Serving the American Liquid Waste Industry Since 2002
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E
conomic
| Impact |
| BUSINESS |
| By: Carol Brzozowski |
Under normal economic circumstances, the summer would be a time of ‘feast’ for portable sanitation operations
after a ‘famine’ of the typical winter slowdown in most parts of the United States.
But what impact will the current economy have on business?
In Greenville, South Carolina, Exquisite Restrooms owner Jeff Potter saw restroom trailer event business “tank”
last fall with cancellations or clients downscaling to less-costly portable sanitation unit rentals.
But Potter says bookings for the spring have been very strong and are continuing to be so into the summer.
“The reality is it’s not as bad as people think,” says Potter, adding that in his market, there had not been the large
construction “bust” that occurred in other areas.
Potter concedes that the strong spring and summer may not compensate for last fall’s losses, which reached 50
percent.
Business is not going to be up this year, he notes.
“We’ll be back to where we were before, but it still was a huge impact on a seasonal business,” he points out.
And for the most part, portable sanitation operators have found ways to cut costs without impacting human
resources, keeping employees on the payroll.
While the downturn in the residential construction sector hits different parts of the country in different ways, there
has been no discrimination when it comes to fuel prices. Every portable sanitation operator is feeling the impact.
Potter is reluctant to institute a fuel surcharge because of the competition in his area, “so basically, I have to eat
that additional cost and there’s really not any way I can improve my efficiency based upon doing a couple of
trailers on weekends versus someone running some every day for 12 hours a day.”
John St. George owns Portable Sanitation in Richmond, Virginia. His business, which has an inventory of more
than 1,000 units, provides portable sanitation to both the construction and special events sectors.
St. George is noting a minor increase in revenues but he’s concerned that will be consumed by fuel costs.
“We’re paying $4 a gallon for diesel,” he says.
Therefore, St. George is taking the approach of other portable sanitation operators by engaging in route
optimization. He’s reconfigured some five-day routes to four days.
“We have five full-time drivers and two of them are going from working five days to four just to get that truck off
the road one of those days,” he says. “From a payroll standpoint, they’ll still probably get their hours, but we just
had some soft spots in our schedule which allowed us to do that.”
At Burns Rentals in Mishawaka, Indiana, company officials have decided to add a small fuel surcharge for portable
sanitation unit rentals; manager R.J. Scoggan believes anyone who drives a vehicle will understand its rationale.
Burns Rental drivers now also use only credit cards at fuel stations, utilizing the SuperFleet fuel discount available
to commercial vehicles.
Additionally, in an effort to save fuel, Burns’ truck drivers are taking their lunch on the road, rather than returning
to the office.
While companies such as Burns haven’t noticed a problem in invoice payments, in some cases for many portable
sanitation operators, there have been longer time lapses in getting invoices paid.
Potter has found himself having to take a more pro-active approach to accounts receivables to ensure no further
delays by asking for more of the money upfront. In the past, he used to on some occasions waive the initial deposit.
“It is never waived now,” he says. “Nothing gets done until that initial deposit is received.”
St. George has seen quite a dip in receivables.
“Between October and now, I’ve made more shareholder loans to the company just to cover necessary expenses,”
he says. “That’s frustrating, because that’s my money and there’s no guarantee I’m going to get that back next
month.”
Increasing efficiencies in any way possible is this year’s primary business strategy. In addition to route
optimization, portable sanitation operators are cutting corners in other areas.
For St. George’s company, summer means being able to cut back on the number of items in a uniform from
shirts, pants and jackets to a more casual, less costly, appearance.
“They still wear uniforms every day,” he says. “They just aren’t in full regalia.”
St. George and his operations manager, Rick Puckett, continually scrutinize expenses, looking for ways to cut
costs, including reviewing supplier costs. They tend to deal with the same chemical suppliers, but shop around on
paper products.
Another measure St. George has taken is in examining his banking relationships.
“We don’t carry a lot of debt,” he says. “It‘s more than I’d like, but not a lot in comparison to revenue because we
purchased a competitor in May 2006 and that note was two years old this month and was at an interest rate of
8.75.”
So he approached another bank with which he’s enjoyed a good relationship to create more cash flow by getting
an interest rate of 7.25.
In the meantime, he’s consolidating payments on equipment, pushing the note terms from five to four years, “so
we lose a year, but we lose a lot of interest expense.I would encourage anybody to do that. Interest rates right now
are very low. I think a lot of guys who borrowed money from the bank on the commercial side don’t think they
can negotiate their rate and they can.”
Rising healthcare costs are another area in which portable sanitation operators are cutting back - many are
requiring employees to assume a greater share of policy expenses.
St. George used to pay 75 percent of his employees’ costs; now his company pays half.
“And that’s subject to change,” he says. “That’s one of the things I like to keep, but we’re certainly scrutinizing
everything a lot more.”
