“And look where I am today!”
If there’s one thing we always enjoy hearing, it’s a success story. There’s nothing more inspirational than the PRO who built his or her business from the ground up. We champion the owners of the small sanitation business. We want you to be the next success story.
Why did you start your own business? Two reasons are usually the foundation of every PRO’s dream – to be financially secure and successful, and to build a company that you can be proud of.
To accomplish both, your company will need to grow. Growth is how you will achieve most of your long-term business goals. Growth is essential to success.
There are also immediate, short-term advantages to growing your company. You may leverage your growth to get better prices for your supplies by buying in bulk or get better credit terms. You may get discounted rates at dump sites. Some potential customers will see you in a different light since larger companies are perceived as more “stable” or as staying in business longer. They may be more willing to hire you for larger events, or hire you more often, knowing that you have the capacity to handle a greater load or offer features and amenities smaller companies don’t offer.
For the benefit of the present and the future, creating growth, then sustaining and managing it, is a process that will continue for the life of your company.
The Small Business Association (SBA) has some wise words for the operator who has just started his or her business:
Growth costs money.
The reality is, early profitability in any small business startup is rare. You should expect and plan for losses. The first years of business ownership are tough, and you will earn every success.
We have found over the years that, in general, the first six months of business ownership will be mostly spent working out the kinks — figuring out your business operations, who your customers are, your competitors, etc. You will often find that things don’t go the way you planned. The unexpected often happens. It’s a time to make mistakes and learn from them.
Since growth costs money, how much money will you need? An important first step is to project when your business will become profitable. A simple formula is to compare your anticipated expenses (startup costs + monthly expenses) to your anticipated monthly revenue. The number of months it takes for the accumulated revenue to become larger than the accumulated expenses will give you an estimate of when you will start making money.
Basically, your business must first grow to the point where you break even. Small businesses such as your portable sanitation company should reach the break-even point in a year to 18 months. That can seem like a long time! During that stretch, you will rely on your startup financing to get you through. Your startup capital will come from your personal savings, loans from family and friends, SBA loans and other investors. (For more valuable information on loans through the SBA, visit https://www.sba.gov/funding-programs/loans.)
If you are working another job while starting your portable sanitation business, you can boost your reserves by saving five percent of your net pay each paycheck. Or, at least aim for saving $100 per week. Get into the habit of saving, and it will benefit you throughout your career, not just in the beginning.
Your business plan should take your startup capital into account. Revisit your plan often, perhaps quarterly, to know where you are and stay on course. Use your Key Performance Indicators, or KPIs, to determine whether or not you have the numbers that show you are ready for growth. (Read our white paper on KPIs in the JohnTalk Vault. If you’re not a member, you can sign up for free here.) You can also perform a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to give you more insight.
The SBA says that throughout the process of growing your business, you should frequently review the fundamental questions of business ownership. What is our business? Who are our customers? Why are we special? Why are we better than our competition?
Forbes.com offers five signs that your business is ready to grow:
Let’s say all indications point to opportunities for growth. Your units are being rented, and you are making money. You could be tempted to take those profits and celebrate your early success. The better plan of action is to channel your profits back into the company. Even a small influx of revenue can generate growth in the long run.
There are many possibilities. If most of your units are constantly being rented, use your profits to buy more. Adding units is probably the simplest and most common way to grow. If you are getting more event business, it may time to invest in wheelchair-accessible units, freestanding sinks or other amenities. You may see an opening to extend your service territory. You may need to increase your OSHA-compliant inventory if you are getting inquiries or more customers from agricultural sites. Is your busy season extending into colder weather? Expand your inventory with cold-weather gear, split tanks and other winter-related supplies. You may need to consider renting more property for storage. If one particular aspect of your marketing is getting good leads, such as signage or online ads, increase your budget in that area. Pay down debt.
Also, plan ahead for the cost of success. As your business prospers, your costs for fuel prices and dumping fees will increase. You will pay more taxes.
The flip side to investing in your business is to know when to not spend and overextend yourself. Entrepreneur offers five common ways that businesses can become overextended.
Keep in mind your business plan and your goals. A common problem is investing in much more overhead than you currently use, so it’s not making money for you. For example, don’t buy more units or a second truck until you can demonstrate a need. Pace your growth.
