Progressive Rentals December 2007-January 2008

Complete issue of Progressive Rentals December 2007-January 2008 by APRO

A Capitol Investment: Politicking for Progress by Richard May

Death and (Personal Property) Taxes by Ed Winn III

Vital Records Protection by Van Carlisle

When Topcat Gets Promoted by Bud Holladay

Thinking Big: An APROfile of New Avenues’ Bill Kelly by Kristen Card


A Capitol Investment: Politicking for Progress
by Richard May

When the third most powerful United States senator in the land introduces a bill to put an industry out of commission, business leaders need to stand up, take notice and take action. That is exactly what the rent-to-own industry did this year and will need to do again in February at the upcoming APRO Dave Egan Legislative Conference in Washington, D.C., February 11–13. Two hundred rent-to-own professionals descended on Capitol Hill earlier this year. Another strong attendance from the rent-to-own industry is necessary in 2008.

With the Democratic shift of power in both houses on Congress, the congressional focus on subprime issues and Senator Charles Schumer's (D-New York) extraordinarily powerful position in the U.S. Senate, the industry's involvement is imperative. With the legislative climate being so potentially dangerous for the rent-to-own industry and for the industry's continued evolution, a federal definition bill would answer that vacuum of federal code recognition. If you have never been to an APRO Legislative Conference, then you need to make plans now to attend.

APRO leaders make sure you are comfortable visiting with your representatives by either attending your meetings with you and/or making sure you are fully prepared. Every attendee in the past has walked away with a new sense of empowerment or has become an APRO Legislative Conference regular and attends every year. APRO also recognizes those brave and hardy individuals who best represent the rent-to-own industry before the U.S. Congress with American flags, pins, rings, statutes and bookends.

The focus of this year's Legislative Conference will be on the passage of the Consumer Rental Purchase Agreement Act. Because the dynamics of the new Congress and the focus on consumer issues puts rent-to-own on the radar, it is now up to us to make sure the industry's legislation (H.R. 1767 and S. 1012) is what is being considered regarding rent-to-own regulations. The lead House sponsor of H.R. 1767, Representative William Lacy Clay (D-Missouri), is already trying to leverage movement in the House Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee.

The subcommittee is where H.R. 1767 has been referred. Clay is a member of the subcommittee and is trying to convince Subcommittee Chair Carolyn Maloney and Committee Chair Barney Frank to hold a hearing and to vote on the legislation. Clay and his office are working with members of the committee to move RTO legislation forward. He has already approached committee members who have been longtime opponents of our industry to ask them to take another look at his legislation. The RTO legislation is balanced in that it protects consumer rights and allows rent-to-own dealers to do business as regulated in 47 states.

Therefore, this balanced approach is a win-win situation if Clay and the RTO industry can generate enough support. During the 2008 Legislative Conference, the grassroots targets will be lobbying those subcommittee and committee members as well as generating additional co-sponsors. As of press time, H.R. 1767 has 61 House sponsors and S. 1021 has 21 Senate sponsors. While those numbers are very impressive, there is no magic number for movement or passage when it comes to co-sponsorship. It just helps to show support to actually get something moving and the chance for passage. A personal visit to your Congressperson in his or her office in Washington, D.C. is extremely powerful and effective.

So, please attend the legislative conference to raise the power of your industry for both industry and consumer protection. In the Senate, the strategy is a little more difficult. From a political party standpoint, the author of the Senate bill (S. 1012), Senator Mary Landrieu (D-Louisiana), appears to be vulnerable in her re-election bid for another six years in the Senate. Senator Charles Schumer, as a Democratic leader in the Senate, is charged with the responsibility of helping Democratic senators get re-elected. Therefore, Schumer's success as a party leader hinges on helping re-elect Landrieu. It is hoped that both senators' staffs will work together for fair and balanced rent-to-own legislation.

The Landrieu bill is similar to Schumer's bill, without the price controls. Perhaps a win-win situation can be created with this dynamic. Passage of the Landrieu bill would help both consumers and businesses in Louisiana. Another six-year term for Landrieu will help Schumer maintain Democratic control of the U.S. Senate. APRO President Larry Carrico always uses the following quote from Zig Ziglar:

"You can achieve your goals by helping enough people achieve their goals." Yes, it will be cold in February in D.C. and the cherry blossom buds will still be frozen in the branches, but February is a calculated date for political strategy. During the beginning of 2008, members of Congress will be trying to pass legislation so they will have a story to tell and a reason for constituents to re-elect them.

