& pick-up times
Vancouver, British Columbia
VANCOUVER, BRITISH COLUMBIA — When Brian Scudamore bought his first pickup truck and began hauling junk in 1989, he had no idea that, 16 years later, his company would grow to become the world’s largest junk removal company, with more than $66.2 million in sales, 284 franchises across Canada, the United States and Australia and a corporate office in the United Kingdom. As testament to its staying power, the company is projecting $112 million in sales by the end of 2006 – a 69 per cent jump.
He first started hauling junk as a way to make money during the summer. As the business grew, so too did Brian’s vision. In 1994, he realized there was an opportunity to bring organization and professionalism to an industry dominated by one- and two-person operations. “No one had ever professionally branded junk removal,” he says. At that time, his company, The Rubbish Boys, had three trucks running full-time, 11 employees and annual revenues of about $100 000. As a small business owner, could he singlehandedly change the face of the junk removal industry to become the “FedEx of junk removal”? What would he need to do to undertake such a challenge?
He started by putting the proper systems in place, testing and refining them until he was confident they would work on a broader scale, and acquiring the expertise he needed to help him expand. By the beginning of 2006, 1-800-GOT-JUNK? was well on its way to becoming a global brand, recognized around the world for its fast, efficient service.
When Brian started The Rubbish Boys in the spring of 1989, he was just 19 years old, fresh out of high school, and his only long-term plan was to make enough money to pay for college. The summer job market was tight, and self-employment seemed more interesting than working for someone else in a minimum-wage job. “I didn’t envision that I was going to build something that I’d take across North America,” says Brian. He bought an old pickup truck, built some wooden panels in the back and painted his phone number on the side, 738-JUNK, along with the slogan, “We’ll stash your trash in a flash.”
He hired other students to help him on the trucks and later, as the business grew, in the office. In the beginning, they would drive up and down alleys, looking for stuff that garbage crews wouldn’t take and offering to haul it away. “We still do haul away trash, of course, but now we have a lot of corporate clients as well.”
By 1993, the business had grown to the point that it was beginning to interfere with Brian’s university studies. Besides, he was having more fun running the business than going to school. “I was learning much more about business than when I was studying it,” he says. A year and a half short of graduation, he quit university to concentrate on his business full-time, formally incorporating the company as The Rubbish Boys Disposal Service Inc.
“When I started, I found the industry to be really fragmented,” says Brian. “It included many independents who owned a truck and knocked on doors and asked people if they had any junk to get rid of.”
The solid waste management industry in North America is highly structured and dominated by a handful of giants such as Waste Management and BFI Canada. Most of the smaller waste management companies specialize in particular types of waste, such as construction debris. Junk removal is a niche market that, until recently, has been dominated by local haulers with a dump truck looking for small commercial and residential jobs. They remove the bulky household rubbish that the larger disposal firms can’t — or won’t ” deal with, from construction material and garden refuse to old furniture and appliances. Service was typically unreliable and pricing and quality were inconsistent.
While some companies may have developed small, regional operations consisting of several trucks or locations, no one had developed a national presence in the junk removal business. “There are companies out there that do this sort of thing. They just don’t do it like we do,” says Brian. “Our uniformed drivers show up in their shiny trucks at a scheduled time, with a standardized price sheet in hand. The level of professionalism that we have adopted is what differentiates us from the competition.”
One of the only other companies to attempt a similar approach to 1-800-GOT-JUNK? was Trashbusters, also based in Vancouver. Established in 1994, it now has several offices across Canada and the United States. Ironically, one of the founding partners of Trashbusters worked for The Rubbish Boys for two summers before leaving to start his rival company. At first, Brian was upset. “I tried everything ethical in my power to stop them from growing,” he writes in a column for Profit magazine in March 2006. But now he says he’s learned to welcome the competition. “In our industry, where our biggest challenge is creating awareness not only of our brands but of the existence of junk removal services, who better to help than the competition?”
From the beginning, Brian has retained 100 percent control of the company. No equity partners, no venture capitalists and no investors or employee shareholders. “I believe in a vision, and I believe in one captain of a ship,” he says. He purchased his first pickup truck — used — for $700 with money he had saved from various part-time jobs. For the first five years, he ran the business out of the basement of his parents’ home, taking advantage of the free room and board his parents gave him while he attended university. He financed the business through cash flow and “three or four credit cards,” he says. His parents also helped with loans along the way.
