218. How this company scaled to $1M in revenue and 60% gross margin

0:00Alright listeners, I'm going to paint you a picture here. You're atop of the corporate ladder and you are a top sales performer. You're pulling in a solid six-figure salary. You're selling advertising space to local small business owners, analyzing their profit and loss statements every day. And you realize something's shocking. The local carpet cleaner and junk hauler are quietly making far more money and living a much freer life than you are. That's the moment Fred and Sherrod knew their comfortable corporate existence was a guided cage that they had to escape. They walked away from a Fortune 500 company, started with nothing but a borrowed pickup truck.

0:34And today their system generates$1 million a month. That is not a typo there. $1 million a month and an incredible 60 % gross profit margin. I'm Ryan Atkinson and you're listening to the Up the Podcast where we uncover the secrets of building and running successful businesses, especially the ones others dismiss as dirty. Fred and Sherrod are here to reveal the exact playbook for building a recession-proof high margin service business that anyone can replicate. And they are previously on the YouTube channel, which I had the honor to actually interview them for a hour. So Fred and Sherrod, I am so excited to see you both again.

1:03Thank you so much for being here. Yeah, man. Good to be back, my man. Thank you so much for having us, man. I'm excited to have you back here in action. I'm going to encourage all the viewers right now to, once this podcast is done, to go check out the YouTube channel because it is generally one of my favorite interviews we've done. Okay, let's dive into this podcast though specifically. And Fred, I want to start with you. And let's start with your background as a US Army veteran. You're on top of the B2B sales world, slinging sales. Let's talk about when you're analyzing P &L statements, what specific number or like observation convinced you that maybe the corporate ladder isn't what you want?

1:34You hit it on the head. I appreciate you sharing, man. I'm an eight year U.S. Army veteran, served four years active duty Army, and then four years in the Florida Army National Guard. So if you're out there, if you know, you know. And so that said, I kind of cut my teeth in advertising sales as my professional career initially. And like you mentioned, Ryan, part of that gig is going through small business owners and their profit and loss statements in regards to their marketing efforts, right? Understanding where they spent their dollars, what's been their wins, what's been their losses. And like you mentioned also, I also discovered that the local franchise business, whether it be the carpet cleaner, the landscape guy, the roofer, were a lot more lucrative than I had assumed.

2:18And like you also mentioned, I started to plan my great escape out of corporate America. What that looked like for me was like a lot of your listeners, I kicked the tires on ideals of joining a franchise, right? All the way to starting my own business, looked at some things that were a little bit more intense in terms of owner operation. And I even looked at some things that were semi-absentee, things that I could do while I still kept the professional career. But ultimately, none of the people that I was trying to emulate were living their vision part-time. They all were at this in terms of building out their future all in.

2:53And so that's what I look to do. I took a big leap of faith in terms of starting a business, making sure we did kind of crawl, walk, ran before we jumped all the way out in terms of making sure that we understood our business systems to some degree. But even with trying to take that due diligence, life still lifing. And we still had to understand some hard lessons in regards to what was the viability of the offerings of the services that we were offering at that time and how did we need to pivot to make sure that we were meeting the needs of the market and that we could have a successful business to grow.

3:28That said, it led me to having these types of conversations with Sherrod in regards to what my future looked like in terms of owning a business. And he had a trash can pop up at his doorstep that kind of changed our life. And we went to take that trash can or the concept thereof. And we put about 20 ,000 of those trash cans across 20 ,000 doorsteps across the nation. So I'll kick it off to Sherrod. He'll tell how that trash can kind of morphed into the nation's only junk removal app and how we're changing the landscape again in regards to that infrate and our software. Important part of Sherrod's story here.

4:03He has a great quote. If you're willing to do the things that people are not willing to do, you're going to have the opportunity to reap the rewards that a lot of people are not. That's a great takeaway. Talk to us, Sherrod, about that quote and how that really has transitioned to 60 % margins you had a million dollars a month. Absolutely. It was something that I learned at a very young age. I was actually nine years old. I used to go to the frozen lemonade stand around the corner from my house. And as a way to pay for the lemonade, I ended up getting my first job. I negotiated the first job cleaning the parking lot.

