"Because we aren't talking about a lot of accounts the impact wasn't that big," he says. "But we figured we were better off to minimize our losses, that's for sure. You're better off minimizing your losses by losing the account than maximizing your losses by keeping the account."
Then, once East Coast had determined its break even point and weeded out accounts that were costing them money, it was time for some strategic planning. They looked hard at the market, their costs, their pricing, and made an important decision.
"The only one way to stay in sweeping is to look at it as a loss leader," Ben-Yashar says. "I'm not saying that all our accounts are losing money, they're not. We don't bid them to lose money. But we made a decision to rely on sweeping to help cover our overhead. Once we made that decision we decided the next step was to use the sweeping base to generate additional business that can help us be profitable."
Determining a new direction
This re-examination of the business started in 2001 and East Coast began implementing its decisions in 2004. East Coast brought parking lot striping in-house, now subbing out only the work it can't handle. They began pursuing crack repair, doubled their landscape maintenance, continue to pursue snow removal, in 2005 re-opened their department of power washing, and will add exterior lighting maintenance this year.
"We looked at other kinds of services we could offer, what other ways we could service our day-to-day sweeping customers," he says. "We know they need this work because someone else is already doing it for them."
Ben-Yashar says that because of its sweeping business East Coast has visibility with almost 500 customers "so we were bound to get some work. We lost some because customers already have established relationships with other vendors, but other customers were willing to give us a shot. It's always easier to get in the door with somebody you're working for, where you have an established relationship, than it is to find new business."
He says East Coast now continually sells its ancillary services to its existing customer base, with a goal of growing those support services.
"We're working on improving the visibility of our ancillary services to our sweeping customers," he says. "The profit margins on them are significantly higher than on sweeping."
Ben-Yashar says he undertook this reexamination of the company only because he had to.
"I really had no choice," he says. "If we hadn't taken a step back and done the analysis we did we would not be here today. It's that simple."
Perhaps surprisingly he doesn't take too much credit for what he did.
"Had I done it in 1995 it would have been smart, but in 1995 I didn't think I needed to do anything like this," he says. "I didn't know price per hour, but I didn't think it mattered. At the end of the day we made a profit so I figured everything was okay. We didn't know where it came from but we had a profit and we were happy."
Ben-Yashar says he thinks what happened to East Coast happens – and is happening – to many contractors, sweepers and other types of pavement maintenance companies, too.
"We were able to get by with it because we were a small company and did not have huge overhead, but a big company with overhead will have trouble," he says. "If you really think about the big companies there are few out there making it on litter sweeping. You can do it if you're a small company, but once you reach a certain size, and have certain expenses, it changes the entire profit-and-loss statement. Then you've got some concerns."
Adjusting to change
He says while crew members did have to learn some new skills (he sent two people to work for a week of training with Ken Pritchett, \\\STRIPES/// Parking Lot Service, Denton, TX), the group most affected by the change in direction was the sales staff.
"Traditionally our sales people push sweeping because that's what we did. But we had to let them know we wanted them to push other services," Ben-Yashar says. "Typically they only pushed vertical sales but now we need them to sell horizontally. That means we need them to sell more services to the same customers rather than one service to new customers.