Southeastern Equipment Co. Inc. Inc. had built up a good rental business serving large contractors, but didn’t have a rental approach for homeowners, smaller contractors and farm customers. That changed in 2014 when they began to rethink how they reached those segments and opened a 10,000 square-foot, rental-only facility — Southeastern Rents.

The rental facility is based in Cambridge, Ohio, near the dealership’s headquarters. The dealership has 18 other locations in Kentucky, Indiana, Michigan and Ohio. The retail stores and the rental store carry Case Construction, Kubota, Kobelco, JLG, BOMAG, Sullair and many other brands.

“We previously only dealt with weekly and monthly rentals for larger construction customers and customers who provided their own insurance coverage. The average person couldn’t come in and rent. Smaller contractors used to own equipment and some have gotten away from the expense of maintaining them. If they were not utilizing the equipment enough, they couldn’t justify the monthly payment. With rental, they use those fees paid as a tax write-off,” says Mike Townsend, Southeastern Rents manager, who also handles outside sales.

In Rural Lifestyle Dealer’s recent Business Trends & Outlook Report, about 40% of dealers say they offer rental. There are profits to be made if you can address the issues of safety, liability, inventory and sales. Townsend shares how Southeastern Equipment is addressing those issues.

Setting Up Processes

The success of a rental business hinges on two key factors, the rental contract and rental insurance. Southeastern worked with a lawyer to set up its agreement and offers insurance through J.T. Bates Insurance Group. Consider checking out the business resources available through the American Rental Assn.

Keeping a customer safe — and satisfied — means spending time with them, not unlike the discovery process a salesperson follows.

“I came from a family-owned glass company where I did a lot of service and sales, so I have experience working one-on-on with customers. James (Kimble, operations manager) has been in the rental business for 26 years,” Townsend says. They talk though the project with the customer and use the machine’s specifications sheet to identify the right machine and explain their recommendation to the customer.

Once the machine is selected, they do a walk-around with the customer to familiarize them with the machine. It’s important for the customer to certify that they have a trained operator as part of the rental agreement for everyone’s safety. And to help with liability when transporting the equipment, Southeastern Rents offers delivery services.

Southeastern Rents offers options for extending the rental, but they do not keep credit card information on file, to guard against customer data being stolen or misused.

Ensuring Inventory

Generally, machines are kept in the fleet 2-3 years, depending on the usage. The goal is to keep the machine in the rental fleet as long as it is under warranty. After that, the retail locations have access to this used equipment, which generally has low hours and is in good condition. The store has sold machines that were out on rental, giving customers credit for a percentage of the rental paid, but is changing that policy.

“We're really focused on retaining a certain level of inventory. We want to know how many we have of something in stock before adding to the fleet each year to replace equipment,” Townsend says.

That strategy has become even more important now that competitors have opened rental stores in the area.

Advice to Other Dealers

Expanding the rental business was a good decision for Southeastern Equipment and Townsend offers this advice for those who may be considering offering the type of rental they do: “It can be a very expensive endeavor — it’s easy to wrap up $50,000-$80,000 in a piece of equipment and some of what we rent costs over $100,000. We offer at least 50 pieces of equipment in our inventory. Plus, the have overhead, payroll, delivery trucks and insurance.”

 

Practices like outside sales — Townsend makes many “cold calls” — quality equipment, good customer service skills and solid rental agreements have helped Southeastern Equipment be successful. They also make their lineup attractive and easy for customers to figure out what they need. For instance, they line up the equipment outside by size and have attachments hooked up, even specialty attachments.

Although much of their equipment is targeted to contractors, Townsend says they have strong rentals to homeowners who are tackling their own projects.

“We’re always adding more to our lineup, constantly evolving and getting larger,” he says.