February will also come before presidential politicking, which really clouds the air. When each party gets serious about aligning itself with the right candidate so that its candidate gets elected, very little legislation gets passed. What are the chances of anything happening on the industry's bills this session? On one hand, the current Congress and the legislative climate is a dangerous pit of vipers on the brink of sending a deadly bite to the rent-to-own industry's existence. On the other hand, the current Congress and the legislative climate bring a unique and powerful opportunity to actually pass federal legislation that would finally take the rent-to-own industry to the next level.

However, to personally participate and to fully understand today's legislative climate, you will have to join with your peers and stand on Capitol Hill February 11–13.

To register for the APRO's 2008 Dave Egan Legislative Conference, please visit the APRO Web site at www.rtohq.org or contact APRO's Jeannie Hutchison at jhutchison@aprovision.org or 800/204-2776, ext. 108. The conference will be held at L'Enfant Plaza Hotel. The deadline to reserve your room at the L'Enfant Plaza is January 4. Call 202/484-1000 to get the APRO room rate of $219.

Death and (Personal Property) Taxes
by Ed Winn III

Not every state imposes a tax on personal property, although these days, most do. Most often personal property tax is levied on a person's or a business' tangible personal property. There is a separate tax on real property. Taxpayers must fill out a schedule and, as of a certain date each year (often January 1), list the value of all personal property that the taxpayer owns on that date that is not subject to one of the exemptions in the state tax code. Taxpayers must then remit the tax due to the county according to the taxing schedule-a percentage of the declared value of the property.

States have enacted many exemptions to the personal property tax: motor vehicles, personal effects, household furnishings, business inventories, intangibles, etc. Some rental dealers have paid the tax on their idle units only and have left the value of their units out on rent off the return. Not all county tax assessors are familiar with the rent-to-own business and so even under audit, these dealers have avoided paying tax on the value of their units in the field, because the valuation offered by the dealer corresponded roughly with the units on display and in the back room and the auditor left, satisfied. Other dealers have challenged the premise of having to pay personal property tax on their units held for rental altogether.

They have made different kinds of arguments over the years, depending upon the specific wording of the applicable tax provisions. Most often, rental dealers have argued that their rental units qualify for the business inventory exemption-that they are goods held for resale in the ordinary course of business. These arguments have been made in Virginia, Florida, Missouri, Utah, Texas and, most recently, in Indiana. All of these attempts at qualifying for the exemption have failed. The one state where the argument succeeded was Kansas.

The Kansas challenge began in 1991 and was based upon amendments to the tax code that were enacted in 1989. As a result of those amendments, the definitions of "merchant" and "inventory" in the Kansas law are unique. Inventory is defined as "any tangible personal property…which shall have been purchased primarily for resale without modification or change…and without any intervening use, except that, an incidental use, including but not limited to the rental or lease of any such property, shall not be deemed to be an intervening use." (The amendment added the language in italics.)

The issue of whether RTO property qualified as inventory under Kansas law bounced around the courts in several different counties, through multiple administrative hearings with multiple rental companies joining the fray and made two trips to the Kansas Supreme Court before finally being resolved in favor of the rental companies in 1999 with the ruling in Board of Sedgwick County Commissioners v. Action Rent To Own Inc., 969 P2d 844 (1999). The court specifically held that the rental company's rent-to-own merchandise qualifies as inventory and is statutorily exempt from taxation. Even so, in 2000, the Kansas Department of Revenue issued a directive to all county appraisers (No. 99-037), that concluded:

"If a county appraiser is in doubt as to whether rent-to-own property is held primarily for sale or for rent in the ordinary of business, he or she should construe in favor of taxation… All relevant facts should be presented to the Board to allow them to make a proper determination." It is apparent that the Department of Revenue did not care for the Supreme Court's reading of the tax code. To read the briefs in the Kansas litigation is to fall down the rabbit hole and find rental dealers arguing that down is up and that leases are sales for the purposes of interpreting the Kansas property tax code. Some of these arguments were being made at the very same time that Representative Henry B. Gonzalez was holding his infamous hearing in the U.S. House Banking Committee in 1993, "Rent-To-Own: Providing Opportunities or Gouging Customers?" Gonzalez did not allow the industry's doublespeak to pass unnoticed: "A rent-to-own company is now arguing in a Kansas appellate court that it is in the 'sales' business in order to avoid paying state taxes on rental property…

