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Having a Loaner

Down Time Not Allowed When Servicing Customers

Most of your quality commercial customers will carry more equipment than they can utilize at any one time. Even the one man company has several mowers, string trimmers, and blowers. Some of the reasoning for the additional equipment may be for different types of landscape or the occasion in season, where additional help is necessary to get all of the work load completed.

But for the commercial customer that can afford the equipment, the reasoning is traditionally that they do not want to have any down time due to equipment failures. Time is money, and you can't make any after sunset.

There is an opportunity for a business such as yours, to capitalize on the various situations where a customer has need for additional equipment.

What if you were to provide equipment as a loaner, for a price? The situation could get out of hand as witnessed by this example; a store started with only one walk behind mower and then added a complete rental department as he saw the potential develop to make more money.

The loaner is made available at a price that is less than comparable equipment rental at a traditional rental store. This price is given only to customers for which you are currently repairing their equipment, or for a select group of customers that spend a substantial number of dollars within your business.

You may institute a higher price for a rental to residential customers or customers that only give you a part of their business. For the latter situation, this may become a way to encourage a customer to bring more of his business to your shop.

The one concern that you may have is in making sure that you have equipment on hand, and ready for that commercial customer that will otherwise have one of his crew, or himself, standing idly by while his equipment is being repaired. This, of course, makes an excellent argument for having a two tiered shop rate.

One shop rate which is for the situation where you have the opportunity to take a piece of equipment out of sequence and provide immediate repair. And the lower rate being your traditional rate.

Deciding what equipment to make available can be based on several scenarios. Some dealers will want to use a piece of equipment that has been traded in. Working the financial side of the equation, you can usually afford to give a fair dollar for the equipment when it is traded in, perform an initial servicing, rent the equipment several times so as to recover your trade in allowance, and then reservice the equipment and sell it for a decent profit.

If your mechanics are on commission, they will like this idea because they will have the opportunity to write two service tickets on the equipment.

Another line of thinking is to take the oldest trade in equipment that you have that is still functional. Most dealers will have reservations in regards to the benefits of this thinking, because a dealer will have a very unhappy customer if this equipment breaks down in the field.

The third thought process is to use new equipment. The idea behind this is to get your commercial customers to test the newest and latest, as well as be seen out in the field using your new equipment. You will always have the possibility of a customer that brings the rental back, and wants to know what you will sell this "slightly used equipment" for.

Whichever way you decide, there are two areas that you need to check out with your insurance company. Many insurance policies will allow you to rent equipment without an increase in premiums as along as rentals are less than 25% of gross sales.

The second scenario you will need to verify is the resolution to the possibility of this rental equipment being stolen while in the possession of the customer. Understandably with most equipment, your insurance deductible will be higher than the cost of the equipment, but never the less, you should check it out.

The total package can lead to additional sales, perhaps a rental department, and most of all, customers that know you understand their needs.

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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 128, Dardanelle, AR. 72834. Phone 727-823-7205. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.

 

NOVEMBER 2024
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BOOK US

With over 25 years of frontline experience Tom Shay is America's leading Small Business Management Expert. He's a "Must Have" for your next event.

Small Business

Advisories

Perhaps you have investments outside of your small business; gold, stocks, bonds or money market funds. With each you likely know what the rate of return is.

 

What about your busines? Do you know what the rate of return is for your business? You should. After all, you do not want to be the person who has just bought themselves a job.

Small Business

News

 

Top Story

We see a lot of social media with what we think is a "sympathy plea" do do business with local small businesses.

 

It is not going to work. People select where they do business based on positive reasons. We discuss what we are seeing.


Article of the Month

A timely article for the holiday season. With any business that has inventory, are you looking at sales per square foot? Are you looking to see which is the most valuable space in your business? You can increase sales by knowing which items to place where.


Book of the Month

Fix This Next by Mike Michalowicz. We love this description of the book; The biggest problem entrepreneurs have is that they do not know what their biggest problem is.

 

If you find yourself trapped between stagnating sales, staff turnover, and unhappy customers, what do you fix first? Every issue seems urgent - but there is no way to address all of them at once. The results? A business that continues to go in endless circles putting out urgent fires and prioritizing the wrong things.