722: The Million Dollar Business in Your Backyard

0:00This is the million dollar business in your backyard. What's up, what's up? Nick Loper here. Welcome to the Side Hustle Show. It's the entrepreneurship podcast you can actually apply. And I've got an incredible story for you today. Today's guest went from zero to 350 recurring customers in his first three months in business, starting as a side project and racked up over$3 million in revenue last year, all from the not so glamorous service of pet waste removal. And if that wasn't enough, he says, you know what? There's so much opportunity in this space. I'm going to teach other people how we did it.

0:35And that's turned into another almost million dollar a year side hustle from swoopscoop.com and the Poop Scoop millionaire community, William Milliken. Welcome to the Side Hustle Show. Yeah, thanks for having me, Nick. I appreciate it. You bet. It has been quite a journey from this little side project idea to cleaning a quarter million yards, a couple hundred thousand yards at this point. But it is late 2020. You're working in digital marketing and you come to this realization that, look, I could be making way more running the kinds of businesses that were hiring you for marketing help than just being the hired marketing help.

1:13What led you to the pet waste niche? Yeah, so I guess my first home service company was in the trade. So I have an electrical company. I got a garage door company and I had a buddy from high school that I grew up with. We went to elementary school, middle school, high school, grew up down the street and he wanted to start a business with me. And I started investigating. I said, what kind of skills do you have? Did he have any trade skills? He had basically no skills. Couldn't do plumbing. Couldn't back up a trailer. Couldn't do lawn care. And at the time, my wife was pregnant. I was busy working on the businesses, so she had hired a pooper scooper.

1:42And they just weren't doing a very good job, not very professional, didn't show up a lot of the time. The billing was weird. No uniforms, anything like that. And I thought, maybe we give that a shot and just kind of see what happens. Which I honestly wasn't expecting much, because when I get into a new industry, one of the first things I do is I check to see how much Google search volume there is just to get an idea of demand. And there's pretty much no search volume for this service. So I said, eh, we'll give it a shot and see what happens anyways. And I'm glad we did. So you didn't let that be a red flag.

2:09Like nobody necessarily, they don't know it's a thing. They don't know to look for it. Exactly. So that's actually how we ended up growing was not with a lot of Google at first. It was just trying to find ways to get in front of people and let them know that that service exists. And once that started happening, things just started to snowball from there. Yeah, that's interesting to say. People aren't necessarily going out proactively looking for it. But I still think there's some demand. I mean, your wife had hired a service, so you knew there was at least some kind of demand, people looking for help here.

2:37Yeah, but nobody likes picking up dog poop. So at least I don't. I don't know about you. No, this was because we've done a few episodes with Erica Crouppen from Crouppen's Poop and Scoopin'. And similar, she's like, this was a pain point for her. And so the light bulb goes off and said, well, if it's a pain point for me, other people probably don't like doing it. Maybe there's a business there. Absolutely. And there's some other things that were really appealing about it, too. It cost almost no money to get started, which was a big one. You don't have to worry about hiring journeyman electricians or people with 8 ,000 hours and all these crazy licenses.

3:07When you want to scale it up, it's a lot easier to hire people. You don't have any custom materials. You just got trash bags. You're not buying a bunch of home service equipment. Sure, sure. Okay, so it checks the box. Low specialized skills required, low startup costs. And despite no search volume, I feel like there's some demand out there. Yeah. And there was other service providers doing it. And maybe interestingly, they weren't doing a great job. Like, despite their lack of branding and lack of effort, they were still getting business. Yep. Yep. 100%. Did you do anything else pre-startup phase, like in the idea validation or competitive research?

3:46Honestly, it wasn't a lot of information out there. You had your local competitors, so you can kind of get an idea. You had Erica Crouppen was one of the OGs, had a YouTube channel. So basically, that was the only information we had. My business partner runs the ops, so he didn't even have a dog. So I remember when we were first getting started, he threw a bunch of rocks out in his backyard and he was sweeping up rocks to time himself to see how long he thought an average yard would take. So there was a lot of trial and error, especially when we were starting off. That's funny. You picture the guy with the stopwatch like in any kind of sports montage movie.