4:32So I was the trash guy. I was VP in charge of sanitation. And it meant the world to me. And the owner mentored me and he was just look at how passionate I was. I'd love to make a difference with my hands. And he was like something about you. Never lose that. Never lose that. And it's just like a different. And not only was I benefiting from being able to pay for the lemonade and treat my friends, but it was that sense of purpose that stuck with me. And when I look to identify opportunities later on in my life, something that always stayed with me in terms of like go the extra mile. Right. Whether I was waiting tables and I'm like, let's make these people feel like, you know, that they've never felt before.

5:08Right. I'm willing to go and give them an experience that they've never had before. And you know what? They might come back and choose me next time. And that's kind of that mindset. And so when I saw that trash can at the doorstep, I'm like, well, how many people would dedicate their time to come night after night to solve that problem for somebody with their trash? And like that same feeling when I was nine years old came right back to me and I knew I was in the right place. Yeah. So take us to that exact moment here. You know, there's a trash can outside your door. Like, what are like the bells and whistles going off in your head of like, hey, this is an opportunity here because this is really like ground zero of like how you guys started.

5:41So talk to us specifically about that moment and what listeners should know about like when identifying opportunity. I want to make it actual for them as well. really good really good i think it's it is the style of problem right and in my case i had a problem and i would deal with the problem every day with my trash i lived at one side of the property and i would have to transport my everyday trash to the compactor which was the equivalent of about two football fields away so logically i would put in the trash on my car sometimes i would forget trash sometimes it would fall off but it was a chore right and then it was just like there's got to be a better way and that trash can was that solution that i'm like that can help me but it can help a lot of people that may have this problem.

6:22And then that's where the light bulb went off. And so what I would say is that if you're really looking to be effective, look to effectively solve a problem. I like it. So when was the moment that you guys met and thought about this business idea? Shrad, did you go to Fred and Fred was like, heck yeah, let's do this. Or is Fred like, heck no, I'm not gonna do this. Talks about the founding partnership of this and taking us from zero to one of what did you guys first do and was it successful? Absolutely, man. Fred was the guy to see. He was the mayor. I call him the mayor of the market. He's the hometown guy.

6:52But the year I met Fred, he won the Man of the Year award for his fraternity organization. So he was super active in the community, throwing parties, hosting events. And so I actually went to him to help me with my logo for the company, Tampa Bay Trash. I was just thinking, man, Tampa, I'm going to kill it. And Fred helped me to think a lot bigger than Tampa Bay Trash. But the funny thing is, we were already making our employer millions of dollars, right? We're literally signing contracts, right? And making that money. I said, listen, I'm going to do the same thing with this business. I don't need to be the CEO or the president.

7:24Put account executive on my card. I'm going to get to it. And Fred was just like, oh, that's brilliant. He liked the humble approach. He was just like, let's do it. It's the same thing that we do. But now it's a win, a win, and a win because we understood how not only were we helping the residents, but we were helping the property compete and make money. And so he was in right there. He was like, what do I got to do to get in? And then that's when the partnership really began. But Fred, what was that conviction that you had to be in? How did you know it was going to be what it is today? Talk to us about that.

7:54No, Sherrod touched on a good portion of it, right? I clearly saw the problem solving. It brought to the nature of our tagline of our main corp, which is Accelerated Waste Solutions. Our tagline is problem solved. And so that said, you saw the solutions and what the service offered. But even beyond that, it had some synergies with what we already did in terms of our current skill set. that we sold contracts for that B2B advertising. And it created, those contracts actually created recurring revenue, not for us, but for our employer. So although we were ingratiated, we had good commissions, we knew we were signing contracts at the time that were earning our employer millions of dollars in reoccurring revenue.

8:33And it was a piece of the process that we didn't have any control over and we didn't have any access to. And so to now think that we can start our own business, put up our own shingle, and now have that type of monetization take place, not just have a one-time sell and that's it and we get a commission, but know that we could offer a service, a tangible service that we could get a reoccurring invoice on or reoccurring earnings on and build a platform of business that we could stand behind. And so that's what really excited me. It was something that one, I already had a skill set in terms of being able to compel people for those contracts, but two, I could start to reap the benefit of the back end of those contracts in terms of that repeat business.

