In an uncertain economy, there are few better business survival strategies than diversification, and one of the obvious options for PROs who already service construction contractors is to add related services.
Not only does this leverage the 80/20 rule for existing customers — that businesses derive 80 percent of their revenue from 20 percent of their customers — it also opens doors to new customers who may previously not even considered you as a vendor.
This month, we talk to two PROs who’ve diversified with new services, and find out what it’s done for their bottom lines.
Knight’s Pumping and Portable Services Inc. has an inventory of 3,000 restrooms, and already offers related services such as holding tanks, water tanks, temporary fencing and power poles to its commercial customers. This side of the business is split evenly among construction, agriculture and the petroleum production industries. Knight’s also serves special events, and recently bought a restroom trailer because the company was feeling pressure from competitors who have more upscale options.
“We want to be able to compete on the same playing field with our competitors for special events,” says Tracey Lince, the company’s vice president of business development. “The construction market in California — like most other regions — has really taken a hit, so we’re lucky to have our business spread into oil and agriculture, too.” It’s an understatement, given that Knight’s does 90 percent of its volume with these commercial customers.
This dependence led the company to add temporary fencing at the turn of the century, in an effort to position itself as a full temporary site service provider for this important sector of its business. The other ancillary products quickly followed. Lince says there’s a possibility that the company may soon add dewatering to its repertoire in response to severely tightening restrictions on disposal, especially for grease trap waste, which Knight’s also pumps. This would allow yet another revenue stream in taking waste from other pumping contractors.
Lince says the addition of related site services not only helped the company better serve its existing customers, but also helped sales efforts to expand its customer base.
“We offer 250 portable restrooms and about 150 roll-off Dumpsters,” reports Nick Plummer, who has owned the portables side of the family business, Plummer's Disposal Service, for three years. “We’re now looking to get into temporary fencing.”
Along with these services, Plummer’s offers septic pumping, drain cleaning, hydroblasting and hauling of non-hazardous waste. The company had offered portables 17 years ago, but had gotten out of that end of the business until Plummer decided to bring it back. The company was already renting roll-off containers before re-establishing portables service, so the restrooms were actually the first ancillary construction site addition.
Plummer says the additional services are a bid to both further service existing customers and to add business from new ones. “With current customers, we can tie it in to a package deal, multiple services from one vendor. They love it. And then for new customers, we can go in and say, ‘Hey, you’re dealing with three vendors now, we can do it all. Then if something goes wrong, you’ve only got one throat to choke,’ ” he adds, laughing.
