Installers turn to septic tank cleaning as a relatively simple way to expand into a new service line that offers business synergies and steady revenue.
An old adage says, “If you’re not growing, you’re dying.” Growing a business in a down economy is challenging, and onsite installers face the added difficulty of a slow housing market.
In such times, most business advisors would suggest owners stick to their core business. For installers, a move into septic tank pumping provides potential for growth within the basic area of expertise. While contractors say pumping may not be a high-profit-margin enterprise, it remains attractive in various ways – chiefly as a steady source of revenue and another way to attract customers for installations and repairs.
Les Harris, owner of Mr. Ed’s Advanced Septic in Grants Pass, Ore., reports a quick boost from pumping: “In the first 18 months, our installing and repairing has gone up 20 percent.” Since the company added a vacuum truck in 2011, it has added about 5 percent in new revenue with two or three pumpouts every day. “Having the pumper truck also gives you first contact with your customer,” says Harris. “It’s a service we provide that refers work back to us to keep our excavators busy.”
While the barriers to entry are relatively low, owners need to consider a few key factors before making the move. They include capital costs, the demands of emergency calls, and the need for qualified employees, along with the issue of building a customer base.
“When it’s slow, there is always pumping,” notes Brian Miller of Brian’s Septic Service in Tallahassee, Fla., a third-generation installation and pumping contractor. Pumping of septic tanks and restaurant grease traps now makes up about 25 percent of his sales. “The profit margin on a pumpout isn’t real good, but it pays off if you can keep busy,” he says.
He looks at pumping as something he can count on, because even when installation work is slow, septic systems still need regular service: “I have a lot of customers on a routine maintenance schedule. We’ll come out every three to five years, depending on the size of the household.”
In Gloucester, Mass., Ralph Hobbs gets about 60 percent of his business from pumping and the rest from installation and maintenance. “Pumping is probably not going to produce a great deal of income if you’re just pumping residential,” says Hobbs. “There is more money in commercial pumping. But that’s difficult to get into because most of the commercial accounts are already with another company.”
He adds that pumping serves as a business builder for the rest of the company: “One of the assets of pumping is that you have a foot in the door for repairs, maintenance or installation of systems. When you show up on a job and there is a problem, you have the opportunity to correct it.”
Harris pondered for a year before expanding into pumping. “We were going to wait a little longer, but one of the local pumpers decided to retire, so the opportunity came up. Within three months, we had the pumper up and running.”
He finds about 60 percent of pumping calls involve some kind of repair or replacement. “It’s going to make your business grow extensively the first two years, then it’s going to level out,” he says. “I wasn’t prepared for the expansion that took place. That’s something you have to be ready for.”
Along with more work, Miller says, pumping means emergency calls: “When somebody calls, you have to answer the phone and you have to go. If someone is backing up, they want you there with a pump truck. If you don’t answer the phone, you’re going to miss that call and potentially miss a repair bill or an installation.”
Kenney Lee, owner of Metro Septic in Cartersville, Ga., started his business in 2005 with one vacuum truck. “Now we have three trucks and are planning to add a fourth next fall,” he says. “They stay pretty busy every day; three to four calls a day per truck, about half that during the slow time in summer.”
He added septic installation and repair to his business last year and now wished he had done that from the start instead of subcontracting that work. “It’s hard to do one and not the other,” says Lee. “If it’s not done in-house, you lose control of the quality of the work to someone else.”
He observes that customers don’t want to have to deal with two companies. “I like being the guy they call whatever is going on,” says Lee. “If it needs to be pumped, we’ll take care of it. If the drainfield needs repair, we’ll take care of it. If they’re having a septic system issue, they call me because they want to get it resolved.
“They don’t want to hear, ‘We don’t do that, you’ll have to talk to somebody else.’ Our customers are a lot happier now that we do everything in-house. Pumping is the front line. The homeowner isn’t going to say, ‘I need fill lines fixed.’ They just know they have problems and want them resolved.”