St. George’s experience with special events this summer echoes that of predictions made in earlier issues of
Sanitation Journal: the special events sector is virtually untouched by present economic factors.
“We seem to be rather steady with special events,” says St. George. “That’s one thing I’ve noticed over the years
- even if there’s a downturn in the economy, people are still going to have their parties and graduation gigs.”
St. George also deliberately avoids doing special events that don’t reap a decent return on the investment of
equipment and time.
“There are a few operators in our general vicinity that handle bigger events. We’ll do the smaller ones with 50
toilets, but if there’s an event with 200 units here and 400 units there, we spend three weeks setting up and tearing
down.
“We avoid those things because they don’t pay any money. Too many business owners get caught up in the big
sale. They’re too focused on their revenue and they don’t look at the bottom line. One guy says he’s going to do
$3 million this year, but he won’t tell you he had to take a pay cut and lay off three guys. He won’t tell you his
expenses are through the roof and he’s not making any money.”
Portable Sanitation will not negotiate prices, St. George says, adding that other operators in the area will do so.
“There are a few ambitious start-ups in our area and I’m watching our expenses go up and I’m watching their
prices go down,” he says. “It drives my operations guy nuts, but he understands if we do it once, we set ourselves
up to negotiate again with the same guy or a buddy of his.”
Glenn Greeno of Ameri-Can Portables in Belleville, Illinois won’t negotiate prices, either, and it hasn’t hurt his
business, he says.
While larger operators have offered special rates to competitors’ customers, “for us, an economic downturn has
had little effect on our special events market, as most of our customers have already opted for quality, rather than
cheap,” says Greeno. “In fact, many of our return customers have increased their numbers and this year expect to
pay more to cover higher fuel costs.
“We have also discontinued making believe that we can deliver a single weekend special events unit for the same
cost as a contractor pays for a month of service. We have instituted a minimum charge for a special event, no
matter where it is, and we are simply redirecting these single ‘loser’ jobs to our competition, so they can spend
their resources - spending over $120 in direct costs - to deliver a unit for less.”
Greeno has no problem telling customers they should take a unit from a competitor at a lower price if that’s all that
matters to them, but if they want quality service at a reasonable price, his company will supply the units.
The impact of the economy has meant a trickle-down effect to portable sanitation clients.
“It’s affecting everything from the fuel to the toilet paper we put in our restrooms,” says Scoggan, adding his
company - which is licensed in Indiana and Michigan - is even seeing increases in licensing fees. “The companies
we get it from raise their prices, we have to raise our prices and it just goes right down to the consumer. It‘s a
domino effect.”
after a ‘famine’ of the typical winter slowdown in most parts of the United States.
But what impact will the current economy have on business?
In Greenville, South Carolina, Exquisite Restrooms owner Jeff Potter saw restroom trailer event business “tank”
last fall with cancellations or clients downscaling to less-costly portable sanitation unit rentals.
But Potter says bookings for the spring have been very strong and are continuing to be so into the summer.
“The reality is it’s not as bad as people think,” says Potter, adding that in his market, there had not been the large
construction “bust” that occurred in other areas.
Potter concedes that the strong spring and summer may not compensate for last fall’s losses, which reached 50
percent.
Business is not going to be up this year, he notes.
“We’ll be back to where we were before, but it still was a huge impact on a seasonal business,” he points out.
And for the most part, portable sanitation operators have found ways to cut costs without impacting human
resources, keeping employees on the payroll.
While the downturn in the residential construction sector hits different parts of the country in different ways, there
has been no discrimination when it comes to fuel prices. Every portable sanitation operator is feeling the impact.
Potter is reluctant to institute a fuel surcharge because of the competition in his area, “so basically, I have to eat
that additional cost and there’s really not any way I can improve my efficiency based upon doing a couple of
trailers on weekends versus someone running some every day for 12 hours a day.”
John St. George owns Portable Sanitation in Richmond, Virginia. His business, which has an inventory of more
than 1,000 units, provides portable sanitation to both the construction and special events sectors.
St. George is noting a minor increase in revenues but he’s concerned that will be consumed by fuel costs.
“We’re paying $4 a gallon for diesel,” he says.
Therefore, St. George is taking the approach of other portable sanitation operators by engaging in route
optimization. He’s reconfigured some five-day routes to four days.
“We have five full-time drivers and two of them are going from working five days to four just to get that truck off
the road one of those days,” he says. “From a payroll standpoint, they’ll still probably get their hours, but we just
had some soft spots in our schedule which allowed us to do that.”
At Burns Rentals in Mishawaka, Indiana, company officials have decided to add a small fuel surcharge for portable
sanitation unit rentals; manager R.J. Scoggan believes anyone who drives a vehicle will understand its rationale.
Burns Rental drivers now also use only credit cards at fuel stations, utilizing the SuperFleet fuel discount available
to commercial vehicles.
