NO GUTS, NO GLORY.  WHAT IS YOUR RATE REVIEW STRATEGY?

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To say we are in unprecedented times is an understatement.  Pandemic, war, inflation, material shortages, increased fuel cost and labor shortages are just a few of the challenges waste collection company owners and managers are facing every day.

The quote “No Guts, No Glory” was first credited to U.S. Air Force Major General Frederick Corbin Blesse.  Put simply, the saying is a call for people to attack important tasks aggressively.

Blesse stressed that aggressiveness was needed for all involved.   Without aggressiveness, it wouldn’t matter how well-trained any Air Force pilot was. He would let enemy targets slip through his fingers.  The saying has applications for both the military and everyday usage.  In the military, it helps to have accurate information so certain targets can be attacked quickly and efficiently.  In business, it helps to attack the challenges that face your company boldly and with decisive action.  A proactive rate review program must be a structured, regular, periodic activity championed by company leadership and communicated to all team members.

Since 2000, the average inflation rate in the USA has been 2.38% per year.  Over twenty years, this has produced a cumulative price increase of 67.89%!   This means that today’s prices are 1.68 times higher than average prices since 2000, according to the Bureau of Labor Statistics consumer price index.  According to Kiplinger, the forecast for 2022 inflation will be 6.3%, well over double the average of the last 20 years.  A 6.3% (or more) increase in operational costs will erase much of your company profit if left unattended.

In the past, a small company could outpace relatively low inflation simply by growing their business aggressively.  The mistake that most small businesses make is they don’t pay attention to the margin between revenue and expenses.  As a company grows, cash flow should increase but if your net profit is decreasing as a percentage of your top line revenue, you are actually going backwards!

A careful and complete study of your costs will provide an idea what your rates adjustment should be.  Compare your profit margin from pre-pandemic 2019 to 2021 and year to date 2022.  What do you see?

Don’t fall into the trap of “I can’t raise my rates, I’ll lose all of my customers!”  Better to lose some customers than your business!  Every month or quarter you delay a rate increase, you are experiencing lost opportunity (and profit).

So remember, “No Guts, No Glory” !  Be courageous when it comes time to adjust rates, and make sure your quality of service justifies your increase.    Be intentional about tracking your operating costs.  Make sure your rates provide a comfortable profit margin.

Need a strategy regarding rate adjustments and discipline?  Call us!

jvt@vantholenassociates.com

#afriendinthebusiness

DISASTER RESPONSE PLANNING

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It sounds awful, doesn’t it? Disaster, that’s something we see on the news, nothing that will ever happen to me or my business, right?
Over my 33-year career in the waste and recycling industry, I experienced a multitude of disasters. Our office burned down, 4 trucks had crippling fires onboard, trucks went over on their sides, accidents, disposal sites shutting down, and others I do not care to recount. One night while walking out to my truck, I watched a tornado across the street narrowly miss our property where all our carts and trucks were parked. Take it from me, it can happen to you.
I hope none of you ever have to experience any of these things but if you’re in the business long enough, something is bound to happen. Are you ready? Let’s take a look at a few things you can do to make sure you are prepared in the event of such tragedies.
First off, how’s your relationship with your fellow haulers? If you haven’t made an effort to reach out to a competitor who could be an ally, do so. Talk about these things and what you could do to help each other in the event of an emergency. Some will be uninterested, but others who are willing to talk with you may turn into a great ally in the future. You may even work together to secure contracts you would not otherwise have been able to secure on your own. Recently, one of the members of the Facebook group Mom and Pop trash business for dummies experienced a heartbreaking fire. They reached out to the friends in the group and were met with help from all sides. This is an incredible way for all of us to help each other no matter where we are located.
Second, build a relationship with a heavy equipment dealer who has equipment similar to what you are using close at hand. Open an account with them if you haven’t already so if disaster strikes, you don’t have to wait for credit approval! In addition to dealers, find out who the closest refuse equipment rental company is to your location and again, open an account. In our industry, you can’t just go down to Main Street and get a truck, they are sometimes hard to come by.
The most important part of a disaster response plan is to document what to do if and when disaster strikes. My friend and business partner can laugh now about putting our plan together. We sat down, locked the door, turned off the phones and brainstormed every potential disaster that could befall our humble company. You have to know us to understand how much laughter went into that process but suffice to say that we came up with quite a list. Fortunately, not much of it ever came to pass but we were ready! We had documented everything from loss of equipment or offices to loss of life and what we would do step by step following any of the occurrences. This plan was put in print and all of our employees had access to it. After all, it did include the possibility of John and I perishing while in the same vehicle on our way back from lunch at Five Guys.
I hope none of you has to deal with the worst of what can happen but if you do, be prepared. If you would like to talk more about how to put together a disaster response plan, we would love to talk with you!
Ed Dryfhout
ed@vantholenassociates.com
vantholenassociates.com
#afriendinthebusiness
Below is a picture from 1989. It is a route sheet that survived a fire. While this was before the common use of computers, it is a good reminder to have your data backed up in multiple locations. Fortunately, only the edges were singed. The route sheet was just legible enough to stop follow. More to come on fire in future episodes.

CRAZY TIMES IN VEGAS, BABY!

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WasteExpo is happening next week in Las Vegas, NV.   This annual gathering of waste professionals from across the world always provides a great time to get away and get a new perspective on our industry.

But many will say their biggest purpose in going to Vegas is the partying.  After all, “What Happens in Vegas, stays in Vegas”, right?   While having fun is certainly important, the value you go home with is much greater than winning (?) at the craps table.

I attended my first WasteExpo in 1968 (I was very young), and I still walk around the show floor in amazement at the shiny trucks like I did so long ago.   But, I now have a whole different perspective when I realize the cost of these glittering works of art, and the complexity involved in getting materials picked up at the curb and recycled, landfilled or incinerated.

Besides the lights, the give-aways, the food and drink, here are few things to consider as you spend time at WasteExpo:

Visit with vendors. An obvious one. Ask questions. Open your mind to new ways of doing things.  Don’t be blindly loyal to just one make or model of truck, compactor or container, but weigh carefully the advantages offered by the alternatives.

Visit the big company’s booths.  Talk to them, ask questions, get some insight in the way they do business.  Who knows, you may get invited to their private parties!  I remember seeing the Doobie Brothers and REO Speedwagon at WasteExpo in years past!

Visit with old friends.  Look for the folks you’ve passed along the way  in your career.  See what they are up to.  Grab a drink and learn something new.  Seek out your competitors and get to know them on an entirely different level.  Today’s competitors can become tomorrow’s friends!

Make new friends.  Don’t be bashful!  Introduce yourself to people looking at the same products you are.  Ask questions about their business, you may find some great ideas from someone across the state or across the country facing the same challenges you are.

Take in a conference session or two, or ten!   It may be hard to sit inside a building all day while its sunny and warm outside, learning about the latest trends in the industry, the newest technology, the best way to manage employees, these are all topics you will hear discussed.  Get the most of your investment by hearing from some of the best minds in the industry.

So, if you come for the gambling, OK.  But you can leave a winner if you have a plan and organize your time and attend WasteExpo in an intentional manner.  And make sure, What Happens in Vegas DOESN’T Stay in Vegas!  Bring home some solid ideas to improve your business!