4:17Yeah, we should go back and make that. That's a good idea. So what happens next in terms of launching and getting first customers here? I get the idea, kind of come up with a basic service pricing, come up with a basic kind of service system. Because there's definitely things that you want to make sure you do, like spraying all your equipment with like camel grade disinfectant so you're not spreading like Parvo or other illnesses. So that was one thing that was really important to us. And honestly, at first, I kind of made my business partner grind it out. So he was door knocking, trying to network with vets and putting up door hangers and stuff like that.

4:46Probably tell that we got our first 15, 20 customers or so. And once that happened, I said, OK, let's start to throw some real money behind and see what happens. Google, as I mentioned, not a lot of search volume. But once we started running Facebook ads, it kind of went semi-viral. People were just signing up left and right. And it got pretty crazy because we went from an idea we didn't even know that was going to work. Then we had to start buying trucks and hiring people within the first couple of months. So it was a pretty intense time. Yeah, no kidding. All of a sudden, yeah, if we get this in front of the right audience through the Facebook ads, we prove out the demand in a hurry.

5:17And all of a sudden, we're off to the races. Did your partner get positive response from the vet offices, from the door knocking? Or was it kind of like, how big of a dog do you think I have? Like, this is fine. It's not a big problem. Yeah, I think it was a little bit hit and miss. And honestly, another thing that he was doing that I forgot to mention too, was he was posting in the free buy, sell, trade groups on Facebook, or like dog owners of Spokane, dog owners of Seattle, that type of thing. I'm just making those free organic posts in those groups. So between that, door knocking, just really grinding it out.

5:48that's how we got our first I guess about a thousand dollars a month in revenue what kind of posts do well in those organic groups is it can you come in straight up self-promotion and be like hey we're starting a new company it's called swoop scoop you know look for the bright blue t-shirts and you know we're going to take good care of you depends on the group all the groups have like different rules so you'll want to make sure that you read the rules a lot of them have different posting schedules so like businesses you can post once a week or you can post on Fridays and so just follow the rules.

6:15As far as what works best, what works best for us now is anything that has a real person in it. So one of our employees is wearing a branded uniform if they're standing in front of a Raptor vehicle. It tends to work the best. But when we first started, I think our best performing ad of all time, I literally just took a picture of a bag of dog poop in the snow and that thing crushed it for us. We were getting leads for like six or seven bucks, closing one out of three, one out of four of them. So it was pretty crazy. I wish it still worked like that. Yeah, let's talk about some of the economics here.

6:45So$6 to$7 per lead early on, maybe best case scenario, 30 % close rate. What's that process flow like? This is filling out a form on your website, like a request for a quote? What happens after this lead form? Yeah, so we've modified over the years so now everything goes to the website. But at the time, I wanted as little friction as possible. So we were actually just running Facebook ads to send us a DM on Facebook. So we didn't have to worry about them going to a website. We didn't have to worry about page speeds. We didn't have to worry about any technical issues. It was just the lowest friction.

7:15They sent us a message. We tried to reply as quick as possible with some pre-formatted messages. Get them a quote and get them on the schedule. Okay. How do you figure out how much to charge per yard, per dog, per week, anything? Yeah, it kind of goes back to the reverse engineering. So the scooping the rocks in the backyard to kind of figure out how long it would take to do a yard. And then once we started getting some customers, it was a lot easier to validate that and see what actually is going to happen. So one tech can typically handle between 125 to 150 customers on their route. So they're doing 25 to 35 a day, depending on route density.

7:51So as the business scales, it's been a lot easier to kind of reverse engineer that. But at first it was see what the competitors are charging, charge a little bit more, be more professional, try to time yourself to get some guardrails. And at the beginning, it's really just selling labor. Yeah. Like I said, there's not a lot of cost of goods sold and whatnot. So it's more forgiving if you screw that up at the beginning. Was there an hourly rate you were shooting for with the rock pickup practice rounds? Probably around trying to shoot for around the$70,$80 range, I think at the time. Now we want to be like well over 100.

8:22Yeah, it's wild that there is demand for that at$70 an hour. It's like, yeah, it sucks, but I can swallow my pride. I can go out and do it for that price. Yeah, so you don't tell people you charge at$70 an hour to pick up dog food. No, no, no. It's packaged a little bit differently. Yeah, exactly. And over the time, too, there's been little tips and tricks. Like instead of telling people what the monthly price is, if you give them like the per visit price, that tends to convert better. So there's a lot of tips and tricks you learn along the way that just makes the business compound more and more over the years.

