Being an effective rental manager is the ability to bring all aspects of your job into a good financial report. Basically, when we start talking about financial management, that is managing the people, the process, and the products to try to drive revenue as efficient as possible with our expenses so that we create profit. And so, we're going to dig into the area of financial management now and look at revenue. We're going to look at the major expense categories and those things that you need to be concerned with as a rental manager. We're going to take a look at some industry information to begin with as to why it is so important for a dealer to be involved in the rent-to-rent business and what to expect out of it. So, every year, the AED publishes a report called the Cost of Doing Business Survey. And in that survey, members have reported on their specific businesses and how they're doing in terms of profitability. And I want to share some of that information with you because it should create a pathway or an incentive for you to want to impact your dealership in the same way that the high-performing dealers are operating their business. So, let's take a look at the average AED dealer versus a high-profit dealer. And the first thing we're going to review is the revenue mix comparison. So, each of these categories, machine sales including rent-to-sell, rent-to-rent, parts, and service, each one of those categories, how much of their total revenue comes from that area? And so, if you look at machine sales, the typical dealer versus a high-profit dealer, the typical dealer is somewhere around 68% of their revenue comes from machine sales and rent-to-sell. If you look at the rent-to-rent, the typical dealer is about 3%, and the high-performing dealer is about 10. So, it's almost 3x. If you look at the parts, it's a dead heat. Both of them sell about 20% of their revenues come from parts. If you look at service, it's almost a dead heat. What I want you to see is that the gross profit difference is about 10% in favor of the high-profit dealer. It might even be more than 10. And if you look at the major difference, it has to do with the revenue mix coming from machine sales versus rent-to-rent. And that's why we want to be more in rent-to-rent, and we want to do it well, because it yields higher profitability. So, according to the last AED Cost of Doing Business survey, the average dealer's net before taxes was 3.9%. The high-performing dealer was 7.6. So, almost 2x the amount of net profit before taxes was achieved by dealers that operated their business slightly different. They were in each of the areas, but they had a different mix of revenue. And I believe the significant piece is in this rent-to-rent, and that's why it's so important for you to do your job well.

rental manager

financial aspects

revenue

profit

rent-to-rent