Derrick Nelson Shares His Savvy Sales Tips

The young owner of Nelson Sanitation & Rental had a knack for landing new customers and parlayed the skill into big profits

Derrick Nelson Shares His Savvy Sales Tips

Derrick Nelson takes a moment to cuddle with the company mascot, Jack the cat, in the garage.

Derrick Nelson always felt there was a lot of growth potential in Nelson Sanitation & Rental, the portable sanitation and septic service business that his father, Jerome Nelson, ran on the side in Rice, Minnesota, for decades. Turns out he was absolutely right.

When Nelson bought the business from his father in 2011, the company employed three people: Derrick, his father and Tyler Nelson (Derrick’s cousin). The company’s capital assets included 300 restrooms, two restroom service trucks and two septic vacuum trucks. Today, the company employs 13 people (including a full-time sales and marketing director) and owns about 1,400 restrooms, three septic trucks, nine restroom service trucks, three luxury restroom trailers and a Vactor Manufacturing 2100 combination sewer vacuum truck. 

Moreover, the company in 2015 bought the portable restroom division of a local roll-off container and portable storage unit rental company. Restrooms account for 80 percent of the company’s revenue and slightly less than half of the business is related to special events.

In addition, Nelson Sanitation & Rental moved into new corporate headquarters on a 5-acre site in 2016. Further, gross revenue has grown roughly 60 percent during that 6-year period. And Nelson sees more expansion on the horizon.

GROWTH OPPORTUNITY

Part of that jump stemmed from the simple fact that Nelson, who worked for his father for about 11 years before he bought the company, saw the business as a growth enterprise. His father, who worked full time for a local railroad, ran it part time to generate side income. “He was getting close to retirement and wasn’t concerned about growing,” the younger Nelson says. “He was on the chapter called ‘quitting work,’ while I was on the chapter called ‘just starting out.’ It led to some arguments every so often.”

But that growth also was spurred by Nelson’s common-sense, boots-on-the-ground marketing instincts; an emphasis on customer service; a be-first-to-market mentality with new technology; the ability to trust employees and delegate responsibility; and a strong work ethic.

How strong? Nelson says it’s not unusual for him to deliver restrooms (or even a restroom trailer) on a Friday afternoon for a Saturday wedding and then get up at 5 a.m., clean the units, and deliver them for a Sunday event. “For the money you can make, why wouldn’t you be willing to do that?” he asks rhetorically. “Who doesn’t want to double their money on a weekend? Plus, you can pay things off pretty quickly if you book restrooms on both a Saturday and a Sunday. The bottom line is that the portable restroom industry isn’t well-suited for someone who doesn’t like to work hard.”

Jerome established the company in 1979 as just a septic-pumping operation based in Rice, located north of St. Cloud. In 1994, he started renting portable restrooms. Derrick, 33, started working for his father in 1990 when he was 16 years old. “My dad basically decided to rent portable restrooms to people for weekend parties. … That way, he’d get a little income and my older brothers and I wouldn’t have to look for summer jobs,” Nelson explains.

“I never expected to buy the business,” he continues. “In fact, I didn’t want anything to do with it. But then you get older, and the real world starts to hit.”

While he initially wasn’t interested in the business, Nelson found one thing intriguing: As it turned out, he was pretty good at drumming up sales. When he saw a building contractor on a job site, he’d call to see if they needed portable restrooms. The same thing applied to schools and parks — anything that might need restroom services.

“Finding new customers came kind of easily to me,” he relates. “I had business card magnets made that I’d stick on the doors of job shacks (on construction sites) if no one was there when I called. It was total boot-leather marketing.

“I had no experience at all in marketing, but we went from 30 restrooms to 300 in six or seven years, so I must’ve been doing something right,” he adds. “Plus, at the time, no one else in our industry was prospecting for customers like that, so I was really rocking it — probably closed on 95 percent of my sales calls.”