8:53Pricing on the website today says between$65 and$125 a month, but then you break it down as, well, it's only$25 a visit or something like that. Yep, exactly. If you go to the quote tool, you can leave different pricing. So pricing is based on how many dogs you have, what service frequency you want, and then it's just based on the average size yard. So somebody has like two acres, obviously we're going to charge more for that. But everything's up front and transparent right there on the website, which I think is important as well. Yeah, they got two acres. They got a bunch of horses out there. You're like, well, this is not part of the deal.

9:25Yeah, exactly. Exactly. Do you find most people go for that recurring monthly service and that's just kind of they add it into their budget, makes it easier for them? Yeah, I'd say definitely the majority of customers will do that depending on the season. So this business, the seasonality of it actually was pretty surprising to me. Everybody expects that summer is going to be the busy time, but it's actually usually the first quarter of the year. So when the weather is the worst, it's peak demand. And if you're in a market that gets snow, like our first market was, once that snow melts off, I call it peak poop pain season.

9:56And things just go crazy because they got three, four, five months of poop that they haven't picked up and they don't want to mess with it. They want to go out and mow their yard or whatever, but it's just, it's nasty. Got it. Got it. Okay. I saw a note about switching from monthly billing at one point to quarterly billing for certain customers. And maybe just like the psychological impact of reducing that decision fatigue. Like, well, I've got to sign up for this thing again, again, again. It's like, oh, no, no, just to make fewer decisions or fewer charge points. Exactly, yeah. So every time you charge somebody's car, there's a chance that that doesn't go through, right?

10:29Whether the car number changes or whether they want to cancel services and whatnot. So we decided to offer an additional billing frequency option. We actually have two now, so you can either be monthly or you can be quarterly or you can also pay annually, which is something that we just rolled out. But we found that people on quarterly billing are about 72 % less likely to churn than people on monthly billing. Kind of as you mentioned, they have that look back period. If you're only getting billed once or four times a year versus 12 times a year, there's just less opportunities for them to kind of think about that and decide if they want to cancel or not, kind of from a psychological perspective.

11:01Yeah, yeah. They're pretty committed to this in a way and just, yeah, they see it less frequently. Do you offer some like, oh, it's 10 % off if you opt for the quarterly plan or something like that? Yeah, so we do. It's kind of a standard 10 % off. Kind of the way that we did it when we rolled it out for the first time, we usually do an annual price increase just to kind of keep up with inflation or whatever else is happening. As the service gets better, as we get more overhead, we naturally have to charge more. But when we first rolled it out, we did about a 10 % price increase. but we said, hey, if you sign up for quarterly billing, we knock 10 % off.

11:33So you're essentially locking in the same rate for the next year. Got it, got it. Pretty good take rate. Between annual and quarterly, we're about close to 40 % of our client base is on those higher billing frequencies. Oh, wow, okay. Yeah, you had pretty good opt-in for those. Like, yeah, I want to save the money. I love this service. So let's keep doing it. 100%. So that was one of the best things we did too. And also timing that strategically because as I mentioned, we acquire most of our customers during that first quarter of the year. So we do that. December, we pre-bill everybody, so we're able to pull forward all that cash so we can use it to grow the business faster.

12:05What are you mainly investing in? William's answer, plus his mind-blowing customer lifetime value, coming up right after this. When I started the Side Hustle Show, I had no idea what I was doing, but I did have a lot of what-ifs. What if nobody listens? What if I embarrass myself? What if no one cares? But what started as a little experiment in the corner of the living room has completely changed my life. When you're ready to face down those fears and hesitations and what-ifs and launch your thing, whatever it is, it helps to have a partner like Shopify in your corner to help. Shopify is the commerce platform behind millions of businesses around the world, from household names to dozens of side hustle show guests.