Lee also finds that the pumping season runs opposite to repair and installation. That helps keep his company busy and evens out cash flow over the year. “Normally, we do enough pumping in the winter to save up for the summer when it gets slow,” he says. “Doing installation and repair work this past summer, there was a little bit of a downturn, but it wasn’t near what it used to be. Everything kind of leveled off. It opened my eyes.”
Harris has had the same experience: His pumping work peaks in the rainy winter season. “A lot of the systems that are on the verge of failing will start backing up when the rains come in,” he says. “We typically don’t do repairs in the middle of winter; we do them in the summer. Last winter, business did not slow down one bit.”
Lee also finds that grease trap pumping can fill valleys in the workload. In his territory, traps have to be pumped every three months. He knows that money will be there, but he can do those jobs on slow days. “You don’t make a lot of money off grease traps, but it pays the bills, and it’s work you can do whenever you can get to it,” he says. By scheduling grease traps a few weeks before they’re due, he can shuffle them around and still keep customers in compliance. “If you’re busy doing something else, you can push it off. If you don’t have anything else to do, you can move them up in the schedule.”
Of course, expansion into pumping is not without hurdles. The capital cost is a prime decision factor. Contractors advise looking at used equipment initially. Miller found a good selection of used trucks at appealing prices in Pumper magazine listings. “I started with one old, used truck and kept it for a few years,” he says. “Business got good and I traded it for a brand new one. And now I have three.”
Harris suggests adding a good camera and cable machine and warns owners to prepare for a spike in the workload, especially for smaller operations that have a limited crew. Harris began with a part-time pumping employee, who is now full time. “More business is more work, and I guess that’s a good problem to have,” adds Harris.
It does take a while to build up a pumping business. “You’re not going to see a revenue turnaround on the truck until the word gets out,” says Harris. “I would put some money into good advertising. Definitely do the Internet. That’s going to bring the business in.”
Installers also need to analyze operating costs, mainly tipping fees and fuel, both on the rise lately. “Dumping prices have tripled around here,” says Miller. “That has taken a big toll on our profits. We can’t pass on that much cost; we had to absorb a majority of it. And we have a lot of contracts that have set prices.”
Tipping fees at wastewater treatment plants vary greatly with geography. Land application of septage can be an alternative, although it requires knowledge of and compliance with regulations and in some areas is impractical or restricted by regulations.
Given the cost of fuel, Hobbs advises looking at travel distance for disposing of septage. “One of the big problems is finding a place within a relatively small radius of where you are working,” he says. “If you have to drive a long distance, it might not be worth it.”
Add to those issues the need for qualified help. Vacuum truck operators need a commercial driver’s license (CDL). Hobbs says that can limit the pool of prospects: Many people prefer not to live under CDL restrictions.
CDL drivers also need the interpersonal skills to serve as the face of their company, along with sales skills. They need a neat, clean appearance, a pleasant personality, and the ability to relate to customers, many of whom are women.
“The sales portion is really critical,” adds Hobbs, and that requires more skills than just pumping a tank. If there’s a problem and they know what they’re doing and how to fix it, you’re going to benefit from that. Some tanks need repairs and troubleshooting. You have to take customers by the hand and educate them.”
If the vacuum truck operator isn’t qualified and certified for septic system repair, the company loses the ability to help customers on the spot. “It’s hard to find a certified individual,” says Hobbs. Truck drivers are the most obvious source of potential vacuum truck operators, but most lack knowledge of septic systems and would need to become licensed or certified. In addition, says Hobbs, pumping is still viewed as a low-skill job, which means pay levels may not attract experienced truck drivers.
Taking the leap
To the bottom-line question of whether to take on pumping, Miller responds, “Yes, absolutely.”
Lee adds, “If you’re doing one side of the business and not the other, you’re missing out. If you’re doing installations and don’t think there is room to grow, there’s a whole separate division you can get into. There’s revenue to be made. It doesn’t take much to put one truck on the road to take care of your customers.”
And then, be prepared, adds Harris: “This could escalate into something bigger and bigger, and that’s what’s happening with us. It forced me to go out and get another machine to keep up with the repairs you find with a pumper truck.”