It looks like there is no end in sight for rising homebuilding in the United States. High interest rates, inflated construction material costs and some shaky economic indicators don’t appear to be dampening the demand for new housing.

The situation was put to me this way a year ago by a Realtor helping my son find a home to buy: We have hundreds of thousands of young people looking to purchase their first home in our state, but very few homes available for sale. The implosion of the residential construction industry that happened 15 years ago brought most new construction to a halt for a decade. The homeowners who would step up to a new home can’t find one, so they stay put.

Today, construction is getting back on course, and much of it is happening outside of our cities, which requires septic systems. In addition, millions of existing septic systems in the United States have reached well beyond their predicted life expectancy and need replacement. The result, of course, is that you and your installing crews are insanely busy.

Every week I talk to at least one installer who is seemingly stretched beyond his or her limits. Of course, it’s always better to have jobs stockpiled into the future to fill the calendar. But there is a fine line between when a job list feels good for your company’s long-term sustainability and when these calls become overwhelming. At some point, customers are no longer satisfied to wait for your excavators to show up and start digging.

That’s when you have to do something, whether it is turning down work and stagnating or hiring workers to keep on growing.

At the end of 2023, I’d like to ask: Are we there yet?

EXPAND NOW?

If you choose to hire a new crew, chances are very good that additional workload will find you. For several reasons, I don’t think installers have to worry about keeping new staff busy.

New-construction demand will continue. Indications are that new construction will remain healthy for the foreseeable future. While costs for homebuyers rise, particularly due to interest rate fluctuations, it seems like rising home prices are being offset to a degree by escalating wages for the American workforce. And the pent-up demand after a decade of little to no homebuilding is significant. Also, from talking to installers, my hunch is that each new system will be more profitable moving forward. That’s because so often the best land has been developed and builders need more advanced treatment solutions to add homes on what were previously viewed as substandard lots.

More systems fail every day. I read a recent report out of a small Canadian town where existing septic systems were being inventoried as part of an environmental initiative. While it was a small sample size, well more than half of the systems were either failing, out of compliance with sizing rules or required repairs or upgrades. I think this mirrors the onsite situation everywhere. By nature septic systems are out of sight, so out of mind. Many existing systems are 40, 50 or more years old and no longer functioning as designed. At the same time, county and state health departments are starting to crack down on failing systems. These factors converge to ensure a steady workload for installers.

Municipalities don’t have money. I am hearing it more and more. Cities once eager to extend sewer service into outlying subdivisions are rethinking that trend. Government budgets are tightening, infrastructure project costs are rising exponentially, and government labor and pension costs are rising as much or more than the private sector. Suddenly to these overburdened bureaucrats, decentralized wastewater is looking like a great idea. Any option that will take pressure off of their treatment systems is seen as a good thing.

The installer workforce is graying. Our industry is a great place for young workers to land. The future of decentralized wastewater treatment is bright. Still, everywhere I look, some of our best installers are nearing the end of their careers. Each time we blow out the candles at another retirement party, the demand for remaining installers grows. Tell your kids, tell your friends’ kids about the great opportunities in the onsite world. We’ve got to turn this around.

OR PULL BACK?

On the other hand, turning down customers to achieve a better work/life balance will probably help reduce stress. But what long-term effect will this strategy have on your company?

Hurt the value of your business. Small businesses like yours typically need to view the company’s assets and revenue stream as a retirement plan. If your inventory of machines is healthy and growing and the revenue from your customer base grows at a consistent pace, a buyer will be willing to pay more for the business when it comes time to sell. Some small business owners fail when they take their eye off this long-range goal and sabotage their retirement plan by deciding to retreat and stay small.

Reduce your pay. There are short-term implications to pulling back when demand for your work is high. At the end of the year, do you want to look at a flat or slow-growing profit and loss statement? This will impact how much income you as the owner can take from the business for expenses like the mortgage payment, new vehicles or sending the kids to college. We all have experienced the impact of rising inflation these days. If your dollar doesn’t go as far as it used to, imagine how your budget might be pinched by deciding to cut back.

Strengthen your competitors. Every time you turn down a job, another company in your region lands the contract. So what, you might ask? You can to get by just fine losing a customer or two. But this will have a detrimental effect and cause problems over time. The competitor will use that added revenue to retain good workers, update equipment on a regular basis, and invest in a marketing plan to take more business away from you. And when you lose revenue, all of those things will happen in reverse, and your competitor might even offer more money to your best technicians.

HOW ARE YOU DOING?

What is your strategy for dealing with the persistent strong demand for your services? Share your thoughts by writing to editor@onsiteinstaller.com.

For those installers who are pulling 80-hour weeks and feel unable to control the situation, I hope you find a solution. Work is important, but so is having time to enjoy life outside of the trenches. I’ll leave you with one story that highlights the concern I have for the overworked contractors in our industry:

We’re trying to complete a profile story on a family installing company, but it’s been difficult for the owner to find time to squeeze in a phone interview. His wife candidly told me she was worried about his stress level and exasperated with the situation. She finally told her husband she was planning a Christmas holiday trip with the grandkids and he could take time off to go along or stay home and work. I’m sad to report he decided to skip the trip and keep working.