When it comes to brokers, proceed with caution and focus the growth of your business with your own networking on your agreements. If your commitment to safety and service is excellent, pricing is irrelevant to a customer looking for dependability.
By John Paglia, III
As your company grows, at some point you will be forced to enter the world of bid work. Even for established companies, bid work has evolved to be attractive or not to haulers depending on who you speak too. I am here to warn you that all bids are not the same. Bids started out as a process for municipalities or large waste generators to find and gauge interest of qualified service providers leading to an award or negotiations. Everyone was happy. Waste companies would get an opportunity to provide their pricing and predict a fair ROI. Then brokers became involved. This is the bid work I tell you to tip toe with caution or avoid all together if possible. As the Internet and technology found ways to make the industry more efficient, growth through brokerage evolved. It is one thing to be awarded a bid, but who is winning?
A Common Thread
Every time I open my inbox, I have an e-mail from another new waste broker, urging me to open their spreadsheet and submit pricing. I find a common thread in all of them. They have no real history in the industry and they too are searching for the business, by combining the cheapest pricing they can find in the area in question. A majority of the time, my time is wasted. I believe that they are more interested in making money off haulers assets and liabilities, while making margins we can only dream of. They do this without putting the first piece of equipment in the field. Some will even ask you to drop your quoted rates lower to get the business. When I found actual examples that we were already the lower bid, they still wanted a margin close to 45 percent for being the middle man. I often find myself telling them to lose my number or e-mail and challenging them to put their own capital at risk on the streets.
Do Your Homework
Not all brokers are created equal. There are a few good ones out there. Just do your homework and do not compromise on your pricing. If you are awarded the business, ensure that you are protected with terms like you would be on your own agreement. If the broker is willing to ensure to terms like your company’s agreement, I would call that a good broker. The brokers that I have agreements with protect all parties legally and are usually the reputable brokers and easiest to work with. At the end of the day providing any of our services is not a cheap trick anymore. Asset and labor costs continue to climb. Why should we allow brokers to force pricing back down to rates that were common 20 to 30 years ago? Our cost is not the same, so our revenue should not be either. I always encourage when and where possible to avoid a broker unless they play on your terms. At the end of the day we do not need the practice, we are all for-profit companies.
Focus on Your Business
You know the old saying, if you cannot beat them, join them. Many hauling companies—both public and private—across the nation have created separate entities to also broker waste. Starting as a necessity for nationwide service for larger customers, it has now evolved to a more polished understanding of the role of a broker versus the “fly-by-night” waste brokers. A waste hauler with their own brokerage are the brokers that will allow you to make a fair rate of return on your capital. It all boils down to what you feel comfortable with and, like anything, relationships. If a broker wants to seek a bid from my companies, I invite them to stop by the office and develop a relationship. When, and if, they decline, they go to the naughty list. The brokers that accept an invite show me that they are there for the long run. I most recently had a company pester me to bid a commercial account and I knew the current provider was raising them and rightfully so. I absolutely could have swooped in with a better more efficient rate, but I did not compromise on my principle. I set up a meeting to meet the CEO at this year’s past Waste Expo. A few hours before our scheduled meeting, he e-mailed me to tell me he was not attending this year’s expo. I continue to take a pass on all his offers to “grow my business”. Eventually other haulers will refuse work from the searching brokers of our industry and they will fizzle into the background. Until that point, proceed with caution and focus the growth of your business with your own networking on your agreements. If your commitment to safety and service is excellent, pricing is irrelevant to a customer looking for dependability. | WA
John Paglia, III is a 4th generation garbage man. Before he climbed the ranks to become Florida Express Environmental’s General Manager, he had a successful career in college and professional athletics. John has been around the garbage industry since his car seat days. Currently, John is focused on growing his company and offering the highest level of customer service and prolonging the world we live in today. John wakes up every day knowing the impact professional haulers have on their community is far greater than most realize. He can be reached at (352) 629-4349, e-mail John3@floridaexpress.us or visit www.floridaexpress.us.