12:46With hundreds of ready-to-use templates, Shopify helps you build that eye-catching, high-converting online store. Plus, Shopify helps you find customers with easy-to-run email and social media campaigns. And if you get stuck, their award-winning 24-7 customer support is standing by. It's time to turn those what-ifs into with Shopify today. Sign up for your$1 per month trial today at shopify.com slash sidehustle. Go to shopify.com slash sidehustle. That's shopify.com slash sidehustle. when it comes to leveling up your life and your business it's wild how much the basic stuff matters like how you talk to your customers how you keep your team on the same page a cleaner more modern setup can make everything feel smoother that's why i'm excited to partner with quo for today's episode spelled q u o quo is the modern alternative to run your business communications in fact it's the number one rated business phone system on g2 with over 3 000 reviews.

13:47More than 90 ,000 businesses, from solo operators to growing teams, already rely on Quo to stay connected, stay professional, and be consistently reachable. Quo works wherever you are, right from an app on your phone or computer, and lets you keep your existing phone number. You can add new numbers or teammates in minutes, sync with your CRM, and rely on seamless routing and call flows as your business scales. Make this the year where no opportunity and no customer slips away. Try Quo for free plus get 20 % off your first six months when you go to quo.com slash side hustle. That's q u o.com slash side hustle.

14:26Quo, no missed calls, no missed customers. The main thing, especially for that time of year is going to be marketing, marketing, marketing, marketing is where most of that extra money is going to go. So you definitely have to keep a close eye on like your customer acquisition costs, you got to keep a close eye on like what your customer lifetime value is going to be obviously make tweaks as you go. But once you have those things kind of dialed in, you can see how aggressively you're able to scale the business in any particular market. It's one of these things where in my head is probably a pretty sticky service.

14:53Once somebody gets used to the luxury of somebody going by, I don't have to deal with this anymore. I've got, I got a team for this. I get the swoop scoop people are coming. I don't have to deal with it. And it's like, whatever they charge, it's fine. Imagine the LTV tends to be pretty good. Like, do you have those metrics? It's a gross revenue. It depends a little, bit different per market. So in our CL market, it's a little over$3 ,000 LTV on gross revenue. And then Spokane is closer to$25 to$2 ,600, kind of in that range. That's wild. That dog in the yard is worth quite a bit. I know. I'm going to start just buying people dogs, I think.

15:25That might be the next thing. Yeah. I thought it was going to be high. That's a lot higher than I expected. And so you've got now some leeway to go spend on customer acquisition. And of course, there's labor costs involved in delivering the service. And so maybe we'll switch gears and kind of talk about that side of the fulfillment side. Because we've got the demand side, okay, we can run these Facebook ads and get customers in the door relatively predictably. But now we got to go out and deliver a rockstar service. Otherwise, people are going to cancel or never going to materialize into that $3 ,000 LTV.

15:57Or I think you mentioned like, okay, one service provider can cover 125, 150 yards in a week, but they might not have that many early on, or they're like, okay, I got one customer over here, I got somebody else the other side of town. It's kind of messier in the early days. But talk to me a little bit about the fulfillment side. Yeah, so on the fulfillment side, it's all about efficiency. So as you mentioned, you don't want to be driving from one side of town to the other. So we'll split up our week by different service days. So we'll have different zip codes or different clusters. So we only service that particular day on Monday or Tuesday or Wednesday or whatever that might be.

16:28And that's kind of the main thing that you want to do when you're first getting started. And then as far as fulfillment goes, it's also important to have a standardized process. So we send the customers a 60-minute on-the-way text. We get to the house. We have an app that has all the gate codes, notes, all that kind of stuff. They'll go, they'll walk the yard in a specific pattern and make sure that they don't miss anything. And at the end, they take a picture of the closed gate, send it to the customer so they know their dog's not going to be let out. And then they spray all their equipment down with a kennel-grade disinfectant.

16:53So just having that standardized process and having good training around that. It's not like rocket science, but you definitely want to make sure you're not missing any steps. Otherwise, it's going to hurt your service quality. And it sounds like you had to go out and hire helpers almost right out of the gate because you're like, well, we're not going to be able to do this ourselves anymore. Maybe the intention was to never do it ourselves, but we've got to bring in some people here. So what are you looking for in a professional pooper scooper? In the early days, I'll admit it was pretty rough.

17:23I remember we'd hire somebody and train them for 30 minutes, and then we'd hire three more people and then have them try to train them. So it was definitely pretty rough in the early days. But now we're very selective about who we hire. We'll probably, every time we post a job ad, we get hundreds of applications because people just find it interesting. We pay pretty well. We get benefits, those types of things. And now we'll filter through 100, 125 resumes just to get a handful of ride-alongs and maybe hire one or two people. So we're very selective about that. There's different things that you can look for.

