Rent-to-Own

Keep it Clean! Keeping Rental Furniture in Top Condition by Greg Yearsley

From Buddy to Boss: 12 Steps to Successful Staff Promotions by Phillip Perry

E-Signatures: Online Rental-Purchase Transactions by Ed Winn III

APROfile: Bestway’s David Kraemer by Katie Garza

 

 

 

 

 

KEEP IT CLEAN

The upholstery cleaning process that a rent-to-own company chooses can have a big impact on improving furniture appearance, extending service life, increasing client satisfaction and decreasing returns. The look and condition of furniture can also affect the rental rate and a client’s desire to rent or purchase the piece. Delivering cleaner furnishings may even improve the chances that clients will take better care of the items.

Not only is it important to use a cleaning program that provides good results, it also makes sense to select a process that fits staffing and budget resources. It’s of little value to use cleaning methods that are labor-intensive, do not provide reliable service or cost too much. There are three basic options for cleaning and maintaining rental furniture: Hiring contract services, using spot remover products and maintaining on-site equipment. Let’s take a look at these processes and review the advantages and disadvantages of each. ucts are also designed to use on smaller spots, so larger areas require extensive time and labor. In addition, it may take multiple cans or bottles to clean one piece of furniture, so cost-per-use can be relatively high.

OUTSIDE SERVICE CONTRACTORS

Overview: Some RTO businesses use outside service professionals for cleaning and spot removal. Factoring in the expense of outsourcing cleaning jobs against the benefit of saving internal resources is an economic decision that each business needs to evaluate for its specific circumstances.

“Because it’s so expensive, we try our best to get furniture clean with our own system before calling in the pros,” says Larry Randolph of Customer’s Choice in east Texas. “But, it’s worth it to spend $100 or more if a piece of furniture can be salvaged and rented again.”

Advantages: The most direct benefit of using an outside service company is that it requires no labor from on-site staff. Some people also believe that service contractors have a degree of training and equipment technology that allows them to achieve better cleaning results than RTO staff.

Disadvantages: The expense of outsourcing may be hard to justify, especially in a tight economy. Plus, to reduce billing expenses, there may be a tendency to let moderately dirty furniture go back into service without the benefits of cleaning. In addition, contractors may not be scheduled for a service call or be available for an appointment when you need them the most. If soiled furniture sits idle waiting to be cleaned, it’s not generating any revenue. Plus, it takes up valuable storage space either in the store or the warehouse.”

SPRAY-ON SPOTTERS

Overview: Some rental companies invest very little in furniture cleaning and rely on mass-market spot removers for emergency upholstery cleaning.While these over-the-counter products usually cost only a few dollars a can and are readily available from just about any supermarket or janitorial supply house, they usually are not very efficient for the RTO market.

Advantages: Small package sizes are ready-to-use and require little storage space. Most products spray on and blot off, which requires no equipment or training.

Disadvantages:

Household spot removers usually have problems taking out the tougher stains and are known to leave residues that promote resoiling. These products are also designed to use on smaller spots, so larger areas require extensive time and labor. In addition, it may take multiple cans or bottles to clean one piece of furniture, so cost-per-use can be relatively high.

ON-SITE EQUIPMENT

Overview: For most RTO businesses, investing in on-site equipment saves money and can provide added flexibility in getting furniture back into service fast. Depending on the size of the rental operation and how much space is devoted to home furnishings, cleaning may take place at the store level or in a central warehouse.When deciding to purchase or upgrade equipment, there are several different types of equipment to consider, many of which are described below.

DRY EXTRACTION SYSTEMS

Overview: Dry cleaning systems generally use low-moisture foam or gel compounds that bond to dirt and dry quickly to a powdery substance.

Advantages: Because there is very little water used, the biggest benefit of dry extraction systems is fast drying. Disadvantages: Dry compounds tend to sit on the surface and provide little penetration. They also require a thorough extraction vacuuming to remove the dried powder.

HOME SHAMPOO UNITS

Overview: Much of this home care equipment is designed for use on carpet and upholstery and is available in an almost endless array of choices. Decision points include price, power, capacity and performance.While these units may be inexpensive to purchase, they may not always provide satisfactory results.

Ed Spuzello of Furniture Source in Des Moines, IA, reports only moderate success with a home unit. “We use a small home machine. With that machine, the stains basically lighten, but they don’t really come out. If they’re too bad, we have to rent the furniture as is or sell it off,” he says.

