Rental Center -- Serving up service
Contractors Equipment Rentals recently moved into its new facility – a family restaurant-turned-rental center – to better serve its customers in the greater Chicago area.
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Robert Sloan, owner of CE Rentals in Elmhurst, Illinois. |
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Left to right, Trinidad Ramirez, maintenance manager; Robert Sloan, CE Rentals owner; and Rich Swan, store manager. |
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CE Rentals counter staff: Left to right: John Cannon, Rich Swan, Tony Pitello. |
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CE Rentals maintenance staff: Danny Lopez, Antonio Ramirez, Ren Murray and Trinidad Ramirez. |
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The new showroom was formerly the main dining room of the family restaurant. |
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The new 40 foot by 50 foot shop with three bays was built with tilt-up panels and concrete |
When Stan Sloan retired from owning and operating an auto parts store in 1989, it didn’t take him too long to figure out that he was bored in retirement. Similarly, his son, Robert, was just finishing up his MBA in Finance with a focus on real estate and looking for a career track to run on.
As Stan was closing accounts on his auto parts store, one of his best customers, an equipment rental center, suggested that Stan buy his business. Stan and Robert talked it over.
“That was when prime interest rates were 13 percent, and the rental center owner had some big notes that would have had to be refinanced, which made that idea a no-go,” recalls Robert, who now is the sole owner of Contractors Equipment (CE) Rentals.
Stan thought about the idea a bit more and decided they should open their own equipment rental center. “The ARA show was in Chicago that year, so dad went there and ended up buying $40,000 worth of compaction equipment. He wrote them a check and they asked where he wanted the equipment delivered, but we didn’t have a location yet,” says Robert.
By May of 1990, they had found a building to rent and took delivery of the equipment…and bam! They were in the rental business.
Stan and Robert operated the business together until the summer of 2022 when Stan passed away – he had continued to work until the week before he died at the age of 91.
No rental backgrounds
Ironically, neither Stan nor Robert had a background in construction equipment. However, Stan’s business background with the auto parts store matched up well with the operational needs of a rental center.
“My degree in real estate finance, in retrospect, offers the same kind of fit. You buy an asset, you rent it out, maintain and potentially you sell it. You must understand cash flow, depreciation and finance. I didn’t know what I was going to do right out of college and all of the sudden, the pieces of the puzzle just fit,” Robert recounts.
Over the years, the one area that continues to surprise Sloan is how many things you must buy to run a business that are not generating revenue. “Time and again, we’d buy something, like a compressor for the shop, and I’d think, ‘well, I don’t need to buy that again.’ And then something else was needed, like computers, and I would think that all over again.”
On the move
Once they opened the doors at their first location, it didn’t take them long to find out this location was not the best spot for an equipment rental company. After a year, they relocated about 20 doors up the street, which was a better location and rented there for five years. That’s when they purchased a Chicago-style bungalow five doors away with a large back yard where they built a shop.
“We ran the rental operation out of the house and made repairs in the shop,” says Sloan. They worked out of that location for 25 years, growing all the while.
With that growth came growing pains. “It still was not an ideal location. We were loading and unloading equipment in the street. Employees were parking in the street. It took three guys at least 20 minutes to secure everything at night and to open in the morning because we were on such a tight location. We needed to find somewhere else,” Sloan says.
Finding property in Elmhurst, Illinois, is a challenge in the hot Chicago real estate market of the 2020s. Robert was running out of ideas – and patience – until he had dinner with a friend who had just opened a new equipment dealer out of a bowling alley he refitted.
“I sat there in awe. I had been looking for someplace in Elmhurst for five or six years. After that conversation, I realized that I had to look at everything available.”
Sloan settled on the recently closed Elmhurst Family Restaurant on West Lake Street, a major street on the northern part of town. “The property appealed to me because it has a large parking lot with a drive-through, so contractors coming in for equipment pickup or drop-off could simply drive into the property, load or unload their rental equipment, then drive out the other end,” he says. “We now have a big, wide-open space. We can accommodate as many as six trucks and trailers in the yard.”
As a former restaurant, the 5,000-square-foot building had to be completely gutted and reconfigured. A 40-foot x 50-foot shop built with tip-up panels was added to the back side of the building. Just recently completed, the staff will be fully outfitting that this winter.