9:13So that's what was most compelling and honestly, what was the biggest driver. And it's still a lot of a big driver for a lot of our franchisees today in terms of how we operate the business. That's still a big business system for us, still a big foundational piece of revenue that a franchisee can take hold of when they open up a junk shop or doorstep details business. Are you ready to launch, grow and scale a business? Inside the Upflip Academy, you'll get a complete roadmap to shortcut your success with 25 plus step-by-step programs taught by active business owners, not gurus, who share their step-by-step blueprints, plus ongoing live workshops, skills training, a business idea database, and community to share resources and celebrate your wins.

9:58Click the link in the description below to join the Upflip Academy today and start surrounding yourself with the people and tools that can change everything for your business. Listeners, stay tuned because we're going to talk like really in depth here about B2B and like why you guys go after B2B, but like not to spoil it, but like, do you guys talk to us? Are you guys going after B2C, B2B? Did you do that from like day one? And like, why did you guys decide to go B2B or B2C? I kind of already gave the hint away, but talk to us about that. Yeah. Those contracts that I mentioned are signed with multifamily asset management companies or apartment complex property management companies.

10:33And essentially, that's a B2B, right? And that felt right within our wheelhouse. What we discovered was, is once we started to design those contracts, and honestly, to be transparent, that didn't happen right away. Like a lot of businesses, we still had a lot of things to figure out. And to just be short, we failed at it initially miserably. It actually was one of the things that caused our pivot in terms of making sure that we could continue to earn dollars while we figured out this contractual piece of our business. And this will open the door up for junk removal because we were already targeting that B2B client in the way of multifamily.

11:07We noticed that the move ins and the move outs of those apartment complexes cause bulk items to need removal on a consistent basis. And since at the time our name was fairly ubiquitous, we were called Tampa Bay trash at the time. And so we started to encompass all things trash. Believe it or not, we used to do dumpster rooms, but we don't anymore. But that said, we started to encompass all things trash and we gravitated very hard toward the B2B because we understood that unlike residential, we love cleaning out people's garages. I love breaking down the trampoline in the backyard as far as junk removal at people homes go.

11:43What we realized is that in that method, we were actually renting a customer. We were paying for marketing that would get us access to a customer for a given event for one task. And And we may not see a single family homeowner until they have that life event again, right? Until they move again, until there's a wedding, until they downsize, et cetera. But with the apartment complex, the offshoot of that bulk furniture created repeat business that required us week after week, month after month. And instead of renting a customer, now we were owning a customer. And that's essentially the business that I wanted to be in.

12:19And that's the evolution that took us to eventually be able to sign a Valley Trash contract. So we eventually got that off the ground. But it opened our eyes to the availability and the marketability of junk removal and what was really left to be able to exploit in that business. Yeah, it really sounds like the takeaway there for listeners should be like, if you can go after like B2B, because that's where like the bigger contracts are. And if you're able to actually scale with like reoccurring revenue, that sounds like why someone would choose B2B over B2C. But yeah, correct me if I'm wrong on that.

12:50You're right on the money. That we also noticed that there was different revenue streams in that same client, right? They would have, right? So they would need maybe more frequently the items that are being left behind. But then they would have items in the unit, right? Where it would take a little longer, a little intensive. We noticed that maybe every few months they might need the storage facility area cleaned out of the maintenance shop. We noticed that every year or so, every couple of years, they might be getting new toilets or new appliances and things of that nature. So it's kind of a gift that keeps on giving.

13:17And once we understand their need, they can kind of dictate where we can fit in to solve that need. Let's go into something that you guys have trademark, and that is bigger trucks, better pricing. Break down that math for a listener. How does an 18.67 cubic yard truck in volume, whatever, allow 60 % gross margin? Break that down for us. We'd love to hear that. So yeah, not all junk trucks were created equal, right? And so it comes down to the mathematical equation. We talked a little bit about it in the video, but I'll give it to you. Length times width times height divided by 27. We want to understand a cubic yard, right?