Consider that small businesses should reach the break-even point in a year to 18 months. During that lean span, you will need your startup capital to carry you through, so plan to spend accordingly.
Know your borrowing limits!
Your business plan is a crucial tool to track your company’s financial past, present and future. A poor plan is just as bad as no plan at all, just as poor directions are as bad as no directions.
If you aren’t precisely targeting your potential customers, you can lose twice. You will not only waste money by spending it on useless marketing, you’re also missing out on potential revenue because you’re not reaching your customers.
As a rule of thumb, once you own more than 100 units and are renting more than 75-85 of them at a time, it’s time to move into a new and exciting stage of growth – hiring employees.
Your investment in people is a milestone and a big responsibility to be “the boss.” You’re not only investing time and money, you’re investing in your company image. Your employee(s) will be representing your company. Everything they do will be the same as if you did it yourself.
Your investment in people will also help you grow professionally. The people skills and managerial experience you gain will be valuable throughout your career.
When hiring for the first time, you should take advantage of the help and expert advice of your business mentor, as well as SCORE, Small Business Development Centers, Women’s Business Centers and Office of Veterans Business Development.
Growth costs money, and employees cost money. Before hiring, make a realistic estimate of the costs. The most significant costs, according to the SBA:
The job market is tight. Dependable workers can be hard to find and worth your best effort to keep.
When hiring, put yourself in the place of someone looking for work. There are advantages and disadvantages to portable sanitation.
Portable sanitation may not have a positive image. Job seekers may regard portable sanitation as undesirable because it involves cleaning human waste. It’s also a physical job that requires being outside in all kinds of weather, working weekends and long hours.
Portable sanitation can also be exactly the type of work a job seeker is looking for. Physical, outdoor work may be a positive reason to take the job. Portable sanitation also offers the independence of working with little supervision and the opportunity to meet all sorts of people. Portable sanitation workers have the satisfaction of providing an important service, and they help keep our world cleaner and more sanitary.
Put together a job application form that you can email or send to applicants. (There are generic forms available on the internet that you can edit to your needs.)
Review the applications for candidates who stand out. You can begin the interview process over the phone.
You may want to include questions in the application and/or phone interview that involve work history, commercial driving experience and driving record. You should learn if the applicant can read a map, use GPS, is familiar with the service area, and can do repetitive tasks and lift 50 pounds regularly in all weather conditions.
Invite your top candidates for an on-site interview. Give them a tour. Show them how to load, unload and clean a unit, and have them try it. Explain the steps you take. Can they follow and understand direction?
Have the candidate drive the truck in the yard. Did he or she use caution starting and moving the truck for the first time? Adjust the seat and mirrors? Use the seatbelt? How well does he or she maneuver and back up? Set the parking brake when finished?
Don’t expect immediate success. Every time you hire, you’ll recruit many candidates before you find the right person. But when you do, welcome your new employee, and have a plan to help them get up to speed. We call it the onboarding process.
Start your new employee on Monday. For the first week (or however long you decide), accompany your new hire. Have them do the work while you supervise.
Emphasize to your employee that the job is more than cleaning toilets. It’s cleaning well, driving safely, being knowledgeable, communicating well, following instructions, being polite and friendly, and looking for new opportunities. Show them the professionalism you expect by conducting yourself professionally.
When you hire more employees, you can have your more experienced employees train the beginners.
Hiring an employee means you must also meet certain federal and state regulations.
Read the SBA article “Hire Your First Employee” at https://www.sba.gov/starting-business/hire-retain-employees/hire-your-first-employee. Here is a review of your major requirements when you hire:
Step 1. Obtain an Employer Identification Number (EIN) (also called an Employer Tax ID or as Form SS-4) from the IRS.
Step 2. Set up records for withholding taxes. The three types of withholding taxes are:
Step 3. Verify employee’s eligibility to work in the United States by completing Form I-9.
Step 4. Register with your state’s new hire reporting program.
Step 5. Obtain workers’ compensation Insurance.
Step 6. Post required notices in the workplace that inform employees of their rights and employer responsibilities under labor laws.
Step 7. File IRS Form 941, Employer’s Quarterly Federal Tax Return, when you pay wages subject to income tax withholding, Social Security and Medicare taxes.
Step 8. Set up additional recordkeeping required by federal employment laws.