Additionally, in an effort to save fuel, Burns’ truck drivers are taking their lunch on the road, rather than returning
to the office.
While companies such as Burns haven’t noticed a problem in invoice payments, in some cases for many portable
sanitation operators, there have been longer time lapses in getting invoices paid.
Potter has found himself having to take a more pro-active approach to accounts receivables to ensure no further
delays by asking for more of the money upfront. In the past, he used to on some occasions waive the initial deposit.
“It is never waived now,” he says. “Nothing gets done until that initial deposit is received.”
St. George has seen quite a dip in receivables.
“Between October and now, I’ve made more shareholder loans to the company just to cover necessary expenses,”
he says. “That’s frustrating, because that’s my money and there’s no guarantee I’m going to get that back next
month.”
Increasing efficiencies in any way possible is this year’s primary business strategy. In addition to route
optimization, portable sanitation operators are cutting corners in other areas.
For St. George’s company, summer means being able to cut back on the number of items in a uniform from
shirts, pants and jackets to a more casual, less costly, appearance.
“They still wear uniforms every day,” he says. “They just aren’t in full regalia.”
St. George and his operations manager, Rick Puckett, continually scrutinize expenses, looking for ways to cut
costs, including reviewing supplier costs. They tend to deal with the same chemical suppliers, but shop around on
paper products.
Another measure St. George has taken is in examining his banking relationships.
“We don’t carry a lot of debt,” he says. “It‘s more than I’d like, but not a lot in comparison to revenue because we
purchased a competitor in May 2006 and that note was two years old this month and was at an interest rate of
8.75.”
So he approached another bank with which he’s enjoyed a good relationship to create more cash flow by getting
an interest rate of 7.25.
In the meantime, he’s consolidating payments on equipment, pushing the note terms from five to four years, “so
we lose a year, but we lose a lot of interest expense.I would encourage anybody to do that. Interest rates right now
are very low. I think a lot of guys who borrowed money from the bank on the commercial side don’t think they
can negotiate their rate and they can.”
Rising healthcare costs are another area in which portable sanitation operators are cutting back - many are
requiring employees to assume a greater share of policy expenses.
St. George used to pay 75 percent of his employees’ costs; now his company pays half.
“And that’s subject to change,” he says. “That’s one of the things I like to keep, but we’re certainly scrutinizing
everything a lot more.”
St. George’s experience with special events this summer echoes that of predictions made in earlier issues of
Sanitation Journal: the special events sector is virtually untouched by present economic factors.
“We seem to be rather steady with special events,” says St. George. “That’s one thing I’ve noticed over the years
- even if there’s a downturn in the economy, people are still going to have their parties and graduation gigs.”
St. George also deliberately avoids doing special events that don’t reap a decent return on the investment of
equipment and time.
“There are a few operators in our general vicinity that handle bigger events. We’ll do the smaller ones with 50
toilets, but if there’s an event with 200 units here and 400 units there, we spend three weeks setting up and tearing
down.
“We avoid those things because they don’t pay any money. Too many business owners get caught up in the big
sale. They’re too focused on their revenue and they don’t look at the bottom line. One guy says he’s going to do
$3 million this year, but he won’t tell you he had to take a pay cut and lay off three guys. He won’t tell you his
expenses are through the roof and he’s not making any money.”
Portable Sanitation will not negotiate prices, St. George says, adding that other operators in the area will do so.
“There are a few ambitious start-ups in our area and I’m watching our expenses go up and I’m watching their
prices go down,” he says. “It drives my operations guy nuts, but he understands if we do it once, we set ourselves
up to negotiate again with the same guy or a buddy of his.”
Glenn Greeno of Ameri-Can Portables in Belleville, Illinois won’t negotiate prices, either, and it hasn’t hurt his
business, he says.
While larger operators have offered special rates to competitors’ customers, “for us, an economic downturn has
had little effect on our special events market, as most of our customers have already opted for quality, rather than
cheap,” says Greeno. “In fact, many of our return customers have increased their numbers and this year expect to
pay more to cover higher fuel costs.
“We have also discontinued making believe that we can deliver a single weekend special events unit for the same
cost as a contractor pays for a month of service. We have instituted a minimum charge for a special event, no
matter where it is, and we are simply redirecting these single ‘loser’ jobs to our competition, so they can spend
their resources - spending over $120 in direct costs - to deliver a unit for less.”
Greeno has no problem telling customers they should take a unit from a competitor at a lower price if that’s all that
matters to them, but if they want quality service at a reasonable price, his company will supply the units.
The impact of the economy has meant a trickle-down effect to portable sanitation clients.
“It’s affecting everything from the fuel to the toilet paper we put in our restrooms,” says Scoggan, adding his
company - which is licensed in Indiana and Michigan - is even seeing increases in licensing fees. “The companies
we get it from raise their prices, we have to raise our prices and it just goes right down to the consumer. It‘s a
domino effect.”
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