Rent by the numbers

Deciding when and how to rent equipment is a matter of looking at the books.

If you’re working outside of your normal service area, taking on a special job or looking to expand your offerings, rental equipment can help you get the job done without putting a big equipment cost on your budget.

But before you sign that agreement, there are a few things you should know about training, insurance, hidden fees and more.

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The right time.

Grounds Guys of Dothan in Headland, Alabama, rents pretty much every time they need heavy pieces, since they only have eight to 10 jobs per year that call for earth-moving equipment.

So co-owner Jessica Hollerman says there would just be too much downtime to justify purchasing large pieces.

“A damage waiver – it can be good for you, but most of them just cover freak accidents that are never going to happen.” Jessica Hollerman, Grounds Guys

“The numbers don’t lie, so there’s not enough call for this equipment on the jobs,” she says.

The company most often rents for land-clearing jobs, opting for a Harley rake or Land Shark and spending $10,000 to $12,000 a year on skid-steers and attachments.

Matt Hutton, owner of Hutton’s Landscapes in Savannah, Georgia, uses rental equipment when he does out-of-town jobs to save on transportation costs or when he starts work in a new community.

“Until I’m sure of the work environment and if I don’t want to have a long-term expense on my books, we’ll typically rent equipment for a month or two in that situation,” he says. He’ll also rent when a piece of his own equipment breaks down. In total, the company spends about $100,000 per year on rentals, usually renting things like skid-steers, specialty attachments, mini-excavators and sleepers. The company also sometimes rents jackhammers and augers.

While Grounds Guys of Dothan breaks down rental costs between jobs that call for rental equipment, Hutton’s Landscapes charges the cost directly to each job.

The right place.

Both Hollerman and Hutton generally stick to the same rental companies.

About 70 percent of Hutton’s business goes to Sunbelt and the rest goes to Hertz and a few local companies. He says Sunbelt isn’t always the cheapest, but the equipment is always in good working order, so the extra cost is worth it.

Hollerman generally uses the same company, but makes a point of introducing her company to everyone in town.

“I’m trying to find someone who’s willing to provide a discount because that helps us be able to provide our clients with a more competitive proposal, which lands us more jobs, which in turn brings them more business,” she says.

The details.

If you haven’t rented big equipment before, there are a few things to consider. If you don’t have vehicles to haul larger pieces around, Hollerman recommends having the rental company deliver them to the jobsite and pick them up.

“If you pull it with just a regular Chevrolet 2500, I mean, it’s going to pull it, but it’s going to take you twice as long to get to the job,” she says.

“Then you have the headache of pulling it and the gas that you’re going to use and the extra time you have to spend.”

Hollerman says it only costs her an extra $60 or $65 for delivery, so it’s money well spent.

And watch out for fueling charges since it can cost twice as much to have the rental company refuel a vehicle as it would to fill up before you return it.

Along with providing his own gas, Hutton keeps his own rental insurance policy since going through a dealer can be extremely expensive. “They charge astronomical fees,” he says.

Grounds Guys of Dothan doesn’t carry its own insurance, opting instead for the damage waiver. But Hollerman does recommend that companies ask their insurance agents whether or not they’re already covered.

“A lot of people have it and don’t even know it, and are still paying the damage waiver to the rental company,” she says. “And there’s a lot of small print when it comes to damage waivers. Every company is different.”

“A damage waiver – it can be good for you, but most of them just cover freak accidents that are never going to happen,” she says, noting that holding her own policy would be an extra $600 a year.

So, Grounds Guys opts to pay the $60 damage waiver on a case-by-case basis.

And don’t forget to look at the weekend rental rates, Hutton says. Some companies will charge and some will “let you slide until Monday,” he says.

The training.

Neither Hutton nor Hollerman provide specific training for their operators when it comes to rental equipment. Instead, they hire skilled operators who have experience.

“We probably should,” Hutton says. “We don’t have a rental program, but we’re big on instruction here and I could say that’s a hole in my network that I don’t have training for that type of thing.”

Hollerman says she never puts someone on a machine unless they’re familiar with it, and the company makes sure to stay up to date on any changes to safety rules in the industry.

The purchase.

If the work is going well and you find yourself using a piece of rental equipment often, look at your numbers and see if buying makes more sense for your business.

According to Hollerman, all you have to do is look at the numbers. Ask yourself how many jobs you’ll need the equipment for in a given year and know the needs of your operation, he says.

Otherwise, it’s not an investment; it’s a drain on your operation.

March 2016
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