13:55Some people reference a cubic yard like a washing machine. So it comes down to how many washing machines or how many cubic yards can your truck fit, right? And so once we can understand that, we can understand the full load price, right? We can kind of divide that. We can divide that by the cubic yards. We can understand the price per cubic yard. So that's a good indicator right there. Essentially, what we're saying is we come out and intentionally provide the most affordable price per cubic yard. And that's how you win. And so it does take a lot of homework. You have to study your competition, understand what you can and can't do, right?

14:27And do your research. And then once you have that information, it's all about that value proposition, which is the bigger trucks, better pricing. So that's our competitive advantage when we go into a marketplace. We're able to save the customer's money. And we do have to work harder. It's not a given, right? Because at the end of the day, if we're matching or beating a competition's price point, we have to work for it to be profitable. What it does, though, it leaves us another quarter of a truck, if you will, to be able to offset that discounted price to go ahead and be home. And that's what I love about your guys' story is the transparency when it comes to pricing.

14:59One way that you guys do this is, speaking of innovation here and solving a common industry trend, is a lot of baiting and switching happens in the trash valet, whatever, junk removal business. Let's talk about trashparency. How do you guys have that technical solution to solve the trashparency? And what should listeners know about solving common pain points with technology? Talk to us about that. I think it's everything as we move forward in the future. We actually have a patent around the process of being able to take a photo or video of any trash or material for the advent of disposal or transportation.

15:35And although that sounds fancy, ultimately, we utilize technology to be able to give a great insight about our work fulfillment, our proof of work. And we do that through reporting. Both sides of our business, from the Junkshot app side of our business, offers before and after photographs so that our customers have clear understanding. Like Sherrod mentioned, we charge them based on volume that goes in the back of the truck. So it's imperative that we give clarity about the amount of material that was taking place up because we charge them based on that aspect. And it's extremely unique in our industry to have this level of reporting and this level of insight into our services.

16:12Most of our competitors actually hide this process to be able to gouge people in terms of their pricing because they don't have understanding of what was removed. If you don't know that I removed this amount of material, I can pretty much tell you it costs anything to remove it. And we don't operate that way with us. There comes a built in trust that you can not only see, but you can also stand behind in terms of your team and your reporting. And so it's a really, really key piece to both sides of our business. It's honestly how we look to scale our franchisees. It's how they get inside of a marketplace and can have maximum confidence that they're going to stand above and beyond any competitor in the marketplace because they offer that initial transparency.

16:53I'm curious, like the operational like leverage this like gives you for like your franchisees. Talk to us a little bit more about that and like why having that leverage that differentiator is like so important. Obviously, like everyone's gonna be like, well, duh, like you need to differentiate from your competitors. But like, why like does it like actually like matter, especially just from an operational perspective, being able to quickly click and few clicks away, they have a price. Sure. Success leaves clues. Right. And this allows us to leave a breadcrumb or trailer breadcrumbs. Right. From the inception of the need to the actual completion.

17:24And we can go back and we can kind of study and where that helps us to become subject matter experts in terms of what we're removing, how much space to make pickup in the truck, where we're going to dispose of it or transport it. It also allows us to be intentional about the assets that we send out for a job, whether it's multiple trucks or one truck or one guy. We have that flexibility. Oftentimes we can route and plan where we're going before or after the job. Then also we can provide a trust factor with the customers, with them understanding that we're doing the job the right way. But even that's not enough.

17:55It wasn't enough. We didn't just rest on our laurels in terms of that. We wanted to be intentional about rewarding our customers for utilizing our service, especially if they're able to use our app and our technology to be able to help us make solid operational decisions. And so we implemented a loyalty rewards program. We're one of the first in-home services or service industry to do so, where our customers and clients get points for using the Junk Shot app. those points, they link right into a e-commerce like you're talking Starbucks, we're talking Home Depot and so on and so forth. They can get gift cards for their loyalty.

