Rental Center: Durante Speed!
Annual growth rates of 45 percent or more?
A three-year-growth rate in the 200% range?
How? The leadership team at Durante Rentals credits people, locations, relationships and product knowledge – key aspects for any rental center. And they’re right, every one of those elements, carefully selected and intelligently guided, support strong, rapid growth.
Sometimes, though, when you walk through a business’ doorway, it’s what you see and sense that tells the story. At Durante Rentals the “story” is energy, hustle, chemistry and trust in a group of people who work hard, stay positive, have fun and focus on a common goal: Making Durante Rentals the most successful rental business in the New York City area.
Illustrating the energy of one of the industry’s fastest-growing companies isn’t easy. Durante Rentals moves at what CFO Chris Jones calls “Durante Speed.” A pace that is frenetic, not just day-to-day, but in terms of expansion as well. Though barely five years old, the company has rocketed from one location to four, was prepping a fifth location at the time of this interview and, as this issue went to print, negotiating on stores six and seven.
Look beyond the white-knuckle growth rate, past the accolades the company has earned, and you see that Durante strives to perfect the basic building blocks of a solid business. Honesty, integrity and customer service are the core of what John Durante, company president, references when he says, “Be the best!”
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| Anthony Durante |
When asked how they continue high-trajectory growth, CEO Anthony Durante refers to “spirituality.” He emphasizes that numbers, vital to their plan and business model, receive constant focus, but every day they also work to help employees improve. The numbers follow. “We work on the core of our employees and invest a great deal of energy and emotion into them as people. In fact, our sales growth is a barometer measuring the success our people bring to the company,” he says.
At times, co-workers might refer to the three as “The Three-Headed Monster,” but that only emphasizes not just the relationship with their people, but with each other. The three bring different strengths, different methods of working to energize those they work with, yet continually focus on their core values of “speed, convenience and culture.”
Speed – work fast, make fast decisions, don’t agonize over mistakes, correct them and keep moving.
Convenience – in every aspect of working with a customer. That includes location, equipment, speed of delivery and service, working to find customers the right solution and meeting the customers’ needs at any time and any place.
Culture – teamwork, mutual respect, a desire to help each other and every customer, along with a healthy dose of fun and energy.
These three factors – plus their “maniacal” daily attention to data – fuel Durante Rentals’ business engine. They’re on pace to net a third Inc. 5000 list, awarded by Inc. magazine, as one of the country’s fastest-growing, privately-held businesses. New equipment sales revenue is up 107 percent YTD (through November 2014), with rental revenue up 53 percent YTD. “The Inc. 5000 award is based on three-year growth. If we hit our numbers this year, our three-year growth will be 211 percent,” Jones says.
About 90 percent of the company’s business is with contractors, mostly highway, utility, paving and excavating; rental comprises 40 to 45% of the company’s total annual revenue. Currently the company has about $10 million invested in its fleet.
Fate, business acumen
Cousins John and Anthony Durante grew up in Durante Equipment, an equipment sales and rental business owned by John Durante Sr. Whatever aspect of the business – from sitting in financial meetings to working in the yard to handling parts to fielding phone calls – they were given the opportunity to do. During and after college, they handled more and more responsibility until they were running the business.
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| John Durante |
When Durante Equipment sold in 2000, the cousins worked for the buyers for a time, then took different paths. John went to law school, launched a law firm and had a commercial and residential rental property business. Anthony scratched his entrepreneurial itch by launching Gotham Equipment, an equipment brokerage firm.
Still, starting anew in rental and sales had never been too far from John’s mind. “I had been driving by a place for years, it was a rental place before, and I always said ‘what a great location’,” John says. “And then it came up for sale in 2009 and I thought, wow, maybe now is the time!”
A few days later, Anthony called. “And he happens to bring up that property and said he wants to do something there. How serendipitous is that?” John emphasizes, leaning forward in his chair.
They spent three months building a business plan, confident in their knowledge of the market, its needs and in the tools and equipment they could rent and sell. Ready to roll?
Not quite.
“We didn’t know cash flow statements, we didn’t know budgets, planning and forecasting, projecting – all of
the important aspects that really tell you how a business is doing,” John says.
Enter Jones, an entrepreneur in his own right. Jones started his first company at age 23, an accounting and business consulting firm, and built his reputation in the burgeoning Silicon Alley tech community working as a part-time CFO for multiple tech and creative companies. Jones is no stranger to risk; Durante Rentals is his fourth venture and he knows what it takes to guide a start-up to success. He describes himself as a very “pro- marketing and sales CFO.” His focus, the team agrees, is to make sure the company has the resources to maintain growth.
