Many portable sanitation businesses have been booming recently, taking advantage of our robust economy. Fast growth is great, right?
Not so fast! Sometimes, it can actually harm your business.
Of course, growth is what you need to make that new business of yours profitable. There are many ways a business can grow, such as expanding into new markets or merging with or acquiring other businesses. But we’re talking about the most basic type of growth, which is often called organic growth. It means you are increasing your “output” – your sales and service. It means you’re servicing more customers and perhaps offering more products.
Businesses can grow slowly or rapidly. The potential problem is not the growth itself, but how you manage it. A growing business is your goal, but unchecked growth, which means growth that isn’t properly managed, can be a danger to your business in many ways.
The potential hazards of business growth, especially fast growth, are real. The examples below are worst-case scenarios that can happen.
Customer service suffers
You’re so busy that you’re late delivering units. A worker on overtime or hurrying through the route may not clean as thoroughly as usual or forget that extra roll of toilet paper. It takes you longer to fix a problem with a unit. You may not have time to answer questions or reply to a customer’s texts. A new driver messes up because he’s learning on the job.
It’s easy to lose focus on service when you’re busy all the time. All it takes is a few unfortunate interactions to burden your company with the reputation of poor customer service.
Cash flow is squeezed
Growth costs money. So, this scenario becomes a possibility – your company is growing so fast, you need to quickly purchase more units and more supplies. Weekend work is constant, so you’re paying a driver overtime. You hire a part-time worker to help out. You’re spending more on fuel and dumping fees. Cash is coming in, but you actually have to borrow money to make up for the cash going out.
There can also be the temptation to spend loosely. For example, you suddenly have a lot of cash, so you decide to take an extra vacation or buy a new pumper truck with all the bells and whistles. Then business peaks, and you suddenly have less income but more bills.
Safety becomes secondary
You or your workers may speed a little faster to get to the site. Unload units a little faster. You’re in a hurry, so you take a chance that you can back up into a tight place without someone to spot you. You’re working seven days a week – you’re tired and your reactions are slowed.
Tiredness and impatience lead to accidents and injuries. There is potential danger not just for your business, but for yourself, your drivers and your customers.
Stress and dissatisfaction
When you’re growing fast, it can seem like every moment of the day is taken. On the business side, you don’t have time to run the company because you’re just trying to keep up. Because you’re tired, you “blow up” over a problem or complaint that could easily be resolved. At home, it seems as though there’s less and less time for family, for social life, for relaxing. You may start to wonder why you ever got into portable sanitation in the first place.
Your driver is also experiencing the same issues. He’s talking about jumping ship.
You didn’t expect business to grow so quickly, so now you have to hire a driver quickly. Rushing the hiring process could result in a poorly trained employee, an employee who isn’t suited for the job or who isn’t a good fit in your company.
Whether your business growth is fast or slow, the key to business success (and a better life) is effective management.
Growth means new customers or increased orders from current customers. There can be many reasons for the growth of your business, and several could be happening at the same time. Growth can be due to your own efforts, reasons you don’t control or both. It’s important that you understand the reasons you are growing.
Your own efforts are the most reliable source of manageable growth.
A clear indication of good service that results in growth is customer referrals. This means a new customer received a positive recommendation from a current customer. Or, a current customer called you with a tip about a potential customer. You can bet the “usual suspects” are responsible:
To maintain this pipeline of growth, make sure you thank customers for referrals and always ask new customers for their referrals and positive reviews. You can even offer a long-term customer a bonus (like a percentage discount for a few months of service) if they give you a successful referral.
You may want to realign your marketing budget to put more resources into a successful component and reconsider how you want to use less effective marketing components.
Your business colleagues at the Chamber of Commerce of a civic organization have recommended you. Or (for example), you donated your services to a not-for-profit organization, and so at their next big fundraiser, they hired you.
This can be another source of continued growth. Return their recommendation in kind, if possible. Let them know how much you appreciate their efforts.
You have no control over these factors, so be cautious when projecting growth over the long term.
It may be that a rival is receiving negative reviews and customers are switching to you. If so, compare your services. What is setting you apart from your competition? Continue to emphasize those qualities of your service.
Has a competitor gone out of business? If a company dropped out and you picked up their customers, it’s a one-time growth opportunity. Don’t expect continued growth from this area.
How are your competitors doing? Are they also growing? If all the PROs in your service area are doing well, it may be because your service area is enjoying a prosperous economy. Stay up-to-date on local business news and network with your business connections to understand the local economic environment. A good source of information is the local economic development organization. Look for an increase in construction projects, new businesses moving into the area and recent efforts at the state or regional levels to attract new business.
The continuing growth of the local economy is a good sign for your business. It usually means more spending. You may be getting more and larger weddings, birthdays and graduation parties. There may be more events scheduled, or event organizers may anticipate more attendees. Investing in more luxury units or amenities may be the necessary course of action to maintain this avenue of growth.
It really helps to prepare for growth before it happens. Let’s look back at the problems that can arise from growth, especially fast growth, and some response options.
The key to well-managed, successful company growth is right here.
You not only need cash to grow, but you also need cash as you grow. Build up your cash reserves by means other than new business to offset the costs of growth:
SCORE offers an informative article “How Much Cash Should a Small Business Keep in Reserve?” at https://www.score.org/blog/how-much-cash-should-small-business-keep-reserve.
Make a commitment every day to make safety a priority. Trying to do everything in a hurry is the opposite of safe conduct. Some simple safety refreshers include:
When growth is strong, how are you finding, hiring and integrating new team members so that quality is maintained?
If you have determined that the growth you have achieved is sustainable (you’ve added many long-term contracts, for example), you may be ready to hire your first driver or an additional driver.
Download our manual “Your Guide to Operating a Portable Restroom Business” for more comprehensive information.
While the economy is currently positive and businesses are growing, a recession is still a possibility. In our article “What You Can Do to Prepare for the Next Recession,” we noted that many leading economists are warning that there are signs of a possible recession in 2020 or 2021.
Managing growth should take into account that growth may slow or stop. In fact, some of the tactics of managing growth and preparing for recession are similar, such as building cash reserves. One effective tactic as both a means of growth and a hedge against recession is diversifying your services.
Diversifying gives you access to new markets and broadens your customer base, reducing your risk. These options are ideal for PROs:
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