18:32And so it's a great way that we say thank you for trusting us, for choosing us, partnering with us. At the same time, we're also saying thank you for helping us be efficient, helping us be trash parent and helping us be a great partner for you. Trash parent. That's so good. I've heard that like a few times from your team. Obviously, you guys have like built this out like incredibly well. for advice for someone that's like just getting started. Of course, go franchise from your guys' team. But besides that, if someone is just like getting started, what are like three things that they need to do right early on to like better enhance their chances of success?

19:07I'd love to hear that, especially with the experience you guys have now. Like if I was starting any business, honestly, it really wouldn't matter to business. I've been a steward of relationships. Probably one of my biggest Achilles heels is honestly us not getting started in building connections when we first got started. We were kind of like a lot of people chasing the dollar, right? If you open up a hot dog stand, your first thought process is to boil the hot dogs and put up an open for a business sign. When really, you might benefit from just going to visit the local church or the local Boy Scouts to understand, hey, how many hot dogs do they use?

19:41And when do they need your services? And that sort of thing. And that's honestly where I would tell people that they need to start a business. You don't always need to rush. And if you're selling cupcakes, make the cupcakes. You know, you can make cupcakes. You got to understand, hey, is there a local church? Is there a local chamber? Do I go to see the local chamber to understand the local church that needs me? Because the local church is a member of the local chamber. And that's a mission of relationships. And I promise you, whenever I talk to a local business owner, I tell them, and like I said, I'm agnostic about the business, join at a minimum your local chamber.

20:16You do even better if you can get industry specific about the associations and things that you want to get involved in, i.e., like I say, you're selling food, you want to be a part of the restaurant, Gil, etc. But that said, building those relationships initially is a big box to check and can point you in the right direction so that you don't spin your wheels in places that you don't need to. Second is be mindful of the things that you're strong in, right? We all have strong suits and be also mindful of the things that you're going to need other resources to help you with. Hey, if you're not great at sales, understand the resources in your market to take on different classes in persuasion, different classes in speech, different classes in sales.

20:58If you're not technology driven, right, there's a host of different resources from in your community to online to understand how you engage with AI, chat GPT and the like. But that said, understand where you're going to have your best wins at in terms of your skill sets and start to think of the resources that you're going to need to offset your challenges, things that you might need help with. Count the cost. Understand your expenses. Understand your profit. Understand the time that needs to be committed. Understand what's going to cost you. Whether that's time or whether that's money, that's how you should understand where you are in business and how to scale that.

21:34Once you're happy with the cost, we're happy with you for the 10. 10x in front of that. All right. Last question here before we get into FanBlitz. What I love about you guys is there's a conviction here because you guys have turned down a$5 million 10x multiple offer because you knew the business was just getting started. $5 million is not a small amount by any means here. Where does that conviction come from and what can entrepreneurs learn from that? I'd love to hear from both of you on this one before we dive into FanBlitz. have your vision know your why again if it starts with counting the cost you understand where you can take it be firm on that right and don't stop until you get where you need to go and so i think you really get started with having a vision right and if your vision is five million stops at five million you're good it's 50 million but it keeps going it's 500 million better to keep going that's kind of where it's up she got it now i share cinnamon meant we understood exactly what we're up to.

22:26And honestly, in Sherrod, like you say, we've made millions before. And although we still have a ways to go in terms of our earnings potential, our next journey isn't all going to be about us becoming the next Daddy Warbucks. It really is going to be about taking this business system and helping other people fulfill their dreams of business ownership. And that's what's driving us. That's what's positioning us. There's a light at the end of that tunnel. There's a pot of gold at the end of that rainbow too. So it isn't a thankless task, but it is one that drives us every day and that we take extremely seriously.

22:57And it too was in the back of our mind. We had seen the likes of mentors like Brian Scudamore, Nick and Omar here with the college hunts haul and jump in our markets, but competitors all across our space that have done great things that honestly, we not only wanted to come up the board with, but we honestly look to surpass. We look to beat them. So that said, those drivers always pushing in the back of our mind and we're always looking to take our franchisees to that next level with that in mind. It's really good. You guys have taken this podcast to the next level, so I appreciate you so far. This has been really, really good.