Over the past 20 years of getting to know so many people in the portable storage business, one of the things I find of particular interest is learning how and why they got into this business. It seems the explanations are as varied as each individual with whom I speak.
For some, the business has been in the family for generations; for others they seemed almost to discover their way into the business by accident when someone showed up one day wanting to rent a trailer sitting on their property and then realizing that others were willing to rent trailers and containers as well. Many were in the trucking business and saw container and trailer rental and sales as a natural outgrowth of that trucking business. Others just saw the potential of the portable storage business.
Regardless of how or why you are in this business, one of the common threads is that you are an entrepreneur. You love to organize and manage an enterprise and you enjoy the considerable initiative and risk involved with building a business. Because of your entrepreneurial spirit, you may have already or are considering expanding your current portable storage business to add some type of companion business. Let's examine some of the issues to consider if you have a companion business or are considering adding one.
What are some of the most common companion businesses we see with portable storage companies?
Many start and operate companion businesses very successfully while others struggle. To operate companion businesses successfully, we believe it is important to understand a key point that can easily be overlooked…
The companion business ideally should share these common factors:
If there is little to no commonality between the businesses, it is important to understand you are running separate businesses. Straying too far from having these factors in common with your main business will mean you will either have to learn how to do these things or bring in additional staff with appropriate skill sets. For example, say you want to add Mobile Offices to your product offering, a very common companion business to portable storage.
While there are many similarities to your container rental business, ask yourself questions around each of the factors in the above chart:
Would the customers I currently have for my containers and trailers also be my customers for mobile offices? If not, who are those customers and how do I reach them?
Do I have the operational expertise, the land and equipment to handle mobile offices?
How will I handle the AR and AP side of the business and will my current software handle all aspects of this business?
How and who will sell this product to these new customers?
Do I know how to do everything from selling, delivering and set-up, to tear down and R&M?
What will happen to my current business by adding on this new business venture?Do I have the capital resources?
If I decide to sell my businesses in the future, are these companion businesses something the same buyer will want or will they have to be split up?
Companion business can be a great source for growing your business and I have seen firsthand where this has been done very successfully. I have also seen many businesses where a companion business has become a distraction from their main business or outside of an owner's core competency.
If you first consider and address what is outlined above before getting involved, you can flourish by adding companion businesses. If you already find yourself with companion businesses and are experiencing challenges, review where you are in each of the above areas and determine what it will take to correct the situation. If you decide it is more than you want to take on, now may be the time to consider exiting from that business segment. During this analysis, you may even determine that your passion has become the companion business and that it may be time to exit from your main business.
Finally, I would advise that you track the performance of each of your companion businesses individually. Even if your companion businesses are just different product lines, such as containers and trailers, it is important to be able to analyze each business or product segment separately. Ideally, separate P&Ls for each business or product segment, but at a minimum you should be able to quickly and easily see which business is driving your success and understand from where and how that business comes.
Mark Graham is the owner of The Advice Store LLC, offering business advice and consulting services in a number of areas including, Acquisitions, Sales, Business Strategies. He is also a speaker and conducts business workshops. He can be reached at:[email protected] - 602-418-8793 www.TheAdviceStore.com