Upcoming Rental Report to Take Unique View of Industry

Thu September 24, 2020 - National Edition #20
Lori Lovely – CEG Correspondent

The Association of Equipment Distributors has compiled a report that may just revolutionize the American heavy equipment rental industry as it examines management practices and provides granular benchmarking data for this important industry segment.

Available this fall, AED's 2020 Cost of Doing Business Report and Annual Rental Report will be packaged with a white paper written by Richard Stewart, an independent consultant who conducted the research and compiled and analyzed the data.

Nitty Gritty Details

Stewart, a former CPA and now an independent consultant, adopted an academic methodology for the study, using a double-blind approach in conjunction with Industry Insights Inc., an independent professional research and consulting firm that specializes in conducting financial surveys, compensation studies, market assessments and other forms of customized research.

"The report is reliable, relevant, and representative," he stated.

The 12-month research project began with 10 volunteer equipment distributors — just enough for Stewart to recognize trends in common practices that allowed him to develop a confidential survey to be distributed to other AED members for further investigation. The survey, completed by 91 dealers (20 percent of the membership), collected financial data, information about management practices, business models, strategy, budgeting, planning and operational data at a granular level.

Stewart said this level of detail has never done before in the rental market, but now that it has been collected, it offers an opportunity for distributors to "understand business at a level never seen before" and to make improvements to their business practices.

A Good Buy

The proprietary data is available only from AED. With the white paper providing an objective interpretation from a neutral party, these documents provide key insights into the rental business. Stewart said the data addresses a value proposition for benchmarking.

Information is segmented according to geographical location, sales volume, company size, equipment size by horsepower and other categories. Loaded with graphs that track eight-year trends in rentals, as well as performance measurements, the report offers an opportunity for direct comparisons with peers in the industry.

What's unique about the report is that it delivers prospective benchmarking, according to AED.

"The information has never before been examined in this way," Stewart said, explaining that most examinations of business practices are done "in the rearview mirror."

Taking a prospective view enables dealers to make changes. That's one of the reasons Stewart believes this is the right time for this report.

"During uncertainty is the best time to look for improvements in business — the right time to make changes."

The forward-looking benchmarking tool also can be used as coaching tools for future leaders, Stewart said, teaching them how to examine financial results, management processes such as budget and planning, and business practices.

Rentals are a strategic line for equipment dealers, but haven't always received the attention they deserve. These reports from the AED intend to change that, according to the association. Jason Blake, executive vice president and COO of The AED Foundation, said, "The rental report is a culmination of one year's worth of interviewing, research and evaluation of many different dealerships. We are very proud of the final result and feel it will help our members make rental decisions now and in the future." CEG

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