One thing is clear. The industry cannot have it both ways. Rent-to-own operators cannot be lessors in order to evade state usury ceilings and federal disclosure laws, and yet be sellers in order to escape state property taxes." The industry held its collective breath during those hearings and their aftermath. Having fought long and hard and successfully to prove that rent-to-own trans- 26 PROGRESSIVE RENTALS actions were really leases and not disguised sales, the industry could only watch, awestruck, as a handful of Kansas rental dealers threatened the legal status of RTO for the whole country to save a few thousand dollars in local taxes. Gonzalez was not successful in putting RTO dealers out of business, despite his best efforts. The world did not split in half on account of the Kansas rental dealers. The rent-to-own industry continued to flourish and rental dealers have, from time to time, continued to argue for an exemption to paying personal property taxes on their units in the field, although to date, only the Kansas dealers have been successful.

The latest unsuccessful attempt brought by a music merchant came in Indiana-see W.H. Paige & Co. v. State Board of Tax Commissioners, 711 N.E. 2d 552 (Ind. 1999) or view the case online at http://www.ai.org/judiciary/opinions/previous/ wpd/07190001.tgf.doc The issue has most recently come to life in Colorado, where a two-store dealer intends to challenge a personal property tax audit by making the inventory/sale argument. The rent-to-own world is safer in the 21st century than it was during the 1990s. It is unlikely that the Colorado dealer's arguments will seriously affect the legal status of RTO transactions in the country or even in Colorado. If every dealer in the country started making this argument, there might be legislative repercussions, but an isolated tax challenge here and there should not undermine the RTO legal edifice that has been so laboriously constructed over the years. There is, however, something to be said for consistency. Rental dealers who understand the business that they are in and who feel that they are paying too much in personal property taxes every year can challenge those taxes without having to twist their logic and words and pretend that they are retailers.

They can challenge how their property is being valued and in most places, it is probably being overvalued, which means that the dealer is paying too much in personal property taxes. The reason for this is that many county assessors apply generic depreciation tables to the kinds of products that rental dealers rent. Those tables reflect how long televisions or refrigerators typically last in a business environment when used by the business and they might be on seven or even 10-year depreciation schedules. This means that a dealer who paid $1,000 for a TV in 2007 might be assessed tax on a value of $900 in 2008 when, in fact, the TV will only be the property of the dealer for 18 months or so and the real value should be $667 or even $334, depending upon when the unit was acquired. Dealers have been successful arguing for more realistic depreciation schedules for rent-to-own property in a number of jurisdictions, including Florida and California, although not all such efforts have been successful- see Rent-Way Inc. v. Wilkins, Tax Commissioner, Ohio Board of Tax Appeals, No. 2004-A-331 (April 13, 2007).

The board acknowledged that the code allows a taxpayer to show that the administrative code guidelines can be rebutted if the taxpayer can prove a more accurate valuation. Then the board rejected the rental company's proof as inadequate. In Texas, rental dealers have taken another approach to the too-high personal property tax issue. Fresh on the heels of their successes in getting the Legislature to increase late charges in rent-to-own transactions and to decrease grace periods, Texas rental dealers sought a constitutional amendment that would exempt RTO property from personal property taxation altogether. A few years previously, car dealers had gotten an amendment for their industry that allowed them to lease vehicles in Texas.

Prior to this change, Texas car dealers had to offer vehicle leases by selling cars to consumers with an agreement to buy them back at the end of the "lease." Television and appliance rental dealers were able to go to the Legislature and argue equal protection. The car dealers got their inventory exempted and it is only fair for TV and appliance dealers to be treated the same way. The argument was persuasive and Texas dealers got bills passed out of both houses of the Texas Legislature, but ran out of time on the legislative calendar to get the issue on a statewide referendum for voters, which is a requirement for a constitutional amendment in the state. Most states would not require a constitutional amendment to make changes to the personal property tax code. It is a quirk in Texas law that requires this extra step for Texas rental dealers. Ad valorem taxes remain a lively issue in the industry and, for most rental dealers, a painful, but not unmanageable cost of doing business. Dealers may be able to lower their personal property taxes if they are willing to challenge the system and spend some time and money on the process. They are unlikely to beat the tax altogether unless they die- or live in Kansas.

