot of these folks and I’m certain that the members of Tim’s association are people that who not only rent tools to us, but who have product to rent for parties and to consumers who consumers. Is that is that true? And. And if that is true, can you give us a lay of the land? And as much as percentages are concerned for how much is pro-business and how.
Tim [00:02:47] I can I can give you a bit of that. Yeah. So the the biggest market segment on a like a dollar valuation is certainly going to be construction and industrial. And they’re gonna make up. Oh, I believe it’s in pushing the 50 percent mark. And with that, understand there’s some gray zone between these. So you may have a store that’s primarily construction and also has some general tool. You may have one that is general tool primarily and has a little bit of construction and then you’ll get to the party and event. Party and event, I believe is a neighborhood of around 10 percent of the market. So you’ve got 50, 40 and 10 as a ballpark.
Morris [00:03:25] So that’s general construction and party. Is that the order or do I have it?
Tim [00:03:32] So you would have construction and industrial, then you would have the general tool 40 and then you would have the party and event 10.
James [00:03:41] Okay, I got it. All right. I think we need legislation where we’re spending more on parties.
Morris [00:03:47] Yes. And less on work.
James [00:03:49] 10 percent for parties.
Morris [00:03:52] Well, here’s the deal. You go in and you rent a tractor for 200 dollars an hour. Right. And you can rent 10 cases of glasses for a year. For the same amount. For the same. Ali. Right.
James [00:04:08] Yeah. I think that the pro audience may be interested in all the categories. But let’s talk a little bit about the value proposition associated with renting as opposed to buying. And we know that there is maybe a minimized capital investment, of course, a little less risk. You put the onus on somebody else, especially if you buy damage waiver insurance. And if you don’t buy damage waiver insurance.
Morris [00:04:38] You’re an idiot.
James [00:04:38] The few cents per dollar that it costs to replace a piece of equipment. You’re crazy because you know, these tools that we use get rode hard and they are very, very expensive. Now let’s talk about the value proposition associated with renting tools.
Tim [00:04:59] Going to come from a few different angles. One of them that seems to be growing really in popularity is basically you’re talking about a fixed cost, so you get a quote for an equipment rental, you know how much it’s going to cost you per week. And when you’re bidding your job, you can pretty tightly understand that it’s going to stay pretty close to when you’re owning equipment. You know, especially now Tier 4 emissions and that kinds of things. Not only can it upset the cost of the job, but also the time when this stuff goes in for repairs. It may not come back out in a day or two. It might be a week or two or a month depending on what’s going on. So there’s no putting the cost in advance so that you can just mark that up, whatever you need to do in your business model. There’s the risk that you’re taking this, having to get things maintained or repaired. And, you know, finally, like you said, that just not putting the money out in advance equal to to free up you for other things. See? Maybe carrying you through a project before you’re receiving payment on it from the end user. Those kinds of things are where I see the three most common.
James [00:06:17] Well. Plus, if you need a forklift dude, you better be prepared to write a big, big check as opposed to if you’re going to make a purchase as opposed to renting a forklift. As an example,.
Tim [00:06:28] Right.
James [00:06:28] Which could be a 2 percent one or two percent of the cost and maintenance associated with that particular piece of equipment. When does it make better sense? Tim and I know that you’re an advocate for rental, but when does it make sense for our pros to purchase tools and equipment rather than renting?
Tim [00:06:49] Right. So, you know, I’d start off with saying, well, I advocate rental. We really do advocate that contractor and understanding what he needs to do. So it by no means hurts me to see them buying equipment. What we’ll see is when a customer is renting it enough that, you know, he can consistently make the payments on a piece of equipment. For instance, in our area, it’s pretty seasonal. So they’re going to need to earn enough in the four or five, six months of good weather that we have to make the payments throughout the year. Hopefully they have enough profit going that they’re able to depreciate it and take advantage of that. A lot of times too what we’ll see is, you know, we’ll have customers that own several, we’ll say mini excavators of their own, but they’ve got an opportunity to do another job in rather than go by a fourth excavator. Then they can come in and rent one for a while. So they’re really kind of balancing those numbers out. Just see where they land.
Morris [00:07:47] Yeah, that’s kind of the way we figure it. We look at a tool as builders, as contractors. We look at that tool and we look at how often we’ve rented it in the course of a year, what its cost us to rent it for that year. And if the frequency of use is such that we feel it’s going to continue, then we look at buying one. But we also have to look at the cost of maintenance, the cost of insurance and the cost of storage, which is all part of you know, there are advantages, though. You know, we have a deduction. We have an asset, not only an asset, but a deduction as well. So there are some advantages outside the confines of the base purchase. So we look at everything before we ever buy a piece of equipment and we tend to look at rentals more and are much more friendly way than as a purchase. I’m not interested in making a purchase unless I’m just using the living dickens out of a particular tool.
Tim [00:08:53] Yeah, exactly. Yeah.
Morris [00:08:55] Yeah.
