By Bert Alanko

Published Feb 2004 RV News Magazine

Now, that headline should get your attention!

How would you like to make an extra $300,000 a year? What if you could do that with minimal risk or major additional investment? This is not the “buy real estate with no money down” or “work at home in the evenings”, or any get rich quick scam. It is basically doing just what you have been doing with just the same profile of customers that you have been doing it with, using the same products that you are currently selling.

This opportunity is the RV Rental business! Before you go and turn the page, allow me to tell you a little story.

Many of you know that for years I have been on the board of RVDA as chairman of the rental association. On the board for many of these same years has been one particular very successful dealer from the North Country. He has been quite successful selling new and used, but has never been in Rental. Not only that, but he said that he would never get into Rental, “Can’t see that there is money in it” he used to say.

Well, along about five years ago he one day up and decides to start renting motor homes from his main location in Minnesota. He started up with about eight motor homes. The first year went pretty well, the second year even better, and so on. This last season he had about thirty motor homes in his Rental business – in Minnesota.

So here we are at the last board meeting, I’m sitting next to another successful dealer, from Wisconsin, (not in Rental) who asks if I can assist him with insurance for a single unit as an accommodation for special events.

Now, sitting between us is Mr. M, who says to Mr. W, “You’re not in Rentals?” Mr. W says no, basically “Been there, done that.” To which Mr. M says, “I used to feel that way too, but let me say that last year I put $325,000 on the bottom line with the rental business! Everyone ought to rent.”

Well, let’s say that Mr. W almost spit coffee across the table. Mr. W looked at us with utter amazement, asking could it be possible. Then Mr. W said what every old line dealer says, “We were in Rental years ago; it didn't’t work for us.”

Now, fortunately for me, Mr. M can now give the “You should be in Rentals” pitch as well as I can – but with obviously more authority. Result; Mr. W will be starting his rental business this spring with 10 units. He has a rental manager and is making the full effort to be successful, right from the get go.

This is not an unusual story, only the latest and freshest in memory. The rental business can be a terrific adjunct to your current dealership if done properly. When Don asked me to write my annual Rental article, he did ask that I possibly make it less “self-serving” than I tend to do. OK, so this is my one self-serving paragraph. MBA just celebrated its 25th year insuring RV Rental fleets. We insure over 1200 rental locations nationally, varying in size from 3000 units to 1 single motor home. We still insure the very first dealer that we wrote a policy for 25 years ago, who now rents 40 – 80 vehicles, depending on the year. We have a number of accounts that have been customers for twenty years plus minus. Rentals have not only been good for us, but obviously many rental businesses as well. Ok, I’m done being self-serving.

As one dealer, Scott Krenek, states it, “If you are in sales of new and used motor homes and/or trailers, you are nuts not to rent.” There are so many reasons to rent and we will again touch on the long list that I have gone over (and over) in other articles, since the early 90’s, but look…

These are the good times for our business. Sales are brisk, people are discovering RVing. Potential customers are coming on your lot to see what this RV thing is all about – thanks in part to GoRVing! People are curious to see if this RVing thing is for their family. They are curious about our industry, our life style and our opportunity. Fortunately for us they are discovering that RVing is great family fun.

Business is good. Dealers are expanding their dealerships, building new facilities, and seeking additional business growth opportunities. It makes sense. “Make hay while the sun shines!” You, of course, ask yourself, how do I make more hay faster, easier, and with less risk?

Why Rentals

Let’s suppose that you would like to expand during these good times, build something new, ad a little additional to the bottom line. What are you going to do? Do you want to commit to a whole new product line, with a greater spread of similar inventory with increased flooring? If you take that route this requires that you dig more new vehicle sales out or your market plus everything else that extends from expansion. That certainly could make sense in that times are good. But, there is risk. Alternatively, you could invest in a totally new area of business that is a little risky, but what the heck, nothing like learning something new.