Ed Winn is APRO's general counsel. His e-mail address is edwinn@mwvmlaw.com.

When Topcat Gets Promoted by Bud Holladay

We've all seen it: Company A needs a district manager, so it promotes the organization's top profit-producer to run six stores scattered throughout nearby counties. The decision appears to be a no-brainer: Mr. Topcat has won Store of the Year three years running, he has added 100 new customers the past two years and the numbers for his store always top every report. Best of all, Topcat's staff turnover has been nearly zero. But six months later, the six stores have shown almost no improvement-in fact, two are clearly worse off than ever, some managers have quit-and the smooth operation that Mr. Topcat left behind is in disarray, too. Profit and customer count are declining and Topcat's successor, his longtime assistant, suddenly seems lost. Judging from results to date, it appears the company just wasted its best store manager and still doesn't have a good district manager either. What happened?

The dilemma the company faces could have been avoided had management done a little more homework before making its move. Eager to reward its top manager for a successful run at the single-store level and fill an important slot at the same time ("We promote from within!"), it failed to understand that a manager's job expands both horizontally and vertically when he takes on more than a few stores. If his skills and abilities are not extra-dimensional, disaster awaits. Someone should have told management that Mr. Topcat's practice of just doing more of what got him promoted would prevent him from being successful in that new position.

Back in his own store, he was the "Top Cat." All decisions were made by him; his touch was on every activity. Nobody gassed up a truck without first checking with Mr. Topcat. He was famous throughout the company for coming in early, leaving late and calling the store or dropping in on days off and during vacations. The owner often spoke glowingly of his "favorite workaholic." And therein lies the problem. It is difficult to be a workaholic, at least an effective one, in six different workplaces at once.

While a district manager must lead, direct, inspire and orchestrate the activities of six or more managers, a store manager has only one manager to manage: himself. The assistant manager is rarely more than the second key holder and relief truck driver. He or she fills holes, handles some paperwork and can generally answer a few questions about inventory and past dues. But all power resides with the store manager. Topcats surround themselves with people of unquestioned work ethic, character and loyalty. The people they hire and keep are used to following orders. Making decisions is, in the eyes of those people, a form of professional hari-kari. Upward mobility is not on their résumé.

It should not be surprising that Mr. Topcat and this assemblage of hardworking anybodies can turn out impressive work over a long period of time. The rent-to-own business is so number-centric that once a few key ratios are mastered and good customer service is a habit and not a goal, everything else falls into place. Of all the events that can interrupt growth and impact profit in a rent-to-own store, none match the prolonged or frequent absence of an experienced, hard working manager. Likewise for the debilitating effect of a manager who works short hours and takes off at inopportune times. The Mr. Topcats of the industry often get promoted because they are always on the job. But they have to be, because nobody else in the operation can make a decision or start or stop any of the processes that make the store go. No one in the store is trained upward but everyone is trained exceptionally well in doing the tasks required for tenure at their job level.

So if Mr. Topcat was the wrong cat for the job, who might have been the right one? The effective multi-store manager must, above all, be good at managing managers, or be able to get good at it. This quality can be spotted early if one knows what to look for. Beyond basic job knowledge and the ability to communicate effectively (Ever see some of those memos from rookie district managers?), some other characteristics trump things like loyalty, dependability, etc. Those are: inclusiveness, sharing, patience and a tolerance for forward-leaning errors.

Inclusiveness simply means that the potential district manager includes everybody in the management of his current store. Each person is accountable for managing some part of the operation and all are regularly reviewed on the progress and gains they make on their own. This is a form of coaching that assumes everyone can manage something, even if it is only himself. Employees who experience it gain confidence that fosters new competencies and they usually want to go on to bigger things.

