Even though Chad Rott had worked in the portable sanitation industry for more than a decade, it seemed the fates were against him when it came to starting his own company.
“I’ve been doing this for about 12 years for other companies,” says Rott, 32, owner of the 2-year-old Happy Portables in San Bernardino, Calif. “I’ve bounced around a bit.”
Working for other companies — including stints with two Portable Sanitation Association International presidents — Rott says he gained a lot of experience. “I had pretty much done every aspect,” he says, including dispatching and delivering restrooms, sales and working his way up to facilities manager.
Still, he recalls, “I didn’t have the courage” to go out on my own.
The turning point for Rott came in 2004, when a group of investors asked him to head up a portable restroom business in Las Vegas. Seasoned in the industry, but green in financial matters, Rott took the job only to quickly see the operation fall through.
The silver lining, however, was that Rott gained the courage to undertake business on his own. “We can do this for ourselves,” he thought. “We just need the money.”
Shoestring financing
Finding the financing didn’t appear to be a major hurdle, especially when Rott’s father-in-law, David Whited, signed on as a partner. But it didn’t work quite as smoothly as planned.
They used Whited’s initial capital to purchase 120 Five Peaks Technology units, but the cash flow soon dried up … leaving them spiraling into the world of “creative” financing.
Whited had a solid credit history, but no experience in the sanitation field. Rott, on the other hand, had little credit history but solid business experience. Even with that apparently desirable mix, however, potential financiers were not willing to bite. “We got tossed around a bit because we were a new business,” Rott says.
“We actually had a real bad start. We didn’t have any credit. We ended up paying cash for all our units and then had to finance our first truck,” Rott recalls.
Despite financial uncertainty, Rott hired Crescent Tank in New York to build his first truck.
“Our truck was going to be in the (2005 PSAI convention and trade) show (in California), so we didn’t have to pay freight,” Rott says. The show was conveniently located 15 minutes from Rott, but even though it seemed like an ideal situation, fate intervened again.
Capital assured by one lender evaporated when the loan representative left the company, leaving Rott scrambling for a solution.
“The day before the show, we had to come up with $50,000,” he says. When the credit leads dried up, Rott and Whited were literally backed into the corner by their new Isuzu cabover vacuum truck.
“We ended up putting that truck on five of Dave’s personal credit cards,” Rott says.
“Now that we have purchased another truck and gotten a couple of other loans, I see how the loan process works, and something like that will never happen again,” Rott says.
“We learned the hard way. Make sure you secure your financing before you even order; we felt we would qualify, and that was good enough for Crescent Tank, but we just had bad luck.”
Proving themselves
That dicey financial route might not work for everyone, and Rott doesn’t necessarily recommend it. “I wish we could have had financing down and not eat up more capital,” he says.
“I would never tell anyone to put a truck on credit cards; the interest rates are horrible, and payments are due throughout the month instead of at the end,” Rott says. “We didn’t consolidate them; we just focused on paying them off,” he adds, something Happy Portables continues to do.
Still, despite the financing challenges, Rott doesn’t regret venturing out on his own. In fact, Rott says Happy Portables was able to turn a profit its second month.
“We grew rapidly,” he says, adding cautiously, “I wouldn’t call it success yet. We got lucky.” Their first customer was a company erecting cell phone towers, so it spread the Happy Portables name on a wide scale. The company services a 100-mile radius in four Southern California counties.
One of Rott’s earlier clients was the San Bernardino Fairgrounds, where Happy Portables was renting office and storage space. At the time, fairgrounds officials were shopping for a restroom contract. “It was lucky timing,” he says. “They had some issues with the one they were using, and they liked the idea of us being onsite.”
Now Happy Portables places units for all fairgrounds events. The number of restrooms varies from 20 to 30 up to 140 for major events — from car shows and rodeos to concerts and county fairs. Special events, however, make up only about 25 percent of Happy Portables’ business; Rott says he’s currently marketing more to construction customers.
Ample equipment
The Happy Portables inventory includes 420 Five Peaks Aspen restrooms, several specialty Five Peaks and Hampel Corp. units, 15 250-gallon holding tanks, four ADA units and 55 Bravo hand-wash stations from PolyJohn Enterprises and 10 handicapped-accessible Liberty units from Satellite Industries Inc.
The fleet has grown to three trucks and a restroom transport trailer: two 2006 Isuzu NPR trucks from Crescent Tank with 550-gallon waste and 250-gallon freshwater tanks; a 2007 Kenworth T300 with a 1,500-gallon waste and 500-gallon freshwater aluminum tank from TankTec; a 2004 Ford F-150 delivery truck and a 12-unit restroom hauler from McKee Technologies Inc.
Rott hopes to grow that part of the business even more when he finally gets Happy Portables listed in the area’s 10 phone books. Because he started late in 2005, he missed the deadline to be listed in most of them. “It’s forced me not to depend on it,” Rott says, who recently hired a route driver, which frees him up to do more in-person marketing.
“I hired a driver, and I’m still working the same hours,” Rott says, “but I’m focusing more on marketing and growing the business.”
That’s a refreshing change of pace for Rott, who was working 14- to 18-hour days, seven days a week. “The first six months of the company, I was doing it all,” Rott says. “If you’re starting out on a shoestring, you’ve got to do it all.
“Do it yourself as long as you can,” he advises, “but at some point, you can’t do it all.”
The heavy workload took its toll, not only on Rott, but on his wife, Theresa, who learned just one day after they decided to start the business that she was pregnant with the couple’s second child. “It really added to the stress,” says Rott, who included his wife’s doctor visits as just another stop on his route.
While Whited continues to work full time, he’s is more than an investor, and has been heavily involved in promoting and marketing the company. He also handles many of the financing questions that come up as the company buys more equipment.
Finding a niche
While Happy Portables works to pay off those five credit cards, Rott retains his pleasant demeanor and anticipates a growing future. He hopes to open a location about 100 miles east in Indio, Calif. “They’re doing a lot of building out there,” Rott says, adding that branching out into Arizona might also be in his future.
Right now, Happy Portables might not be the biggest company in the market, but Rott says he has found his niche. “We’re kind of the dog under the table catching table scraps,” he says, adding that many of his customers have come to him because he is the new kid on the block. With so many larger consolidated companies today, Rott says customers sometimes feel lost in the shuffle.
“I’ve got a couple big accounts that wanted to deal with a small company,” Rott says. “We’ve found our niche right now in the ‘onesie-twosie’ market,” he adds, noting that having many smaller accounts has helped them sustain a profit margin and maintain a reputable name.
But even though Rott had to rely on starting on a shoestring, don’t think for a moment that he devalues what he offers his customers. “Find your angle, but don’t let your angle be financial,” he says, explaining that slashing costs might not be the best way to gain and retain customers — especially in light of high fuel prices.
“We don’t see raising our rates, but we didn’t come in with low rates,” he says. “We’re around the third highest in the area, but we’ve got to get what we’re worth.”
