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FLUCTUATIONS NO MORE: HOW EQUIPMENT LEASING COMPANIES CAN RIDE OUT SUPPLY AND DEMAND
September 2018
Tel: (855) 898-6058
Email Us: [email protected]
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
Page 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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
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“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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
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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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
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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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
Page 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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
Page 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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
Page 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.
Fluctuations No More: How Equipment Leasing Companies
Can Ride Out Supply and Demand
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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.
© 2018 Copyright Asset Panda
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) 898-6058
Email Us: [email protected]
Headquarter Office: 3001 Dallas Parkway,
Suite 580, Frisco, Texas 75034
www.assetpanda.com