Broad Run has a permit to operate around the clock, but right now it operates 91 / 2 hours a day, Monday through Friday.
“You can see the room for growth,” he said.
Broad Run Recycling opened Jan. 8, 2008. It took three months to run the business at an efficient level. Herb had to find reliable and conscientious employees willing to stand for hours and pick through trash while it moved swiftly past them on a belt. He had to fire some heavy-equipment operators who crashed into light poles, catwalks and walls.
By summer 2008, as Herb was working the kinks out of the business, the recession had started.
“It all went south in September,” he said.
Broad Run was squeezed from two sides: Because there were fewer construction projects, dumpster trips dropped from 19,000 in 2008 to less than 16,000 in 2009, a 20 percent decline.
In September, the bottom fell out of the commodities market, decimating prices. Recycled cardboard went from $120 a ton in July to $17 six months later. Metal went from $220 in July to $75 by Thanksgiving of 2008.
Herb moved quickly.
He negotiated with his banks, which allowed him to stop paying principal for six months.
“That helped a lot,” he said.
Caterpillar waived principal payments for six months on the equipment he had bought. His monthly bill went from $10,000 to $4,000.
He laid off two salespeople and began making sales calls to contractors himself. He reduced his administrative staff and laid off some drivers. He pressed his insurers for better terms, threatening to leave if they did not drop the prices. He saved $120,000 a year. Advertising in the Yellow Pages was cut from $60,000 to nothing. He even got the uniform vendor to reduce its monthly price from $2,500 to $1,500.
Broad Run weathered the storm — barely.
Commodity prices have come back, and June was Broad Run’s best month ever. Herb said the company will gross about $5 million this year. At a 10 percent profit margin, I estimate that the company will earn about half a million this year. Most of that will go toward paying down the debt.
The dumpster business will break even this year, thanks to an expansion of service into the District. The two businesses together employ 55.
Herb gets downright giddy when he talked about his recycling plant, which sits on 4.2 acres and is a warren of belts, tubes, cables, tunnels and dirt.
“It reminds me of Dr. Seuss and his contraptions,” said Herb, who studied business at Old Dominion University in Norfolk.
He speaks in a drawl and sounds so laid back that I thought I woke him when I phoned him recently. But that masks an aggressive sales streak and a head for numbers. Herb is happiest when he has a giant spreadsheet before him.
“I enjoy numbers, but I don’t have a choice,” he said. “I have to know my costs. I am the president, owner, human resources director, sales manager and the guy who can’t sleep at night because his receivables aren’t where they need to be.”
Most definitely not light on the land.
Follow me on Twitter at addedvalueth.
Loading...
Comments