How Much Can You Make in the Commercial Rental Industry?

Learn about my earnings and details on department financial metrics when I was a Rental Manager in the commercial truck space. 

Transcript

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Hello and welcome to the premium episode for today's Career Yak. And hope you enjoyed the episode with Ian. And on today's episode, I want to shed light on what I was able to earn some of the details behind my earnings when I was in the rental industry as well. And again, these aren't necessarily indicative of Ian's earnings or anything like that, but gives you an idea maybe of how commission plans may or may not be structured, or whether you're in a different industry or this industry kind of gives you some insight into how certain companies do it. So again, this was a few years back now, so obviously times have changed with inflation and wage rates and things like that. But um the basic premise hopefully can help shed light on what to expect maybe in this world. So I was a rental manager with a company out of Denver, Colorado, and as a rental manager I was responsible for both the administrative and billing side of the rental department and um the sales side. So it's a one-man department that worked with the service side as well. It was uh just me on the sales side, and worked to track costs and also obviously increase sales, and then ultimately make sure you know the profit margin was was gonna be there, and how you manage your trucks was obviously a huge part of that, making sure they were all up to date, trying to avoid big uh repairs, breakdowns, things like that. So uh base salary at the time, um, so I was there three uh full years, a little over three years, uh in total. And first year it was kind of a new location, we were uh not profitable. Second year we were about break even, and third year uh we had like a 20 uh what was it? I'm looking at an old spreadsheet actually, like a 23 and a half percent margin or so, and so that uh obviously was just it was an upward trajectory for that area. Good area to be in. Uh I really enjoyed, you know, kind of helping grow the business in that region. So with that, uh when you're in rental, you want to make sure your assets are always utilized. So you want to make you usually have like a revenue per unit benchmark. Um so it depends on the piece of equipment or the tr kind of truck that you're renting. Uh mine I shot for like uh I you'll hear a rule of thumb, like you want to make sure you get$2,500 per unit or something like that. I might be higher now, or depending on your your fleet and the makeup of it. I think I was shooting for like a$2,800 per unit in revenue. Uh I was about 26 in change, 27. So it was right right around there, 2700 per unit uh uh per month, that is. Um so that equated. I had a 40 to 50 truck fleet at the time, um 46 give or take. It did ebb and flow throughout the year. Sometimes you would uh retire trucks, sometimes you get new trucks, but our total revenue for that location was right about 1.4 million uh for that just the rental department, um, and then you know 23-ish percent margin on that. So uh that kind of gives you a framework of what to you know look for as far as uh profit and loss in the rental world. You're gonna want to track your variable costs, you're gonna want to track your fixed costs, obviously. So fixed costs would be things like um depreciation, um, interest, taxes, licensing, insurance, um, things like that. Whereas your variable costs would be things like repairs, uh maintenance, um, you know, and or not annual, you know, periodic um preventative maintenance schedule, oil changes, things like that, tires, whatever it may be, that would factor into your uh your variable costs. So with trucks, you would track it typically as like a cost per mile. So, you know, maybe this truck is costing you 10 cents per mile or whatever it may be. And with rent rental equipment, you might look at more of a cost per hour. Um, since they're not running heavy miles, they're more utilized like an excavator would be you'd be tracking the hours as far as usage goes. So when I was in truck rental, um we would we would charge a fixed exp uh fixed uh cost for to the customer, so like they would pay, you know, for instance, like uh a sleeper truck would be you know eight hundred dollars a week, if you will, but then we'd also charge them a mileage rate of like say, I don't know, 12 cents a mile. So that's probably a good ballpark, but it it would have been flow based on the customer, based on how long they had it, the type of truck, things like that. Sometimes there'd be some fees on there, but you'd want to obviously make sure that revenue that you achieve from that, you know, that breakdown would cover above and beyond your costs to get you're shooting for probably 20 to 30% margin in that world. So um as far as my personal uh structure went, uh base salary was I think first year in Denver started at 55,000, and it uh there were some annual increases just for cost of living and uh performance goals, things like that. Um so I was over 60 by the time I was done, and then with the commission structure, it was a couple different categories, if you will. So they incentivized me for new accounts, so a hundred bucks for or I'm sorry, twenty-five bucks to bring on a new account and get them