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| Chris Jones |
“We employ an aggressive-conservatism management style. We push our resources to the max, but everything is planned, budgeted, projected and measured,” Jones says. “We know what to expect in every investment we make and we know if that investment is paying off according to plan.”
In 2006, he received the Westchester (NY) Rising Stars 40 Under 40 Award, an important recognition from a very business-oriented county. One of the other award winners that year – John Durante.
The two had chemistry right from the start. Jones recalls: “We were sitting with a group of Westchester business people – and these are successful, focused people – having a serious discussion about what drives us, what energizes us to work 10 or 12 hours a day, then go home and still be energized. John finished his explanation and then I finished mine when all of a sudden John jumps up and says ‘Chris Jones, you complete me!’ Right in the middle of the meeting!” Jones laughs.
“I knew we could work together,” John explains. “Everything he was, I wasn’t. Everything I was, he wasn’t.”
Launch in a recession?
Being able to work together is one thing but, given the timing and the impact they’d already seen on their other businesses, why were they so crazy to think launching a contractor-focused business was going to work?
“Well, maybe we are a little crazy,” John says, laughing and nodding toward his cousin.
“Yeah, some of that but it’s what we know,” Anthony says.
They felt comfortable with the size of the business they were starting; small compared to their previous experience, with about $800,000 worth of inventory and in a great location. With their initial plan, and Jones’ financial and start-up savvy, Durante Rentals opened in September 2009.
There have been times, Jones admits, when he wasn’t sure what he’d gotten himself into. In his previous jobs, his business assets went home at night. Here, on any given day, 70 percent of the assets are in someone else’s hands. Clearly, he’s done more than rapidly adapt to the business; The Westchester Business Journal named him 2013 Small Business CFO of the Year.
Smart start
The path to Durante Rental’s success, the partners emphasize, came from laying a solid foundation. The small size of the location, the ability to invest in equipment at a time when others were liquidating, a site with 220,000 vehicles per day driving by its billboard, all set the stage. “We did cold calling, we did a little bit of job site visiting, word of mouth spread quickly, plus the location, all helped us get rolling,” Anthony says.
They assumed, as part of their self-challenging launch process, that no previous customer would return. All of the business they were projecting “we said we would have to earn from scratch,” Anthony explains. “We calculated every move.”
The business started with credit from manufacturers, and with short-term, high-interest loans against inventory. By renting equipment quickly, and with Anthony’s well-honed sales ability to move iron, Durante generated sustainable cash flow. “But for about three years, with financial institutions looking at previous year’s revenue against current assets, we didn’t fit their equation,” Anthony points out.
“The first three years were driven only by what we could afford,” is how John puts it. Although, there were a few differences of opinion as Jones became immersed in the business. Probably to be expected when you see hard-charging, sales guy, CEO Anthony on one end and a stereotypical born-to-say-no CFO on the other.
“I was usually in the middle,” John says. “I understood we needed a guy that always said ‘No,’ and that was Chris. And that you always need a guy that says ‘Yes,’ and that’s him,” he points to his cousin.
When he and Anthony first met, Jones says, “Anthony’s first words were, ‘I don’t want to like you’.” Accurate recollection, Anthony nods, “but five minutes in, I knew he was the right guy.”
“We have the same focus for the business, we know what we each bring to the business and we have faith in each other,” John says.
Jones agrees. “No matter what it is, how hard it is, whatever disasters get put in front of us, we’ll figure out a way. Blood, sweat and tears, we’ll figure it out.”
So far they have, although they admit the first rental show was a bit of a surprise, at least to one of the trio. While they had a plan on what they wanted to purchase over the course of the year, Jones didn’t realize about 75 percent of the purchases were going to be made while at The Rental Show.
“Every time Anthony stopped at a booth he was saying ‘Yes, we need to add this to our fleet.’ I never felt so sick in my entire life!” Jones says.
“We signed all the agreements personally back then,” Anthony says, “and Chris got to the point where he was saying ‘I’m not signing it! I’m not signing it!’ He’d say ‘Do you know how much this costs?’ and I’d say yes, but think of all the revenue we’ll bring in!”
The cousins laugh, just hearing Jones talk about his level of anxiety, only too happy to rub it in. “We’d say ‘Chris, if you’re in eight feet of water and can’t swim, how is that any different from being in 20 feet? Let’s buy it’,” Anthony recalls.
Now all three are laughing about the experience. Watching them interact, listening to their banter, the chemistry is clear. Then they start talking numbers and dates, providing specific revenue numbers from months and years and talking about where they were against the budget at that time. They talk about lines of credit, working with banks, with insurers, with manufacturers. And they spend a lot of time talking about the people and their pride in seeing everyone in the company contribute to their business. These are smart people, aware of every business nook and cranny.