Labor Recordkeeping Requirements: https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
Occupational Safety and Health Act Compliance: https://www.osha.gov/dcsp/compliance_assistance/quickstarts/index.html
Employment Law Guide: https://www.dol.gov/compliance/guide/erisa.htm
At the end of a set period of time (30 or 60 days for example), meet with your employee for a performance review. Give a realistic update on how he or she has been performing. Tell your employee the specific reasons why he or she is doing well, and offer suggestions for improvement in areas where the performance isn’t up to your standards. Give them the opportunity to bring up any concerns, questions or issues they may have. Give them goals or performance targets for the next review.
With the hiring of your first employee, you should begin to put together an employee manual that states rules of behavior and what is expected of employees. For an introduction, read the SBA article “Employee Handbooks” at https://www.sba.gov/starting-business/hire-retain-employees/employee-handbooks.
The first portable restrooms were made of wood and metal and were incredibly heavy and hard to move. Can you imagine using them today? In the early days of portable sanitation, the only deodorizer option was formaldehyde-based, which is toxic and dangerous to the environment. Now, formaldehyde-based formulas are becoming less and less used because there are safer, more environmentally safe options.
New technology can take many forms, and every aspect of your business can benefit. New tech doesn’t have to be complex, nor expensive, nor difficult to understand. Can you handle it? Absolutely. We’ve known many an operator who started with nothing more than a notebook and a pencil to keep track of their service route. Today, they wouldn’t do without the latest route management software with street-level maps and service sticker scanning.
Where might you look for new technology? First, in the portable sanitation industry itself. Units, accessories, supplies and cleaning equipment are always subject to new designs, more features and amenities, improvements to the manufacturing process and new generations of materials.
For example, PolyJohn just introduced a new cup holder feature. It’s a simple upgrade to their unit design, but customers will appreciate the convenience. At the other end of the complexity scale, an example of exciting new technology is waste processing equipment, now beginning to enter the market, that can be used by individual businesses.
The best way you can stay current on all the latest advances in the industry is to become a member of Portable Sanitation Association International (PSAI) at psai.org. Attend trade shows such as The WWETT Show (Water & Wastewater Equipment, Treatment & Transport) and the PSAI Convention and Trade Show. Also, be active on social media such as Facebook. You can discuss the innovations that other operators are enthusiastic about.
Your pumper truck is another opportunity to introduce new technology into your business. Lighter materials, more efficient design, and better fuel economy are just some of the ways trucks continue to advance. Keep the lines of communication open with your truck’s sales rep or the manufacturer. Let them know that you are interested in updates on upgrades or new technology.
In the office, examples of new tech are the latest routing software and QuickBooks or similar software for office management to replace your spreadsheets. Routing software can integrate billing, account management, tracking inventory and a host of other features. This can be an incredible time-saver and help your operations run at top efficiency.
When your business grows, your business changes. Embrace change as a positive development, not something to be feared.
The portable sanitation industry is never stagnant. It’s always changing, always growing, always finding new ways to improve services and sanitation itself. Growth is often about how well you can adapt to the changes in the industry. Change and growth are really an attitude of open-mindedness.
If you are faced with the opportunity to change, consider the pros and cons, as well as the costs and the benefits. After you’ve studied the issue, you may decide that the change isn’t in your best interest, but you will at least avoid the knee-jerk reaction that says, “We’ve always done it that way in the past.” Even in the instances when you decide not to change, that is part of the process of managing and sustaining growth.
If you’re not wholly convinced about the need for change, here’s a little initiative – your competition is changing – and growing!
Managing and sustaining growth means your company should be changing to the point where it is running efficiently within 3 to 5 years. Good growth means increasing revenue, increasing profits, improving cash flow and adding units to your inventory. Good growth means strengthening your professional experience as a boss and manager, in project and financial management, in problem-solving and other people skills. Good growth means building your company’s reputation, becoming a business leader in your community, and becoming an advocate in promoting public sanitation.
Looking to Take Your Portable Restroom Business to the NEXT LEVEL? Download our FREE Guide: “Your Guide to Operating A Portable Restroom Business.”
Thinking About GETTING INTO the Portable Restroom Industry? Download our FREE Guide: “Your Guide to Starting A Portable Restroom Business.”