18 months, 210% Growth: A 505-Junk Case Study

 


505-Junk began as a class business project for co-founders Barry Hartman and Scott Foran, who were both attending university. After deciding they wanted to take their plan to the next level, they quit school to pursue their entrepreneurial dreams. “We didn’t have much to work with at the time,” says Barry, “Just the business plan, our dreams and a used pickup truck and a trailer that we’d found on the side of the road.”

Fast forward five years, and 505-Junk is now an award-winning junk removal company that is the first of its kind to install innovative scales in their trucks, allowing them to charge clients by exact weight. “It’s a great model,” says Scott. “It guarantees clients a fair and accurate price without the hassle of guessing the volume of a load to determine the cost.”

With a team of 15 and revenue in the millions, a lot has changed at 505-Junk since the days when Barry would cold call prospective clients from a plywood desk in his parents’ basement. Solid profit margins, increasing revenue and a market-preferred pay-by-weight business model have put the company on the road to success. Growth has been so impressive that 505-Junk is now poised for expansion into multiple new markets across British Columbia this year.

That growth and success didn’t come easily, though. In fact, the first few years were extremely challenging. When 505-Junk joined the Breakthrough Academy program in the fall of 2015, cash flow was tight, profit margins were low and revenue was stagnant. Barry and Scott were determined to turn things around.

In the 18 months since 505-Junk joined the BTA program, the company has seen dramatic results. To get them on the fast-track for success, three significant initiatives were employed early on:

  • Daily KPI’s (Key Performance Indicators) were established along with goals and a tracking system to monitor results. At the end of each day, every truck’s revenue, labour cost, dump fees and fuel costs are summarized and submitted into the office for tracking. “This lets us track gross profit margins on a daily basis so that we can make quick adjustments when margins dip below target,” says Barry. This dedicated focus on daily revenue and gross profit goals caused a corresponding cultural shift in the company at the same time. As a result, monthly revenue has grown by 210 percent in the past 18 months and gross profit has increased by 5 percent – even as staff wages have increased.
  • A second important factor in 505-Junk’s growth was their focus on putting the right people in the right roles on their team. With a defined strategic direction, Barry took on the job of piecing together the roles and organizational structure that would be required to achieve their goals. A General Manager was required for the Vancouver area so that Barry and Scott could focus on working on those activities that would enhance the long-term growth of the business. “We also knew that our Truck Team driver, Alex Elsey, was looking for a role with more responsibility,” says Scott. “In the four years that he’d been with us, he’d proven himself to be a solid performer.” Alex was promoted to General Manager, which allowed Scott and Barry time to work on initiatives that would take the company to the next level.
  • A third key to success was the proper targeting of clients so that 505-Junk could provide the greatest possible value. While the majority of the marketing was initially focused on residential clients, market analysis indicated that commercial work was more profitable and significantly more valuable. The biggest benefit to commercial clients was the use of the simple, consistent, fair pay-by-weight pricing model, which was preferred over having to negotiate with traditional, volume-based junk removal companies. Marketing efforts were adjusted accordingly, with dramatically positive results.

With the proper fundamentals in place – and rapidly-growing revenue the result – 505-Junk is ready for large scale expansion. Franchising the company is the next step, with three franchises launching in the fall of 2017. Barry and Scott have also set their sights on every major market across North America and – thanks to the Breakthrough Academy program – have the strategy and support to help them realize their goals.

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