Menu
Average Rating: 4.5
Your rating: none
Posted January 6, 2015

Fueled by Flexibility, He's Building the Business He Was Destined to Build

by Mike Martin

It’s an almost windowless, industrial-looking building, tucked on a side street.The lot, though equipment is neatly parked, is cramped, with compact loaders, compressors, skid steers and various other pieces of equipment. Inside the shop, a trench roller, pump, compressor and generator are being prepped for delivery or in various stages of maintenance. The storefront, a former shop bay, is organized but the walkways are narrow. 

Everywhere you turn you see signs of activity, of jobs in various stages of completion. It looks a little dark, a little crowded. And it is exactly where Derek Bauer wants to be.

Derek Bauer
Derek Bauer, founder of ABLE Tool & Equipment

The founder and owner of ABLE Tool & Equipment, in his South Windsor, Conn, rental center is doing exactly what he wants to do, renting and selling the equipment and tools he wants to handle, and working with customers he not only wants to work with, he relates to. He credits his wife for incredible support and guidance, particularly when he launched his business in 2005. “We had our personal overhead down so tight. It was hard. But I think she would have lived in a tent if I asked her to,” he says, shaking his head.

He surrounds himself with good, smart customer-oriented people. His business is growing – more than doubling from 2009 through 2013, with 2014 pacing well. And he is very far from satisfied, complacent or relaxed.

With a ready grin for customers, visitors and his team, he says that every day is an opportunity to get better at what they do. Business is good and growing, including his three-year-old location in Springfield, Mass., but he has his concerns. He needs a good mechanic, he needs to add a couple more people so that no customer is kept waiting for anything. He chuckles and lightly scolds himself for some of the clutter in the office and storefront. “I definitely want to grow, we can do more business,” he states. “But right now, I want to make sure we are doing the best job we can managing the business we have.”


Flexibility, instinct drive growth
Bauer grew up in construction; a grandfather and stepfather were builders. Summers were spent working in construction. A New England native, his first job out of college took him to California, working for a national rental center. Five years later he had the itch to head home. Landing a job with another national chain gave him that opportunity.

“And it was great, I came in real excited. The company was getting off the ground and buying small independents. A lot of these guys, or their fathers, started their rental business from the ground up, being extremely flexible, extremely reactive. I always thought that those small independents were the guys that I wanted to be like,” Bauer explains.

Early on in his job, he says, they had some of that entrepreneurial flexibility. His employer was focused on acquisitions and Bauer focused on helping the acquired businesses succeed. In doing so he worked with many of the former small independents, guiding credit decisions, helping choose equipment and tools to rent, trying things and learning by success and failure. “It was thrilling, it really was,” he says. “To say ‘I think we can grow our business here’ or ‘I think we can get this account if we talk to this guy and take this approach’ and it worked, we grew.”

Things change. As the company became larger, more processes were put in place, reducing the flexibility Bauer thought was required for a growth-oriented business. While he understood his employer’s need to have consistent procedures, he realized it wasn’t going to be a fit for him.

“We did well, we made a lot of money, the people working for me made a lot of money. But that chemistry, that formula of working with contractors and running a rental business, I thought, in a small way, that it could be duplicated.” Plus, “I was working a lot of hours, getting calls at all hours, and decided I should be doing this for myself. I’ve worked for some really good people and some who weren’t the best and I decided I really didn’t want to be working for someone else. I wanted to do things my way.”

Becoming the resource his customers want
Because of a non-compete clause with his employer, he spent the next two years doing some construction work and mapping out his launch plans. His experience with independent rental houses was key. Also intriguing, he says, were the “light equipment, AED (Associated Equipment Distributor) guys. A lot of them had compact equipment lines and would rent equipment, along with pumps and compressors, that type of thing. That’s what I wanted to do.”

Ron
Ron Barnas discusses rent, RPO and purchase options with a customer. Having the flexibility with RPO to work as a “small finance company” lets ABLE equipment better meet contractor needs.