CUSTOMER SERVICE COUNTS

Nelson also attributes the company’s growth to providing quality customer service. Clean restrooms and knowledgeable employees go a long way toward promoting repeat business and word-of-mouth referrals, he says.

So does going the extra yard. If customers call after normal business hours and need a restroom right away, Nelson Sanitation & Rental delivers. “And not everyone is willing to do that,” he notes.

Nelson also tries to exceed customer expectations — and differentiate his business — by doing things such as providing newer restrooms, two-ply toilet paper instead of one-ply paper, and quality deodorizer products like Quick Scents and Cabana Spray (Satellite Industries). “We also strive for consistent cleaning days and times, and we are willing to do twice-a-week service if customers ask for it,” he points out.

The company also used to take on customers located so far away that it was unprofitable to serve them. “But that’s what made us what we are today,” Nelson explains. “You’ve already worked a 12-hour day, and then you agree to deliver a restroom 30 miles out of the way, adding an extra hour to the day and not making any money on it. But that earned us some pretty loyal customers. We’ve been serving some of our customers since 1994, which says a lot about the service we provide.”

Hiring great employees also served the company well. Members of the Nelson Sanitation & Rental team include Tyler Nelson, lead septic maintainer; Amanda Gunther, operations manager; JoAnn Hagan, accountant; Chad Houg, director of sales and marketing; Jeff Deslaurier, delivery and setup specialist; Randy Symanietz and Rudy Montag, route service technicians; and Scott Thompson and Luke Barringer, route and delivery relief drivers.

EARLY MARKET ENTRY

Investing in new equipment that enabled Nelson Sanitation & Rental to quickly break into new markets also has been key to the company’s growth. A good example is the company’s three 14-foot luxury restroom trailers, two made by Satellite Industries and one by Comforts of Home Services.

Nelson says the investment was a calculated gamble. On the plus side, no one else in the region had restroom trailers at the time. On the other hand, Nelson worried about whether or not customers would be willing to spend more to rent luxury trailers. As it turned out, they were willing to rent the units, but first, Nelson had to experiment to find a price that was palatable to customers and still profitable enough for the company.

To promote the trailers, Nelson takes them to wedding shows so potential customers can see a luxury trailer and what it offers. “We pull the whole trailer into a show hall,” Nelson says. “A lot of people still haven’t seen one, so it helps them if they can have a closer look.”

Has the move into the restroom trailer market been successful? Yes, Nelson replies. “We bought our first one three years ago, and our goal was to buy three within three years. We met that goal, and we now have a number of weekends where all three units are booked.”

That raises another key to success: Nelson is a big believer in setting goals, not only for overall corporate growth, but for individual employee development, too. Establishing benchmarks to aim for keeps the company headed in the right direction and also provides opportunities for evaluation when goals aren’t met, he notes.

“If our goal is to improve sales, for instance, and we aren’t able to do that, then something’s wrong,” he points out.

IN THE YARD

As the company’s customer base grew, so did its roster of equipment. Today, Nelson relies on seven restroom service trucks. Four of them feature 650-gallon waste and 300-gallon freshwater steel or stainless steel tanks from Satellite Industries, and are built on Ford F-550 and Dodge 5500 chassis. The other trucks are a Ford F-450 with a slide-in unit featuring a 450-gallon waste and 200-gallon freshwater aluminum tank from Satellite Industries; an Isuzu NPR with a 450-gallon waste and 200-gallon freshwater steel tank from Satellite Industries; and an International 4900 with a 1,100-gallon waste and 400-gallon freshwater aluminum tank from Progress Tank. All seven trucks are equipped with Masport pumps.

The company also has invested in 1,400 restrooms, mostly from Satellite Industries and PolyJohn Enterprises, and a Vactor 2100 combination sewer vacuum truck, built atop a 2005 Sterling chassis with a 10-cubic-yard debris tank.

