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May 1, 2005
COMPANY GROWTH IN THE waste industry can develop in many ways. For example, Mickey Flood started IESI Corp. of Ft. Worth, Texas, with two trucks in 1995. By 2004, his company had become the 16th-largest waste management firm in North America, according to the 2004 Waste Age 100. And in November 2004, BFI Canada took notice and bought IESI for $1.1 billion.
In the past decade, Michael Paine, president of Paine's Inc., nearly doubled the size of his third-generation family company. As the company matured, Paine's grew from 35 employees to 55, and the company truck count grew from 25 to 43, Paine says.
During the same period, Republic Services Inc., Ft. Lauderdale, Fla., became the third-largest waste management company in the nation, according to the 2004 Waste Age 100, on the strength of acquisitions and internal growth. In 1999, for instance, Steve Hizel took over Republic Services of Colorado, which at the time was nothing more than six routes divested by Houston-based Waste Management Inc. During the next five years, Hizel turned those six routes into 32 and seven drivers to 35. Overall growth: 400 percent.
Each of those three waste management professionals pursued growth from a different point of view. Flood sought swift, dramatic company growth. Paine wanted to take his family's business to a new level, but steadily and carefully. Hizel wanted to build a solid Republic Services division from a small beginning. Yet despite their different ideals, each planned his company's growth by developing strategies in five basic areas: personnel, marketing, operations, service and automated equipment. Following are some of their tips:
Personnel: Always hire for the future. “When I started, I was hiring people that were running $2 million regions for major companies, Flood says. “As we grew, our people were able to deal with the business.”
Republic Services wanted a pro to manage its six new routes in Denver. “Steve Hizel is an old time garbage person,” says Will Flower, Republic's vice president of communications. “He knows the market and its expectations, and his approach is to exceed expectations.”
Paine says it is important to have enough people to handle growth in every area. A few years ago, his company's customer service lines were maxed out, unable to take additional calls without requiring the customer to hold for what he felt were unreasonable wait times. So, he added extra phone lines. It didn't help, however, because there was not enough staff to handle all of the lines. The solution was to add more people, too.
Marketing: Flood, Paine and Hizel agree that growth comes from opening new markets and building density in existing markets. In choosing new markets, Flood looks for areas that fit IESI's particular expertise in municipal franchises, wins a franchise and then expands into surrounding areas.
Paine says his company looks for areas to grow in, “then we tailor an advertising plan to that area,” he says. “Instead of mass-market advertising, we do a lot of little things, like supporting little leagues and buying sign space at community athletic events. We also sponsor the local symphony. Don't expect immediate results. Just get your name out so that people know you when you call on them.”
According to Hizel, everyone in his company is a salesperson. “It is amazing what drivers see compared to salespeople, who take main routes,” he says. “Drivers are on all the streets, so we have our salespeople attend safety meetings to get to know the drivers.” By getting sales and operations staff together, the company can generate good leads, he says.
Operational strategies: Paine scrutinizes the cost of any growth initiative, looking at personnel needs, equipment, fuel, training and maintenance before moving forward.
Flood worries endlessly about disposal costs related to new business. “Make sure you have no downside risk for disposal in any market you go into,” he advises. “Disposal is the biggest cost factor.”
Hizel uses operations — drivers in particular — to build market density. “We can always get a new customer between points A and B on a route,” he says. “We can give them advantageous pricing because we're already driving past. That's where my drivers look.”
Service: A key component of growth involves maintaining existing business through service. Hizel sums up service succinctly and adds a marketing twist: “Do what you promise, when you promise. Win customers over. Ask for referrals,” he says.
Flood agrees and also suggests providing extras. “Pick up paper around containers. If you can't get to a container because it is blocked, call the customer and let him know. Do the little obvious things. They're important.”
Technology: Paine credits his company's growth, in part, to productivity increases from switching to mostly automated trucks in 1995. Since then, each additional truck is run by one person. This enables the company to maximize its manpower.
Flood says automated equipment also reduces injuries and keeps experienced people on the job. He also notes that fewer injuries help control workers' compensation costs.
Paine's last thought on what not to do?
Don't let your ego influence marketing plans, he says. “There are a lot of accounts you might like to have, but if the cost of a showcase account exceeds revenues, it won't do the company any good, and it will not make you grow.”
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