Good Business Models To Learn From

The economy has been slow and as a result many companies in travel related businesses are feeling the pinch. As soon as the economy began to decline however, the car rental companies made some really smart financial decisions. The changes they made have caused them to become the leader in the travel industry. Instead of reacting to the decline they were proactive and took steps with the first sign of trouble to get ahead of the curve. This is a shining example of good business sense and a move that many other businesses can learn from.

First, they decided to sell down their fleets, reducing them down to just the most in demand vehicles and those that they were sure they could rent. This put them in a better financial standing providing them with more capital but it also accomplished something else, it gave them leverage with the public allowing the demand on their vehicles to go up which in turn allowed them to charge more per rental. With fewer vehicles sitting idol they were able to increase their overall profit per vehicle and this helped improve their overall business.

The second successful step was to close all non or poor performing locations within the system and created a leaner better performing location to meet the increasing demands. This also put a higher demand on the available vehicles which equated to pricier rental rates. This also created more demands for healthier competitive prices withing the industry as a whole, which is very good for business and lessens the negative impacts of a slow down in the economy.

Finally, they made the decision to hang onto their reliable vehicles longer and this is helping them to decrease their overhead which was being spent on replacing vehicles and since a vehicle's life is truly more than 30,000 miles they have been able to maintain the same fleet of vehicles by servicing them well and hanging onto them longer. This has greatly reduced their overhead.

As a result of these good business decisions, while other companies in the travel industry as slashing prices and going out of business, rental car companies are still thriving and rental prices are holding their own. If anyone knows who is running these companies with brilliant business building ideas such as these they should ask them to step up and see if they want to run the country. It would be wonderful if some of the politicians we currently have in office could learn from this stern example of good business sense.