There are 4 mistakes UCO collectors make which drive them to close the doors or sell before they reach their potential.
The Small Business Administration (SBA) says that 67% of all small businesses fail. Business scholars put that number even higher, estimating that up to 90% of small businesses fail. The most common reasons cited for failure are:
- Lack of capital, cash flow
- Not the right team
- Failure to effectively market
- Failure to pivot
Mistake 1: Lack of growth capital is commonly cited as the #1 reason small businesses fail. Entrepreneurs who fail often say they “couldn’t afford to grow” quickly enough, or couldn’t access sufficient capital. If a UCO collector started with a truck and a tank and $100 in the bank his chances for success are pretty low. Why? Because in order to grow rapidly—a key to success—the UCO collector has to spend additional money (account startup costs) on each customer that they onboard onto their service. Costs such as containers, delivery and installation take several months to recoup and consequently generate short-term losses.
How to Prevent It: Work with Reiter to build a business plan (or at least a spreadsheet based cash flow model) showing start-up, customer acquisition, and operational expenses from month 1 thru 36. Then, with an understanding of the financials seek out a financing partner that is comfortable with the amount of money needed.
Ask yourself, would you survive if the value of your UCO was cut in half due to a down commodity market? What if you lost a key account? Acknowledging these risks is KEY to avoiding their pitfalls.
The team at Reiter Consulting can help UCO entrepreneurs avoid these mistakes and clue them in on some proven growth strategies.
Mistake 2: Not having the right team. Solo entrepreneurs fail more often than partnerships. It’s rare that a single entrepreneur has all the skills needed to succeed. Steve Jobs was a brilliant marketer. Steve Wozniak was a brilliant technician. Together, they created Apple, one of the most valuable companies in the world.
How to Prevent It: What should a UCO collector look for in a partner? A collector should look for a partner with complementary skills. Does the partner have experience in the business? Is he or she compatible as a partner? If you have operations skills does he have marketing skills? If you don’t have cash does your partner bring access to cash? Does your partner have a network of people who provide value-customers, bankers etc? The right partner is a crucial factor in the success of a startup. Your best buddy from grade school may not be the best choice.
Do an assessment and determine what you have and what you need. Then use that list to choose a partner. It’s ENTIRELY possible, that the best partner, is a consulting group like Reiter Scientific. With over a decade of experience assisting UCO start-up, Reiter has the experience necessary to design, assemble, operate and enable the expansion of YOUR UCO enterprise.
Mistake 3: Failure to market effectively. Marketing in the digital age and the era of Covid is a tricky business. Knocking on doors, cold calling and using print ads can bring in some customers, but the cost per acquisition will probably be prohibitive for all but the largest target customers. If you are not doing digital advertising: google search, remarketing, digital display then you are missing the boat. A multi-dimensional marketing plan utilizing a combination of digital strategies is the method used by successful UCO collectors to grow their businesses and to ramp up revenues.
How to Prevent It: Digital advertising at first glance seems straight forward but optimizing your ads to effectively acquire customers is a huge investment of time and knowledge. You don’t set up an ad and wipe your hands of it. Advertising requires constant development, adjustment and optimization.
Digital advertising not only brings in customers and drives revenues, it adds an aura of credibility and professionalism to your business. Get a professional to run your digital advertising.
Mistake 4: Failure to pivot: When conditions change, a business may need to update its strategy, pricing model, operational approach, or in some cases entire business model. This is called pivoting. In the world of UCO collection the most common failure to pivot is not adjusting your service charge/rebate structure to reflect the ever evolving market for Used Cooking Oil. Because the value of Used Cooking Oil can vary greatly from year to year what would be considered a reasonable rebate a few years back could be viewed very differently today.
If you’ve successfully avoided mistakes 1-3, it may feel like you’ve got everything under control. Your company is on autopilot. You’ve probably got lists of customers and addresses kept in Excel Spreadsheets. You’ve got drivers that drive the same routes each week and an accountant who knows how to manage your invoices and rebates. But if you want to grow, consistency isn’t enough.
You’ve got to figure out the best way to expand. Is there an untapped market to start cleaning grease traps for your existing clients? Are customers looking for higher-tech solutions like automatic used cooking oil management systems? Perhaps most importantly, how can you increase the efficiency of your collections so you get more oil without growing your expenses?
How to Prevent It: Working with an experienced consulting team such as Reiter Scientific can help you to avoid these mistakes and ensure your success. Reiter Consulting can help with cash planning, facility design , equipment purchases, digital marketing, as well as the smaller day to day questions that UCO entrepreneurs face.
Entrepreneurs have the ideas, launch the business and guide early growth. Eventually management professionals are needed or entrepreneurs evolve their skills to manage larger entities. Reiter’s COST system is an enterprise resource management system (ERP) that manages all aspects of UCO collection and grease trap cleaning businesses. It provides tools to drivers, accountants, marketers and operations supervisors and allows access to the information that each function or person needs. It accelerates profits by ensuring more oil is collected in less time, less time is spent on administrations and accounting, sales cycles are effectively managed and routes are optimized and customers have access to the information they require. Without the COST system your UCO business is tottering tower with loose bricks.
Avoiding the 4 mistakes UCO collectors make is key to starting and growing a successful UCO collection business. Reiter Consulting, with decades of experience in all aspects of the industry has helped to launch and grow numerous successful UCO collectors. Reiter Consulting helps you launch, finance and market your business. Reiter Software helps you manage your business to peak efficiency and profitability. Reiter Trading ensures you get top dollar for the sale of your oil. The Reiter Companies can ensure your success.
Call Reiter Today for a Free Consultation: 888-428-5617