Member profile: ARA, especially its peer groups, moved Michigan company from surviving to thriving
By Connie Lannan
When Kyle Keeley, president, Chet’s Rent-All, Rochester Hills, Mich., was growing up, the rental industry was never part of his career plan. Welding supplies was the family business. That changed after his father rented a 3-in. trash pump to drain his pool. When he saw how much they charged for a day rental, he thought this might be a good business opportunity for Kyle and his other son, Kevin.
“My father, Ken, purchased a single location welding supply store in 1972 and grew it into a large regional company. In 1982, he sold the family business to Airgas, which was the second acquisition that Airgas had made. Although my father continued to work with Airgas until his retirement in 1997, he had strong opinions that his two sons should own their own business. In 1995, he rented that trash pump to drain his pool,” Kyle says. That experience demonstrated that rental might be the career path for his two sons.
Kyle’s brother, Kevin, leapt headfirst into the equipment rental industry in 1996 when he left Airgas, after having worked at the company since graduating from college in 1988.
“Kevin moved back to Michigan and bought Davison Road Rental in Burton, Mich.,” Kyle says. “An opportunity to buy Chet’s Rent-All, with its four locations, came up in 1997, so he bought it. He called me and asked if I wanted to become a partner in the business and be the controller as my background is in accounting. I didn’t know anything about the rental business. I was working in St. Louis for Airgas and was really enjoying my job and life. I decided that the opportunity to own my own business with my brother was too good to pass up, so I called him and said I was in. My brother kept calling me almost daily and saying he really needed me as soon as possible, and couldn’t I get there sooner than 30 days.”
Kyle joined his brother in Michigan a month later to start this new adventure. He suddenly realized why Kevin was so frantic for him to get there. “I found out that all four Chet’s Rent-All stores were open seven days a week, and my brother had only seven employees to take care of those four stores. I felt it was baptism by fire into the rental industry,” he says.
Kyle admits he and his brother made “an abundance of mistakes in the beginning. I went to my first ARA [American Rental Association] show in 1998 in Orlando and bought all the wrong equipment — posthole diggers without pneumatic tires and with no guards on them. They were destroyed in a year. I was a bean counter. I didn’t know the difference between a sod cutter, a trencher and anything in between. It was quite the learning curve,” he says with a hearty laugh.
Kyle quickly learned and focused on what he knew — the financials. “Unfortunately, the financials didn’t look that good. We always had strong, correct and well-organized bookkeeping. We just didn’t know how to make money,” he says.
They stuck with it and kept learning the business. In 2003, they closed their Burton, Mich., operation and took over four stores from HSS Rent-X, which had closed its Michigan locations. “We took over the leases, and by that time we had grown to 10 stores and nearly 90 employees,” Kyle says.
In 2007, they expanded once again by acquiring Plymouth Construction and Equipment Co. They consolidated an existing store that was about 3 miles away into that new location. They thought this would help them make some headway, but “immediately after we bought that store, the recession started. We closed one of the Rent-X stores, and for five years we didn’t buy a single piece of capitalized equipment. We sold off half of our fleet to just get by, but we survived,” he says.
By 2012, Kyle and Kevin knew they had to make some drastic changes to turn things around to be profitable. They knew it was possible, but they just weren’t there yet.
“At The ARA Show™ in Las Vegas that year, I was on the hunt for knowledge,” Kyle says. “I attended the town hall meeting that was moderated by Terry Hagy, then president of RentalMax. One of the panelists, Glenn Leppo of Leppo Rents, kept talking about peer advisory groups and how they were looking for new members to join. After the town hall, I talked with Glenn and Terry. They told me to go to the ARA booth to learn more, and I’m glad I did.”
Within a week, he received a call from Dan Crowley, president of Peer Executive Groups, Philadelphia, who oversees the ARA groups. “I went to the fall meeting as a guest and was invited to join the group. In the spring of 2013, I went to my first meeting,” Kyle says.
That was exactly what he was looking for. “The knowledge I got out of that group helped us grow. It was a pretty neat thing. The financial information we shared and the ability to talk in-depth with other equipment rental business owners showed my brother and me how to get things done, grow our business and buy the fleet that we needed to be successful,” Kyle says.
He also learned to “be aggressive and grow our fleet.” In 2013, they negotiated the purchase of Mtech in Waterford, Mich. “That was our largest acquisition. In that three-year period, from 2013-2015, we increased our fleet over 300 percent,” Kyle says.
In 2016, Kevin became more involved with the ARA of Michigan and served on the board as president from 2017-2020. The networking and educational opportunities offered through the state chapter also played a part in the success of the business.
Then, in 2018, they decided to move the business’s equipment focus to larger equipment that would appeal more to medium-sized contractors. They sold off a lot of small items with lower rental rates that generally required higher touches to generate meaningful rental revenue numbers. They added excavators, loaders, lifts, mini loaders and more trailers in larger and larger quantities. The larger equipment helped them to bring up the average rental ticket and longer-term rentals.
Revenue shrank in 2019 as they underestimated how much large equipment would be needed to offset the loss of the items sold off. In 2020, the coronavirus (COVID-19) hit, and that took a toll on revenue since the state was shut down.
“We reacted immediately and used all of what we learned in the previous recession,” Kyle says. “Our state government mandated a shut down, including all construction. Our revenue trickled down. One week we talked to our people about eliminating overtime, and then the next week we talked about dropping down to 32 hours per week. We circled the wagons and got through it. All the rules regarding paid time off went out the window. We weren’t busy, but we did not have to lay anyone off.”
As a result of the construction ban “lasting longer in Michigan than almost any other state, the slowdown in business lasted longer too,” Kyle says. “Until that construction ban was lifted, we were very slow. We had one bad month. By the end of the year though, we came out financially OK because we had taken the steps we needed to take.”
In fall of 2020 the decision was made to increase the fleet value in 2021 by 30 percent to $20 million. The brothers put together a list of equipment to order at The ARA Show in 2021. “At the 2020 fall meeting of my peer group, I learned that if we wanted any equipment in 2021, we had better start ordering equipment for the next year immediately due to supply chain issues. That was November 2020. We immediately ordered everything we wanted in bigger and bigger quantities. We received more equipment in 2021 than any other year in our history. It trickled in a few machines at a time, but that was an opportunity move that paid off. We saw a growing demand for mini loaders and purchased them in large quantities. We were on top of that trend, and many customers were renting from us because they couldn’t get it themselves,” Kyle says.
After going through all of that, Kevin decided to retire from the business in 2021. Kyle bought him out and is now the sole owner of a financially healthy business. It couldn’t be more different than when they started all those years ago, Kyle notes.
With a staff of 58 at his nine locations, Kyle is ready to move forward, saying he never would have made it to this point without ARA and, in particular, the support from his peer groups.
“We learned how to survive and learned the business by tapping into the ARA — buying all our equipment at The ARA Show, meeting with vendors, using the training tools, etc. Then joining the peer groups helped us to go from surviving to thriving,” Kyle says.
It has been quite the journey, but Kyle is grateful for all the help he has received over the years and the camaraderie and relationships he has developed with other rental owners, his employees and his customers.
“We have always focused on customer service — making sure each customer experience is the best it can be. We are here to provide the right equipment to help solve people’s problems,” he says, adding that no matter the financial picture of the business, customer service has been and always will be the focus at Chet’s Rent-All.