Rental Center: Remove the friction
Partner Rentals aims to take the rub out of equipment rental, externally and internally.
by Clair Urbain
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| Partners at Partner Rentals, L to R: Fernando, Hernán and Ernesto del Aguila. |
At 31 years old, Hernán del Aguila has spent most of his life in equipment rental. A native of Peru, he and his parents emigrated to the United States when terrorism in their home country became an unsafe place to live.
In Peru, Hernán’s father, Fernando, was a part-owner in a Bobcat dealership, so it was natural that he continued to pursue that line of work once arriving in the United States. He first started working at equipment rental companies, which at the time, were mainly family-owned businesses.
By the time Hernán was 5 years old, his parents started their own equipment rental center in Kingston, New York, called Kingston General Rental. “Every summer since I was 8, I'd find myself writing contracts, washing equipment or doing something to help my parents' rental business,” he recalls. In 2003, they became franchisees of Volvo Rents. “We were the 17th company to join the newly-formed vision,” he says. Hernán eventually graduated high school and attended college at Johns Hopkins University, but continued with his usual summer job each year.
Selling out
Meanwhile, his parents continued to grow the business, putting every dime back into the business and opening a second store in 2007. Then, the Great Recession hit.
“When the recession hit in 2008 and 2009, it was awful; many independent rental businesses found themselves in financial trouble. Thankfully, my parents were able to weather the storm and reach the other end of the tunnel,” Hernán says.
Volvo eventually ended the franchise program and bought out their franchise in 2011. Hernán was offered an IT opportunity at Volvo that evolved into managing highly visible projects. “By the time I was 26, I successfully led the overnight ERP conversion of 132 retail locations and over $1.5 billion in assets. A few months later, I found myself helping the company through a private equity purchase,” he recalls.
In 2015, he went to work for Wynne Systems, an ERP provider to the largest rental companies in the world. “This opportunity gave me a front-row seat to how top rental companies around the world do what they do,” he says.
Starting over
In early 2016, the del Aguilas received notice that the company that acquired the family business would leave Kingston. “We quickly put a plan together to restart the family business as Partner Rentals and use what we had learned since being acquired to run a more efficient, larger, more profitable business,” he says.
Today, the partners in Partner Rentals are Hernán, his father, Fernando, and brother, Ernesto. “Almost three years later, our goals are being exceeded and we couldn't be happier with the results,” Hernán says. Today, the firm has $5.75 million in fleet assets and 10 full-time employees. Presently, it has one location in Kingston, but will open a branch in Poughkeepsie this year.
Secrets to success
The secret to the del Aguilas’ success could be compared to a three-legged stool: It’s based on top-quality equipment, operational excellence and a steadfast commitment to safety.
The family learned from past business that buying equipment solely on low price may in fact cost more at the end of its life cycle. “We approach buying equipment in the same way the big-box rental companies do it. We spec our machines identically so it’s an easy comparison for our customers.
“Looking back, we sometimes made fleet decisions based on initial acquisition cost but ended up paying more in the long run in terms of maintenance costs. The residual value may be lower and we may have even turned off some of our customers with less than top-tier brands.”
Their fleet is made up of the meat and potatoes of rental equipment. “When we go to the ARA Show and are in the market for equipment, we don’t want anything out of the ordinary or new. We let the big-box companies test and introduce new product into the market because they can afford to do that. We’re going for just the basics and market-accepted products,” Hernán says.
The family also operates Partner Equipment, which is a dealer in the Hudson Valley for Volvo construction equipment, LiuGong forklifts, Genie MEWPs, and Wacker Neuson and Husqvarna equipment.
“We are actually a sub-dealer for Volvo and it is a very good relationship. Earthmoving equipment can be difficult for rental companies because we must work through a dealer network, as opposed to most other categories. Too often, they act only as a middleman and can create friction because, for dealers, all paths lead to parts and service revenue, which doesn’t always align with our needs as a business that does our own service work,” Ernesto says. “We’ve been fortunate to work with Volvo and our local dealer, Vantage Equipment, to test out the rental sub-dealer mode, with which we are quite pleased.”
One of the problems the family sees with equipment rental companies is that they are not very focused on equipment sales because the margin is lower than equipment rental. “That’s why we have one person 100-percent dedicated to equipment sales. It has been an ‘ah-ha!’ moment. He is able to focus on selling and the effort is surpassing our initial sales expectations” he says.
Balancing the rental business needs with the equipment sales demand can be difficult. “Sometimes the internal friction is worse than the external friction. It’s sometimes difficult to keep the sales side from selling things that we need to keep in the rental fleet. We usually don’t want to sell anything until we estimate that it’s at 50 percent of its life. Of course, if someone really wants to pay top dollar for it, we will figure out a way to meet the rental side’s needs and bring in a replacement,” he says.
Operational excellence
In the first months of operating Partner Rentals, Hernán realized that there was no great tool out there for independents to measure rental business performance and metrics on-the-go. Hernán’s experience with enterprise ERP systems has given him great insight into ways to streamline operations. “Rental systems are good at capturing data but rental houses are often poor at analyzing it. Small businesses like ours don’t have the funds to develop those tools like the big-box stores can. Without the data, you can’t see trends.
“There were no good tools out there, so a few friends and I got together and created a mobile app that led us to start Rental BI, an equipment rental focused business intelligence firm. With Rental BI, we provide services to rental companies that understand the importance that technology plays in our everyday business lives,” he says.
The Rental BI tool allows users to mobilize the information that’s collected and managed on the computer desktop. “We have a single screen that pulls together quick statistics on all assets of the business. It covers equipment status by cost percentage, utilization, revenue, accounts receivable, open contracts, equipment pickups due, days sales outstanding – anything that’s important to me to manage the day-to-day business.”
The Rental BI app does that, plus it can tap into telematics information, be used for equipment check-ins and check-outs, view contracts and will soon even provide e-signature ability for customers.
“Our goal is to create an app where the sales, delivery, mechanics and yard people don’t need to be in front of a computer to access this information. We want to untether them from their desktop. I want to use technology to reduce the internal friction. We are trying to make our people work more efficiently. If we can do it with fewer people, we are in a better position to pay them more. We see using technology is a win-win for us and our employees.”
Safety focus
The del Aguilas believe the company’s commitment to safety helps set it apart from its big-box competitors.
“Ever see a safety incident that couldn't have been avoided? We haven't, either. That's why we believe that safety is a trainable culture that we welcome with open arms. The equipment and work we do is dangerous. Our job is to do our part to make sure that our employees and customers go home safely to their families every day. By conducting monthly safety meetings and performing safety training for our customers, we aim to decrease the accidents directly and indirectly involving our employees and customers,” Fernando says.
Customers also take advantage of the safety training Partner Rentals offers, especially forklift and aerial lift safety training. “It’s in addition to our general familiarization training that is delivered with each transaction. We serve customers in the motion picture industry and lately, they have been requesting operator training. It’s a good niche for us. The training typically consists of a written or online portion and a hands-on portion. We can provide both at our facility or go to the customer’s site for both or just the hands-on portion.”
The future
The team believes the future of rental lies with technology adoption. “We are always looking for ways to reduce friction internally and externally. It’s an area that’s moving very fast. The big boxes have already moved to using e-commerce to interact with customers, and now we must follow suit or be left behind. We have no choice.”
This story was originally published in the March-April 2019 issue of Pro Contractor Rentals magazine. © Urbain Communications LLC. All rights reserved.
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