FLUCTUATIONS NO MORE: HOW EQUIPMENT LEASING COMPANIES CAN RIDE OUT SUPPLY AND DEMAND

Transcription

1 FLUCTUATIONS NO MORE: HOW EQUIPMENT LEASING COMPANIES CAN RIDE OUT SUPPLY AND DEMAND September 2018 Tel: (855) Us:

2 In many industries, supply and demand levels regularly fluctuate throughout the year. But when demand falls too far, it can cause a prolonged recession. And when recessions go on for too long, many companies go out of business and lose thousands of dollars in revenue. This situation is especially true for leased equipment companies. Any business that leases equipment is often profoundly affected by the industries it serves. Essentially, industry-specific recessions can have a significant impact on their ability to lease out vehicles, assets, and equipment. After all, their clients won t lease equipment if they don t need it. For example, the mining industry has been going through a significant financial downturn. The price of copper has dropped to $9 per pound from $21 per pound over a five year period. Why, then, would mining companies rent out any extra equipment they don't need? Many other industries besides mining also lease out equipment. They include: Manufacturing Rental cars Furniture staging Retail Storage and moving Farming and agriculture Equipment leasing vendors must learn to weather severe fluctuations in the supply and demand of the industries they serve. Some months are busy, while others are dead. Trying to keep your business operating when demand changes so drastically can be difficult if you don t plan. These potential downfalls make it more critical than ever to track the assets you lease. In fact, some experts in the captive finance field think that tracking technology is the only way that manufacturing companies will continue to succeed. Implementing the right tracking system will help you plan for downfalls. When you have a plan in place, your business can keep functioning at a steady pace regardless of industry conditions. Page 2

3 Implementing the right tracking system will help you plan for downfalls. When you have a plan in place, your business can keep functioning at a steady pace regardless of industry conditions. The Dangers of Operating a Business in Unstable Industries How can you operate a successful business if the industries you serve are declining at a rapid rate? While the current outlook for the metals and manufacturing industry is positive, there s no guarantee it will continue to recover, for example. To weather times of recession or depression, you need to have a solid business plan. If your company banks on income that never comes in, you could have several quarters in the red and go bankrupt. Companies who experience a drop in sales for too long can get desperate for business. You could lower your prices too much or take on customers you can t afford. If you re desperate for business, it can lead to agreeing to lease out equipment before signing a contract or agreeing to terms that are fair. Experiencing an unexpected busy season can also have its problems. If leasing companies don t have enough harvesting equipment in the fall, for example, farms can lose out on thousands of dollars in spoiled crops. Rental car companies will experience a drastic increase in maintenance needs, and retail outlets may not have the fixtures they need to put everything on display. Unexpected demand also makes it challenging to deliver excellent customer service. If you have too much demand and can t keep up, you re inevitably going to let some customers down. This will drive some of them away and could create a negative reputation for your organization. Page 3

4 One of the most significant risks facing manufacturing and metals industries, in particular, is their lack of digital effectiveness. However, by implementing a digital tracking solution, many of these companies could end up improving overall productivity and increasing total company value. Industry Recessions Impact Equipment Demand While many signs lead to a recession, there s no way to tell how long they will last or how much they will impact the industries you serve. When your clients are losing money, they are less likely to lease equipment, leaving you with less income. Consider the mining industry again. Coal mining is declining and poses great workplace hazard. In the past ten years, the global market value has gone down by more than $1 trillion. With such a sharp decrease comes a massive loss in jobs and much less demand for coal mining equipment. Whenever any industry goes through a recession, it isn t an isolated incident. The last economic downturn caused stock prices to drop by 57%. During a recession, the first sign of a problem is the decline in sales and profits. In response to less money coming in, manufacturers will stop hiring new employees, and could potentially let some existing ones go. To further cut costs, they could stop leasing new equipment, slow down research and development, and stop releasing new products. All of these actions will impact everyone they do business markets. Suppliers will also see a decrease in sales, vendors could lose clients, and equipment leasing companies will have less need of their services. No matter what field your company operates in, unused assets can pose a huge problem. If the assets you ve invested in aren t getting leased, they re taking up storage space. Unused equipment falls into disrepair, making it dangerous for the next person who uses it. Page 4

5 How Different Industries Utilize Leased Equipment Each industry has a different way of using leased equipment. Assets leased in these fields pose different challenges in tracking and maintenance. Manufacturing Manufacturing companies often lease equipment when they need equipment now, but don t have the equity to purchase it right away. Companies who lease assets are also equipped to take care of any damage that happens due to typical wear and tear. Leasing more technically advanced equipment is much less dangerous than buying it yourself, as you can return it to the company if it doesn t work out. Rental Cars Rental car companies provide a much-needed service for those who are traveling and don t have access to their vehicles. Most of the time, the cars they rent out come with add-ons that make traveling more comfortable. However, tracking which cars come with which add-ons are complicated. Not tracking these add-ons can lead to lost money, since this is where rental car companies make most of their money. Unlike many other asset leasing businesses, rental car companies are leasing directly to consumers. Page 5

6 Furniture Staging Interior designers and professional home stagers need the right furniture to sell homes on the market. These professionals work with furniture rental companies to get the right look. Because each home requires something different, it doesn t make sense to purchase furniture for each staging. Furniture leasing companies must keep some pieces on hand to match the style each designer is trying to achieve. Frequently changing trends can create a considerable amount of turnover, which makes inventory tracking a vital aspect of this business practice. Retail Holiday retail sales can account for up to 30% of a store s yearly sales. The uptick in sales during the holidays also makes leasing equipment necessary. Most stores already have the equipment they need for regular operations. But because they sell so much during the holidays, they need to use more equipment during the last two months of the year. Storage and Moving Companies Storage and moving companies also work with consumers instead of with other businesses. Individuals who move across town or the company don t need large trucks once they ve made a move. Working with storage and moving companies allows them to transport all of their belongings without making an investment that won t be of any use to them once they re finished. Farming and Agriculture Buying all of the equipment necessary to run a farm costs more than $700,000. Most farmers don t have the kind of capital needed to purchase all of this equipment. What s more is that they don t use each piece of machinery all of the time. Leasing is a much more feasible option and allows them to plant, maintain, and harvest their crops and still turn a profit. Page 6