When he first started, Brian gained valuable experience through a federally funded self-employment program offered by the YMCA. “In 1991, The Rubbish Boys didn’t get off to the best start, so I took the program to find out more about financials,” he says. He’d never run a business before and the training program, which covered all aspects of managing a small business, helped him to put in place the office and support systems that would allow his business to grow. “It certainly gave me the confidence that the business could be bigger than how I had originally envisioned it,” he says. “I had to master every aspect of running the business before I could start to train people in what I did and before I could start to put the systems in place to ensure that things ran consistently.”
Later, as the business grew, he took advantage of various summer student training programs offered through Human Resources and Skills Development Canada. The wage subsidy programs allowed him to hire additional drivers and office staff during the busy summer months, and helped offset costs during the slower winter season.
In 1994, shortly after deciding to concentrate on the business full-time, he moved out of his parents’ home and into a small office. He paid $500 a month in rent, and purchased four used pickup trucks for $1000 each from a paving company that had gone out of business. By then, he had three trucks running full-time, 11 employees and sales of $100 000.
“We have a quote posted up in our head office that says, ‘It’s all about people.’ When people see that quote, it’s something we can hold ourselves accountable to,” says Brian. “It’s all about finding the right people, and treating those people right.”
The same year that he moved into his first office, Brian ended up firing his entire staff of 11 people. It was the toughest decision of his career, he says, but ultimately the best one. “I had tried to change the culture, and I finally realized that I just didn’t have the right people. I wasn’t going to be able to change them, so I decided to start fresh.”
He knew that starting with a strong team was critical to his success in building a company that would transform the industry. He was looking for people who were professional — polite, clean-cut, well-educated and well-spoken. “I wanted people that were going to treat my customers exceptionally well,” he says. “I wanted people that were going to get excited and go home at the end of the day and say, ‘I’ve got a great job, I had fun today, I met some great customers and those customers were incredibly pleased at the job I did, and I feel proud,’” says Brian.
The incident taught him the value of spending the time required to develop a strong recruitment program. “I was terrified,” he says. “I didn’t feel good about having to fire people. So yes, it was a terrible time, but it taught me that I had to be really, really careful about finding the right people.”
Once he let everyone go, he scaled the business back to one truck, which he operated on his own, recruiting new people in between jobs picking up rubbish. It took him a couple of months before eventually getting the business back on track. As a result, the company now has a strong recruitment and training program in addition to a variety of other employee programs designed to create a positive work environment. In 2004 and 2005, it was ranked by BC Business magazine and Watson Wyatt Canada, a management consulting firm, as the best company to work for in British Columbia. Outside of the call centre, which employs a lot of students, the company reported a 1.4 percent turnover in 2004.
An avid reader, Brian was especially inspired by Michael Gerber’s book, “The E-Myth: Why most Small Businesses Don’t Work and What to Do About It” first published in 1977. In his book, Gerber argues that small business owners would be more successful if they adopted a franchise model for systemizing their business, regardless of whether they were planning to franchise or not. He suggests that business owners break their business down into easily manageable components and then create a system for each component.
The approach was well-suited to Brian’s vision of bringing organization to the junk removal business. He began following Gerber’s model long before he considered franchising. “You’ve got to run your business like it’s a franchise,” says Brian. “Systematize the business so that other people can run it like you do.”
Brian began to methodically put the right systems in place to grow his business. From the start, he recognized that one of the reasons for his success was his attention to customer service. Truck drivers showed up on time and were clean, efficient and polite. He implemented a dress code and ensured that all staff were pleasant and well-mannered.
Today, franchisees wear uniforms of navy slacks, a royal blue golf shirt imprinted with the company’s logo, a baseball cap, and matching belts and boots. They drive one of three late model trucks as selected by the company, always in blue and white. All have identical dump boxes, manufactured to company specifications, with the company’s logo 1-800-GOT-JUNK? emblazoned on the sides. Franchisees are also required to wash their trucks at least once a day and ensure that they are well-maintained.
Brian established his first call centre in 1994 to handle all bookings and dispatch. Based in Vancouver, the call centre has since grown from a single dispatcher to become the hub of 1-800-GOT-JUNK?’s worldwide organization, employing some 150 operators. Sophisticated software now allows call centre operators to pinpoint the customer’s exact location and schedule a pickup, no matter where they’re calling from. Franchisees never miss a call and customers are always able to reach a live operator. The centralized system also allows 1-800-GOT-JUNK? to maintain tight control over the company’s brand and image by ensuring that all phone calls and customer inquiries are handled consistently, in a pleasant and professional manner. In 2006, between 4500 and 5000 calls a day flowed through the call centre.
