Member profile: Fast growth results from tapping into need
By Connie Lannan
January 10, 2023
The initial idea was to start a small, independent rental operation in Denver. Since opening in January 2020, there hasn’t been anything small about Rental Equipment Center (REC).
The company has experienced unprecedented growth by tapping into an overwhelming well of unmet need. By the end of 2021, it had generated $11.1 million in revenue — a growth rate that garnered a shoutout in the June 2022 Rental Management “Market Movers” section.
Today, plans are underway for a third location in the state, and by the end of 2022 the company’s rental revenue had jumped to $20 million-plus and its total revenue was $22.5 million-plus.
So, how has REC been able to achieve such growth in record time? Co-founders Jerry Morin, CEO, and Troy Miller, chief financial officer, attribute their success to a number of factors, including their experience in the industry, dedicated and talented employees, their disciplined go-to-market strategy and their uncompromising commitment to “provide the highest level of equipment and service to the customer,” Miller says.
“We often say that we are an independent that acts like a national,” Morin adds. “We’ve learned a lot from working for the nationals over the years — what a branch looks like, how to service customers and what the setup plan is — and if you really want to be a player in the market, you really have to buy fleet and grow quickly. But what comes with that is you hire the right people too. We were fortunate to be able to hire seasoned employees. We found people we worked well with as equipment came in and the extreme growth went perfectly.”
That growth trajectory wasn’t quite so clear in the beginning for this duo who teamed up after first working together and becoming minority partners at Contractors Equipment Center, Henderson, Colo., which was sold to H&E Equipment in 2018.
“We first reached out to Genie and bought about $4 million worth of fleet and things were starting to pick up,” Miller says. “We were gaining some momentum and hired people we knew in the market who had been in the industry for a number of years. Then COVID-19 hit. At about the same time, Jerry and I went home for dinner to our respective wives. They asked us what next steps were and if being able to relinquish the equipment back to Genie was an option since most pieces were less than 90 days old. I said I didn’t think Genie would let us take the equipment back just because of the pandemic and we were going to push through with our original business plan despite the hardships the pandemic was creating.”
So they dug in and set their sights on growth.
With a fleet of “about 40 percent aerial telehandlers, about 30 percent dirt equipment and then towables, light towers, generators and smaller items,” Morin says, “we kept calling on customers and reaching out.”
“Fortunately, a lot of rental companies weren’t buying fleet aggressively in 2020, given all the uncertainty,” Miller says. “And there were a number of companies that were laying employees off or they were freezing their pay increases and things of that nature. So experienced employees became readily available for us, and the manufacturers, more specifically the manufacturer financing offers, were very aggressive because there weren’t a lot of companies buying fleet. That gave us a tremendous advantage in hindsight to lock in a lot of low-cost fleet.”
In addition, they found that during the beginning of the pandemic “other companies seemed to be less aggressive or did not participate at all in regard to sending reps out to the field or even making phone calls to try to earn business or start a relationship with a new customer,” Morin adds. “It was much more difficult because of the restrictions, but we were still diligent in communicating with current and new customers in any way we could. It showed customers we were going to be there for them regardless of the tough situation COVID put us in. It proved positive as we were able to grow our business despite COVID.”
It was a challenging time. “We had only about half a dozen employees at the time. We had to write them notes so they could drive to work each morning because they were afraid they would be pulled over as they might not be considered essential workers. That was an interesting time. It was a little tumultuous for the first 90 days,” Miller says.
But all the elements came together for the business to take off. “We have talented employees who wanted to grow something much bigger, and we were fortunate that the manufacturers and the lenders knew Jerry and me. They knew what we had done in previous companies and they believed in us. The combination of the manufacturers and lenders plus this tremendous pool of talented employees, all put together, grew very quickly and easily. It didn’t take much to meld because we all had worked together before and had similar goals as well as a common culture and understanding,” Miller says.
By the end of the first year, they had about $20 million worth of fleet and in 2021 “we bought pretty aggressively. We added another $27 million of fleet that year, which was fortunate because we were able to lock in a lot of the fleet early before the price increases occurred,” Miller says.
When they started, they didn’t realize how much need there was for their type of services. When customers responded to their calls and sought them out, they knew they had found their niche.
“I think there were customers who had become accustomed to that independent rental house relationship that we provided for a number of years before our previous company was bought out. Our average customer does about $50,000 in revenue. We have probably 2,500 customers, but our largest customers, which make up about 6 percent of our total concentration, will do about $1.4 million to $1.5 million a year. We can give a lot of attention to the small- to middle-sized customer. They can feel really special about the condition and type of fleet we have, the pricing, support and servicing that we provide,” Miller says.
It’s about creating a market shift between the independent and the customer, Miller notes. “I think what we found in this market is that when a customer becomes accustomed to doing business with an independent, they’re very loyal and you grow as their business grows. There’s respect and history. Without a doubt, the nationals do an incredible job on a national level. They can support the largest of the national contractors where we can’t, but in our own backyard we can be head-to-head and oftentimes we win.”
