A Ren’T’Own® Success Story from The Land of the Midnight Sun: Alaska Car& Van Rentals, LLC
Name: Tom Prunty
Business Name: Alaska Car & Van Rentals LLC
Business Bio/Background: Alaska Car and Van Rentals started in 1995 as Alaska Van Rentals by a retired school principal. Alaska Van Rentals was a struggling car rental business in Alaska, the founder never figuring out the recipe for success. It was deeply leveraged, utilizing rented business space in a heavily disadvantaged neighborhood, with no more than three staff. It had a couple of inherent problems. Renting cars on a daily rental business had several limitations. The first problem was that the tourist season in Alaska is very short. The season runs from about 70
to 90 days maximum per year. This created several problems. The obvious one was that it is a very short time to rent cars and retire debt with the income. Off season rates are barely enough to maintain the vehicles let alone retire debt and offset depreciation. This added the additional problem of having to buy inventory in the spring when vehicle prices were high and trying to reduce inventory in the fall when the other car rental companies were also dumping inventory. We did a poor job of retailing vehicles so we were buying high, selling low and trying to survive on a short tourist season. It was a recipe for disaster. The owner knew Tom, who had a history of saving struggling companies and getting them to a financially solvent position. In 2002, he encouraged Tom to help his company out. Tom implemented a variety of strategies, trying to find the right combination. In 2003 the owner retired, and Tom took over the business completely. Constantly struggling, frequently doubting he would be able to salvage the company, he continued to work at finding the solution to get the company back on its feet.
Eventually Tom met Al Lentsch at a trade show and he explained the RTO concept to him. The rest is history as they say. Tom started Alaska Car and Van Rentals, and established an efficient system by which company resources (vehicles, office space, staff, etc.) could be shared between the two companies, bringing both to solvency. Rent to own evens out the cash flow in the off-season and provides a profitable way to dispose of older inventory. Within two years the company was able to purchase a large, centrally-located, highly visible property with office space, car lot, and mechanic shop for fleet maintenance. Eventually, the mechanic shop was expanded to provide services to the general public, providing yet another revenue source for the company. We have gone from a failing business to a business with a positive cash flow and a bright future. We now continue with a daily rental business with the emphasis on summer high season rentals and the year ‘round business of rent to own.
How has RTO/LTO impacted/changed your business?: Our year-round focus is now rent to own, with the car rentals emphasized during the brief tourist season. We are better able to manage and utilize our fleet of rental cars. We are able to buy low and sell high. When our daily rental vehicles are ready to be replaced, they are moved into the RTO fleet. Alaska Car and Van Rentals has become a full service entity. People who have one of our rent to own cars, or the general public, bring their vehicle to us for repairs, and can rent a car from us while theirs is being worked on. (Special note: we provide a cheaper shop rate to our rent to own customers, which encourages them to bring their car to us. We, in turn, can be confident our investment is being maintained satisfactorily!). The success of the company has allowed for creative expansion into other areas. We have become more focused on our impact to the community.
RTO/LTO Lesson Learned: We have learned several important lessons. The first and probably the most important is that we are a people-oriented business. With not only severe but long winters, Alaska is a difficult place to be without a car. Bus systems can be impacted by weather and accidents. Sidewalks can go for days without being cleared of snow and ice, making walking, even to and from bus stops, a hazardous undertaking. People don’t work if they don’t have a reliable way to get to their job. By providing a unique way to obtain a vehicle for those are unable to obtain financing from traditional methods, we are providing a service to our community. People want control, especially those who have so little of it in their lives. Control can be obtained by offering options and flexibility. If we provide a program within which options are provided to the customer, they can work within its parameters. Typically our clientele come to us because no one else will finance them. Things are usually strained and difficult in their lives. They may be distrustful, not in control, disrespected. They seem to have more than their share of problems in their lives. Seeing things from the customer’s perspective is critical. Many of our customers have never learned good money management practices. We know we need to provide constant attention and a watchful eye to ensure they keep up with their RTO responsibilities, to include not only their payment, but their insurance premiums and maintenance for their car as well (which protects our investment). We help them keep us as a financial priority. We do everything we can to support and assist them to keep their vehicle, knowing that is a necessity in maintaining a job and allowing them to strive for a better livelihood.