Advantages: Equipment designed for the home market is relatively inexpensive, lightweight and easy to use.

Disadvantages: These units provide little cleaning power and marginal deep cleaning ability. Most use a high-suds shampoo, which creates a foam mess and leaves a residue that promotes resoiling. Some units have a rotary brush that can flatten and mat fabric.

STEAM CLEANERS

Overview: Steam equipment has been used for a variety of cleaning applications for decades. While vapor steam cleaning—with temperatures above 200 degrees F—is still used for some carpet and upholstery jobs, this process is largely being phased out and replaced by hot water extraction processes.

Advantages: Steam effectively emulsifies and suspends a wide range of deep-down oily and non-oily dirt.

Disadvantages: Steam creates excessive moisture and heat that can damage fabric, dull color and strip off stainresistance compounds. Plus, as a safety concern, steam vapor can burn skin.

 

12 Prefect TO successfully Staff Promotion To Boss

Promoting Susan to that new management position seemed like a great idea. She always worked long hours and wanted to move up. And she was so popular with her co-workers! Why bother tracking down an outside candidate when there was already a staff member ready to roll? f Unfortunately, problems cropped up as soon as Susan took on her new duties. She failed to keep her staff informed about new initiatives. She scheduled meetings only to keep everyone waiting while she completed some phone calls. The staff—formerly her friends—started to grumble that she was “too bossy.” People lost interest in doing a good job and the business started missing its sales and profit goals. f Not a pretty picture, but one that is all too common. Done right, promoting from within motivates the entire team and fosters staff loyalty. Done wrong, it sparks workplace friction and resentment. f How can you make sure your own internal promotions move people up the ladder of success without falling on their heads? For the answer, look to the first half of this article, in which consultants from around the country offer valuable pointers. The second half contains advice for the new supervisors themselves.

PART I: TIPS FOR COACHES

1. BE A GOOD ROLE MODEL

Your own behavior must demonstrate the style of leadership you expect from newly promoted individuals. For starters, you need to treat your staff fairly. “If they have been mistreated by their own managers, new supervisors will commonly do the same with their subordinates,” warns Ian Jacobsen, president of Jacobsen Consulting Group, Sunnyvale, CA. “Just as a child from an abused home is more likely to be an abuser, new supervisors who have not had good role models will behave in dysfunctional ways.” Second, you need to play by the company rules. “A lot of people think they can start slacking off once they are promoted,” says Peggy Morrow, a Houston-based consultant. “Show them this is not your way by being a strong role model.”

2. INVOLVE YOUR STAFF IN THE PROMOTION

What characteristics will make a successful candidate for the available position? Ask your staff. People will more likely accept a decision in which they have invested their own ideas.“Have the people who are going to be supervised participate in the development of criteria for selection,” says Jacobsen. “Hold a meeting to discuss how the job may have changed in recent months and what the company now needs to look for in a new leader.”

The criteria may be as varied as technical competence, communications ability and talent in solving problems. “Brainstorming these criteria not only gives people some input into decision making, but also helps them better understand more of what the job entails,” says Jacobsen. “All of this will make it easier for the new person coming in as long as the criteria have been adhered to when the selection is made.”

3. TRAIN THE PERSON

Good leadership is learned. You need to groom the person for the job. “Too often today, new supervisors are not given a sense of what to expect from their positions,” says Judy Foritano, president of Somerset Consulting Group, Titusville, NJ. “They need to be trained so they know how to deal with relationship issues.”

Consider having a current supervisor mentor the prospective manager, suggests Fred Martels, president of People Solution Strategies, Chesterfield, MO. This mentor may develop a plan for success and put it into motion. “The mentor can serve as a coach, answering questions such as ‘what will your first day as a supervisor be like?’” suggests Martels. The mentor may also outline the expectations the company holds for new supervisors and impress upon the prospect the need to meet them.

One approach is to give prospective supervisors temporary work assignments which will hone the skills required to do similar work full time. “Try having the prospective manager develop the skills of a buddy,” suggests Mel Kleiman, President of Humetrics,Houston. “Then see how the person deals with problems that arise.”

Skills need not all be gained on the job.“Maybe someone is president of the PTA or other civic organization,” says Kleiman. “Encourage individuals to get active in such groups because it is a non-threatening way for them to gain skills that can be effective on the job.”

