EXECUTIVE PERSPECTIVE By Brian Holland Strategies to Foster Growth and Enhance Margins A S WE ENTER A NEW ERA IN EQUIPMENT LEASING where competition continues to increase, pricing is becoming more commoditized and leases look more like loans, there is a tremendous opportunity to break away from the competition with innovative solutions and value-added services. Much of the growth in the leasing indus-try can be attributed to creative solutions and innovative product design, and while these factors have historically separated leasing from other sources of financing, the abun-dance of capital is threatening to drive those elements out of the marketplace and further compress margins. Thankfully, there are a number of strategies that lessors can employ to leverage their expertise, foster growth and enhance margins. and clear understanding of the risk of pit-falls that may be encountered are your best arsenal. Reviewing all the “if-then” scenarios is a necessity to designing customized solu-tions for win-win transactions. Look for less crowded spaces where you can bring specific expertise In our business, we specialize in Class 8 trac-tors and trailers for private corporate fleets, and use data analytics and asset-specific expertise to bring additional value to transactions. Rather than competing on price and rate, we focus instead on fuel economy, maintenance costs, driver retention, new technology, safety and reducing CO 2 emissions. By adding multiple elements to the value proposition, we are able to create incremental value, which we divide equitably with our customers and enhance our overall margins. There are numerous opportu-nities for lessors to expand their offerings and capitalize on their own respective expertise. Use technology to create new markets Throughout the leasing industry, a rapidly evolving technology landscape is accelerat-ing change in the customer experience. From education to manufacturing to transporta-tion, cutting-edge technologies are helping provide more customized solutions to cli-ents—often revealing insights that allow us to formulate solutions previously unavail-able. As specific solutions are developed and tested, new markets are discovered and new products launched. Brian Holland Functional vs. economic obsolescence All equipment has both a functional life and an economic life. Depending upon outside inf luences (government regulations, the economy, operating costs, etc.) and new features included in the equipment, these timeframes can change dramatically in a relatively short period of time. The decisive factors come down to cost and productivity. Increased productivity at lower cost is the key to competitive advantage. Focus on the total cost of ownership Emerging information technology is also creating fundamental changes by capturing real-time operating cost data that measure the Total Cost of Ownership, not merely the cost of financing. This data, when properly managed, can dictate when and how often a company should acquire and dispose of equipment to achieve the lowest possible cost. Use data to help customers make better decisions The very nature of our industry dictates that we capture enormous amounts of data, which can be useful in enhancing transac-tions and creating new opportunities. With the avalanche of “Big Data,” companies don’t need more information, they need the right information in the form of actionable intel-ligence that allows them to make better in-formed and timelier decisions. Developing experience in mining and maintaining data on essential metrics allows lessors to deepen relationships with customers and increase customer reliance. In summary, be on top of your game. Look for innovative ways to add value to the trans-action. Embrace risk. Welcome change. ■ Brian Holland is President and CFO of Fleet Advantage, LLC. Design new product solutions to match changing needs and usage patterns Most businesses are dependent upon the economy. Many times clients do not know what the future holds and need to develop contingencies. When it comes to finance, structuring and creativity are not only essen-tial to close the deal but may be paramount to a business’s survival. Industry insights that anticipate change, in-depth knowledge of the client’s needs and plans for future growth, Pending accounting changes will drive shorter lease terms If the proposed lease-accounting rules ever get implemented, expect to see shorter lease terms as companies look to have less debt on their balance sheets. Lessors that are nimble and can design practical, creative solutions to capitalize on this trend will gain a competitive advantage. 56 MARCH/APRIL 2015 EQUIPMENT LEASING & FINANCE MAGAZINE