17:50You don't necessarily have to have outdoor working skills, outdoor working history, but definitely people that can work hard is going to be important. People that are okay working alone, people that are okay working outside in all kinds of weather conditions. We also prefer to hire people that already have a job because they have some skin in the game, right? If they have to put in their two-week notice, I think that's always a good sign for us because they're going to be more committed to the role as well. Yeah, and right now you're looking for full-time people. You're like, look, we've got enough yards to keep you busy.

18:17Yep, there are quite a few people. I think there's close to 40 something people in the company now. Okay. Is there a way that you think about the unit profitability like per yard or per route? I don't know. I'm trying to think of, okay, if I'm charging a customer 120 bucks a month, I know roughly it's going to cost me 60 to fulfill that. Like, I don't even know how to phrase it, but like, how do you think about the labor margins? Yeah. So gross margins, we're trying to be around 70 % gross margin. So that would include your employee, like full end costs between insurance and taxes, all that stuff.

18:48and then basically just the garbage bags and everything else that it costs to fulfill the service. Sometimes we end up in the high 60s, but we've increased prices again. So we should be above that 70 % mark that I like to shoot for. And then we're also going to be moving our scoopers to a pay for performance model. So instead of just getting an hourly wage, they'll actually get a percentage of the revenue that they fulfill. That'll probably land in the low 20%. Okay. Is it considered an hourly, like what's a typically hourly rate to pay people right now? So it depends on the location. It costs a lot more to hire people in Seattle than it does in North Idaho.

19:20Generally, I like to look and see what all the other landscapers are paying, what entry-level jobs at Amazon, FedEx, all those types of places. And I like to pay a couple dollars an hour more than that so that we get the best pool of people. So, I mean, that could be anywhere from$20 to$25, depending on the location. That's right. And then that goes back to the, well, we're shooting for$70 an hour on the customer side with some degree of opacity. So talk to me about the decision to go full, like branded trucks in because I assumed because I've seen your trucks around town and like I assumed this was like a franchise thing and you're like no no no it's all company operated we want to maintain some level of control and process it's like okay you know I'm just curious about the infrastructure and like building trucks and providing those to workers too.

20:05No it's definitely a harder way to go I think that's something I learned kind of from the other home service companies I had worked with when you have branded vehicles not only is it good for marketing it also allows you to charge higher prices. It makes you seem more professional. It's going to help your conversion rates. So that goes a lot more beyond just the marketing side of things for the wrapped vehicles. And I'd say that's kind of a core pillar of our business. But I kind of go into it, especially this one. I saw how bad some of these other companies were doing. And I just said, I want to do everything better.

20:31I want to make sure we have uniforms. I want to make sure we have a standardized process. I want to wrap vehicles, which we weren't able to do right away. But within the first year, we definitely started getting our vehicles wrapped. Now that's just a standard process every time we buy a vehicle the first thing we do is go and get it wrapped and then it just starts to compound uh over time because as i mentioned when we first started there's no google searches now on our peak months there might be eight nine hundred a thousand searches a month just for our branded terms and i think our truck wraps and our other marketing has a lot to do with that yeah people see you driving around town yeah what was that company again yeah so very consistent very professional and that's what i guess i would have assumed like, oh, somebody bought this territory, but it's like, oh no, we just had demand.

21:13And so we hired somebody to go out and fulfill it. Yep. And we also want to position ourselves as a, as a premium service provider. Cause it means somebody's high school kid can go out there and scoop poop for half the price that we're charging. Right. So we want to just make sure we're upholding that image and that professionalism that other companies really can't replicate and really reduce the risk for the customer that they're hiring a professional company with background checked employees and that we do everything the right way. so there's a there's a premium to that yeah how are we going to justify our premium positioning or premium prices like this all goes into that it's all part of it yeah 100 what's next in terms of you know expanding like geographically i imagine people asking you like oh could i bring this to my town or something like that it's like well you can and i'll tell you we'll talk about that in a minute yeah so next next step for us um this last year is really about building kind of that uh next layer of management so we have an ops manager we got a marketing manager we got a finance person, we got office manager, we got supervisors is what we call them for each location.