All call centre operators or agents are skilled in customer service, sales and complaint resolution. Once a job is completed, the customer receives a follow-up call from the same operator who made the original booking to make sure the customer is satisfied. “We wanted to be able to offer a more personalized level of service and like the feeling of a small office. If Linda books a job and then later the customer has a complaint, Linda already has a relationship with that customer,” says Brian.
Customers can also log onto the company’s website at www.1800gotjunk.com to schedule an appointment to have their junk removed. Launched in 1999, the website now allows customers to submit a request for an estimate and schedule a pickup online, something the company wants to encourage. “The cost of booking a job at our call centre is about $6.50,” says Cameron Herrold, Chief Operating Officer at 1-800-GOT-JUNK?. “For us to now book a job online is about 4.5 cents.” By mid-2006, approximately 15 percent of 1-800-GOT-JUNK?’s sales were made online.
“We couldn’t run the business we have without the system and technology,” says Brian. “It has allowed us to expand all over North America. With this system we can have a central hub and mobile locations all over the place. We are growing very quickly, and Junkware and JunkNet are making the process easier.”
In 1995, Brian began developing Junkware, a proprietary software program that systematized the company’s administrative and accounting procedures. As the company grew, the software was further refined and customized to support the franchise program by providing franchise partners with computerized forms and a customized accounting package that made it easier for them to set up their financial and administrative systems and keep track of customer and employee information.
In 1997, the company launched JunkNet, an intranet system that linked all partners and employees to the Junkware program online through a web browser that connects directly to the company’s in-house servers. Today, franchise partners log onto JunkNet each morning to see their daily schedules, download forms and track their marketing efforts. At the end of each day, they post their daily sales and expenses online. The head office handles all payables and receivables, issues payroll cheques and maintains up-to-date balance sheets.
JunkNet also handles all booking and dispatch operations, and maps each franchise partner’s territory by zip code, allowing call centre agents to view the different territories and book jobs without knowing the area.
Once Brian determined that the systems he had developed would work effectively, he began exploring the idea of expanding the company through student franchises. He borrowed a page from College Pro Painters, a company that had also been started as a summer business by a university student. Established in 1971 in Ontario, it has since grown to become one of the largest and most successful student painting franchises in North America. Like Rubbish Boys, College Pro brought structure and organization to an industry dominated by small, independent operators. And like Rubbish Boys, College Pro encouraged employees to think like they were running their own business.
Having learned from his earlier mistakes, he knew that it was critical to bring the right person on board to help him. That person turned out to be Paul Guy, former manager for the British Columbia branch of College Pro Painters. Paul had worked his way through university at College Pro and was passionate about the model. Brian recruited Paul to help develop the student franchise system, which ended up serving as a trial run for what would eventually become a full-fledged franchise program.
Paul Guy had been referred to Brian by Cameron Herrold, another College Pro Painters alum. “I saw a flyer on the floor that said ‘Earn $10 000 and run your own business,’” says Cameron. “I thought, ‘I can do that.’ So I did it and made about $12 000 my first summer.” He too liked the student franchise concept. “The thing I’ve always liked about franchising is that the systems allow you to grow faster,” he says. “That’s what franchising does. It gives you all the tools, all the systems and then it’s up to you to use them.”
In addition to recruiting people with extensive experience in franchising, Brian turned to other business owners who had successfully expanded their businesses, either through franchising or through multiple, corporate-owned locations. “I went to a company called Shred-It, and had a mentor there. I turned to Mailboxes Etcetera. I turned to Subway and its founder. I would just call up people and say ‘hey, this is what I’m building and I’ve got a question for you.’” He spent hundreds of hours talking to people on the phone and visiting them in person if he had the chance. There was no single company that offered everything he was looking for. “I had to take different bits and pieces from different franchises and different company mentors,” he says.
“I decided to use franchising because I think someone running their own business would do whatever it takes to succeed,” Brian says. “That’s what happens when your own investment is on the line.” He had learned the hard way. In 1995, he had opened a second location in Victoria, British Columbia, staffed by a full-time manager and four students. While it made $77 000 in sales during its first year of operation, Brian felt that the student employees lacked the kind of drive that can only be expected of a business owner.
Brian developed an operating system that provided student franchisees with a complete guide to setting up their junk removal business, including information and forms on hiring and managing staff, marketing and accounting. “They had to do most of the same things that our regular franchise partners now do, but on a smaller scale,” says Brian.