Larger equipment, he decided, wasn’t going to be his sweet spot. Aerial work platforms, though he knew they could be a strong rental item, were also not a focal point for him. His sense was that AWPs often have ultra-competitive rental rates that made their relatively high acquisition cost result in a low return on capital investment.

Instead, because he saw the need for flexibility in his market area, his business sense was pointing him to be “more of a rent-to-sell guy.” Currently, his 100 percent contractor-customer business is half rental and half supply and equipment sales. The rental revenue is split evenly between standard rental contracts and Rental Purchase Option agreements.
When asked further about RPO, he says, simply, “that’s where we want to be. We don’t want to be just a sales organization. We don’t want to be just a rental firm. The most important thing is that we want to be a resource for our customers. We want to be what they want us to be.”

In part, he says, this came from past experience. If a customer rented a piece of equipment for four months at $3,000 per month, he’s already invested $12,000 with you. But what if that piece of equipment, used, was worth $10,000 in an outright sale? You could end up in a situation where you’d have to say that the rental payments didn’t accrue to the sale, Bauer says. “To a customer, that contractor, you’re saying you need $22,000 on a $10,000 machine. I never wanted to be in that position and never wanted to put a customer in that position. If you lose flexibility to work with customers, they won’t come back.”


Challenging start, right focus
Bauer knew the lines he wanted to be able to rent and sell. He was dead certain that having the flexibility and capability to repair, rent, rent-to-sell and sell would be his point of difference. And he knew the type of contractors he wanted to serve. His plan was in place, but the start was far from easy. In 2005, every contractor was busy, every rental center and equipment dealer/distributor was busy. “The problem was, things were going fast and people were doing well and they kind of didn’t have time for me. It was hard to break in.”

He was fortunate, he says, having vendors who said “we’ll take a chance on you. We know you have relationships, we know you can do this.” Yes, in part, because some vendors needed more distribution options, but also because some were eager to see him, with his experience and philosophy, find success. “Even the guy that rented me my first space – it was only about twice the size of this office,” he says, looking around the room, “told me ‘Kid, we’ll get you going, we’ll put you in business’.”

For Bauer, it was always a people business. He talked with the manufacturers’ reps and other sales people who would call on him, developing relationships that helped point him to potential opportunities. “They knew the contractors and could tell us who might not be the best choice or ‘Hey, these guys are starting up and they’re going to be good. You should give this guy credit.’ We have the ability to say that we could take that chance, we shook hands and looked each other in the eye and built our business relationships with a lot of contractors. We didn’t have to go to corporate for an answer. When you know the guys that pay and you can take a chance on the guys that probably will pay, you can put yourself in a good position.”

Out of his initial location in part of a small strip mall, Bauer hired someone he’d worked with in the past who could handle phone calls, equipment and customer orders. Bauer was constantly on the road, meeting with potential customers, some of whom he’d known in his previous job, some of whom he’d met while working construction. Little by little, he started getting their attention, earning their business.

Therma Terry
Therma Terry's customer focus helped ABLE gain a stronger foothold fast when the company bought a small equipment dealership. Key customers stayed because of her.

Though Bauer says he’s been lucky, that luck is based on leveraging instinct, experience and knowledge. He’s worked hard, spending a lot of time in the field, and taking a few credit risks along the way. Posting a 130-plus-percent gain in four years suggests his plan is working.

Targeting his market
Bauer focused his attention on heavy highway, bridge, concrete and utility contractors in his area. He has an affinity for those customers, he says, because that’s the type of work he’s interested in. Targeting those contractors, rather than residential and commercial builders, was a prophetic move. They helped carry him through the lean years and led to his current strong growth rate. Those relationships are gold, he says. “I want to be here 25 years from now, still working. And I want to have these same customers 25 years from now.”

When he talks about growing his business, about flexibility and putting customers first, Bauer uses the term “we.” Chat with a few of the people in the office and you quickly see that Bauer’s philosophy is embedded throughout the organization.

