By Thomas Heath
Monday, September 22, 2008

Staff writer Thomas Heath's Value Added column appears Tuesdays on the WashBiz Blog. Most weeks, it profiles local entrepreneurs, discussing how they make money and what they do with it.

So here I am, writing the second column in a couple of months about a pair of guys in their 20s who started a seemingly silly business and are earning way more than me. I am full of both jealousy and admiration.

Nick Friedman and Omar Soliman, two buddies who attended the District's Sidwell Friends School with Chelsea Clinton, will gross more than $2.5 million this year running a trash-hauling business that started as college summer jobs. College Hunks Hauling Junk owns a fleet of eight trucks in Washington, employs 20 part- and full-time employees, and has franchises in 13 cities, including Baltimore, Richmond, Chicago and Los Angeles.

The business has gone from a room in Friedman's parents home in Northwest Washington to a warehouse in Rockville and a national call center in Tampa. These are the guys you call to clear out the garage or get rid of the old computers and printout machines in the basement.

When the two entrepreneurs were heading into their senior years at college, Friedman at Pomona College in California and Soliman at the University of Miami, they used a van owned by Soliman's mom to sell themselves as furniture movers. After they dinged up too much furniture, one customer suggested they stick with trash. They became garbage haulers, distributing fliers and relying on word of mouth. They split $5,000 for the summer and went back for their senior years.

Soliman took the idea and turned it into a business plan that won him a $10,000 award and first place in an entrepreneurial competition at Miami. The two were working as consultants in Washington a year later, Friedman at Marsh & McLennan and Soliman at the Advisory Board, when they decided to revive the company.

They made a check list. Brand, logo, Web site, truck. Initial financing from parents. Soliman's business plan had them eventually going national. They stole their orange and green company colors from Soliman's University of Miami Hurricanes.

"Getting business was a combination of guerrilla marketing, using the truck as a billboard, giving presentations at networking functions like a Chamber of Commerce happy hour in Chevy Chase," Friedman said. "We would go and bring our business cards and wear our orange-and-green suits."

I estimate that Hunks Hauling Junk throws off around $500,000 in profit, although Friedman would not confirm that. He and Soliman, who are president and chief executive respectively, earn six-figure incomes and roll the rest back into the company.

"Our primary goal is go get into the top 100 metropolitan markets around the country, to scale up and become a household name," Friedman said.

Of the $2.5 million in gross revenue, $1.2 million comes from the D.C. business and the rest from a 12 percent cost levied on gross revenue from the 13 franchisees. Franchisees can buy a territory for $25,000, adding $12,500 for every additional territory. The fees help cover the cost of the call center.

They learned how to price jobs by trial and error. When they lost money hauling away concrete, they decided to charge extra for heavy items like dirt and concrete. They pay dumps $60 a ton to get rid of the trash.

Another headache was knowing how many employees they needed on a given day and getting them to show up. Hunks pays $10 an hour to their part-timers, but they started adding bonuses of up to $50 a shift based on customer feedback. It became easier to find help.

They also had trouble getting taken seriously. One property manager in downtown Washington didn't like the image of college kids hauling stuff from a law firm in Class A space. Hunks put together reference material from customers like US Airways. They got the job.

The single homeowner is still their biggest customer, constituting 60 percent of their business. But the housing slowdown has reduced demand. So Hunks is targeting commercial office buildings, currently 20 percent of revenue and growing, for more business. The rest comes from real estate agents and remodeling businesses.

The biggest cost is $400,000 for labor annually. The next biggest cost is $75,000 for insurance. Gasoline, dumping fees and $3,000 a month for the warehouse round out the rest of the costs. The only current debt is $240,000 on the eight dump trucks in their fleet.

And they recently founded a new company called College Foxes Packing Boxes.

The name of the spinoff is a display of the same tongue-in-cheek marketing employed by its anything-but-hunky founders.

"We started out with the idea that clean-cut college guys doing the work," Friedman said. "Operating an unglamorous business with shirts tucked in and doing manual labor, had some allure to it."