Students paid a fee of approximately $4000, which included rights to an exclusive territory, the first and last month’s payment on the lease of a truck emblazoned with the company’s slogan, an initial training session, and access to the company’s call centre and in-house accounting system. In return, student franchisees were required to pay a 6 percent royalty on gross sales.
The student franchise concept was launched in the spring of 1997. By then, The Rubbish Boys had a fleet of 12 trucks, annual sales of $1 million, and a full-time staff of 16 yearround and another 25 during May through September, the company’s busiest season.
“The leap of going from a student business to this more professional sort of building out the brand across North America hasn’t been overnight,” says Brian. “It’s really just been slowly but surely, being patient and building it out.”
He originally thought that he would stick with the student franchise model, but “I realized that there wasn’t enough of a season for these students to make enough money,” he says. By June 1998, the company had 11 student-run franchises, 27 employees and 16 trucks. After testing his student franchise model and fine-tuning the program, Brian determined that full-scale franchising could work in his business and that his systems were strong enough to stand on their own. “We spent three to five years investigating how to franchise so we could do it properly. It’s not a short-term deal,” says Brian.
Franchising also gave the company the opportunity to expand without serious capital outlays and without relinquishing control over the company’s direction and image. “Brian didn’t have any money and didn’t want to go public, so he used franchises as a means to grow,” says Cameron. Like the student franchisees before them, full-scale franchise partners paid an initial start-up fee plus an annual royalty as a percentage of sales. The revenue generated through selling franchises would finance the company’s ability to strengthen its system and attract additional franchise partners in new regions.
As he moved closer to launching his franchise program, Brian recognized that it would make things easier if he had one telephone number, accessible from anywhere in North America, eliminating the need for multiple local numbers. “Imagine if we could have a name and a phone number being one?” he said. Building on the success of his original phone number, 738-JUNK, Brian came up with 1-800-GOT-JUNK?, a catchy title that was inspired by the ubiquitous Got Milk? campaign and the success of 1-800-FLOWERS.
The phone number was already taken by the Department of Transportation in Idaho, but Brian was persistent. “I made 60 phone calls to the person who had that number,” says Brian. “I just told them how badly I wanted that number, and how important it was to me. So, while I had 59 noes, I did get the 60th one, which was a yes.”
In December 1998, the company officially changed its name and phone number to 1-800-GOT-JUNK? “The name is instrumental to our success,” says Brian. “People remember it.”
The first 1-800-GOT-JUNK? franchise was opened in Toronto in May 1999 by Paul Guy. After working with Brian on developing the program, he was keen to see how it actually worked. Brian also wanted to make sure there weren’t any glitches before rolling the program out nationwide. Paul’s experience with College Pro and his knowledge of 1-800-GOT-JUNK?’s corporate culture made him a natural and contributed to his success. “Paul Guy hit a huge home run in Toronto,” says Brian. “If we didn’t have someone that was so successful leading the way, then it wouldn’t have been as dramatic. He paved the way for the future franchise partners coming into the system. That was important.”
The following year, seven more franchises opened in Canada and another 14 in the United States. “The first franchise partners were imperative to our success,” said Brian. The first franchise partner in Portland, Oregon, however, didn’t have the same success as Paul Guy. “He wasn’t a failure by any means,” said Brian. “He was quite a success. He just wasn’t nearly as successful as we thought he could be.” Once again, Brian learned from the experience. “You learn how to pick better people,” he said. “And we became clearer on what we were looking for in a franchise partner.”
They found that partner a few months later in Tom Rypma, who opened a franchise in San Francisco, California, in November 2000. A former business manager for a medical equipment maker, Tom was originally from Calgary, Alberta. “I don’t think anyone dreams of being in the junk removal business,” says Tom. “My parents were like, ‘After all that education, you’re doing what?’ But I’d been looking for an opportunity, and was really drawn to the company. I feel like I’m in on the ground floor of something that can really grow.”
Tom was relentless, said Brian. “He understood that it wasn’t just about getting out there and marketing one week and then taking three weeks off from marketing. Marketing is about getting out there every single day.” Brian was able to use the success of the San Francisco franchise as a testimonial in recruiting other franchise partners. “Tom would get on the phone and talk to franchise candidates and they would hear Tom’s passion,” said Brian. “His excitement would lead to their excitement, so that was a big help.”
The company set the original franchise fee at $28 000 plus a 6 percent royalty on gross revenues with another $40 000 to $60 000 in working capital for a truck and related equipment. They soon found that the fee was making it difficult to attract the kind of young, highly-motivated entrepreneurs they were interested in, so they dropped the fee to $10 000 plus a $6000 licensing fee for each territory with a population base of 250 000. By 2006, the fee had risen to $20 000 for a territory with a population of 125 000 plus a $6000 marketing fee to cover the grand opening of the new franchise.