Customers are seeing that and appreciating how REC quickly addresses any issues that come up.
“Jerry, Troy Michael [vice president of sales and a shareholder in the company] and I are here every day,” Miller says. “When problems arise, we deal with them very quickly and head-on. There’s no call center. There’s no hierarchy of approval to get things fixed. We always pride ourselves in doing business the right way and doing it quickly and efficiently. We don’t drag our feet. If we make a mistake, we fix it and move on because our customers are busy. Time is money and the fastest way to lose a customer is to make a mistake and not fix it. That was the niche we found in the market,” he adds.
Their ability to quickly handle the needs of customers reached contractors beyond the immediate Denver area. They opened a second location in Fort Collins, but in August 2022 they moved to a larger facility in Loveland, Colo., to better service the growing customer base in northern Colorado and into Wyoming. They plan to open a store in Colorado Springs, Colo., in March or April of 2023.
“We take what comes to us. Like the location in Colorado Springs, we have customers who are down there asking us to open up a store in that market. We have business there right now, but we are commuting two hours. That business is going to pull us into that market. We aren’t going down to that market and planting our flag to try to drum up business. It is definitely a pull vs. a push,” Miller says, adding that the Colorado Springs store will “cover our Colorado footprint. We’re not looking to take over the world or even looking to take over the Mountain West, but we want to be the dominant competitor in our market. Our sights are two hours south of Colorado Springs and that’s something we’re confident we can do even with the headwinds of increasing prices and interest rates.”
So what does the future hold?
Miller and Morin have aspirations for the state, but outside of that “it will be up to the next generation of leaders,” Miller says.
“We are fortunate that we are one, two and three levels deep in management. We are very blessed to have some really experienced individuals who can take this business and scale it to a much larger platform than what we currently have or keep it within the state and size we are at. We are open to that as well. They can take it as far as they want and we will vouch for them, we will personally guarantee it and take it as far as they want to go, but they know we won’t grow just to grow. We will look at other markets and see the tremendous opportunity, but they also have to look at: Is it worth it? Is what we have here lightning in a bottle and can you replicate it in another city? If you can’t meet the high level of expectation that we have, then we aren’t ready,” he says.
Relationship-building culture plays large role in Colorado company’s success
A culture built on relationships and partnerships is vital for the success at Rental Equipment Center (REC), Denver, according to company co-founders Jerry Morin, CEO, and Troy Miller, chief financial officer.
“We always say culture eats strategy for breakfast,” Miller says, referring to the famous quote by Peter Drucker, management consultant, educator and author, that implies a company’s culture determines success regardless of how effective its strategy may be.
“It’s true. You can have the best facilities and the most money but fail all day long. But if you have a good culture that’s positive and incorporates a can-do attitude, there’s almost nothing that can stop a motivated team. Customers love that,” Miller adds. “That’s why, at REC, if a piece of equipment goes down, we’ll tell the customer that we will be there in a couple hours. They say, ‘You must be kidding me. You mean by the end of the week, right?’ No, we will be there today to get your job back up and running. They have never heard anyone say that before.”
That commitment also served as an incentive for employees to want to work for the company, says Troy Michael, REC vice president of sales.
“That was a huge factor for me and many others wanting to be part of such a great team. It is a culture that employees and customers were longing for. Everyone here is treated with respect and gets along. There is great camaraderie. Everyone has the end goal in mind to be the best and do it the right way. You’ll never get in trouble for doing what’s right, and if you say you are going to do something, just do it. They’ve made rental pretty simple. Do the right thing and follow through on your commitments. Beyond that, it’s just having a good work ethic and assembling a great team where people trust and respect each other. It has created a positive combination of quality people and customers who want to reach a common goal,” he says.
Miller admits they promote “an underdog mentality. We’re not supposed to be able to compete with the big nationals. We are just the little guy, but the people we have are so talented and they want to win. When they’re part of something bigger from an organizational standpoint, they work exhaustively, try harder and value it more. We’ve had employees come from nationals and from other industries. We don’t have the best facility or offer the most money, but they wanted to be in a place where they could win. We let the employees make decisions and we hold them accountable. They hold themselves accountable and that seems to be a positive for us,” he says.
Customers see that culture and respond to it, Morin says. “They notice a good culture on the phone and hear it when people are talking to their sales reps. When they call in and they need to discuss a bill or something, they feel good about what they are doing. They are not dreading to talk to REC about something. It is more about, ‘Yeah, I will give them a call and we’ll figure it out.’ It’s Troy and I who make the decision. Nobody has to go somewhere else to make a decision. We can make it right then and there. I think that’s what really binds customers. We are very level-headed and straightforward. We’re there if they need us. We’re there if the rep needs us. It is really important that we create a partnership, whether it is with an employee, customer or vendor. We have a lot of partnerships that make things a little bit easier. When we make a mistake, we fix it and there’s nobody to tell us that we can’t do that. It’s really a cool concept if you can get it and grab it and get people involved in it because people like to work with a local. People like to work with someone like them who has started their business. It’s impressive and cool and they want to be part of that.”