Focus on Improvement
Which is not to say they micromanage. They are big on training – everything from greeting people at the counter, to phone etiquette, to the seven key questions to ask customers so they can zero-in on the application and equipment need. Of their 44 employees, only seven had industry experience. The rest were taught from the ground up. “If someone wants an opportunity to grow, if they tell us they want to try something, we let them try. If what they’re doing isn’t working, we try to find a spot where they’ll be successful,” Jones says.
Jones credits hiring good people and helping them stretch as one of the keys to the company’s off-the-charts growth. John adds that “it’s the environment that we create. We’re very big on delegation. We learned that early on. If someone in the
company is capable to handle a job, we get it into their hands.”
“There are times when we need to help someone and I usually say ‘Look, you’re doing an adequate job here. That’s okay . . . but we know you can do so much more than that, we rely on you to be able to do more. How can we help?’” Anthony explains. “And it’s amazing, if we have people that are getting a bit down about work, we can point out that we want them to succeed. I don’t believe in negativity and neither do my partners.
Positive energy is free! It shows up internally and it shows outside in the way we conduct our business. A positive atmosphere in everything you do is a competitive advantage and a tough one for others to match.”
They emphasize that the management team works as one. “There are so many times when I might give someone in the company some direction and they question me, and that’s good, we want people asking questions,” Anthony relates. “If John’s available, I’ll call him over and explain the question or situation generically and ask ‘So, John, how do you think we should handle this?’ Every time, every time, we’re saying the same thing.”
Jones sees it the same way – with a CFO’s perspective. “All three of us are data-centric individuals. We all gravitate to particular metrics that allow us to read the tea leaves in our own particular way, but 99 out of 100 times, the three of us come to the same conclusion.”
Thinking back, was there a time when all three were nervous? They explain, that’s fairly common. They’ve been budgeting according to their “aggressive conservatism” style – a stretch number that they believe is feasible, but not easy. They’ve been budgeting at about 45% growth each year. That number keeps them on edge.
“This is why,” Jones emphasizes, “we are absolutely maniacal about watching Gross Profit Margins, EBITDA and our key performance indicators. The intense scrutiny that John, Anthony, other key members of our management team and I put into reviewing our numbers daily not only allows us to know if something isn’t right, but also creates a feedback loop so we can correct any issues we see in a short period of time. Which keeps margins and cash flow where they need to be.”
If anything, the trio puts more financial pressure on the business than what might be the norm. They buy on three-year terms or shorter and use cash reserves, rather than a line of credit, to get them through the winter. This “stress” on the business is what keeps them so intensely focused on smart growth. Which is something they communicate with employees.
“We’re very open about how we operate and why. We want our people to understand that we’re re-investing in the business. When they see new equipment rolling in, we want them to know that we’re not burning through money. We take the time to talk about return and about our long-term growth plans, that a healthy business means better opportunities for everyone,” Anthony says.
“We want people to know that we have their best interests in mind,” John adds, “that we’re reinvesting in our business every year. And people see that there’s nothing we would like better than to keep growing and giving people more responsibility and more money.”
Which brings up another question. Are the three of them, as owners and operators, with laser-vision on numbers, willing to give up more managerial control?
“The way we look at it,” Anthony says, “is that if we’re growing 45 percent a year, we have to push ourselves to get 45 percent smarter. If someone can do what we are doing, we want to be able to get them into that position. We will figure out where else we can go and what else we can do to keep the business growing.”
Annual Planning Drill
These discussions become part of the trio’s annual planning meeting. For three days they sequester themselves into a hotel. Day One “can be brutal,” Anthony says, with John continuing, “because that’s the day we tell each other what we need to work on. We are very open with each other about what we see working, what’s not working, where that person needs help or how that person can help us.”
Day Two is financial planning, laying out annual, quarterly and monthly objectives. This includes the buying
plan for The Rental Show where “everything is planned out. We know what we are buying and why,” Jones emphasizes. Day Three is the deep-dive for every employee, with an action plan for each one.
This process – every element of it – is how they set their sights on the near-term and a bit beyond. “And over the course of the year as soon as there’s a question or disagreement on what we need to do, we all know and agree we look at the budget first,” Jones says.
When they disagree? “We’ve had disagreements, but every time we get into a discussion we say we all have to agree on what we’re going to do. We don’t leave the room until we all agree. And we do, it’s unanimous,” Jones says.
“That’s the thing,” John quickly adds. “Technically, any two can agree and make the decision. But in five years not once has that happened. Not once!”
From his tone, it’s clear what they’ve put together is energizing and it’s working. The partners are in lockstep. Their people are learning, doing, teaching and growing. And the company’s track record would seem to be proof in and of itself that the right team members, the right chemistry, the balance of data, intuition and decision-making, is working for Durante Rentals.
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