January 23, 2012

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Going for the Green

How 1-800-GOT-JUNK? is Saving Money and the Environment

Hilary Ingoldsby Whitesides

January 23, 2012

When 1-800-GOT-JUNK? felt the pinch of the nation’s economic downturn, owner Brian Gibson went back to the drawing board to find a solution. What he came up with was a big risk, but you know what they say about taking risks: the bigger the risk, the bigger the possible reward. Not only did the well-planned gamble pay off, but it changed the way the local franchise does business and created a win-win situation for the company, local community and environment. Surviving and Thriving In 2003, 1-800-GOT-JUNK? arrived in Utah and immediately started cleaning up—figuratively and literally. The company, which prides itself as being a professional junk removal service, averaged an 89 percent growth every year from 2003 to 2007. Gibson credits the growth to the needed service the company provides, and the Salt Lake City franchise quickly made a name for itself as the perfect solution for hard-to-dispose items. “We do all the loading and clean up,” Gibson says. “All the customers really need to do is call us and point to what they want gone and we do the rest whether it be old furniture, campers, appliances, boats, construction materials, old computers—anything.” Near the end of 2007, economic warning signs appeared and like many companies, 1-800-GOT-JUNK? experienced declining revenues for the first time since its 2003 inception. Gibson and his team looked at the worldwide economic troubles and realized the company was going to be hit hard. In 2008, the company lost 35 percent in revenue and in 2009 the company experienced an additional 35 percent decrease from 2008. Since some consumers considered junk removal a luxury, Gibson knew that the survival of the business depended on some serious changes. But survival wasn’t enough. Gibson also wanted his employees and company to thrive despite the challenges. “Not only did we want to improve profitability and survive, but we also wanted to improve employee engagement and continue being good corporate citizens,” he says. Innovative Thinking Key Like many businesses, Gibson realized he “hadn’t been careful enough during the fat years,” and decided it was time to fine-tune each and every process and employee. Gibson’s top cost is labor so, like many in his shoes, he “got rid of a few bad apples,” and didn’t rehire as many employees when natural attrition occurred. As Gibson looked for more ways to save money and improve the business, his mind quickly turned to diverting items from the landfill by recycling and making charitable donations. While the company had always recycled and donated, lack of space often led the company to sending items to the landfill. Because employees work out of trucks, the business office was always small—first an apartment and later a small office. And while employees were always encouraged to recycle what items they could, the extra driving involved to make recycling possible had to remain cost-effective, which often meant making recycling trips fewer and farther in between. Gibson knew, though, that if his crews could recycle more, the company would save more money. But he also knew that to accomplish that, he had to take a risk and make one really big change. “Last year, right in the middle of the downturn, we decided to take a risk and expand into a warehouse,” Gibson says. The expansion would increase the company’s lease costs and utilities five times over. Some thought the risk was too great, but Gibson gambled on the idea that the company could save more in dump costs than the increase in other costs—and he was right. According to Gibson, the company’s cost to dump items at the local landfill decreased by 51 percent—a savings that has more than paid for the warehouse, utilities and extra hours for dedicated employees. After Taking the Leap What was once considered optional is now a way of business. “It was always important to divert from the landfill, but now it’s a huge part of our business,” Gibson says. Trucks now stop by the warehouse after almost every job to unload items that could be recycled or donated. Employees sort through the items and take them to be recycled or donated to local charities. Since 2003, Gibson estimates that the company diverted 2,500 tons of junk from the landfill. The company also experienced a 15.5 percent increase in net profit. Not only did the move to the warehouse make the company more financially viable and greener, but the change increased employee morale as well. Gibson reports that employees are more engaged in their work and feel good about the difference they are making in the community. “With the downturn in the economy, we started getting a lot more applications and we were able to be a little more selective in our hiring,” Gibson says. “We made sure that the guys we hired cared about recycling and the environment and there has been definite improvement in employee morale and engagement. We were green before it was popular to be green. Now we can take some of that buzz and have it permeate our whole team.” Gibson’s branch ended 2009 with zero business debt and is passing the savings to its customers. In March, having alleviated fears about employee morale and profitability, 1-800-GOT-JUNK? lowered customer rates. Gibson is confident, having made the necessary improvements, that 2010 is going to be a great year. “The recession forced us to dig deeper and finally do what we had thought about doing,” Gibson says. “Not only did it help our finances in the long run, but it also helped us with what we’ve always felt is important—to be good corporate citizens.” Strategic Breakdown How your company can put this case study to work. Situation 1-800-GOT-JUNK?, a professional junk removal service, opened in Utah in 2003. Before the economic downturn, the company averaged an 89 percent growth every year from 2003 to 2007. Problem In 2008, 1-800-GOT-JUNK? lost 35 percent in revenue. In 2009, the company experienced an additional 35 percent decrease from 2008. Goals Increase revenue back to pre-2008 levels and continue growing. The company also wanted to improve employee morale and maintain its commitment to the environment. Plan Fine-tune each and every process to determine revenue-generating solutions. Innovative thinking led the company to begin recycling and donating more items, but the company did not have the space to begin this process. Owner Brian Gibson took a strategic risk and opened a warehouse to store possible recyclables and charitable items. The expansion increased the company’s lease costs and utilities five times over. Results The benefits of recycling and donating goods eventually outweighed the warehouse costs. 1-800-GOT-JUNK? ended 2009 with zero business debt and experienced increased employee morale and customer retention. Lessons Strategic risk taking during hard economic times is key to surviving, and thriving, a downturn. Management should welcome innovative ideas and seemingly risky ideas that may lead to greater long-term rewards.
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