4. ANNOUNCE THE PROMOTION APPROPRIATELY

The formal transition to supervisor must be announced in an unambiguous way so the staff realizes the new supervisor has the backing of the organization. The process will vary by size of group. “In a small group, I would hold a short meeting to inform the group of decision,” says Martels. “Then let the new supervisor take the reins.”The new supervisor needs to not only express his or her vision, but also must let people know she is behind each of them. “People always want to know ‘What’s going to happen to me?’” says Martels. “If the new supervisor expresses a desire to move each of them forward, then everything will be okay.”

In large work group, says Martels, communicate the promotion through a letter from the person who made the decision. “Inform people of the decision and ask for their support. Invite anyone with questions to come and see the person who wrote the letter.”

5. FOLLOW THROUGH AFTER THE PROMOTION

How’s everything going? That’s the question to answer after a person is promoted. Jacobsen suggests finding out on an informal basis. “As you walk around the workplace, ask people how the new manager is working out.You are not being a snoop, but you are getting the feedback you need as you go about your task of coaching the new manager.” Informal discussions are likely to be more fruitful than passing out a questionnaire, says Jacobsen. “People feel much more at ease talking about this on an informal basis.”

6. TACKLE PROBLEMS

Suppose the new manager just can’t seem to get the respect of subordinates, who start carrying out their duties in a perfunctory manner or let things slide. The way to tackle this issue is to ask questions, either of the supervisor or of the subordinates. “Be sure to cite the specific behaviors,” says Jacobsen. “And then state that this is not what you expected when you made the promotion.” If you are approaching one of the new supervisor’s subordinates, ask: “I’ve really been surprised that […] doesn’t get the respect from you that I thought he would. This is what I see going on [cite the specific behavior issues]. How come?”

PART II: TIPS FOR NEW SUPERVISORS

7. PARTICIPATE IN THE FORMAL ANNOUNCEMENT

Your supervisor will announce your promotion in a staff meeting, then invite you to says a few words. Consultant Jacobsen suggests you express how happy you are to be in your new role and discuss how you want to retain your friendship with each of them, while understanding that in your new position you will have new expectations as to how you will interact with them.

“State that you have a vision as to what the group can accomplish and describe what this vision is,” says Jacobsen. Add that you want to include them in the process of developing shared goals and that you will be talking with each of them on an individual basis to obtain their ideas before making your decisions. Finally, let them know you want to help each of them achieve their personal goals.

8. BECOME A SKILLED LISTENER

“Listening is a key skill for a leader,” says Martels. Most workplace consultants agree. Listening is a vital and perhaps determining factor in the ability to understand and motivate people. “When someone talks with you, pause whatever you are doing and give your full attention. Make good eye contact. Be genuinely interested in what people have to say and learn to have real empathy for them.” Says Morrow: “Ask questions. Talk with your people. Come back and get their ideas for improvement. What can be changed? What can be made better?”

9. LEARN HOW TO OPEN PEOPLE UP

Part of being a good listener is encouraging people to speak up in the first place. “Get skilled in stimulating people to advance their ideas and opinions,” says Martels.

And when people advance ideas, don’t shoot them down. “Avoid idea-killer phrases such as ‘I can’t sell it to management’ or ‘We’ve tried that before.’ Instead say, ‘Tell me more about that’ or ‘How does that work?’ and ‘How does the group feel about that?’ These approaches encourage people to bring more of themselves to the table.”

Every group has an informal leader, a person who is not officially in management, but seems to perform as a pivot for the group’s ideas. “You will be smart to identify and work with your informal leader,” says Morrow. “If they support your initiatives, everyone else in the group will. Get their ‘buy-in’ by asking their opinions, listening to them and working extra hard to get their input.”

10. AVOID PRECIPITOUS ACTIONS

Many new supervisors want to make their mark quickly with dramatic initiatives. Avoid this. “Don’t make major changes in the early days,” says Morrow. “Your authority has not yet been established.” Instead, get that valuable feedback from your staff so they will feel invested in the decisions you will make.

11. SOCIALIZE WITH YOUR STAFF

So now you’re the boss. Can you still have beers with your peers? “There used to be a rule that you had to stop being buddies when you were promoted to management,” says Morrow. “Today you can still be friends and maintain authority.” Indeed, maintaining social relationships pays rich dividends. Today’s supervisor gets work done through subordinates. And if you’re going to get work done through others, they have to be on your side.