credit approved. So they didn't have to actually do business with us yet, but they had to go through a credit approval process, which actually took some logistics to get done, and once they were set up, then they were ready to rent a truck if they ever needed one in a quick turnaround. So$25 for that,$100 if it was a first-time renter. So if someone filled out a credit app and rented as a first-time customer, you get$125. And then um you would also get what was it? A percentage of the total department revenue. So I would get a percentage of since I was the only one there as far as sales went, um, total department revenue for any, you know, truck that was rented out of my location and that territory. So we would do, you know, we were at 1.4 million for the year, so figure, you know, a hundred um thousand give or take, you know, each month. I think our biggest month was like, you know, 146, and our lowest month was, you know, uh slower month, January was like 80 something, but right around, you know, probably yeah, hundred ish give or take thousand a month, and uh then I would get one and a half percent of the revenue for that month as part of the commission structure. So you know, one and a half percent of a hundred thousand would be fifteen hundred bucks, and then also uh, you know, my boss was creative enough to kind of look at the incentivized plan and come up with ways to further incentivize performance. So we were not always tracking costs maybe as um well as he would like, so he really wanted to inner incentivize us based on the gross margin percentage number. So anytime we I believe it was achieved beyond 25%, he would give an extra 500 bucks, and um there were different tiers, so I think you had to be a minimum of 15 to get anything, but uh I'm sorry, I think it was over 20% was five hundred bucks. So you can make up to five hundred bucks a month above and beyond the other commission categories uh if you were if your department was twenty percent margin or more, um, and then maybe you can make you know four hundred, three hundred if it was a little lower than that. So that was uh kind of a cool thing he introduced. Uh we did have the opportunity at times to sell used trucks out of our rental fleet. I think I only did that once or maybe twice, maybe only once, and that was a percentage of the margin that was received. I think it was like five percent of the actual margin dollars, so not a ton, but still something extra. And uh depending on what you sold, obviously it would be uh make a difference. Um so all that together would be your monthly commission structure paid on a monthly basis. So with this uh particular job, uh at the end of this uh my best year, that third full year I was there um was 2018. So our margin dollars were like three you know three hundred and thirty-six grand for the department, and uh so my pay base plus commission overall, I think I was right about ninety-nine um give or take. So for that um for that earnings for that year. And again, this is you know, what is it, 2023, so five-ish years ago. Again, I'm not sure exactly where earning potential is nowadays with uh the rental world, since I haven't worked in it since uh, you know, partially into 2019. I ended up leaving the company because we moved across the country in April of 2019, so I didn't get to finish the next year. But uh so I haven't been in the rental game much since then. I've gone done a little bit here and there with some of the companies I work for, but not a dedicated role quite like this. Um But uh this is kind of Ian's world, uh if you listen to that interview I had with Ian, and um that's kind of how you know rental is this it's essential that you're utilizing all your assets. 80% utilization is kind of the benchmark that we shot for when I was working in it. Obviously you always want higher, but if you're too high, you know, you're at a hundred percent, you're probably missing out on business because your fleet is too small, and then you're having to, we always kept what's called a turn down log. You're having to turn people down because you just don't have enough inventory of rental equipment or trucks to actually satisfy the people that the demand that's coming in. Uh so we kept a turn down logged so that if someone called in for a box truck and we didn't have one, but then I had one returned, you know, the next day, I could just look at that, call them, see if they still needed it, and uh that was pretty helpful of keeping everything moving and turned around pretty quickly. So it's a it's a a fine line between you don't want to be underutilized, but you don't want to be a hundred percent utilized, because then that means you're probably your fleet isn't big enough. So uh easier said than done. That's definitely takes some uh takes some learning and experience to do that. It's not always easy, even if you have done it before. So hopefully this helps. Um and hopefully everything I shared was okay to share, but uh it's on the premium episode, so only a few of you are listening anyways, so it doesn't matter. So, anyways, uh hopefully that was insightful, and if you have any questions or anything on careers or earning potential of this industry or others, feel free to email me at careeryakpod at gmail.com. Thanks for listening, thanks for being a supporter of the show, and we'll see you next time.