Shaking up an established industry like the vehicle rental market is no easy task. However, that’s exactly what Jamie Bennett and Patrick Broadbent have done with Snap Rentals.
With growth of over 400% and a regional win in the 2016 Deloitte Fast 50 and an 11th place ranking overall, the team at Snap are clearly doing something right. We had a chat with Jamie to get a little insight into how they grew the business from a single car to over 400 in just a few years.
“We’ve known each other since we went to university together back in 2006,” says Bennett of his decade-long friendship with business partner, Patrick. He goes on to explain how the pair ended up working together in the campervan rental business after university – a stint that would, unbeknownst to the two at time, lay the foundations of the idea that would later become Snap Rentals.
The business bug struck Jamie after the global financial crisis brought a premature end to their jobs at the campervan rental place.
“I got a job selling coffee in a mobile coffee van and Patrick got a job selling computers, which he hated. The coffee job was actually doing alright so we started our own one and did that for about three years,” says Bennett.
The pair sold the coffee business in 2013, at which point the idea for starting their own rental car business had begun to ferment. Using their combined knowledge of the rental industry and hands on experience in running their own business, Snap Rentals was born.
“Getting into cars, rather than campervans, seemed like a good idea as there’s a lot less faffing around, less capital outlay and it’s easier to scale,” says Bennett of the reasons behind starting the business.
“We started with a very old Nissan Sunny which had done lots of kilometers and then began procuring our first few cars from other rental companies that didn’t have a use for them anymore.”
After a bumpy start, persistence paid off for Bennett and Broadbent.
“It didn’t start particularly well,” he says. “It was pretty difficult for us and was quite hard to carve a niche. We kept grinding away and eventually it just kind of came right and people decided they liked our product and started booking them.”
Bennett says that over the past couple of years the company has drastically improved its offering by ditching the “old battered vehicles” and moving to more modern cars.
The company now operates a fleet of some 460 cars, grown from a base of one in just four years.
We pressed Bennett to share his thoughts on the reasons behind this growth. His first response is, naturally, the quality of the product. In the case of Snap Rentals he says it’s a focus on keeping things simple, providing top notch customer service, low prices and quality cars.
To get this done, Snap needed capital. Vehicles are expensive with ongoing maintenance so good cash flow is key. They didn’t want to lose control of the business by bringing in investors, so they turned to their bank.
“It’s been great, it’s meant we haven’t had to go and look for investment elsewhere and we’ve not had to lose an equity stake in the company.”
Asset finance in particular has enabled Snap Rentals to grow by tapping into the capital that’s otherwise tied up in business equipment and other assets.
Bennett says that Asset Finance was a good fit for a rental car company that, by its very nature, requires a lot of expensive vehicles.
“It’s an asset heavy business. But that [the rental cars] is how you derive your revenue so asset finance is a perfect fit”
“BNZ suggested to us three years ago that, in terms of strategy, asset finance would be a good way to grow. For us it was the best fit for our business,” says Bennett of the reasoning behind taking this particular funding path.
“I think a lot of companies will go out there and say ‘I don’t want to have any debt, I want to own all my vehicles’. But obviously the trade-off there is you lose the opportunity to grow,” says Bennett.
He says growth plays a big part in their plans for the future with longer term plans seeing the business expand offshore to “battle the big guys”.
“We don’t mind carrying a bit of debt in order to grow. We’re happy to leverage our assets and BNZ were happy to do that with us. We like that asset finance is scalable in that you can borrow as much or as little as you need and it’s flexibility lets us pay off more or less each month depending on what suits us.”
In terms of financing growth through their bank, Bennett says a close working relationship with BNZ has been important.
“Our banker, Dan, has really spurred on the growth aspect of what we’re doing. He’s understood what we want achieve and he’s more than happy to be our growth partner in that.
“The relationship BNZ Partners have with their clients is second to none. And that’s not a plug for BNZ, I mean that genuinely, it’s an important aspect of what they do and they do it really well.”
BNZ has supported the Deloitte Fast 50 for three years and we support 21 of the 50 fastest growing companies in New Zealand. Learn more about BNZ’s wide range of business financing solutions including the CreditPlus facility.
Watch as GDP & Snap Rentals, together with their BNZ Partners, discuss how they manage their growth using different tools:
Read more about the Deloitte Fast 50.