Furthermore, in social settings your staff is more likely to provide you with valuable new ideas and advance warnings of brewing problems. “People will tell you things over a beer that they won’t tell you otherwise,” says Jacobsen. “That’s the value of maintaining relationships and communications.” Socializing also helps develop trust among the members of your staff. And that can help smooth the way when it comes time to say “no,” as a supervisor often needs to do. People must understand that you are saying no because you have the organization’s larger goals in mind, not because you have become “too good for them.”

Even so, your relationships with co-workers will change in subtle ways. For example, there may be some resentment from people who remember you as one of the gang and now see you as taking “management’s side” in discussions. And how about the jokes about management that always seem to crop up after hours? Should the new supervisor chuckle in harmony? “You can laugh along,” says Jacobsen, “but you have to know where to say something like this: ‘O.K., that’s enough joking. I know Bill and he’s not such a bad dude after all, and the things you are criticizing him for, he doesn’t have much control over.’”Walking the fine line between humor and disparagement calls for sensitivity as to what is considered a joke and what is considered serious. “The position you are in makes people read things into your messages that they may not have thought of otherwise,” says Jacobsen. To maintain friendship with your employees while making the difficult decisions that you need to make, do lots of listening. “Keep soliciting feedback from people on how things can be made better and you will get a reputation as a person who wants to make a difference,” says Morrow. “Do what you can to make each person’s job better than before you become a supervisor. The people you used to be just a buddy with will sense that.”

12. CONTROL YOUR FEELINGS OF SELF-DOUBT

It’s natural for any new manager to have second thoughts or to worry that things are not going as well as they should. “Remember that you have been put in a bigger pot so you have room to grow,” says Morrow. “If you knew how to do everything you would have been put there a lot sooner. Talk to yourself with statements such as, ‘This is a new job requiring new skills. People are giving me trouble now but I can handle this.’”

Self-talk can also relieve the doubt and anguish that arise when new supervisors have to make decisions, such as termination, that harm other people.“Keep reminding yourself of the criteria you use to make decisions,” says Foritano. “The better grip you have about why you make decisions the more confidence you will feel over time.”

Your superiors promoted you because they have faith in your capabilities. You should remind yourself of that from time to time.“Remember why you were chosen for the position,” says Foritano. “If they didn’t tell you the reasons why they judged you would be a good supervisors—and sometimes companies forget to do that—ask them. Remind yourself of your strong points. A personal pat on the back once in a while is perfectly acceptable.”

Another way to bolster yourself is to get constant feedback from your staff, says Jacobsen. “The new boss should ask people, ‘How’s it going? What am I doing that is making life easier for you? Am I doing anything inadvertently that is making life harder for you?’”

For most new supervisors, the transition from buddy to boss is fraught with stress. These tips should help most new managers make a transition that will minimize team disruption and lead to greater profits and success.

Phillip M. Perry is a free-lance business writer based in New York City.

 

E Signatures

Rental dealers probably are not ready to start renting units to customers over the Internet using “paperless” transactions, just yet. Given the frequent face-to-face contact between rental customers and store personnel, consumer e-commerce may come later to the rental industry in contrast to other industries that focus more on the product than the relationship.

However, despite how much customer contact and familiarity is involved in the rental-purchase process, there may be a customer segment out there today that cannot or will not visit rental showrooms for whatever reason. These customers may already buy books and CDs on the Internet and might be interested in the goods and services offered by rental companies. Rental companies, in turn, are beginning to carry specific product offerings on their Web pages. And so, while e-rental-purchase transactions may never replace paper agreements, in time they may begin to play a significant role in the operations of at least some rental companies. What will happen sooner and is already occurring in a number of rental companies is business with vendors via the Internet.

There are some issues that arise for rental dealers contemplating the development of ecommerce both with vendors and with consumers that focus on how the law and technology are dealing with electronic documentation and signatures.

For contracts with vendors, the statute of fraud in the Uniform Commercial Code in every state requires a signed writing for the sale of goods for a price over $500 and signed by the party against whom enforcement is sought (UCC sec. 2-201). For rental customers, nearly every state rental-purchase statute requires that certain disclosures be made “in writing in a form that the consumer may keep.” A number of state statutes also require that the written agreement be signed by the parties.