7 Use Asset Tracking to Stay Stable No Matter What The best way to deal with running a business in an industry that has several ups and downs is to implement effective asset tracking. Your company doesn t have to run at a deficit when the markets you serve don t lease as much. Leasing equipment to organizations in these fields shouldn t leave you wondering how long you ll continue to be viable. While recessions in the industries you serve will impact your business in some way, using Asset Panda to track your leased assets is a great way to mitigate potential damage. One of the best advantages of using Asset Panda is that it can help you identify patterns in demand. Being able to rely on metrics to better understand your customers can multiply your revenue by up to 11 times. Leased asset data can tell you a lot about what s going on with the industries you serve. If you rent out equipment to retail outlets, yearly data will tell you that they tend to demand more during the holidays, and less during the school year. Likewise, farming and agriculture industries need different kinds of equipment during the spring than they do during the fall. Using a cloud-based platform to track everything related to the assets you lease out will help you collect a considerable amount of information. You ll see which clients. And if all your clients tend to rent equipment at the same time, you can make plans around that. Being able to identify slow seasons will help you find the best time to schedule maintenance and repairs. That way, you won t lose out on any value during the times when your clients need your equipment the most. GPS tracking is an excellent feature for rental car companies. You need to make sure that your clients aren t driving in unauthorized areas. You ll also be able to send assistance if they get into trouble on the road or can t find where to drop off the vehicle. Page 7

8 Asset Panda also comes with an automated check-in/check-out procedure. If you rent out furniture to interior designers, you can have them scan barcodes on the pieces you rent out. This will automatically populate your database with information about your client, what they are leasing, where they are using it, and when you can expect it back. Asset tracking is one of the best ways to balance your portfolio and cash flow. Some assets won t be in as much demand as others. You ll be able to identify what equipment makes most of your revenue and invest in more of it to continue bringing in money. If specific industries look like they aren t doing well, you can also regroup to see if you can make a business pivot and add in more companies from other fields. Another huge benefit of asset tracking is the ability to keep client records. Many of your clients will be return customers and tend to need similar assets each time. With detailed client records, you can make sure you have the right assets ready to check out and lease when they come to you. This information will also help you see what clients from specific industries tend to request, which will help you make informed decisions about future asset purchases. Clients Who Have Used Asset Panda to Track Their Equipment We already have several case studies of clients who have successfully used Asset Panda to track their equipment. Farming and Agriculture Several of our clients use our platform in their farming operations. Asset Panda allows them to track everything related to the dozens of pieces of equipment they rely on to keep going. The platform makes it easy for them to see when they purchased/leased the equipment, when they ve last maintained it, and when they next need to replace the equipment. Different types of crops require unique equipment to plant and harvest them. Sometimes, farmers can t afford to purchase every kind of asset necessary to tend to their crops. Leasing allows them to cultivate more unique crops without investing limited capital right away. Page 8

9 Large Factories Large factories rely on a tremendous amount of equipment to create product and process jobs. Goodyear s China location used to operate with a basic asset tracking setup, but needed a more robust solution that included a requesting system. Our implementation specialists were able to help them build this system so employees could request certain parts and necessary operations items in advance. This system also allowed employees to request new pieces of equipment if they didn t have the assets necessary to complete their work. They could also ask for specific assets to be replaced if they were no longer usable. The system also came with particular protocols for approvals and disapprovals, to ensure that the assets purchased were useful to the company overall. Once a piece of equipment came in, the finance department could then log in to the system and notify the employees when their requested equipment was available to them. This significantly increased their productivity and reduced the amount of money spent on unnecessary assets. Tool Tracking Another one of our clients, Perry Perry Building, works with steel and constructing buildings. Before using Asset Panda, they were having a hard time seeing where their equipment was located at any given time. At first, they were using spreadsheets to try and track equipment data. This was incredibly cumbersome and would often become outdated by the time they updated that information. When they came to us, we took the information on those spreadsheets and created a platform that allowed them to work in a way that fits their practice. The software enables them to track custom statuses like what job site the equipment is on, who is using it, and where it travels to once workers finish up with one location. Having this specialized asset tracking platform has freed up their time and allowed them to take on more building jobs, as well as spend time on other operational needs. Asset Panda s custom fields is a great way to track everything related to the equipment you lease out. You can see which clients use which assets, how long they ll be using it, and what industry they work in. Don t be caught unprepared during the next recession. Try out our program free for 14 days. Page 9

10 About Asset Panda Asset Panda, the most powerful, yet simple to use asset tracking software in the world, enables clients to track their IT assets exactly how they want, and from the mobile devices they already carry. The platform may be accessed either online or via free mobile ios and Android apps that sync with the cloud. The apps include a mobile barcode scanner, so there s no need to purchase a separate handheld barcode scanner. Users can add voice notes, videos, documents or photos to the asset s information. The tool allows users to view check-in/check-out status, GPS location, lease/purchase information, complete maintenance history, insurance information, and the depreciation and in ation calculations your accounting and compliance teams require. Companies of every industry sector and size including some of the world s biggest brands have chosen Asset Panda to help them manage millions of dollars worth of vital assets. Tel: (855) Us: info@assetpanda.com Headquarter Office: 3001 Dallas Parkway, Suite 580, Frisco, Texas Copyright Asset Panda