The future of rentals is in specialization. Contrary to the prevailing industry trend of the “one stop shop” concept, moving toward a reduction of your product offering and narrowing your customer base is where the future lies.
For over 16 years I have had the opportunity to run, purchase, and investigate over 50 different rental companies. Over that time, I have found that specialty companies are significantly more profitable than general rental companies. When analyzing the finance statements of public companies, those with reduced product offerings (2 or 3) have at least twice the bottom line profit of general line companies. Through this series, I will explain why the history of business development leads in this direction, and how specialization improves sales coverage, operational efficiency, customer value, and company profitability.
The concept of specialization is not new to business nor is the logic hard to understand; It is the break from traditional rental business practices that is hard to adjust too. Dropping long serving product lines and saying, “we no longer carry that product,” are difficult changes to implement. Historically we have relied on the desire to give the customer anything they want to keep a competitor out. The end result of this practice is that rental companies are no able to provide value, in the form of knowledge in the product and application, to the customer.
Until next time, give this idea some thought relative to how you currently do business. I look forward to reading your feedback and debating this issue with you.
Harry Hoyer
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