Writing thorough contracts shows customers you’re professional and lets them know up-front what to expect from your company
Most portable restroom operators are very hands-on when it comes to the day-to-day work of their companies, but some struggle a little bit with the paperwork and legal aspects. Getting their hands dirty, literally, is no big deal compared to digging into legalese and writing contracts.
But ensuring that a business has solid rental and service contracts is important for any operator — to protect inventory, ensure customer satisfaction and promote repeat business. But some operators seem hesitant to address this matter.
Travis Vargo, a business attorney and co-owner of Texas Waste Company in Alvin, Texas, says it could be because many PROs may be a bit intimidated by, or even distrustful of, attorneys. Some companies may feel they are just too small; however, smaller companies may feel losses even harder, so having everything in writing is just as important for them.
They may think, “I can do it on my own, I know what to protect myself from,” he says, but he adds that many don’t have intimate knowledge of the laws and regulations of the industry.
But writing strong contracts is more than just good business practice: It demonstrates the professionalism of the company and sets expectations for the customers right up-front.
When Vargo purchased Texas Waste in 2013, one of the first things he did was tighten up the company contracts, rewriting vague clauses to clarify responsibilities of both supplier and clients, and providing the company with greater leverage in settling disputes.
The biggest value of contracts, he says, is to “communicate to your customers and vendors the rules of the game before you start.”
A good set of terms and conditions, and/or a purchase order form, “will protect a company from large unforeseen liabilities and allow them to recover costs of collection if it comes to that,” he adds.
“They will help a company avoid many stressful disagreements with customers, lawsuits and, ultimately, will make your company more profitable.”
All of these contracts fall under the category of what Vargo colloquially calls “you cannot make up the rules after the game starts.”
Essentially, what that means is if an operator wants to charge a customer for something later, the customer needs to know about it up-front.
For example, if you want to charge interest on late payments, then the interest rate needs to be mentioned on invoices. It’s not something a company can, or should, demand or expect after the fact.
“All you want is to be paid what you’re owed. If you’re negotiating on the original amount, you’re discounting your profit. This way, you can negotiate the interest charge and still recover your profit: It’s an extra chip in your sack.”
Even though there may be surprises down the road, such as a restroom unit blocked by a locked fence or other items, there should be no surprises in how the company addresses such situations. An example might be adding terms in the contract noting an extra trip charge in case units are blocked and can’t be serviced. “Tell them what [the charge] is before you take their money and/or before you deliver [the units],” Vargo suggests.
Don’t forget things in the rental agreement such as a credit clause. Some companies might extend credit to larger clients or events, but smaller clients may need to pay in advance. Such terms should all be spelled out.
“Your terms and conditions are only useful if you conspicuously display them to the customer and set their expectations. If you hide them, or your salespeople do not tell [customers] the big ones in advance, you will have a bad working relationship with the customer.”
While some more general portions of rental and service agreements can be “copied” from other firms in the industry, Vargo cautions that each state’s laws are different, so he recommends restroom operators consult an attorney to draft personalized contracts.
“Operators need to tell the attorney what they are most scared of and what they need to be protected against,” he says. “Lawyers know the law, but very few know [the restroom] business.
“I had to draft our forms from scratch and use my imagination. We also improved upon them as situations arose.”
Whether a company is large or small, has 50 restrooms or 2,500, Vargo recommends rental and service contracts for all. However, he reminds operators that it’s impossible to cover every unforeseen circumstance, but a solid contract is a necessary start.
“Attorneys are not foolproof. They’re there to put you in the best position and increase the probability that a dispute is going to resolve in your favor.”