For example, Alex Dolly, former Army helicopter mechanic who also has experience in the private sector in decommissioning nuclear subs, is the one of ABLE Tool & Equipment’s tool, equipment and small engine experts. “We work kind of symbiotically,” he says, nodding to Ron Barnas and Therma Terry, co-workers at neighboring desks. “We all specialize a little in some areas, but we can never say that ‘this is all we’ll do.’ That doesn’t help the customers.”

Dolly leverages his 20 years of experience to help analyze customers’ options. Each contractor and each application can have unique challenges, he says. “We try to direct them to the best way to achieve what they want to achieve, make sure we help them get the proper tool or equipment. If it’s a particular challenge, our sales people will visit the site and help weed out any issues or needs.”

When it comes to rental, rental purchase options, repair or new equipment purchases, he works to provide the best recommendation, which sums up ABLE Tool & Equipment’s whole approach to business: “We help them compare the costs for renting or buying. If they own something that needs repair, we give them the full estimate of the repair and then suggest if repair, renting or buying is the best option. When we can help them see all the potential costs and talk with them about the options and what would work best, then we’re doing our job. We want customers to do what’s most efficient for their operation,” he emphasizes.

alex dolly
Alex Dolly, with more than 20 years of experience across a range of equipment, primarily focuses on smaller 2- and 4-stroke engines. His goal is to help customers make cost-effective decisions. 

Bauer knows that costs him a bit in profitability. “But we can’t let that get in the way of showing our customers that we’re looking out for them. If a guy rents a chipper that’s worth a few hundred dollars and he’s renting it for two months, we never let him rent it for three. If it’s less expensive for him to buy it, because he needs it and will keep using it, he gets a call. The sales people are involved. I get involved. All of the staff know that this is our approach. You win over the long run.”

The “people equation”
As ABLE Tool & Equipment gained business traction with their customer base, it outgrew the original space in a strip mall. A nearby equipment dealership was ready to sell and Bauer made the move to the current location. With that acquisition came Mustang, Sullair and Gormann-Rupp lines, helping him build on his base as a Wacker-Neuser dealer. Therma Terry, who specializes in parts and filters, was one of the previous owner’s top employees and Bauer asked her to stay. “She’s great. She kept some good accounts here, some accounts I never could get before, and held them closely – good paying accounts,” he emphasizes.

Why the emphasis? “There are great contractors out there, and they demand great service. The previous business, though, had been slipping and they weren’t providing the service good customers need. They lost a lot of them. Some that stayed were slow-pay - or worse. We had to work through some of those issues.”

Over time, along with building his customer base, Bauer built that location’s team. It includes Dolly and Terry, plus Ron Barnas, Pete Davis, Justin Burtchell, Ian Fecteau and others.

“That’s one of the toughest things . . . finding and keeping the right people. We’ve weeded through a few, but we have a great crew now. Everyone knows how we approach our customers.”

pete davis
Pete Davis, with ABLE 5 1/2 years, works on larger machines. Wacker-Neuson recognized him as one of the country’s top technicians. 

Watching the staff, listening to them interact with customers on the phone, over the counter and out in the yard, it becomes pretty clear that their customer-orientation and their teamwork are second nature. That’s not easy to build, “but it’s one of those things that’s contagious,” Bauer explains. “You see how the other people work with customers, and we’ve got such great customers, you can’t help but want to do what’s right. They hang up the phone and they’re like, ‘Man, I can’t let that guy down.’ We all know the value of keeping customers and we know they pay our salaries.”

Asking further, you find out that many of the people Bauer surrounds himself with were people he’d worked with or met at various times in his career. Some he was able to hire when their previous employers struggled or folded during the recession. Bauer modeled his own sales efforts after a competitor he had when he was with a national chain, then later was able to hire him. Another key employee was looking for something different and found the culture at ABLE Tool & Equipment to be a great fit. Still another “was the type of guy that needed to work for an independent,” Bauer explains.
He has four outside sales people, one inside, at the Connecticut location, plus his counter and mechanics staff, totaling about a dozen full-time and four part-time staffers. All hand-picked and who have absorbed Bauer’s focus.