The showroom, which was designed in the middle of COVID, features individual offices for each counterperson. “Because we just got occupancy of the building, we are still working out processes. We need to plan how we guide the customers through the facility. At first, customers were confused. They didn’t know which door to come in. We need to design our workflow better and get the proper signage up. That’s a project for this winter; develop how we greet people in the yard and when they come into the rental counter,” he says.
Fleet challenges
The construction and moving process has presented its own set of challenges. “I am acting as the general contractor on this and have made it a high priority to use our customers as subcontractors. The problem is when you have 50 concrete contractors, which one do you choose? We asked for bids,” he says.
CE Rentals is also an ASV and Wacker-Neuson dealer. “We have a fleet of approximately 100 larger rental machines. By larger, I mean mini-excavators, compact track loaders and skid steers, concrete buggies and compressors. Presently, the rental equipment fleet is worth about $3.5 million. We used to actively trade and take pride in our newer fleet of equipment, but we are still waiting for delivery of equipment we purchased at the ARA Show two years ago. We aren’t selling anything right now. We are protecting what we have and keeping it in good repair. I have a notebook full of people looking for equipment; but I can’t in good conscience sell my existing units when I can’t get replacement units. I am not the only rental house in this position,” Sloan says.
Sloan says the fleet is mostly under four years old. “I would say we are less than four years old across the board. Fortunately, we made some equipment investments just before COVID hit and are still in a very good position,” he says.
Rental equipment demand has been strong in the Chicago market and it shows with Sloan’s business performance. “Since 2017, we’ve grown 50 percent collectively. We’ve had double-digit growth every year. We had a very ambitious five-year plan, but with supply chain issues for new equipment, sales are off 50 percent so we are going to be slightly below our plan,” Sloan says.
The drop in equipment sales has been offset somewhat by increased utilization of the rental fleet in 2022. “We had a labor strike at the local gravel plant, which shut down most concrete and asphalt work in the area. That lasted until the end of July; we also had a concrete shortage in the Chicago area this summer. Our utilization was extremely high in the second half of the year. In August, we were at 85 percent utilization and in September, we hit 91 percent! We are typically in the 70 percent range. It’s been overwhelming at times,” he says.
Even with the high demand and increased costs, Sloan did not raise rates in 2022. ‘I think we were the only one in the area that did not raise rates and we advertised that heavily. We will have some price increases in 2023, but we still plan on offering free delivery within a 15-mile radius of the store. If you’re a little farther out, those delivery and pick up rates are still a good value and easy to understand. Contractors appreciate that,” he says.
CE Rentals also offers refueling for a modest markup of the price at the pump. “Many customers understand the time taken by workers refueling. They often have five people in the truck, they all stop at the gas station and get coffee before they get to the job site or return the equipment. Plus, when we refuel equipment, we know the quality of fuel going into the unit and that it is going into the right tank,” he adds.
While parts availability has been less challenging than equipment acquisition, Sloan says that is also an issue in today’s tight supply times. “We delivered a new piece of equipment to a customer and he had a part break on it right away. We searched for a replacement but couldn’t find one, so we fashioned a part for him. Three months later, the replacement part finally arrived. Luckily, we were able to fabricate the part to keep him working,” he says.
Great staff
Sloan says he is blessed with his staff of 14 employees, most of whom have been with him for many years. Presently, there are three counter people, four delivery drivers, four maintenance/yard workers, two in the office and one outside salesperson. “Rich Swan, who is our store manager, started as a driver and has been with us for 20 years; Trinidad Ramirez, our service/maintenance manager, has been here 15 years. Everyone works very hard here, working a ton of hours. I think we just let people do their jobs. We tell them what their job is and then we leave them alone. We have a family type of atmosphere,” Sloan says.
Sloan has four sons: two in college and two in high school. “We will be set up in this location for the next 25 years and with the extra space we now have compared with our old location, there is room for growth and the ability to bring one or more son into the operation if they decide to take that route. If that happens, we’ll consider expansion and even adding locations.”
But in the meantime, Sloan and his staff will continue to serve up excellent customer service to keep their customers coming back for more.
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This article first appeared in the January-February 2023 issue of Pro Contractor Rentals magazine. ©2023 Urbain Communications LLC. All rights reserved.
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