Franchise partners also pay a royalty of 8 percent on gross revenues and a 7 percent co-op services fee to cover management of the call centre and JunkNet, billing and marketing support, and employee training. Another 1 percent of sales goes towards an advertising pool, matched dollar for dollar by the company. The agreement also requires that franchisees spend a minimum of 5 percent of revenues on local advertising. Additional start-up costs range from $32 000 to $52 000 and include the purchase or lease of a oneton truck with customized box, tools, uniforms and computer equipment.
One of the challenges facing the company as it launched its franchise business was how to attract and recruit franchise partners on a limited budget and with minimal brand awareness outside the Vancouver market. The solution, says Brian, was to develop a strong media relations program that took the 1-800-GOT-JUNK? story to the national media. Brian remembered that a 1992 article on The Rubbish Boys that ran in The Province, one of Vancouver’s major daily newspapers, had generated a great deal of public interest. He thought the same strategy could help his company break into new markets.
Rather than spending limited resources on targeting individual local markets, the company concentrated on national newspapers and magazines that would allow them to get their message across to a much wider audience. In addition to reaching potential franchise partners, the stories would also reach potential customers and help build the company’s brand name.
In June 2000, the company’s franchise development was given an added boost, particularly in the United States, with an article in Success magazine’s issue of “The Top 10 Hottest New Franchises.” The magazine named 1-800-GOT-JUNK? as one of the “most innovative and contemporary franchises” that year. “The article in Success magazine was absolutely huge,” said Brian. “The people who responded were educated, very professional, very successful people.” Exactly the type of franchisees they wanted.
In addition to the media, the company uses its website as one of its main recruiting tools. All interested candidates are directed to the website where they can access information on the company’s franchise program, including available locations, the terms of the arrangement and amount of investment required, and an online registration form.
Once they have submitted their registration package, applicants are invited to participate in a series of pre-screening telephone interviews. Candidates who successfully make it through the phone calls — about 4 percent — are then invited to Vancouver for a full day of intense interviews with members of the senior management team. About one quarter are screened out and, of the remaining candidates, about half end up opening a franchise. The entire process, from initial contact through the selection interviews, takes an average of two months.
1-800-GOT-JUNK? has also developed an intensive nine-day training program to familiarize new franchisees with the company’s operating systems and processes. New partners travel to the company’s head office in Vancouver for five days of classroom instruction, followed by four days of on-site field training. Once back in their home territory, franchisees work with business development coaches, based in Vancouver, who provide guidance and support in managing their business through various stages of growth. After their first year, franchisees “graduate” from the more intensive, one-on-one support provided by business coaches, and are assigned to a field advisor who lives and works in the region. The company has also set up a toll-free hotline for franchisees, and established an online knowledge base with access to forms, manuals and articles.
For Brian, having a strong vision has been a defining factor in his success. Almost from the beginning, Brian has had a clear idea of where he wants to take his company. While the core elements have remained the same — to build a strong, professional company — the vision changed in scope to encompass not only Canada but all of North America, Europe and Australia. “My whole vision is to build a legacy so that beyond my lifetime we have a brand that endures,” he says.
In the beginning of 2005, confident that the North American operations were growing steadily, Brian turned his attention to international expansion. First up was Australia, where a close friend of Cameron’s had recently moved. As they had with their North American franchises, they targeted the large metropolitan areas — in this case, Sydney. “At the end of the day, it’s pretty simple what we do,” says Cameron. “If it works here it’ll work there. We haul junk, we say ‘hi’ to customers, we treat them fairly and we sweep up.”
For its first overseas location, the company decided to start with a corporate-owned office that would give them greater control over the market. They hired a manager who spent several months at corporate headquarters in Vancouver, familiarizing himself with the operation and corporate culture, before opening the Australia office. “Gary Kemper, who runs our Australian operation, he’s a native of Sydney, and knows what he’s doing, knows the marketplace, and also knows franchising,” says Brian.
The Sydney office opened in the fall of 2005 and grew quickly. In March 2006, the company announced plans to expand into Australia’s fastest growing metro areas through franchising. The first 1-800-GOT-JUNK? Australian franchise was awarded to Sydney in early 2006.
Next on the horizon is the United Kingdom, where the company is exploring opportunities in Birmingham, England’s second largest city. In fall 2006, they solidified their interest with the opening of a 1-800-GOT-JUNK? corporate office in Birmingham.
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