The sales line-up includes Jim Gilbert, a concrete specialist who had worked for Wacker. Jim Maynard worked for Bauer at the national rental chain, coming on board with deep knowledge and strong customer skills. Ray Tripodina was a “heavy-hitter” equipment sales pro who retired from a John Deere dealership. Dan Abbe was another experienced sales person with a Deere dealership background. “We try to build around the people, make sure it all fits and let them do what they’re strong at,” he says. “You try to fill in (with other staff) where someone has a weakness and push their strengths.”

Second location decision
Bauer says moving to his current location provided more space, let him add lines, customers and some key people. This “catapulted us. I felt at that point, we could start adding sales staff.” Three years later, in 2011, he was ready to add another facility, opening a branch in Springfield, Mass.

The people equation played a key role. “I didn’t go there because I thought business would be great. There was a guy, Dave Bruneau, who is kind of retired now, works a little part time for me, that I’d known for 15 years. He worked for me before. I’d tried to hire him for over a year. When he got ready to do something, I told him we’d open a store around him.”
That store more closely resembled Bauer’s original location – small. It has a bay and small store front. For the first year, Bruneau ran it as a one-man shop. “He’s one of those guys that can take parts calls, take rentals, fix a machine. He brought his customers in - all good customers. They know him, they trust him.”

That alone helped the new store get started. When the first manager starting looking at retirement, Bauer brought in Andy Kessler, with whom he’d worked in the past. Quickly acclimated Kessler to the culture in ABLE’s Connecticut office, Bauer moved him to Springfield. Because of his experience and understanding of ABLE’s approach to business, the store already is on solid ground, Bauer says.

Outside sales people support both locations, operating more like “project managers or an account manager” for their customers. They work set territories but, depending on customer needs, there will be some overlap. Key accounts may have more than one ABLE sales person calling on them, based on location or job site. One of the sales people is very knowledgeable on concrete work and often is brought in to help those contractors. Another sales person has a strong machinery background and helps support sales on the larger end of the lines that the company carries.

While the new location has let him expand his market footprint, he hasn’t changed his targeted customer focus. In his part of the country, Bauers says, projects include a significant pipeline project, electrical distribution expansion, and a major sewage/storm water project. The opportunity is there, so why isn’t he more gung-ho on adding another store?
“I want to do better with what we have,” he states firmly.

Within his current market area, he sees opportunity to do more with concrete demolition contractors – interior and exterior, while bridge, highway and utility work continue as their focal point. When current vendors expanded their product offerings, Bauer and his team leveraged that for growth. Overall, he’s not too interested in expanding his equipment line-up, with one exception: “I think telehandlers could work for us, when we’re ready (to add a line). I think I would need three more people, overall, before we could do that.”

That’s on the back-burner for now. While another location or additional lines are intriguing, Bauer’s constant focus is on perfecting what they’re already doing. ”I remind our sales people all the time that, if we’re not already, let’s make sure we are the best plate compactor guy out there. The best concrete equipment guy. The best air tool guy. We can do that. We’re not going to be the best excavator guy. We’re not going to be the best forklift guy. But look at what we can really achieve.”

They’re an area leader in air tools and compressors – troubleshooting, repair, sales and rental. They’re very strong in compaction equipment, do well in rental and sales on mini-excavators, with about a dozen in fleet, and constantly rotating in new stock as current new or rental units are sold, he says.

“With the flexibility of everything we offer, with the type of equipment we carry, we provide a service - a product really - that no one else offers. We have to keep getting better and better at what we do. We have to get to the point where our relationships are so good, we’d give our top customers keys to the place and let them get what they need here because we trust them and they appreciate us.”

Sound objective – and a lofty goal. Considering what he’s worked for and accomplished in his nine years in business, it’s a fair bet that Derek Bauer and the people he surrounds himself with at ABLE Tool & Equipment will work as diligently as they always have to meet that next objective.

SPONSORED ADS