I have seen that a rental business added to an existing operation can answer expansion questions of investment and customers. Look, if you are going to expand what is easier and safer than Rentals? You already have the vehicles, the parts and the service. All you are doing with the vehicle is delaying the eventual sale a season while creating your own clean used inventory. Finding rental customers you know will not be difficult, your dealership is probably getting plenty of rental calls now. Some of these potential renters are your future purchasing customers sometime down the road. With rentals you are just getting to customers and their disposable vacation dollars earlier and younger, in the buying cycle. You get to the “pre-buyers”.

Remember, the RVIA, Dr. Curtin’s, study in the 90’s, pointed out that 22% of first time buyers are past renters. Who might renters that have had a favorable experience with a brand and a dealer, possibly going to go see first when they do finally shop to buy?

Business expansion. You already have the inventory, you have the parts and you have service. So what are you really doing?

1. You are building your own good clean used inventory for re-sale in the fall.
2. You are advertising and marketing your business in new areas to and for a new viewing audience.
3. You are creating new lot traffic, new customers. Not just customers from the dealer down the street – new customers!
4. You are expanding your business with very little risk; you are GoRVing.

Least I digress, let’s talk about new customers.

1. Those 22% of first time buyers who were past renters,
2. Rental Dealers say that 25% - 40% of their renters are “Repeat” customers. Yes, customers that come back. Customers that give you more money, additional revenue time and time again.
3. Customers, that if you are not renting, you do not receive any money from and worse that you may never meet.

Little story:

Dealers call us up and say, “We get 20 calls per day asking if we rent. Do you think rentals will work for us?” I say, let’s see…that is 20 people per day saying can I give you $1000 to $2500, use your motor home, bring it back so that someone else can bring in $1000 to $2500, and on and on! Then at the end of the season you sell the clean used motor home or trailer. Better grosses. Do it all over again the next year!

Now if only half or thirty percent of those 20 calls actually do become renters, so, what is wrong with that money? Are you telling me that you don’t want “that” money because it did not come to you the way you are currently set up to take it; retail vehicle sales? Are you telling me that you want to continue sending these people down the street, to your competitors, who will rent, or just to another business that will gladly take their $1000 to $2500?

When stated like that, it really sounds crazy! We are in the RV business. Times are good. What are you going to do to increase your income, buy stock in the stock market, invest in pork bellies, or invest in oil wells? That’s a great one – I can tell you! You are in the RV business, but are you completely in the RV business, serving the entire RV sector?

Why not invest in your own business that you know is good, expand your own market, and build your own new future customers! Again, be your own GoRVing!

Let’s face it; there are potential customers out there who are never going to buy an RV. Never. But, the important point and the operative word is that these people are potentially your “Customers”. They will spend money and enjoying the RV life style. They will give their money to someone, someone who will rent them a motor home or trailer. These people will be a good customer for someone in your area.

Just like that dealer in Minnesota who would never get into rentals and now last year put $325,000 to the bottom line due to the total rental operation. If you had heard him speak, you would be a rental convert.

As one dealer says, “It’s a great time to be in the RV business.” If that is a fact invest in yourself; grow the RV business that you basically already know.

Not to be just a little self-serving again, we at MBA can help you get going. We sponsor an RV Rental School each February open to all dealers. MBA will make available state specific rental contract language, the rental forms, rental software, vehicle safety labels, an operations manual, etc., etc. We try to assist you in your effort to become successful in the rental business.

All selling dealers should rent – here are some reasons why:

1. Cash flow
2. Increased lot traffic
3. Greater exposure in the community
4. Broaden your customer base
5. Get to customers at a younger age
6. Dealer profitability
7. Create your own clean used inventory

If you do it – do it right!

1. Assign responsibility in the dealership for rental profitability
2. Consider a Rental manager - 10 units plus
3. Make Rental a separate part of your business
4. Learn what it takes to make it work. Success is not automatic!
5. Clean, newer vehicles
6. Make a “Business” out of Rental.

Look – Minnesota, short season, $325,000 to the bottom line in the fifth year from the rental operation! Sounds good to me. Looks like a nice business expansion move. Could this make sense for you?

Interested in becoming a rental dealer? Contact: Bert Alanko, MBA Insurance,8383 E. Evans Rd.,, Scottsdale, AZ 85251. Phone: 480-946-1066 - e-mail: Josephine@MBAinsurance.net