Tim [00:08:55] Five years down the road, you know, especially with how fast technology is changing today too. You may be looking at having to try and get rid of a piece of equipment and purchase a new one just to get the same work efficiency outright.
Morris [00:09:07] That’s exactly right.
James [00:09:08] What pearls can you offer? What advice can you share? Tim, with our pro audience as regards to renting equipment, are there certain steps that one should take? One of the things that, for example, might come to mind is, you know what? Be ready to use that piece of equipment, because when you pull it out of the rental outfit and you bring it onto your project, the clock is ticking. And if the rental equipment is just sitting there and you’re not prepared to use it, you’re wasting money. I would think that that would be good advice.
Tim [00:09:39] Yeah. You know, it’s gonna pinch me at both ends. If you’re not prepared at the job site and you’ve got it sitting there. You’re exactly right. It’s costing you money while it’s sitting there. The other thing we’ll see is folks that, you know, probably could have called and reserve that piece of equipment two weeks or a month earlier that didn’t. And now they’ve got everybody on site and they’re ready. But the equipment is not available.
James [00:10:02] Flip side. Yeah, that’s good advice. Yeah. Yeah.
Tim [00:10:06] So we really encourage everyone to get, you know, minimum two weeks in advance if it’s busy season. You’d probably better be looking a month in advance, but definitely being prepared and knowing exactly which piece of equipment you want. You don’t want to show up to the job site with a trencher that does a 36 inch trench and you need to go four feet deep. That kind of stuff really makes sure that when that is happening, that interaction, the reservation is happening, that everybody knows what’s going on to get into the right piece of equipment.
James [00:10:36] Now, Tim, you know that we broadcast our program, our radio program and podcast from trade shows all over the country. And we understand that you have a trade show in February in Orlando. And I can’t imagine the way two guys who love tools would have more fun that. And then at the American Rental Association show in Orlando, what would one expect to see there at the show?
Tim [00:11:05] I got to tell you. So, you know, Roseburg is a fairly small town. I’ve done a little bit of traveling and I’ve seen some things that I was completely unprepared for, what I was going to run into. It is such a massive show. It’s unbelievable when you have 700 different vendors all vying for dollars that rental operators like myself are spending. It is a big deal and there is a tremendous amount of promises and money that changes hands on that floor and into an app.
James [00:11:35] Yeah, these are manufacturers that want to sell equipment that you guys will rent. Yeah. You know,.
Tim [00:11:40] You bet.
Morris [00:11:42] Companies like John Deere or, you know, they average the norm rather than the exception.
James [00:11:49] Yeah, I bet you see all of all the names, all the big names are there and some small ones too.
Tim [00:11:54] Definitely. Yep. You know and that’s something neat that ARA does try to do is save a percentage of floor space for new vendors. So it does keep it mixed up a little bit. You certainly have vendors that have been there for a long, long time. Clark comes to mind. I think they’ve been there potentially since the very first year. Awful close to it’s not the first year, but definitely you’re getting to see all the newest innovations. And it’s something that helps us because now we’re able to bring new stuff to our market. It makes sense that. Yeah, that’s true. It’s just it’s fantastic.
James [00:12:29] Wonderful.
Morris [00:12:30] You know, Tim, usually at this part of the show, we like to ask our guest for three tips for success for our listeners. What are yours?
Tim [00:12:41] Well, you know, we kind of covered number one already that was being prepared. So I’m not going to dive more into that. But number two for us is, you know, try to work together as a team with that equipment rental store. They’ve probably seen solutions that you may not be aware of. It’s their job to really stay on the latest cutting edge. So try to make sure that, you know, when you’re talking to them instead of always asking for a specific piece of equipment. Don’t hesitate to take the time to describe the project a little bit because there could be some new stuff out that could make a big difference in how long it takes you to get through your project or what kind of a result you get. And unless one number three, knowing the value of everyone’s time, the equipment rental yard, just like the contractor out there, is really trying to maximize and leverage their time. So knowing what your employees time is worth in ways to leverage that employee, you know, is there a piece of equipment out there that you don’t own that could get your employee through a job as quick or quicker than maybe three people with shovels, for instance, to make it really simple. And then the same holds true for the rental yard there. They make their living selling their time on the equipment. So if you want a good relationship with them, try to help them get the most value out of that equipment as well. When it’s sitting, it’s not really doing anyone good. Say, for instance, on the weekends, for example, the guy that brings it back returns it on time, clean and full of fuel is going to be a customer that that rental store wants to keep happy. You know, those are the guys when everybody’s working together. It’s just leveraging and maximum maximizing everyone’s return.
Morris [00:14:20] Good. Good tips.
James [00:14:22] Thanks to Tim Allen. The other Tim Allen are he’s with the American Rental Association. You may learn more about his association on that fabulous trade show in Orlando in February by visiting the Web site. It is ararental.org.
Morris [00:14:41] And remember, you’ll find our guest information as well as additional podcasts, videos and articles on our Web site at CareyBrosPros dot com.
James [00:14:52] Thank you, Tim.