Sharing and patience may be in short supply among the Type-A managers preferred by some companies, but among the best of the best those attributes are commonplace. A manager at any level who has learned to share the credit with his workers-and has taught them to share the responsibility for satisfying customers and managing outcomes-will probably never lose his entire staff at one swoop or suffer two consecutive quarters of customer losses and revenue slippage. His people simply won't let those things happen. They want to be part of a good thing.

Patience is critical because people don't learn to accept their responsibilities overnight in all cases, just as some don't learn new procedures as quickly as others. The manager who is patient, who includes his people in running things, who shares the credit for wins and analyzes failures evenly, will rarely be slack enough to hire people who don't want to be part of those things.

Most everybody has at some time in their life proclaimed, "There are no dumb questions!" Of course, we all know that is incorrect. The more accurate response would be, "There are no dumb questions that I will be rude enough to point out." Forward-leaning errors are the opposite of dumb questions. People ask dumb questions just to hear themselves or because they truly are too dumb to know that their question has already been answered. An employee who makes a forward-leaning error has tried to do something helpful, for the right reason, but somehow got it wrong. The part that went wrong can usually be attributed to lack of sufficient training, knowledge or experience.

Now doing that same thing again and again with the same result is akin to asking the dumb question. But doing it once-and learning from it-is part of developing as an effective decision-maker and task handler. Managers who don't allow employees such freedom fail to do so because they do not want to absorb the fallout from critical mistakes and they are unable to create scenarios where employees can fail without doing significant harm to the business. So those managers become good at stifling and just come in earlier and leave later to cover all the bases.

The skills required to effectively manage managers are very different from those needed to manage employees or hourly associates. All good managers are competitive by nature. The really good ones are high performers. Managing high-performing competitors is no easy task-just ask any NBA or NFL coach. Mr. Topcat and those like him who have never employed or led high-performing, ego-driven employees in their own stores miss this simple precept. Managers don't become managers to take orders from other people who know about the same or even less, or to get lost in the tall grass with the other underachievers. Most people become managers so they can earn high reward for personal performance.

The best managers know that personal performance in business means leading others in organized activity. Those who figure that out early have a good start on becoming effective multi-unit managers. A high-performing store manager who has not turned out other store managers, who never loses an employee to the competition, who never offers up his second-in-command to go help another manager in trouble, who never offers valid observations on the problems of other stores, is the wrong choice for district or regional manager. No matter how great his numbers or how long his tenure, that manager does not possess the big-picture mentality required of an effective district manager.

The big picture doesn't mean he can take apart the company's balance sheet. It means he has developed an overview of the business that goes beyond today's deliveries and this week's closeout; he understands what is good for the company and realizes that might take away from his own operation, if only temporarily. He can plot trajectories based on skills, competencies, training levels and actual results.

If you ask a big-picture manager why he thinks Store 17 across town hasn't gained a customer in six months, his answers will be compelling, insightful and accurate. They will match your thinking (let's hope yours is right). Mr. Topcat will tell you it is the advertising or the bad neighborhood that surrounds Store 17. He will probably take a shot at the manager, too. If you ask the good manager why his store has gained every month for a year he will cite training, the company's customer service initiatives and support, and knowledgeable staff. Asked the same question, Mr. Topcat will tell you it's because he is the best salesperson in the company and gets the most out of his people.

It is not easy, this science of picking managers and district managers and regional managers. Sometimes personality and clichés play too big a role: "strong," "dynamic," "winner," "team player." You've heard them all. But the descriptive term least often used is "rounded." Being rounded means having an even balance between developing people and driving numbers; understanding that not all people are alike, but the people we like share many of our same qualities. Rounded describes the manager who can work a 50-hour week and get great results or put in 70 hours solving problems and never experience the same issues later. A manager who is rounded can convince other managers to follow him because he has everyone's interest at heart, not just his. And that is probably the key to effective multi-unit management: understanding the "What's in it for me?" equation. If you are a good district manager or ready to become one, you know that you have six "me's" and none of them are you.

Bud Holladay is a founding member of APRO, was APRO's first president and now is director of business development for Bryce Co. headquartered in Cullman, Alabama. Holladay lives in Frisco, Texas.

