Part Two: Industry veteran Mike Disser on what independent rental companies need to thrive

Mike Disser of RMC Consults LLC recently spoke to Rental Briefing about the current trend of consolidation in equipment rental and what he sees as the keys to success for companies navigating today’s economy. We followed up to get his insight into the unique challenges faced by smaller, independent rental companies and how they can overcome those obstacles for continued growth and prosperity. 

Mike Disser has been a force within the US equipment rental industry for the past 20 years, including a lengthy stint at NES Rentals as well as his current role working alongside Mike Crouch at RMC Consults LLC, working to expand its M&A advisory services.

Rental Briefing spoke with Disser recently to get his take on the current wave of consolidation taking the industry, and to find out what it takes to succeed in equipment rental today. In follow up to that conversation, we offer Part 2, focusing on smaller, independent rental companies and the unique challenges they face. 

Rental Briefing: What do you see as the most critical issues facing smaller, independent rental businesses today?
Mike Disser, RMC Consults LLC

Disser: Industry research firm IBIS World reports there are 9,609 Tool & Equipment Rental businesses in the US as of 2023, an increase of 0.3% from 2022. Many of these are considered small to mid-size and account for a large portion of the total market share. Here’s a list of what I believe to be the most critical issues facing those businesses:

  • Market competition from larger rental companies or online platforms
  • Economic fluctuations impacting demand for rentals
  • Regulatory compliance, safety and licensing requirements
  • Maintenance and repair costs for rental assets
  • Technology adoption and integration for streamlined operations and efficiency
  • Customer retention and satisfaction amid growing options
  • Rising insurance costs and liability concerns
  • Sustainable practices and environmental regulations affecting operations
  • Access to financing for expansion or fleet upgrades
  • Attracting and retention of quality employee talent
Rental Briefing: What’s your advice to rental companies considering selling their business to consolidators?

Disser: The best advice I can give rental companies who wish to sell their businesses is to be prepared, understand the process and enlist professional assistance from those who understand the current market dynamics. Here are 10 things to help you get started:

  • Evaluate the market - Research the current market conditions and trends in your industry to understand the potential value of your business
  • Financial preparation - Ensure your financial records are organized and up to date to present a clear picture of your company’s performance to potential buyers.
  • Seek professional assistance - Consider hiring a business broker or consultant experienced in mergers and acquisitions to guide you through the selling process.
  • Determine your goals - Clearly define your objectives for selling the business, whether it’s maximizing profit, ensuring a smooth transition for employees, or retaining some involvement in the company post-sale.
  • Identify potential buyers - Explore different options for potential buyers, including competitors, investors, or individuals looking to enter the industry.
  • Negotiate terms - Be prepared to negotiate terms such as price, payment structure, and transition period to ensure a mutually beneficial agreement.
  • Consider legal and tax implications - Consult with legal and tax professionals to understand the legal and tax implications of selling your business and ensure compliance with relevant regulations.
  • Plan for transition - Develop a transition plan to ensure a smooth handover of operations to the new owner, including training and support for employees and customers.
  • Maintain confidentiality - Keep the sale process confidential to minimize disruption to your business and protect sensitive information.
  • Stay flexible - Be open to adjustments and compromises during the negotiation process to achieve the best possible outcome for all parties involved.
Rental Briefing: What is your advice to business owners whose goal is not to sell, but who want to stay in business for the long haul and/or maintain their legacy?

Disser: Even if you’re not looking to sell your business, many of these suggestions are still applicable. I think you should always be prepared for a possible transition. Life has a way of changing in an instant, so having your business in good shape with an exit plan is both prudent and wise.

Rental Briefing: What is needed to survive/succeed in today’s world as a small, independent rental company?

Disser: Equipment rental companies must employ various strategies to stay successful in today’s market. While the following suggestions are the same suggestions I make to mid-size to larger rental companies, it’s becoming increasingly difficult for small rental businesses to compete unless they incorporate these initiatives:

  • Diverse equipment inventory - Offering a wide range of equipment options to cater to different industries and customer needs.
  • Online presence and booking - Providing easy-to-use online and mobile platforms for renting equipment, allowing customers to browse inventory, check availability, run reports and make reservations conveniently.
  • Customer service - Providing exceptional customer service and support, including timely responses to inquiries, assistance with equipment selection, and troubleshooting during rentals.
    IBIS World reports there are 9,609 Tool & Equipment Rental businesses in the US as of 2023, an increase of 0.3% from 2022.
  • Maintenance, safety and quality assurance - Ensuring that all equipment is well-maintained, regularly serviced, and meets safety standards to minimize downtime and maximize customer satisfaction and compliance.
  • Flexibility in rental terms - Offering flexible rental terms, such as short-term and long-term rentals, with options for delivery and pickup to accommodate various project requirements.
  • Competitive pricing - Implementing competitive and data-driven pricing strategies to attract customers while still ensuring profitability.
  • Technology integration - Incorporating technology such as GPS tracking and telematics to monitor equipment usage, location, and maintenance needs efficiently.
  • Market analysis and forecasting - Conducting market analysis and forecasting to anticipate demand trends and adjust inventory accordingly to meet customer needs.
  • Partnerships and networking - Building partnerships with construction & industrial companies, event planners, specialty contractors, and other businesses to expand their customer base and reach.
  • Sustainability initiatives - Implementing environmentally friendly practices, such as offering energy-efficient equipment options or recycling programs, to appeal to eco-conscious customers and align with corporate social responsibility goals.
Rental Briefing: What do you see as the biggest obstacle to survival/success for independent rental businesses?

Disser: One of the biggest obstacles to small rental companies’ success is market competition, particularly from larger rental companies. These larger entities have more resources, brand recognition, and well-developed supply chain, making it challenging for smaller companies to compete effectively.

Additionally, larger companies may benefit from economies of scale, allowing them to offer lower prices or a wider range of services, further intensifying competition for small rental businesses. To overcome this obstacle, a small rental company might need to focus on niche markets, provide exceptional customer service, differentiate their offerings, and leverage technology to improve efficiency and reach a broader audience.

Rental Briefing: How do you see the breakdown of corporate chain vs. independents changing in the US over the next five years, or will it stay relatively constant?

Disser: I believe the ratio of large chain versus small independents will be roughly the same over the next five years. Even though the “big guys” keep getting bigger by gobbling up smaller ones, there are many new rental businesses emerging all the time. The continued growth of the rental industry, rental penetration and the construction market, including government-funded infrastructure projects, will set the table for continued consolidation.

desktop timer trk_px

STAY CONNECTED


Receive the information you need when you need it through our world-leading magazines, newsletters and daily briefings.

Sign up

CONNECT WITH THE TEAM
Euan Youdale Editor Tel: +44 (0)1892 786 214 E-mail: [email protected]
Lindsey Anderson Editor Tel: +1 312 929 4409 E-mail: [email protected]
Tony Radke Sales Manager Tel: +1 480 478 6302 E-mail: [email protected]
Ollie Hodges Sales Manager Tel: +44 (0)1892 786253 E-mail: [email protected]