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Tempted to subrent?

April 1st, 2016 / By: / Management, Products, Sales & Services, Tools & Equipment

Subrentals help tent rental companies keep inventories active and jobs coming in, but getting the most from this strategy requires playing it smart and being cautious.

Subrenting equipment—whether to or from another rental company—can offer tent rental businesses some important, and tempting, benefits. Take renting to another company. An obvious advantage is that your inventory isn’t lolling about on the shelves but is out earning money. Perhaps a less obvious advantage is that this arrangement can also help you build relationships with other rental companies. In fact, Mike Holland, president of Chattanooga Tent, says in some ways, this is actually more important than keeping the inventory active because it enables tent rental businesses to create a lucrative support network.

Because of its inventory’s size, Holland says his company, located in Chattanooga, Tenn., typically subrents to other companies. Tents are their main rental item, but they do carry other event-related offerings such as tables and chairs. Last year they subrented to 22 companies and subrented from other companies just four times (primarily tent accessories such as glass walls or flooring).

Subrenting from another company can be an excellent growth strategy, letting tent rental businesses take jobs they otherwise might have had to decline, says Holland. Additionally, companies can acquire new skills and determine if it makes sense to add a certain piece of equipment or tent to the inventory before committing dollars to it. Ben Naylor, vice president of Classical Tents and Party Goods, Pittsfield, Mass., says the same.

Subrenting from other companies has allowed Classical Tents to augment its inventory, test products to see how customers like them, and to provide equipment that’s not often requested or that the company doesn’t want to carry, says Naylor, whose company provides a full spectrum of tent and event rentals for weddings, galas, corporate functions and more. It’s also given the company the opportunity to expand what it can offer customers, adds Naylor, who says both forms of subrenting are valuable.

Cover everything in your contract. Getting it all on paper eliminates a lot of misunderstandings and disagreements. —Mike Holland

Be aware

Subrentals can be a smart move but tent rental businesses should proceed cautiously; these arrangements aren’t without potential consequence, as Brian Richardson, president of L&A Tent Rentals, can attest. Based in Hamilton, N.J., the company provides tents and related special event equipment throughout the Mid-Atlantic.

“Recently, we’ve had some subrenters not returning equipment on the agreed-upon dates, returning other companies’ equipment, returning damaged equipment or in some extreme cases, losing the equipment altogether,” Richardson says. “In some instances, the tents have come back wet, which can lead to mold issues.”

These aren’t unusual problems when subrenting out, especially on out-of-state or large job sites where many different companies may be involved in subrenting. (Richardson says they’ve had good luck working with local businesses.)

“Some of these jobs last a month or longer,” Holland says. “The crew doing the install may not be the crew taking it down. So even if you have logos on your equipment, which we do, it’s not uncommon to get another company’s equipment.”

Holland says that 99 percent of the time, these problems are straightened out quickly, but that’s not always the case. He recalls one customer who subrented equipment from four companies, all of whom got each other’s equipment back. It took six months to get it all sorted out.

There’s plenty that can go wrong when subrenting from another company, Naylor says. Orders may arrive incomplete, not arrive on time or there may be delays at pickup. The items may not be clean or in good condition—a particular concern when it comes to tables, china, chairs, linens and so on. Even worse, it may happen that the company no longer has the item or is suddenly unwilling to rent it.

Also, labor costs may unexpectedly increase. “For example, our crews may be very well versed at installing our frame tents,” says Naylor. “However, a different style frame tent may have parts that aren’t immediately recognized by our crew, causing some delay in how the product goes together. These delays can translate to added costs that are often hard to pass along to the end user.”

And there’s always the risk of accidently damaging the other company’s equipment. Being upfront about the situation and willing to work with the company is essential, Naylor says. “Otherwise, that subrental source will be gone for the future,” he says.

Renting from another company

It’s a good idea to make sure it makes financial sense before taking a job that will require subrenting from another company. For example, if the majority of the project requires subrenting, Naylor will generally decline it. Holland says he must be able to mark up his costs by 25 to 50 percent to make it worthwhile. When subrenting from another company, Holland and Naylor give this advice:

  • Instruct the crew to handle subrented items with the same or better care as you do your own. (Naylor)
  • Closely inspect equipment to ensure it’s not damaged or in a condition that would create potential liability. Be clear in your expectations and requirements. Put these in writing. (Holland)
  • Pick up and deliver/set up the equipment yourself whenever possible. If another company is handling the delivery/set up, have a representative on-site to oversee the project and mitigate any unforeseen circumstances. (Naylor)
  • Subrent items you’re familiar with to reduce labor costs. If that’s not possible, try to understand the product by talking with the other rental company first or researching on your own. (Naylor)

Renting to another company

Holland, Naylor and Richardson advise the following when subrenting to another company:

  • Confirm the company’s capabilities. For example, if the company typically carries mainly small frame tents and it’s trying to rent a larger clearspan, this is cause for concern. If you decide to move ahead with the subrental, send a supervisor out to the job to ensure proper installation and add this to the costs. (Richardson and Naylor)
  • Consider the company’s reputation and track record of returning the equipment. Ask for references of other companies that have subrented to it. (Richardson)
  • Don’t subrent what you might end up needing. Look at your bookings for the requested product. If you have availability and feel the product would otherwise stay on the shelf, it may make sense to rent it out. (Naylor)
  • Factor in wear and tear on your equipment, Holland says. “This goes back to the quality of the customer: Will this customer take proper care of your equipment?” As added protection he has subrental customers name him as an additional insured, unless the tent is small and inexpensive to replace. Customers also must claim the subrental on their insurance, says Holland, who requires a certificate verifying they’ve done so.

“Cover everything in your contract,” Holland advises. “Getting it all on paper eliminates a lot of misunderstandings and disagreements.”

Pamela Mills-Senn is a Long Beach, Calif.-based freelance writer.

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