Thinking Big: An APROfile of New Avenues’ Bill Kelly
by Kristen Card

Bill Kelly is a study in dichotomy. He is deliberative, yet driven. An optimistic pragmatist. And while he loves laughter, he strives for perfection. And all of these fascinating facets of Kelly’s personality were evident by the age of 11. l “Between the ages of 11 and 21, I worked at a golf course,” says Kelly. “I started caddying and was carrying bags bigger than I was at five dollars a loop. By 15, I was the No. 1 caddy. Expectations were high—people paying those expensive dues at the golf course wanted things perfect. As first caddy, I got to go out with the first group, which meant I got to go out on more loops every day. I’d get to work at dawn and leave at dark. It taught me the value of a good work ethic and how to get along with people.

It was also a lot more fun than mowing lawns. One year at summer solstice, we got up and played all day long, from sun-up straight through to dark. When we counted it up, we had played 99 holes of golf in a single day.” Today, 49-year-old Bill Kelly channels all of that impressive drive, diligence and determination into his work as chief operating officer of Georgia’s New Avenues Rentals. Under President Mike Moore’s guidance and Kelly’s daily direction, the rent-to-own start-up has opened eight stores in less than two years, including a 35,000-square-foot über-facility believed to be America’s biggest rent-to-own storefront. Just a Midwestern boy from Springboro, Ohio (population approximately 10,000), Kelly was the only child of a stock broker/real estate dealer father and a mother who began her career serving as secretary to TV talk show godfather and fellow Ohioan Phil Donahue. Kelly’s growing- up years were clearly consumed by golf as he went on to captain the golf team at Heidelberg College, a liberal-arts school located in Tiffin, Ohio.

Kelly followed a pre-med academic track, attending four years with a dual major in biology and English. “It was 1979, I wasn’t going to get into med school with a 3.2 GPA, and I didn’t want to go to school anymore,” says Kelly. “I didn’t know what I was going to do. I ended up working for Rex TV and Appliances, selling car stereos. From the first day, I was the No. 1 salesman in the company. I got moved up to selling everything— TVs, appliances, stereo equipment— and at 21, became the company’s youngest assistant manager.” Kelly spent the next decade moving up within Rex and launching the first few of many moves—from Dayton to Mobile, Alabama, to Jackson, Mississippi. By 27, Kelly was a multiunit manager, running 14 stores in five states, and traveling extensively to help the company open up many of its stores nationwide. His Jackson store was photographed and used as the model store for the stock prospectus when Rex decided to go public. Kelly wasn’t moving up alone—during the same years, he and his wife, Linda (who he met at Heidelberg), had grown into a family.

As Kelly’s professional path continued to meander— with seven more moves over the next 15 years—his three young children learned to adapt to new environments readily and make friends wherever they went. In 1989, Kelly was contacted by rent-to-own pioneers Mike Walts and Bud Holladay at Alrenco about switching his career course from retail to rent-to-own, a move that made good sense to Kelly. “I got out of retail because it was becoming too dog-eat-dog,” he says. “All about price, not about service, just buying and selling widgets. I’ve always believed in good value, but I also believe in good customer service. The rental business wasn’t just about price points—it was one factor, but not necessarily the most important factor.”

With his new direction came a new sort of working relationship for Kelly; Holladay became an invaluable mentor for him, the first of many surprisingly supportive— rather than competitive—colleague camaraderies. “I’d had a lot of finance deals at Rex, so I already knew how to deal with customer applications,” says Kelly. “I didn’t know anything about collections, but working with Bud was priceless. He really immersed me in the collections part of the business and gave me a lot of confidence. After about a month of working with Bud, I felt like I could do it as well as anybody, with such terrific training.” Kelly stayed with Alrenco for the next nine years, helping grow the company from 34 stores to 167 as its vice president of operations.

When Alrenco merged with Home Choice in 1998, Kelly launched and, as chief operating officer, ran his own start-up, RentWise, for a few years. In 2001, Kelly decided to leave rent-to-own and earn his insurance license— a Series 6 & 63 broker’s license—and sell insurance and mutual funds. Not surprisingly, he was his company’s top rookie salesman. “It was O.K.,” says Kelly, “but not as lucrative for me as rental-purchase.” By late 2005, Kelly was working for a ColorTyme franchisee in Florida and living in the panhandle town of Navarre, which had just gone through three hurricanes in two years—Hurricanes Ivan (September 2004) and Dennis (July 2005) both hit the coastal community directly. By the time Katrina rolled over in August 2005, Kelly was feeling worn down. “I had six stores severely affected by weather,” he says. “They closed for weeks. We lost customers, employees, merchandise, store fixtures…it was devastating.” In November, another rent-to-own opportunity came knocking for Kelly, this time in the form of Mike Moore, then vice president of a successful chain of 300 specialty finance stores, who had decided rent-to-own would be a great way to diversify their business.

