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What is going on with the Rental Management cover this month? Are we turning the magazine into a news tabloid? No, it’s simply our way of announcing the approaching debut of Daily ShowTimes, which will bring current news and industry information to all attending the A.R.A. show. The American Rental Association is assuming command of the show daily and has asked its own magazine, Rental Management, to handle the publication of this new venture, which, for the first time, will put A.R.A. in charge of all communications at its own convention and trade show.
Make no mistake: we are not simply replacing the show daily that for years has been produced by Rental Equipment Register, an associate member of A.R.A. No, instead we took out a blank sheet of paper and reinvented the publication altogether. We asked ourselves: What would the ideal show daily be like? How could it be designed to be a really useful tool for those at the convention and trade show, and not just a preprinted hodgepodge? How could we make it fresh and vital?
We’re pleased with what we came up with. Come to the 45th Annual A.R.A. Convention and Rental Trade Show in Orlando, Fla., Feb. 26 to March 1 and see for yourself.
A much-ballyhooed management theory holds that anything you can measure, you can manage, and conversely, that if you can’t measure it, you can’t manage it. I’ve never been one to reduce the art of management to quantification alone, but I will grant this much: business management does demand good metrics — those numbers you measure performance by. You have to know the metrics to monitor for the type of information you seek and you have to know what to do with the information once you have it. In this month’s Competitive Management section (page 119), business consultant and CPA Gary Stansberry of Hageman, Stansberry & Associates in Arlington, Texas, covers a bunch of metrics that rental companies should pay attention to. Some of them might surprise you a little.
Growth rates for revenue and earnings, ratio of inventory valuation to revenue, return on assets, return on sales, number of active accounts, current ratio, debt to equity ... sure, you think of them right off. But now, what about the population base of your trade area? Replacement policies based on maintenance documentation? What is the dollar utilization of your fleet? (Rental revenue divided by original cost — it should be at least 60 percent, Stansberry says.)
What about staff? Can you quantify the metric for staff? Sure. You can count how many years or months each person has been with you. But you can go further: measure the turnover rate — that’s a metric that helps show whether your place is a place to stay, or a place to leave. Another metric: revenue per employee. For equipment rental companies, Stansberry says, this number is usually between $100,000 and $150,000.
Have you ever told your valued employees what they’re producing, or your less productive employees what they’re not producing? Metrics help you manage people. They show the reality of what business is ultimately about — creation of wealth — and bring that understanding into the workplace. “Work smarter” does not mean as much as “Here is what your work is actually producing — here’s the metric, in dollars.”
Acquirers are looking for businesses that generate rental revenue and good earnings from rental operations. They’re looking at all of these metrics, and more, to make those determinations.
“A recent trend that I believe will become more commonplace over the next several years,” Stansberry writes, “is that many independent local and regional companies will be looking at acquisitions to solidify their presence in local marketplaces or expand to adjacent ones.”
If so, those who have been the potential acquisition targets in the past will be the acquirers in the future. And when they go shopping, they’ll be looking at metrics.
We do not get directly involved in national politics at Rental Management, and endorsing one candidate over another is not part of our mission. But Rental Management is read by rental people in 50 countries, and I have to assume that they were as bewildered by the United States’ recent presidential election as we were. So now that it’s all over, I do have this one observation.
In many countries of the world, the endless exasperation to have a president picked and the twists and turns of the ordeal well might have given rise to a coup, or even a full-scale civil war. So, American readers, whether you are on the sad side or the glad side, rejoice in that. The system may be a long way from perfect, but ultimately it was order and not chaos that prevailed. And it was decency and unity, not revenge and bitterness, that echoed from the speeches of concession and acceptance that finally came on Dec. 13.
The rest of the world may think we’re nuts, but despite the maddening frustration, there were no soldiers in the street, no martial law, no suspension of freedoms. That would be the truly unthinkable thing. |
