This is no throwaway business
VANCOUVER, BRITISH COLUMBIA--The seven-minute huddle starts at 10:55 a.m. every weekday in the office. The staff gathers in an open area near the kitchen, and the young, casually dressed group members clap and cheer while their leader announces goals met, provides project updates, and reads client testimonials.
What are they so excited about? This is not a Silicon Valley technology start-up or a new energy-bar manufacturer. It's a junk-hauling company. More specifically, it's a company that sells franchises to people who remove your rubbish and drop it off at a local dump. 1-800-GOT-JUNK? is a business concept so simple it's hard to believe there was no national junk-hauling name before this one.
The idea began just like any other one-man operation with a beat-up pickup truck and a handful of fliers. The year was 1989, and Brian Scudamore needed help paying for college. So Scudamore painted a phone number on some plywood lining the side of his truck and, for a fee, loaded it up with ratty couches, rusting appliances, and anything else the garbage people wouldn't take. As the years went by, the business became more appealing to Scudamore than college, so he dropped out. He incorporated the company in 1993 and opened his first franchise in 1999. Today, the company has 121 operations in the top 47 metro areas in Canada and the United States. The plan is to have 250 franchisees by the end of 2006.
Centralization. "We're creating the FedEx of junk removal," says Scudamore, now 34. "This has always been a very fragmented mom and pop industry. We're revolutionizing the way the business is done." Scudamore and his team are doing it by marrying the "old economy" business of waste management with a high-tech backbone and a centralized call center to maintain consistency across the franchised operations. They have also taken great steps to create a culture that attracts smart, motivated entrepreneurs.
"They took a simple concept and made it scalable," says Alexander Chernev, associate professor of marketing for Northwestern University's Kellogg School of Management. "Usually people who deal with junk don't have the vision for scale."
The company's headquarters here has a distinctly dot-com feel--open cubicles, meeting areas with plastic, podlike chairs, a dog as mascot. But Cameron Herold, its vice president of operations, is quick to draw the line at the dot-com comparison. "We actually make money," he says. The company has no outside investors and has relied on its own cash flow from the start. This year it should do $38 million in sales, with a goal of $100 million by 2006. Scudamore says it has been profitable for 13 of the 15 years since its inception. Franchise owners can expect to invest between $67,000 and $93,000 upfront and net roughly 25 percent of their sales. The average gross sales for U.S. franchises operating 12 to 24 months is $279,693.
The company's "big picture" plans are spelled out on the walls where employees enter. Written on the inside of the rest-room door is the message "What are your top five?" goals. Before the huddle every day, the operations group gathers and each person announces his Top 1 priority of the day. Franchise partners agree to specific milestones, and they speak weekly with corporate liaisons to make sure they stay on course.
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