If the whole of contract law is based upon the intent of the parties, it historically has been by means of a written document duly executed by the parties that has been used to determine that intent. How then do you, as a rental dealer, preserve the vast body of contract law laboriously evolved to ensure the predictability, integrity and authenticity of written documentation into the cyber world of electronically transmitted 0’s and 1’s?

The answer to this question is still being developed, but the legal business and technological worlds are working together to craft a safe, secure, predictable way to carry on e-commerce on both a large and a small scale.

In 2000, the president signed into law the Electronic Signatures in Global and National Commerce Act (E-Sign) (15 USC sec. 7001). In essence, this federal law grants the same legal status to electronic signatures, contracts and records as was historically afforded to those items in written form.

In addition, a majority of states have enacted some version of the Uniform Electronic Transactions Act (UETA). These statutes do not tell merchants or consumers how to do business over the Internet. They are, instead, scrupulously “technologically neutral,” not preferring one protocol over another. They were written to allow the marketplace to make such determinations and to allow the process to develop further.

Alongside these laws, several recommended safeguards for e-transactions have arisen. The World Wide Web Consortium (W3C), the National Institute of Standards and Technology, the American Bar Association, and the United Nations Commission on International Trade Law (UNCITRAL) have all issued technical guidelines for creating and safeguarding digital signatures. A number of private companies have been started to implement these systems of digital signatures into user-friendly formats for commercial use on the Internet. Not surprisingly, a lot of legislative concern has been on consumers. Literally thousands of consumer protection statutes and regulations require a written document, often with written disclosures beforehand and written notices afterwards. E-Sign and UETA have dealt with this issue by doing away with these requirements in e-commerce. Here is the E-Sign language:

Notwithstanding any statute, regulation, or other rule of law…(1) a signature, contract, or other record…may not be denied legal effect, validity, or enforceability solely because it is in electronic form; and (2) a contract…may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation.

Interestingly, the law has never required that a signature always be the inked handwritten designation of the name of the person signing. The UCC defines “signed” as being “any symbol” as long as it is “executed or adopted by a party with the present intention to authenticate a writing.” In certain cases, an “X,” a company’s letterhead, a typed name, a name on a telegram and a name on a fax have all been held to be signatures under traditional law.

The reasons for requiring a signature on a document in the first place are practical ones: (1) as evidence that the signer is identified with the document; (2) for the ceremonial purpose of calling the signer’s attention to the legal significance of the transaction; (3) to signify that the signer both consents to and understands the contents of the document signed; and (3) to impart a sense of finality and authenticity to a transaction so that there is less need to look into facts and circumstances beyond those set forth in the document.

The new e-commerce statutes have attempted to achieve these same goals. The e-commerce world recognizes two kinds of signatures: electronic signatures and digital signatures. The first is the more general term and refers to any method by which one “signs” an electronic document or record. It includes a name typed at the end of an e-mail, a mouse-click, the header in an e-mail address, a digitized image of a handwritten signature, a PIN or other code number unique to the signer; a password; a fingerprint, a retinal scan or a digital signature. A digital signature is a technology-specific type of electronic signature. It uses public key cryptography and is probably the most widely used type of electronic signature today. (For the technology minded, public key cryptography uses an algorithm with two different but mathematically related cryptographic keys. One key takes a digital signature or other data and translates it into an unintelligible form for transmission; the other key verifies the signature or other data by returning the information to its original form.)

While digital signature technology exists, as well as other technologies, to secure the authenticity and identity of an electronic signer, the law has been reluctant to dictate a particular technology over another. The California e-signature statute, for example, provides that an electronic signature is valid only if: (1) it is unique to the person using it; (2) is capable of verification; (3) is under the sole control of the person using it; and (4) is linked to the data in such a manner that if the data is changed, the signature is invalidated. The Federal Reserve Board has proposed regulations for e-loans and other transactions covered by Truth-in-Lending, which would provide similar protections. The law is silent as to the best means of achieving these goals, which means it will almost certainly change over time.

Another issue raised by e-commerce is the integrity and authenticity of the document itself. How can the rental dealer be sure that the order he sent to his supplier via e-mail is the same order that the vendor receives on his computer and then fills? How can the rental customer ensure that the agreement she reads on her computer screen and signs electronically does not get altered over time either inadvertently or maliciously?

