Trailer Rental Business Tips: How to Achieve Sustainable Growth
As an entrepreneur running a trailer rental business, it is crucial to maintain a clear vision of your objectives while remaining adaptable in your approach. It's been a while since you last evaluated your business - is it living up to your expectations? By following these seven effective strategies, you can enhance your rental business and bring your aspirations to fruition.
Optimize Asset Utilization
Calculate the overall dollar utilization of your rental fleet by dividing your annual rental revenue by the original cost. Aim for a utilization rate of 70% or higher for larger equipment, and 100% for general rentals. Conduct weekly utilization reports using your trailer rental software (also called a trailer dealer management system) and identify items with low utilization rates (40% or less). Remove such units from your fleet if there is no potential for improvement in the next 60 to 90 days.
Address Maintenance Issues
Use trailer rental software to track repair and maintenance expenses as a percentage of rental revenue for individual units. Any rental unit with a maintenance cost of 10% or more as a percentage of annual revenue may be problematic. Consult with your maintenance staff or provider and consider selling units with chronic maintenance issues. Non-functioning equipment does not generate revenue, and unreliable equipment will deter customers.
Prolong the Life of Rental Units
Trucks and trailers have longer lifespans. Many units can remain profitable well beyond traditional replacement cycles. In lean years, national fleets age their fleet to minimize capital expenses. Ensure that you only extend the life of rental assets that are not currently or likely to be maintenance issues.
Invest in Quality Used Equipment
Reduce capital expenditures by purchasing late-model used units. This approach can conserve cash, limit debt, and achieve the same rental rate as a brand new unit. Even a small investment in a used unit can make it look near new, and customers will not notice the difference.
Supplement Your Fleet with Re-Rent Equipment
Rather than using your cash or incurring additional debt, collaborate with other rental companies or local equipment dealers to provide equipment as needed for rental purposes. Ensure that you maintain a minimum margin of 20% on re-rents, and document the equipment's condition at the time of delivery and return in your trailer software.
Create a policy on who can discount and by how much. Be aware of your “walk away” rental rate on each piece of equipment. Have a realistic book price and make sure that your overall actual-to-book rate is at least 92%.
Consider Business Expansion: Invest Money to Make Money
Acquisitions are an excellent way to expand your business and penetrate new markets. It allows you to leverage existing locations, customers, and employees to achieve sustainable growth. Many successful business owners have grown their businesses during times of economic downturn.
In conclusion, continuously challenge yourself and your business model. Remember, business operations are fluid, and you should adapt accordingly. Trailer rental software can remove the busy work and provide the insights mentioned above that help you grow your business.
WebbRes provides a comprehensive software system that integrates trailer sales, rentals, and service operations into one easy-to-use platform. WebbRes enables dealerships to significantly cut down on manual and repetitive processes. WebbRes eliminates the hassle of switching between platforms and saves dealerships administrative overhead, provides operational insights, and creates a faster customer experience. Learn more at https://www.webbres.com
Visit WebbRes at the 2023 NATDA Trailer Show at booth #2742, Music City Center, Nashville, TN - August 30-31, 2023.