Moore was searching for expertise from an RTO veteran, and Kelly fit the bill. New Avenues Rentals opened the doors of its first store about two years ago in Jonesboro, Georgia, just south of Atlanta. Thanks in large part to Bill Kelly’s strategic and operational know-how, the company has opened seven more since, all located around Atlanta. “Atlanta is probably the most competitive marketplace in the United States,” says Kelly. “We’ve got Circuit City, Best Buy, BrandsMart, Fry’s, H.H. Gregg, 45 Aaron’s with their headquarters here, 50-plus Rent-ACenters and myriad other competitors.

At New Avenues, we’re trying to hold our head above and be something different for the consumer.” Key differentiators for New Avenues are the size, look and feel of the stores. Store size averages a spacious 14,000 square feet. Kelly says what the company aims for is an atmosphere of grandeur and style, which when combined with true value, packs a one-two punch. “We like larger stores, bigger footprints, in high-visibility areas,” says Kelly. “We want customers to walk in and think they’re in a retail furniture or electronics store. We have a director of purchasing and design who keeps us at the cutting edge with our furniture; I do the electronics, appliances and computers. We do an exceptional job in presentation and in price.

I believe if [rent-to-own companies] all made our stores look and feel more like retail stores and less like flea markets—even if people don’t use our industry, maybe their opinion of us might improve.” And then there’s that Decatur-Georgia-based enormostore, the 35,000-square-foot former Circuit City that, as America’s single largest rent-to-own store, is now New Avenues’ crown jewel. “We adapted much of [Circuit City]’s infrastructure to meet our needs,” says Kelly. “We’ve turned their sound rooms into AV rooms; their clearance center is where we accept returns and host a nice bargain area. The facility also has quite a big warehouse with a shipping dock. It’s working out wonderfully.” Naturally, Kelly continues to hunt for more spots the company can grow into. He says despite its pumped-up competitiveness—especially among electronics businesses— he and Moore still see plenty of market room for growth in and around Atlanta, but they’ve also got a wandering eye on markets beyond. You might think a man with his eyes so unwaveringly on the proverbial prize may be unconcerned about the human relations component of the business world. But truth be told, you can’t talk business with Kelly for more than five minutes without him mentioning someone in the rent-to-own industry who has helped, supported or inspired him.

He offers high praise for RTO trailblazers like Chris Bolin (Bolin Rent-To-Own), Larry Carrico (Rent One), David P. David (American Rentals), Ron DeMoss (Rent-A-Center), James McAlpine (Nationwide Marketing Group), Bill Milby (Home Express), Andy Simpson (Credit Merchandise), Daryl and Mike Tissot (Countryside Rentals) and Ed Winn (APRO). As Kelly outlines some of the essential lessons he’s learned over the years, he frequently mentions colleagues as teachers. He also credits many industry vendors like John Blair (DSC) and Bob Saunders (United Furniture) with helping him go out on his own. “Bob has always been there for me with advice, insight and recommendations,” says Kelly. “I consider him a man with a solid work ethic and incredible integrity. John helped me while he was the director of the TRIB Group. He’s welcomed me into the Atlanta area and has been invaluable as a vendor and supplier for New Avenues. “We’re all basically trading customers in this industry,” says Kelly. “So you’ve got to treat customers with respect.

Treat them the way you want to be treated; the Golden Rule applies in rental-purchase as well as anywhere else. And having a positive attitude is very, very important. You’ve got to learn to laugh, learn to have fun. “Working with Bud [Holladay] was as fun as it gets,” he says. “I learned something from him every day, and he made me laugh every day. This job can be so hard— you can stay busy 24/7; you’re never done. So if you don’t laugh along the way somehow, you can get overwhelmed really easily. Whenever I felt overwhelmed like that, Bud made me laugh. He was always ready with a kick in the pants to jolt me out of my complacency. I honestly try to follow that example and use it with my people.

