Improving the bottom line
04/08/2013

ARA’s Cost of Doing Business Survey can be an essential tool

 

There is a way for American Rental Association (ARA) members to find out what areas of their rental businesses they need to work on in order to meet or exceed industry standards, how their business performances with peers and how to use this information to improve the bottom line.

By participating in the ARA’s latest Cost of Doing Business Survey, which is now underway through the independent firm Industry Insights that compiles the information, ARA members can receive a free copy of the report to see how their business stacks up against similar businesses. The survey is available to ARA rental business members located in the United States and Canada at ARArental.org/go/CODB.

“I have been participating for the past 10 years or better. I have to because I need the benchmarks to set my goals,” says Paul Nottingham III, president of Action Rentals in Kingsport, Tenn.

After receiving the 2010-2011 Cost of Doing Business Report, the follow-up report that is free to members who participate in the survey, Nottingham says he discovered he “had a lot of work to get done,” noting that the recession took its toll on his business.

“From the report, I learned that I needed to improve my return on assets, return on investments and profit margin. I have been looking at my processes — or what I like to call ‘habits’ — and trying to get the ‘fat’ out by reducing redundancies, streamlining where possible and increasing my productivity. I’ve included my employees and management team in this process,” he says, noting that he looks forward to participating in the latest survey and receiving the next report to see how his efficiency strategies have improved his business.

“I want to be in the top 25 percent [of rental companies],” Nottingham says. “The report shows you the standards — how you’re doing. If they [rental peers] can do it, I can do it.”

Tony Beringer, president of Baker Rentals & Sales and Baker Party Rentals in Costa Mesa, Calif., found himself in a similar scenario after receiving the 2010-2011 Cost of Doing Business Report. “The recession hit us hard. The last report showed that our employee/employee benefits and ROI [return on investment] were off. We’ve made some changes and the construction market is slowly starting to pick up, particularly remodeling projects for small construction companies. I look forward to seeing whether we have improved in our comparisons to the industry this time. I feel our numbers are better,” he says.

Participating in the Cost of Doing Business Survey is an automatic part of doing business, according to Kevin Hoffman, president of the Madison, Wis.-based A to Z Rentall & Sales and Event Essentials. “We’ve done it every year it has been offered. Dad was a big believer in it as it gives you a basis for comparison,” Hoffman says.

Hoffman also fills out the survey online, which he says “doesn’t take long to do.” He even keeps a copy of what he submits on his computer “so I can look back at it from year to year and be consistent in my reporting,” he adds.

Thanks to what he has learned from the follow-up Cost of Doing Business Report and other business analyses, he decided to separate the two areas of his rental operation into two distinct divisions and locations. Now A to Z Rentall & Sales, which is in Madison, is focused strictly on general tool while Event Essentials, located in Windsor, caters only to the event rental market.

“I told the staff that I knew there was a profitable operation in here somewhere and that we just had to find it,” Hoffman says with a laugh. By taking these steps, he says the business has become more focused and profitable.

“It’s been a journey. The Cost of Doing Business Report pointed out that we could be more profitable. Being able to compare our business with other rental companies helped us look at what we needed to do to improve our performance,” he says.

Like Hoffman, Richard Saunders, owner of Sully’s Tool & Party Rental in Akron, Ohio, participates in the survey every time it is offered. “I do it so I can get a feel of where I match up with my peers — to make sure my percentages all line up,” he says.

He also submits his information online — “an easy process to do,” he says.

The follow-up report has demonstrated that Saunders is taking the right steps for his business. “Nothing has been out of line,” he says. “We try to stay within the percentages, and I look at everything monthly, which allows me to catch anything before it gets too far out of whack.”

There are two ways to participate in the survey. Fill out the entire survey or complete the top portion and return it with your financial statements to Industry Insights via mail to Industry Insights, PO Box 4330, Dublin, OH 43016 or fax 614-389-3816. The survey was mailed to eligible ARA members at the end of February. You also can go online and fill out the Excel spreadsheet version of the survey by going to ARArental.org/go/CODB. All surveys go directly to Industry Insights, the firm compiling the report. None of the company data will be shared with ARA or any other third party.

The deadline to participate is April 30, 2013. For more information, go to ARArental.org/go/CODB or call ARA Member Services at 800-334-2177.