Trends in the Equipment Rental Business Industry and How it Impacts Your Bottom Line

There are all kinds of equipment rental / leasing businesses. I've done models for a wide range myself for various clients. Today we'll talk about some overarching trends in the industry and how it can effect your potential profits over time. One of the ones I have not done a template for is leasing contracts with a sale at the end of a defined contract term. I've had two different versions of that to work through. General rental businesses are one of the most popular requested templates I do work for.

 Relevant Templates:

There are several major trends in the equipment rental industry that are shaping the way this sector operates:

  • Digitalization: The equipment rental industry is undergoing a transformation with the adoption of digital technologies. Rental companies are investing in digital platforms to streamline their operations, optimize fleet management, and enhance customer experience. This includes the use of mobile apps, online booking systems, and telematics to track equipment usage and maintenance.
    • Cost Savings: Digitalization can help rental companies reduce costs by streamlining operations, optimizing fleet management, and automating processes. This can result in lower overheads, increased efficiency, and improved margins.
    • Increased Revenue: Digitalization can also help rental companies increase revenue by providing customers with a better experience. For example, online booking systems and mobile apps can make it easier for customers to rent equipment, which can lead to more bookings and increased revenue.
    • Improved Customer Satisfaction: Digitalization can improve customer satisfaction by providing customers with greater visibility and transparency into the rental process. For example, telematics can provide real-time data on equipment usage and maintenance, which can help customers plan their projects more effectively.
    • Competitive Advantage: Rental companies that adopt digital technologies can gain a competitive advantage over those that do not. This can lead to increased market share, improved brand reputation, and higher profitability.

  • Sustainability: Sustainability is becoming increasingly important in the equipment rental industry. Rental companies are investing in eco-friendly equipment, implementing sustainable practices in their operations, and promoting sustainable behavior among customers.
    • Cost savings: Sustainable practices can help you reduce your operational costs. For example, using energy-efficient equipment, reducing water usage, and minimizing waste can result in lower utility bills, saving you money over time.
    • Increased revenue: Many customers are now looking for environmentally friendly options when choosing service providers. By incorporating sustainable practices into your business, you can attract these customers and potentially increase your revenue.
    • Improved reputation: Implementing sustainable practices can enhance your business's reputation, making you more attractive to potential customers and investors. This can result in increased customer loyalty, repeat business, and positive word-of-mouth referrals.
    • Compliance with regulations: There are various regulations and policies that encourage or require businesses to implement sustainable practices. Complying with these regulations can help you avoid fines and legal issues that could impact your bottom line.
    • Long-term cost savings: Sustainable practices can also help you reduce the long-term costs associated with equipment maintenance and replacement. For example, using eco-friendly cleaning products can extend the life of your equipment, reducing the need for costly repairs or replacements.

  • Equipment as a Service (EaaS): Equipment as a Service is a new business model where customers pay for the use of equipment rather than owning it. This trend is gaining popularity as it provides customers with flexibility and cost savings. John Deer Precision and Xerox are two companies that do this.
    • Implementing this strategy can increase the general earnings of a given piece of equipment as well as lower prices for customers. 
    • Revenues end up being more predictable and sustainable as it is sort of like providing a membership to a car was compared to people going to use a car wash as a one-time event.
  • Equipment Sharing: Equipment sharing is a growing trend where companies collaborate to share equipment and reduce costs. This can be seen in the construction industry where companies are forming partnerships to share heavy equipment.
  • Hybrid Models: Hybrid models are becoming more common in the equipment rental industry. Rental companies are offering a combination of rental and sales options to provide customers with more flexibility. Selling equipment can give your business an in-flux of cash when it is needed while renting provides long-term cash flows.
  • Increased Competition: The equipment rental industry is becoming more competitive as new players enter the market. This is leading to greater innovation and the development of new technologies to improve operations and customer experience.
Article found in General Industry.