And if you can make customers laugh and break down those barriers, they’ll follow you anywhere.” Interestingly, Kelly credits rent-to-own industry organizations— such as the Association of Progressive Rental Organizations and TRIB Group, both to which he belongs—with cultivating the environment of encouragement he has enjoyed with his professional peers. “I worked for a while in the payday loan industry through ColorTyme and found that industry much more divided than rental-purchase,” says Kelly. “I think APRO has done such a better job of uniting its members around a common cause and being extremely consistent. I can name 40 people in this industry who, if I had a question about software or product or people or advertising, would give me some of their time and help to find the right answer. I don’t feel like that would happen with any other competitors and share successes, too.”

Kelly has been involved in APRO since 1989, as well as in state rent-to-own associations in Kentucky, West Virginia and Indiana, where he served as president of the Rental-Purchase Dealers Association from 1997 to 1998. Kelly doesn’t see himself as a trade association mover and shaker, but he does acknowledge the importance of the role he plays for the industry. “Whenever APRO’s called upon me, I’ve tried to be supportive of the organization,” says Kelly. “I’m an operator, not an owner, and the difference is, honestly, I just don’t have the time to invest in the industry-wide big picture because I’m focused on the daily details. I have a tremendous amount of respect for the people who can and do make that huge commitment—hopefully, they’ve got someone like me helping them run their business. But you can be part of things and set an example by doing things right and fair and leading with integrity. I’ve always held myself and my people to the highest standards. I think that helps our industry as much as anything.”

The way Bill Kelly speaks—slowly, carefully, with frequent long, thoughtful pauses— belies the “man on the move” lifestyle he’s followed for more than 25 years. But asked where he sees himself 10 years from now, Kelly’s answer indicates his nomadic days may be numbered. “Ten years from now? Well, hopefully New Avenues will be growing along the same path it’s going right now,” says Kelly. “I’d love to be doing what I’m doing, except with a lot more stores. I’d like to have people point to us and say, ‘Wow—they really led rent-to-own in this different direction, and they’ve done a wonderful job.’ I just love the people I work with—especially Mike Moore, who believes in me and provides the best support in giving us the right tools to go forth and conquer.

We’ve got an amazing team at New Avenues, from the small home-office staff to our store managers and customer-service associates. We all have the same goal, which is to improve every day. “The people who are doing business the same way we were doing it 25 years ago are going to be left in the dust,” he says. “If you’re not continuously improving, then you’re on a slow evolutionary path toward extinction. You’ve got to grow every day.”

At the end of every day, Kelly goes home to Linda, now his wife of 25 years, whom he calls his “partner, best friend and biggest cheerleader. We laugh all the time,” says Kelly. “She says that’s why she loves me.” Kelly still golfs some, though he claims he’s had to learn to “let go and not be as good at it anymore.” He also loves to grill for family and friends and has won several chili cook-offs. But Kelly really gets animated talking about the memorable family vacations he and Linda take annually with their kids—Tom, 21, Caroline, 17, and 15-year-old Annabelle. “Our favorite was Moose, Wyoming, at the Triangle X Ranch,” says Kelly. “It’s up among the Grand Tetons—just stunning. We rode horses and lived in a little cabin. We saw bears and bison and moose. It was outstanding.”

Other Kelly family vacations have included walking Boston’s Freedom Trail, visiting the Alamo in San Antonio and cruising to Mexico to see Mayan ruins. Maybe the dichotomies that seem to make up Bill Kelly are really just a manifestation of his obvious desire to live life to its fullest, embracing as much of it as he can wherever he is, with every passing moment. “There is never a reason to be bored,” says Kelly. “There’s always something fun to do. In rental-purchase, you’re running a retail store, a financial center and a service center all-in-one. In my position, I have not only those three balls to juggle, but I also have others, like purchasing and advertising and site selection. But it’s a lot of fun when you’re building something; you don’t mind working a lot. I could work every day, because every day is fun. This—my work with New Avenues—is big, big fun.”

Kristen Card is an independent business writer in Austin, Texas.