At least for consumers, the federal and state statutes speak effectively to this issue. First, any e-transaction must have the consumer’s consent. Before the consumer can give consent, the consumer must be given a statement of the following:

• Any right or option to get a copy of the contract in nonelectronic form;
• The right to withdraw consent and the method and consequences of doing so;
• What transaction(s) the consent applies to;
• The procedures for updating the information needed to contact the consumer electronically;
• How, after consenting to an electronic transaction, the consumer can get a paper copy and the fee for such, if any.

 

In addition, the consumer must be given the hardware and software requirements for access to and retention of electronic records. And, perhaps most important, consumers must confirm their consent electronically. This must be done “in a manner that reasonably demonstrates that the consumer can access information in the electronic form that will be used to provide the information that is the subject of the consent.” This means that the merchant must verify that the consumer can open and read any documents, notices, agreements and the like that the merchant sends to the consumer concerning a given transaction.

Finally, E-Sign requires that any electronic document must be “capable of being retained and accurately reproduced for later reference by all parties…who are entitled to retain the contract or other record.” This language is intended to prevent either party from being able to alter a document that has been agreed to.

While the world of e-commerce is a brave new one, thoughtful people are working hard to make e-transactions safe, reliable and predictable. As much as the Internet is changing how Americans live in a number of ways, it may also change how rental dealers do business with their customers and vendors, if not immediately and completely, perhaps to some extent, over time. Rental dealers interested in staying at the forefront of their industry will pay close attention to evolving trends in the world of e-commerce and grab those parts of it that make sense to the d e a l e r and that will enhance operations overall. It is almost certain that e-rentalpurchase is not as far-fetched or a far off as some dealers think.

Ed Winn III is APRO’s general counsel. His e-mail address is edwinn@e-bylaw.com. Copies of the statutes referenced in this article are available to APRO members in hard copy from the APRO office (800/204-2776) or electronically at www.APROVision.org.

 

DAVID KRAEMER

David Kraemer is a thinker. He likes to reflect upon where he’s going and how he’s going to get there—and he sometimes does it from the seat of his 2000 Harley Davidson Fat Boy, for which he admittedly spent a “sick”amount of money.P“I like to ride out in the country, just to get away to where it’s peaceful,” says Kraemer, who lives in Rowlett, TX, a city on the outskirts of Dallas.

Yet Kraemer deserves any down time he can find—whether it is an afternoon of cruising or spending quality time with his two sons, Justin and Ryan. These days he regularly clocks seven-day work weeks as president and CEO of Bestway Rent to Own, a publicly traded company with 69 stores in Alabama, North Carolina, South Carolina, Georgia, Tennessee, Mississippi and Arkansas. Even with those long hours, you won’t find him complaining.

“I’m so charged up with this company,” he says. In July 2002, the 41-year-old businessman left his post as executive vice president of Rent-A-Center, where he was in charge of more than 1,000 stores, to take the helm at Bestway Rent to Own.

“I bring a real sales approach to whatever stores I’m overseeing,” he says. “My strength has been growing stores and growing revenues. That’s what Bestway asked me to do for them.

“The company was flat lining; it wasn’t losing, but it wasn’t growing,” Kraemer says. “They’d done an excellent job on their cost containments and things of that nature, but they just hadn’t grown the company.” With 19 years’ experience in the rent-toown industry and a knack for turning stagnant businesses into profit-generating centers, Kraemer’s know-how appealed to Bestway executives. After a few meetings, Bestway made him an offer he couldn’t refuse.

Only a handful of months after his initiation into the company, Kraemer says his coworkers have done an excellent job of embracing his proactive programs to increase sales, upgrade product lines and provide toprate customer service. “Coming into Bestway, my approach was seek first to understand, then be understood,” he says, a philosophy Kraemer has adopted after being involved in more than a few acquisitions over the past two decades.

Starting out as an account manager for Lease Town in Waco, TX, Kraemer quickly rose to leadership positions as the companies he worked for seemed to change ownership year after year. His knack for knowing what business practices help or hinder a company’s success was fine tuned as he oversaw repossessions and foreclosures of unproductive rent-to-own companies for TransAmerica (dba Magic Rent to Own) from 1988 to 1994. “In the ’70s and ’80s, a lot of people got into this business initially to make some fast cash,” Kraemer says. “Early on, there wasn’t much competition, so people got away with a lot more. And the customers weren’t as knowledgeable. So some of the people who didn’t necessarily have good business ethics did well even in spite of the way they ran their companies.When the competition increased, those guys weren’t able to compete because they didn’t have the platform of a well-run company.”

