We're going to now take a look at some key performance indicators, or KPIs, that you should use as a rental manager during the owning and operating period. It's really not sufficient enough to just monitor revenue, because sometimes revenue can be very misleading. So a few of the things we want to take a look at are time utilization, for instance. In other words, we can see our revenue that's being produced, but what we want to know is how hard is the fleet working to produce that revenue? In other words, is it sustainable or not? So you may discover that, gee, all the equipment is working at a real high time utilization, and it's unlikely that we're going to be able to sustain that. You may also discover that we're not doing too bad on revenue, and actually the stuff is working maybe in the 50 to 60 percent time utilization, and we could be driving more revenue with the same inventory. Additional things that we want to take a look at is on any given day, how much of our inventory is actually out on rent? So we're going to measure the difference, or the percentage of original equipment costs that's out on rent versus the amount that we have total. And the reason that's important is we really want to make sure that the most expensive assets that we have are really being utilized. That's why you would not use a measurement like unit count. If you had 100 units and you had 50 of them out, if they were all the same exact item, then you might be able to use that kind of measurement. But in the rental business, you've got small things and large things, and so what we really want to make sure is that the big equipment is actually out on rent. We may also want to take a look at what's the average length of the rental contracts. Are we renting things for two or three weeks at a time, or is everything that we have on rent on four-week rental contracts? Because really to achieve your highest yield on a fleet of rental equipment, you'd like to have a little bit of a mix. You don't want all of your rental revenue coming from long-term monthly rental contracts. We also need to measure missed rental opportunities. So that's virtually every time the phone rings, we want to record what was someone asking for and why did we say no. Was it that we didn't have it available? Our price wasn't suitable? Maybe our transportation cost was too high? There's a variety of reasons why we have to say no, and we need to keep up with how basically your batting average, if you will. How often are we saying no versus actually converting those things to rentals? We'd like to know the number of rental transactions. This is a key indicator of whether your business is trending up or down. How many rental contracts are we writing per day or per week? And then how many open contracts do we have? Open contracts, to me, are an indication of future revenues. In other words, all the rental contracts that you have open, we haven't billed them yet, but they're a strong indicator that there's an invoice coming, and so you want to keep track of your number of open rental contracts. The same way with the number of active accounts. Don't be fooled by high revenues if just a few accounts are actually creating all those. You really need some balance across all your potential clients, and so you want to keep track of active accounts and how that's trending. And then within those customers, you really want to look at what market segments are really producing for you, such as it could be utility contractors is a group, site developers could be a group, highway contractors, mining customers, those types of things, and so you really want to see which groups are trending up and which ones are trending down. Average rental contract value. This is kind of an indicator of both pricing and also time period, and so it's nice to think that you're trending up in this way so that maybe the average price of one of your rental tickets is $850 and it's climbing as opposed to declining, which is not a good indicator because that tends to mean that they're renting potentially smaller equipment, smaller periods of time, and that might be something that you need to have a heads up on. And then new rental customers. It's no secret that you're going to have attrition, and you're going to lose a certain percentage of your active accounts every year, and you need to be working towards replacing those. So one of the metrics that we want to pay attention to is how many new rental customers are we gaining each month. And then lastly, we want to look at our service cycles. Within our own operation, how long does it take us to return a piece of equipment and get it through the service area and get it back to the ready rental line? So that's an internal measurement. We need to create a baseline and constantly be measuring that so that we are improving that process. The faster we spin it, the faster that equipment can go out on rent, and potentially we don't need as much equipment because we don't have as much of that equipment that is stuck in our service area.

rental manager

KPIs

rental fleet

fleet efficiency

business performance