A business “roll-up” is where an investor buys a lot of smaller companies and rolls them up into a larger company. Some investors are trying to do this in the pool service business.
The theory is that they can achieve an economy of scale, drive costs down and profits up, and quickly establish market dominance (and push the smaller players to the side).
Can it succeed? Should we be concerned?
The roll-up model has the seeds of its own failure baked into the recipe.
Allow me to explain.
It takes three basic things to succeed as you grow a pool service business.
I will expand on this further in another blog post.
Inndependent pool guys like us have the clear advantage in all three categories.
On the relationship side, we know our customers personally. With the roll-ups, the customer becomes a number, a revenue source. Customers feel this and the drop-off level from these companies is staggering.
On the profitability side, we generally operate on very little debt. The roll-ups typically incur huge debts to banks and investors and these debts must be paid back. It is the customers who end up paying for this in the long run.
I recently saw an estimate where a roll-up charged a customer $4350 for replacing a skimmer – when I charge $1750 for the same thing and make decent money at it. On the same ticket, they were charging $300/foot to do crack repair when I do it for $100/foot. This pricing model works for the large companies until the customers realize how much they are being overcharged.
On the information management side, the single truck operators have the information stored in their heads. As they get larger, it becomes imperative to implement systems that keep the data easily accessible. With our company, we faced a real challenge in this area about a year ago and had to either build a better system or stop growing.
The roll-ups have more sophisticated information systems but it is still very apparent to the customers that the person on the other end of the line does not really know them at all, and is not terribly familiar with their history.
We have the advantage, but we must not be complacent
Here’s the deal . . . we have a significant advantage, whether we have a single truck company or something larger.
Still it does not hurt to elevate our game, and as we upgrade our company image, customers will be willing to pay a little more.
Here are some fairly simple steps we have taken, and we recommend to our fellow professionals.
1. Develop Your Branding Image
This sounds complicated, but it’s really not. It is a simple question: Who are you and what image do you want to portray?
Funny story . . . in 1998 after I had started my first company, I got a phone call from a lady who said “I am driving behind one of your trucks.” I wanted to say “Lady, you are driving behind my ONLY truck.” One lettered up van made me look like a big company, and gained me that customer (and many more). We grew from one truck to twelve trucks in two years!
A good brand exudes confidence and permanence, and takes away one of the advantages of the big roll up companies. If you have something sketched up and just need to have it turned into a clean logo, we can help you get there.
2. Brand Your Vehicles
Your vehicle should have four pieces of information: Your logo, your phone number, your website and your name.
Yes, your name. This is such a personal business that your name should be on your vehicle. People will remember your personal name way quicker than your company name
There is no need to spend a fortune on this. Full vehicle wraps are a waste of money unless someone else is paying the bill. We use a company called directdecals.com for all our vehicle logos. They print them up on vinyl and we put them on ourselves. Our simple decal set will run less than $300 in most cases. Again we can help you with this.
3. Maintain a Web Presence
You should have a domain, and there are still good ones available. We recently acquired txleak.com, but we are not using it yet. Go for a domain name that is short and easy to remember.
You can search for domain names on godaddy.com or nameboy.com, but do not buy them there. When you find a name you like, you can get a deal on it along with dependable hosting at siteground.com (domain searches on siteground are more difficult than the other sites).
We have an excellent designer, Ahamed Sojib, we located on Bangladesh. He is very professional and works at reasonable rates. We can help you connect with him.
If you want to build it yourself, I am happy to show you how it is done. We use WordPress with the Divi theme by Elegant Themes. It is actually easy to use once you learn a few things.
4. Send a customer newsletter
When I started my first company in 1998 (after working for others for 15 years), I printed out a one page full color newsletter each month on my dot matrix color printer. It was sort of an afterthought to me, and I thought about discontinuing it, but then customers kept telling me how much they loved it.
The newsletter extends that personal touch to your regular customer and keeps your occasional customers from forgetting about you. Fast forward 25 years and we are now doing it via email.
I hope this has given you food for thought and inspired you to take the next step. We want to help our friends out because as you grow, we grow.
Call me if we can be of assistance.
I am committed to supporting our fellow independent pool company operators. Please remember to send me your information (pic, company logo, company info and short (2-4 sentence) history) so we can include you on our friends page and also so we can build a separate page on our site promoting your business.