In addition, the company relies on three vacuum trucks for septic service. Two of the trucks were built on International chassis and one on a Sterling chassis. The two Internationals, outfitted by LMT and Satellite Industries, feature 2,000- and 3,000-gallon steel tanks with pumps made by National Vacuum Equipment and Masport. The Sterling truck — built out by Imperial Industries — carries a 4,000-gallon aluminum tank and National Vacuum Equipment pump.

SOFTWARE UPGRADES

While growth is great, it comes with complications, too: hiring additional staff, establishing effective route logistics, and finding the financial resources to buy new equipment. The latter posed a real impediment.

Nelson explains, “When I first bought the business in 2011, it went from being a limited liability company (LLC) to an incorporated company, so any credit established up to 2011 was basically wiped out. It was like starting out as a brand-new company with lots of bills and overhead. We started growing, but no one wanted to give us loans because of the recession and our low credit rating. So I borrowed money from my dad. Without him, I don’t know that we could’ve grown to where we are now.”

As restroom rentals mushroomed, effective and profitable routing also became more difficult. To solve that problem, Nelson’s brother, Chris, a computer programmer, developed route-logistics software that ended up saving the company 30 to 40 miles per day, per truck. “Diesel fuel prices spiked to more than $5 a gallon at the time, so the software saved us a lot of money and time,” he notes.

But about five years ago, when growth outpaced that system’s capabilities and Chris could no longer devote time to revising the software, Nelson invested in ServiceCore business-management software.

SERVICE DIVERSIFICATION

Looking ahead, Nelson expects the Vactor to eventually become a solid revenue contributor and diversify the company’s service offerings. He only invested in the used vehicle because he had some work lined up in advance of the purchase. Plus, he sees long-term market potential for providing municipal services.

Perhaps even more importantly, few companies in the area own a combination vacuum truck. “Since we already have a long-term contract to do some work with it and no one else near us has one, buying the vac truck was a no-brainer,” Nelson reports. “I see that as part of our business growing in the next few years.

“We also want to grow our septic business more,” he adds, pointing out that more people are moving to the rural St. Cloud area, creating a larger potential market. “The problem is finding employees to handle the additional work. There’s a real shortage of people who have CDLs (commercial driver’s licenses). Plus, this isn’t the most glamorous job in the world.”

Nelson also expects to keep expanding the restroom side of the business. But since the company’s current service area in and around St. Cloud is pretty saturated, further growth can only come through geographic expansion, he says. In turn, that will require more hard work, but if history is any indicator, Nelson is up to the task.


Delegate responsibilities

Growth is a good thing for businesses. But for small-business owners who insist on trying to do everything themselves — from sales and hiring employees to dealing with vendors, handling payroll, and working in the field — growth can quickly become a nightmare.

Derrick Nelson realized that soon after he bought Nelson Sanitation & Rental from his father, Jerome Nelson, in 2011. “You can’t do everything yourself — you can’t be on every job,” he says. So in 2012, Nelson took the plunge and hired Amanda Gunther to answer the company’s phones and handle payroll and some dispatching.

Just as importantly, Gunther also made sales calls to event planners and construction companies as time allowed. “I was worried about whether we could afford her,” Nelson admits. “But it was great because I could just relay business leads to her and she’d make phone calls. And within three years, we almost doubled our restroom-rental business.”

The flip side of the equation was evident to Nelson: If he didn’t have time to make sales calls, it would dramatically hinder the company’s growth. But that never became an issue. In fact, Nelson was so pleased with how things worked out that in 2015 — after the company’s growth had reached the point that Gunther had less and less time to make sales calls — he hired Chad Houg to be the company’s full-time sales and marketing director.

“At times, it was a little hard (to delegate responsibilities),” Nelson concedes. “But overall, it was a win-win situation.”



Discussion

Comments on this site are submitted by users and are not endorsed by nor do they reflect the views or opinions of COLE Publishing, Inc. Comments are moderated before being posted.