Nick Friedman's junk-hauling business grew quickly at first, but he's had to adjust its operations because of the economy.
Tampa entrepreneur Nick Friedman, 27, half-jokingly says that he originally thought he might be able to retire at 30.
With the real estate downturn, Friedman, co-founder of the junk-hauling firm College Hunks Hauling Junk Inc., is adjusting his sights to maybe when he's 40.
In 2007 and 2008, Friedman grew the junk recycling and disposal business to 17 markets, including Washington; Baltimore; Richmond, Va.; Tampa; Orlando; Cincinnati; Louisville, Ky.; Raleigh, N.C.; Chicago; Denver; San
Francisco; Los Angeles; Annapolis, Md.; Dallas; and New Jersey. All but Dallas and New Jersey are open.
But in the past year, as the economy slowed, five franchisees couldn't get funding in Detroit, Chicago, Austin, Long Island and St. Petersburg.
“We're certainly happy what we have, but we would've liked to have had the five others,” Friedman says.
Sales jumped 100% in 2007. Revenue growth slowed to 10% last year.
“It was a gut check,” Friedman. “We needed to re-evaluate our growth trajectory.”
The company cut advertising and trade show trips, among other things. But it did not cut prices. This has been Friedman's biggest lesson as president. The market is unpredictable.
“When we started, we were visionaries and came out of the gates very strong, growing very quickly,” Friedman says. “Then, the market turned on us. It's been a strategic lesson.”
The real estate slowdown has forced Friedman to go after more commercial hauling and distressed property business. Commercial has gone from 10% of the business to about 30%. The remainder is residential.
“We've been building relationships with foreclosure real estate agents, clearing out office buildings,” he says.
But there are plenty of positives, Friedman says.
Friedman and high school friend Omar Soliman started the company in Washington in 2005 as a company with clean-cut, young employees that haul junk from homes and businesses.
It moved it to Tampa in 2008, where it opened a national call center. The past year saw the company hire a director of franchise support and a call center manager. It streamlined franchisee training.
It is recycling more than 60% of what it picks up, which includes metal, paper, cardboard and clothing.
Customer feedback, from emails and telephone surveys, continues to be mainly positive with a satisfaction rate of more than 95%.
Friedman's top priority going forward is retaining customers by making sure all client interactions are positive. That's become the top focus. As residential hauling has fallen off because fewer people are moving, it is getting commercial work, but getting commercial clients takes more time.
“We still feel good, still have franchise interest and we are still making clients happy,”he says.
Friedman is still hopeful the company can reach 30 franchises by the end of this year. A franchise, which serves 300,000 people, costs $25,000. It originally hoped to be in 50 markets by the end of 2009.
But Friedman hasn't given up on his long-term goal to become a national brand and the nation's largest employer of college students. Junk hauling is a fragmented industry with no truly national players.
“Our vision is to see our trucks all around the country,” Friedman says.
While commercial real estate has also slowed down, the company is working on getting business from companies that are restructuring.
“There are companies liquidating space,” Friedman says. “If they are downsizing, they have to get rid of stuff.”