A year later, in 1995, Magic Rent to Own underwent its own transition when Renters’ Choice, then owned by industry veteran Ernie Tally, bought the company. Kraemer experienced firsthand what growing a company entails as Renters’ Choice expanded from 300 to 500 stores before buying out Rent-A-Center, a significant acquisition that grew the business to more than 2,000 stores.

Developing a business model

As he navigated the road map of company takeovers and makeovers alongside industry heavyweights such as Tally and Rent-A-Center CEO Mark Speese, Kraemer says he developed a “best practice” approach to the rent-to-own business. It’s an approach that—on the surface—sounds too simple to be true, but it has proven successful time and time again. The goal, says Kraemer, is to attract good employees, apply the business model with consistency and return to the basics of renting and collecting.

“I believe in making things very simple,” Kraemer says. “I try to take away from the monotonous tasks that stores have to do, so they can focus on the things that drive the business, like the sales programs, taking care of customers…and making sure that our product offerings are what the customers want.

“I try to eliminate those extra forms and reports that are filled out and sent to a district manager or a corporate office,” he says, “because that isn’t helping the store manager operate at a better level.What it’s doing is saving the district manager the time of compiling his own report. I don’t want my stores working for the district manager; I want my stores working for the customers.”

Another of Kraemer’s objectives at Bestway has been to revamp the product offerings in every store to better reflect customer demands. Unprofitable items have been dropped and new, top-of-the-line products have been added.

“I believe our customers want the same high-quality goods that you and I want, yet they can’t afford them,” he says. “The rent-toown industry is an avenue for them to acquire ownership of some higher-end products. I don’t believe in being all things to all people. I want to carry the higher-end items that will encourage pride in ownership. When they bring it into their houses and their families and friends come over, they’re going to be wowed.”

Additionally, under Kraemer’s leadership, the store managers now play an integral role in selecting what their stores carry. “I give them perimeters on what they’re allowed to select, but the managers make the final decisions,” he says, adding that store managers’ input is critical selecting the right products because only they know what merchandise moves in their stores and which products are more resistant to wear and tear. The managers also have firsthand knowledge of how vendors conduct business.

“Our managers vote on which products are the best by how they buy,” Kraemer says. “The vendors either get or lose business based on how they perform as a vendor. It’s not about them coming in and telling me what a great vendor they are. It really comes down to the store managers knowing which products perform the best for them.”

Kraemer also believes advertising decisions must be made with input from the store level if the company’s message is going to reach the right people. “We dug into our advertising right away,” he says. “Our stores are all in the Southeast; we don’t have any in Texas. I don’t believe that I can have advertising people sitting in Dallas and making wellinformed decisions on what type or where our advertising should go. I want to empower my store people and make sure that they’re involved in these decisions.”

Kraemer hired a new ad agency, another Dallas-based outfit, yet this time he closely supervised the proposed direct-mail initiatives and asked the store managers and employees for their input.

“We sent the proposals out into the field and let the stores be the final decision makers on where they wanted their mailers to go,” he says.According to Kraemer, the store employees are the ones who are most familiar with the demographics of the neighborhoods surrounding their businesses. They know where the customers can be found and how to reach them. “They’re going to know that if you have fixed income in an apartment complex down the street, you don’t mail them in the middle of the month,” he says.

Proactive customer relations

Knowing your customers is important, but earning their trust is equally vital to success in the rent-to-own business, says Kraemer, who favors a more proactive than reactive approach in handling customers, particularly those with delinquent accounts. The crux of being proactive hinges on laying the groundwork up front on what the rentto- own agreement requires of the customer and then following through with attentive account management.

“We find that it aggravates customers to receive calls and that they get frustrated when their account isn’t taken care of the way they expect,” he says. “We try to communicate with them on the front end and give them full disclosure on how a rent-to-own agreement works. Then we follow up and make sure that their products were delivered and installed properly. We reiterate that that was a convenient day for them to make their payment and the importance of it.

“If a customer does come in and his account is delinquent, we get that customer off to the side and speak to him specifically about when he gets paid and how often he gets paid,”

KRAEMER, RIGHT, WITH MEMBERS OF THE BESTWAY TEAM BENNY CHEEK AND ROGER ESTEP