|
 |
 |
|
 |
|
|
The opinions expressed in these blogs are the opinions of the authors only and do not necessarily reflect those of RV Industry News or its advertisers.
Jul
28
Written by:
Kevin Maxwell
7/28/2008 10:45 AM
We have all heard the phrase, “When life hands you lemons, make lemonade.” This phrase came to mind in a recent conversation I had with a dealership owner. After being involved in only the retail sector for fifteen years, this dealer was now considering starting a rental operations department to generate extra cash flow.
We all read the papers everyday and see the seemingly endless stream of dismal financial news. We are finding that some dealerships are weathering the financial crisis better than others, which seems to be related in part to geographic conditions. To fully analyze this statement would take an article much longer then this blog post, and it would need to be written by someone far smarter than I. However, I will tell you this. When considering if you should or should not begin a rental operation, my answer is: Why wouldn’t you?
Why wouldn’t you want to take advantage of the fact that many families would like to experience an RV vacation but due to economic circumstances are unable to purchase an RV of their own? A prospective buyer who might have been in the market for a new motorhome last year might only be in the market for a good, clean used product this year. Why wouldn’t you want to have inventory of well maintained rental vehicles to offer them? Why wouldn’t you want to develop a relationship with a family who may not be able to afford a motorhome this year, but may be in a different financial position two years from now? There are not two consecutive days that go by in a single week when I don’t hear from some long tenured dealership owner who says, “I get 5-10 calls per week about renting motorhomes. What do I need to get started?”
When life hands you lemons, make lemonade. When potential buyers turn into renters, my recommendation is to be standing by with a juicer and full glass of ice.
Tags:
3 comment(s) so far...
Re: Lemonade Stand for Rent
Let's see. . . . why wouldn't you want to start renting RVs? I can think of plenty of reasons.
For one, never take the advice of a guy who wants to sell you something. Maxwell's business is selling RV rental insurance. I doubt his comments are objective. I'm sure he's nice, sincere guy but he does have a motive,
The rental business is a tough, dog eat dog, competitive, full time business that requires resources, LOTS of capital and dedication. It's not a part time hobby that you pay attention to only when you've nothing better to do.
If you're thinking about renting RV's because your regular business is in the 'dumper' . . . forget it. You will find that 'rental' is a full time job and darn hard to do right. Sure, you can make money at it but be prepared to spend twice as much time as you budgeted. $4 a gallon makes RV hard to sell. It also makes them hard to rent.
New inventory that is currently hard to sell is no easier to sell once it has some rental miles on it. Don't forget your banker (if you're lucky enough to have one in these times) will require substantial monthly curtailments on top of your interest rates once you start to rent it. DON"T believe the 'new cash flow' story. You will churn cash but it will go to expenses you didn't have before.
Also be prepared to compete with guys who have years of experience at it, supported by systems and procedures that you cannot duplicate.
Think . . . Cruise America, Frazierways, El Monte, Canadream, Road Bear . . . and now Camping World. These guy have THOUSANDS of purpose built rental vehicles and the marketing clout and distribution to make sure your piece of the pie will be as small as possible. They are good at what they do and you will be hard pressed to do it better.
They have risk management programs and INSURANCE premium volume that virtually guarantees your insurance costs will exceed theirs. They buy better, they sell cheaper and have the websites, marketing clout and sales to make life very difficult for smaller operators.
Do your homework and be prepared to work longer and harder, because that is what it will take. Renting is no magic potion, no pixy dust.
Beware salesmen bearing gifts . . .
By Been there, done that! on
7/29/2008 6:29 PM
|
Re: Lemonade Stand for Rent
Well, I can see both points, if I was a dealer getting 15 calls a day about RV rentals I would be having my best sales guy try to sell them a used RV. There is so much to choose from out there. But if they absolutely want to try before they buy there is no other alternative but to rent. I dont know much about RV dealerships except for what I learned in the search for my own but wouldn't it be possible to convert just one or two RV's that are taking up space on the lot to rentals? I do know this, that in my RV travels when I see one of those CruiseAmerica RV's it's like a rolling billboard that screams "renter", "rookie" and other demeaning names. At the prices they charge they shouldn't have to make your rig look like a NASCAR racer.
By BoomerRVer on
8/15/2008 10:03 AM
|
Re: Lemonade Stand for Rent
" . . . At the prices they charge they shouldn't have to make your rig look like a NASCAR racer. . . "
I think that is one of the problems with the rental business. The prices they charge are NOT high enough. A rental for a week is less than 7 nights in a decent hotel room.
And by the way, those 'renters, rookies and other demeaning names' are potential future RV customers who are being introduced to our lifestyle. I wouldn't pick on the rental guys, I would thank them.
PS: I kind of like NASCAR. So do a lot of my customers.
By Been there done that on
8/19/2008 11:16 AM
|
|
|
|
 |
|
 |
|
|
|
|