Contracting companies don't always end up the way they start out, and as in the case of East Coast Lot & Pavement Maintenance, that can be a good thing – a very good thing. Because as Uri Ben-Yashar, president and CEO explains, if the company was the same contract sweeping business he acquired in 1993, it would no longer exist.
"I used to tell people I was a sweeping contractor," Ben-Yashar says. "Today when I explain what I do I say ‘We provide exterior servicing for large parking lots.' We're a very different business than we were back then."
The small company Ben-Yashar bought in 1993 had two sweeping trucks, 25 sweeping accounts, and generated 100% of sales through sweeping. Even as recently as five years ago East Coast Lot & Pavement Maintenance concentrated on sweeping, with more than 75% of all sales coming from regular route sweeping of parking lots.
Today the company has 45 employees, more than 50 pieces of equipment, operates from four locations, has almost 500 sweeping accounts, and operates 20 routes a night. Sweeping generates 55% of the business, with 20% of sales coming from pavement maintenance (including cracksealing, pavement repair, power washing, and striping), 15% from landscape maintenance, and 10% from snow removal. And it self-performs all its own work in a five-state region.
"We always did a little of the other services from the beginning, but it was very little and it was only when we were asked by the client to do them," Ben-Yashar says. "We pursue that work now."
And sweeping, despite the fact that it still accounts for the lion's share of sales, is now used in a much different way in the business.
"Sweeping is really a loss leader. It's very difficult to break even if you have to rely on sweeping to provide your overhead because there are always people out there who will do the work cheap," he says. "They don't invest in equipment like we do, they don't invest in the business like we do, so they don't have to charge what we have to charge to at the very least cover our costs. So the price declines."
He says East Coast has not been able to raise prices to its original sweeping customers. "It would be okay if I could even charge my customers 1993 prices, but I can't even do that. It's gotten to the point where companies like mine just can't make ends meet by only sweeping. That's why we added these other services. It was a vital step in the survival of my company."
Analyzing the company
To get where they are today Ben-Yashar lead East Coast through a complete evaluation process designed to see what the company was actually doing and where it was, or should be, headed. He says the first step was to track and analyze all their costs so they could determine what their break-even point was in sweeping.
"When I figured out what my break-even point was it was a realization. I was very surprised," he says. "I had been pricing our sweeping business to break even in the sweeping operation and I was very surprised to find out that the break-even point was in the low $40-per-hour area where we had been pricing it in the low $30-per-hour area.
"Once we knew the break-even numbers it was easy to figure out what to charge per hour to sweep a parking lot," he says. "Unfortunately no one is charging that…but people are working and work is getting done."
So as much as East Coast prices its sweeping to be profitable, it also prices it to survive. "It's a survival world for companies like mine," he says.
Once he had established the break-even point and readjusted his per-hour pricing, Ben-Yashar evaluated his accounts and began to weed out the accounts that were actually costing the company significant dollars.
"We went to accounts that we had low dollars on and I just explained to them that we needed to increase our prices. About half agreed and half said ‘no thank you'."
He says East Coast didn't have a lot of accounts where it was actually losing money, but it had enough of them.