StreetSmarts: Peripheral Vision
I share a common trait with most of the entrepreneurs I know. Whenever they're told that something can't be done, they feel driven to do it. They take the impossible as a personal challenge.
Why? I guess they want to prove something, although not necessarily to anyone but themselves. For them, business is like a puzzle. They believe there's a solution to every problem, and they think they can figure it out if they can just visualize what needs to be done. That usually means coming up with a different way to look at the situation. They try this angle and that angle, searching for what everybody else is missing. They don't always find it, but when they do, the experience is tremendously satisfying.
I ran into such a predicament recently in the document-destruction business that I started with my friends Bob and Trace. (See " Barriers to Entry," Street Smarts, October 2001.) The company had been growing like gangbusters, with sales increasing 150% from May to August. That had been exciting to watch, but it had also highlighted a critical problem faced by every company in the industry, namely, the lack of off-the-shelf, industry-specific software for tracking the work that's been done, generating accounting reports, and automating the billing process.
We'd searched high and low for software that could handle those tasks. We'd talked to dozens of other document-destruction companies and found that we were all in the same boat. We'd gone outside the industry, checking out businesses that we thought would have similar software needs -- bottled-water distributors, for example -- only to discover that the similarities were more apparent than real.
We'd even contacted the software supplier for our records-storage business and tried to sell its people on developing comparable software for the document-destruction industry. They would work on it, they said, but it was going to take a while. The market wasn't yet big enough to justify a major investment in a document-destruction product. "Wait a few years," they said.
But we couldn't wait. Without the right software, we were forced to do all our tracking and billing by hand. The billing process alone was taking three or four days each month. Inevitably, mistakes were made. The bills weren't uniform. Customers complained. With our sales volume growing so fast, moreover, we could see that the situation would get much worse in the near future.
"We've got to do something," my partner Sam said.
"Yeah, but what?" I asked.
"I don't know," he said. "Everybody says it's impossible, but there's got to be a way."
I think that's when I decided that, come hell or high water, I was going to find the solution.
What made the challenge difficult was the diversity of services a document-destruction business provides. In our company, for example, about 40% of the revenues come from special jobs, most of which are so-called cleanouts. We do those for customers who have accumulated a large number of sensitive documents over a long period of time and want to destroy them all at once. The other 60% of our business is with customers that we service on a regular basis. Those customers keep locked bins on their premises. Each bin has a slot through which employees can slide sensitive documents that should be destroyed.
The problem is that there are two types of bins, and they're handled differently. Some of the bins look like pieces of furniture. We call them cabinets. Our service person goes in, empties the contents, and leaves the cabinet in place. Other bins look like big plastic trash cans on wheels. We call them containers. If the customer has that type, the service person rolls the full bin out and replaces it with an empty one.
So we have some bins that stay in place and some that are moved around, plus all the special jobs, each different from the others. In addition, we have different sizes of bins and different prices and payment terms with each customer, based on the number of bins, bin sizes, type of service, pickup frequency, and other factors. We needed a tracking-and-billing system that could handle all those variables, which wasn't easy to find. If you came up with one for fixed bins, it didn't work for rolling bins, and vice versa. What's more, nothing you did with the bins could be applied to the special jobs. That's why everybody was stumped.
In my gut, however, I knew we were all approaching the problem in the wrong way. People were searching for a global solution -- a system that would cover every type of job a document-destruction company might handle. What if, instead, you took one piece of the problem at a time?
I can't tell you exactly how I came up with the answer, but it involved using a kind of peripheral vision. I knew that everyone else was focusing on the special jobs. I decided to start at the other end, looking at the bins. A few days later I walked into the office of my company's president, Louis, and announced, "OK, I've got it. We can put all the document-destruction stuff on computer, and we don't even need new software or equipment."
In fact, I didn't yet have the whole solution. There was still a piece I hadn't figured out, but I had a feeling I could solve it by talking the problem through with Louis.
He looked at me with obvious skepticism. "OK, let's hear it," he said.
"We can use the same system we have with the boxes," I said.
I should explain that in our records-storage business we track boxes with bar codes and handheld scanners. We send a sheet of bar codes to the customer, who puts one bar code on each box. When our driver picks up the boxes, he scans their bar codes. The scanner spits out a receipt, which the driver gives to the customer. Back at the office, the information is downloaded to our computer, which generates the invoices and the reports.
"What are you thinking of?" Louis asked. "Putting a bar code on each bin?"
"Sort of," I said. "You can put one on each cabinet. With the containers, you can put a little plastic sleeve on the back. In the sleeve, you put a laminated bar code identifying the location, the customer, and the size and type of bin. When the service person comes in, he scans the bar code and moves it from the container he's taking to the empty one he's leaving behind. So the bar code stays at the location."
Louis thought about it for a moment. "OK," he said, "what about the special jobs?"
"Well, what about them?" I asked. That was the part I hadn't worked out yet.
"They're 40% of our business," he said.
"No, they're not," I said. A thought had suddenly occurred to me. "They're 40% of our revenues. How many special jobs do we do a month?"
"I don't know," he said. "Maybe 5, 6, 10 at the most."
"And we have about 1,000 bins in place with our regular customers, right?" I said. "Suppose we think of every bin as a separate job, and let's say we empty the bins once a month. Now we're talking about 10 jobs out of 1,010. That's not 40%. It's less than 1%. We've solved 99% of the problem."
"And how long could it take someone to key in the information on 10 special jobs each month?" I went on. "Fifteen minutes? Half an hour? It's nothing. That's easy to do by hand."
Louis sat there thinking. Then he began slowly nodding his head. "Well, it's worth a try," he said.
The solution wasn't quite as simple, or as perfect, as it had seemed at first glance. We had to do some experimenting to figure out which type of bar code worked best. (In the records-storage business, we use different types of bar codes for different purposes.) In the end, we settled on one that would provide us with all the necessary information but could accommodate no more than 9,999 bins of any particular size.
Still, it will be three or four years before we've placed that many bins of one size, and by then there should be industry-specific software available. If not, we'll have to do some more tweaking. Meanwhile, we've solved our tracking-and-billing problem, and we've also created a new benefit we can offer customers: computer-generated receipts and invoices. Just as the system allows us to track our work better, it lets customers monitor what we do more closely and gives them greater confidence that our bills are accurate. That's an advantage we have over our competitors -- at least until they read this column.
And there's one other thing we've gotten out of the experience. I'm so removed from the operations these days that I suspect some people wonder exactly what I contribute to the business. In fact, I sometimes wonder that myself. So every now and then it's nice to have a reminder that I'm not useless after all.
Norm Brodsky is a veteran entrepreneur whose six businesses include an Inc 100 company and a three-time Inc 500 company. This column was coauthored by Bo Burlingham. Previous Street Smarts columns are available on-line at www.inc.com/keyword/streetsmarts.
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NORM BRODSKY | Columnist
Street Smarts columnist and senior contributing editor Norm Brodsky is a veteran entrepreneur who has founded and expanded six businesses.