The optimum dollar utilization rate depends on the type of rental business. Acceptable entire -inventory dollar utilization targets are around 65% for large, national rental houses; 100% for smaller, general rental centers; and up to 150% for party stores. With regard to time utilization, rates should fall between 40-80%, with 60-70% being the sweet spot. When rates are too low or too high, adjustments need to be made.
E V E R Y BODY ’S BU S INE S S In Memoriam Phil Merrick 1959 to 2009 Utilization 101 Published by: 1233 Janesville Avenue Fort Atkinson, WI 53538-0803 800-547-7377 Fax: 920-563-1700 www.ForConstructionPros.com STAFF Track dollar and time utilization for each piece of Group Publisher Kris Flitcroft, ext. 1646 firstname.lastname@example.org equipment, as well as your entire inventory Associate Publisher Eric Servais, ext. 1713 email@example.com Editor Jenny Lescohier, ext. 1647 firstname.lastname@example.org Managing Editor Lisa Cleaver, ext. 1673 F or equipment rental businesses – like most email@example.com Columnist Dick Detmer businesses – the most important factor to Sales Representatives Barb Levin, Rick Monogue, Tammy Jefson, Amy Schwandt, Nancy Terrill, success is cash flow. The more times a piece Ryan Mountain of equipment is rented, the more money it Sales Services Kasey Strike Production Director Steve Swick brings in, which pays for fixed costs such as payroll, Production Services Representative Kathy Hahn Art Director Dave Haglund debt service and so on. If enough revenue is gener- Audience Development Mgr Jackie Flack ated, the business turns a profit. List Rental — Elizabeth Jackson, Account Executive, Merit Direct LLC Phone: (847) 492-1350 ext. 18 Savvy rental businesses know there’s a bit more Fax: (847) 492-0085 • firstname.lastname@example.org to it than that, but the concepts behind running a Reprints — To purchase single article reprints (minimum 250) for distribution please contact PARS International at profitable rental business are not too complicated. 212-221-9595 x431 or at www.magreprints.com/quickquote.aspx?ID=cygnus One of the most important yard sticks to measuring Jenny Lescohier, editor ForConstructionPros.com Associate Publisher Norine Conroy, ext. 1330 success in a rental business is utilization. email@example.com Editor Sam Simon, ext. 1319 There are two different utilization metrics. The first is time utilization, firstname.lastname@example.org which refers to how much time a piece of equipment is out on rent. It can be Website Manager Jacob Bare Website Graphic Designer Ryan Wengel measured in days, weeks or months. Without time utilization, nothing else Media Services Representative Kathy Hahn matters. In other words, if a piece of equipment is not being rented, it is not CYGNUS BUSINESS MEDIA Chief Executive Officer John French generating cash flow.
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