Competing as an Independent Rental Business

As we look ahead to 2025, many independent rental businesses are wondering how to compete with the ‘Big 5.’ After listening to podcasts and reading on this topic, I’ve gathered some ideas. I want to share these insights to help independents succeed in a competitive market.

The Low-Cost Strategy

One fundamental competitive strategy for any business is to do whatever you can to become the ‘low cost’ provider in your market. This is not the same as being the ‘low price’ provider, but being the ‘low cost’ provider paves the way for you to compete effectively on price. For independents, this is tricky because you do not have the buying power of the larger competitors. So, you must find other ways to lower your costs.  

Efficiency and Agility

The key strategies are to become the most efficient and the most nimble. Larger companies almost always have layers of management and strict policies in order to maintain control. That inevitably leads to higher personnel costs which will offset their buying advantage. And they operate more rigidly. These two factors, taken together, open the door for the independents to step in.

The Engine Analogy

We all know equipment, so let’s draw an analogy between your operations and an engine.  If an engine is not used for the purposes for which it was designed, it will not work efficiently for that job.  Same goes for the people, processes, and technologies that make up the engine parts that drive your business.  

Assessing Your Operation

Is your engine designed specifically to handle every aspect of your operation, bringing your people and your customers together in total and seamless cooperation? Is it a ‘well-oiled machine’, or is there friction, overheating, noise, and breakdowns? Is it a simple engine where all of the components are designed to work together, or is it a ‘Rube Goldberg’ contraption (see definition below) that has evolved over time?  If you are on the latter side of either of those questions, you will find your operating costs higher than they need to be and your ability to compete dramatically compromised. 

The Investment Case

So, what to do?  Simply, the math. Replacing older technology should, conservatively, increase revenues by 3% and reduce expenses by 3%.  For every $10M in revenues operating at a gross margin of 10%, that’s a net gain of around $350K – per year. If you were to invest $250K in new equipment rental business software, your ROI is less than nine months.  But – isn’t that risky? Again, keep it simple – what is the risk to your future, your ability to compete tomorrow, without that investment?

Choosing the Right Software

But – which rental software company do I choose?  Again, not hard.  Ask these simple questions:

• Does it connect all of my people in real-time from wherever they are located, maximizing their efficiency and responses to Customers and to each other?
• Does it connect my Customers in real-time from wherever they are, whenever they need to connect so that they operate more efficiently with me than with anyone else?
• Does it seamlessly perform all of the functions needed by my business on one single platform, and keep all of my pertinent data in one place, organized for efficient use? (Note – without this, AI is a pipe dream).
• Does it provide all of the tools necessary to maximize my Return on Assets (this is a list too long for this post)?
• Am I able to rent equipment, sell equipment, sell parts and supplies, and sell services at the same time – like on one ticket?

Make 2025 the year that you step into the digital world, becoming highly competitive, and opening the door to realizing the true potential of your business. Happy New Year.

Wikipedia – A Rube Goldberg machine, named after American cartoonist Rube Goldberg, is a chain reaction–type machine or contraption intentionally designed to perform a simple task in an indirect and (impractically) overly complicated way. Usually, these machines consist of a series of simple unrelated devices; the action of each triggers the initiation of the next, eventually resulting in achieving a stated goal

Joe Lewis
CEO
Fame Rental

Fame Rental improves rental businesses and the lives of their employees and customers. We do this because we care more deeply, listen more intently, and act more methodically than anyone in the rental industry would ever expect from a software company.

Contact us at sales@famerental.com to schedule a demo.