You Can Start This 6-Figure Service Business Tomorrow Morning for Under $100
About a year ago, I wrote an article about a six-figure service business that you can start for less than a hundred bucks. That article spurred a ton of questions and a lot of interest from entrepreneurs who want to start that kind of a service business. If you missed it, I wrote about starting a vacation-relief service for independent contractors.
Basically, you start a business in which you run an independent operator's route -- for a specified time -- so she can go on vacation. As an independent operator to a company, she is not provided an option to have someone on staff run her routes. She has to find a trustworthy person on her own. For you, it's a huge win. You use her equipment as you run her routes for a week at a time so she can go on vacation.
There are all kinds of companies that you can create vacation-relief service routes for. Companies such as Bimbo Bakeries, Snyder's (preztels and Jays chips), Arnold, Oroweat, Little Debbie, Pepperidge Farms cookies and bread (and more) all use independent operators. Each of the route owners needs, or may want, someone to run their route.
I started my vacation-relief service business in 2000. I ran it for 12 years and grew the business to $500,000 with six employees. We ran routes for independent operators in Wisconsin, Illinois and Indiana. We charged them 10 percent of what their routes ran in the week we were covering them. Our average invoice to the operators was $1,800 a week. It was a great business that I sold in 2012.
If you read the last article, you have probably had a few questions about the specifics. If this is your first time hearing about this kind of a business and you want to move forward, here are some steps to get started.
1. Find the right depot with the largest number of independent operators.
Each of the independent operators at each of the companies I listed above (there are many more that offer the same model) have depots for their operators. They have a warehouse where the operators pick up their product, park their trucks (some park at their home) and get communication from the company and for their equipment. My business was based out of a depot in Waukesha, Wis., because that is one of the larger depots in Wisconsin. We started there and expanded to the Addison, Ill., depot because that is one of the larger warehouses in Illinois.
Wherever you live, there are depots for the independent operators that deliver to your area. You can easily find this information online or you can find an independent operator in your local grocery store and ask him where the depot is. Look for larger depots but not the largest. At the largest ones, you’ll run into several entrepreneurs like you who run vacation-relief services. The midsize ones tend to be a better opportunity because no one is there yet.
Either way, there are a lot of independent operators spread across these companies. Not many people have caught on to this business or know how to set one up. Many won’t be consistent, so the operators won't want to work with them.
2. Figure out your structure and put a flyer together.
Before you head to the depot, know how you’re going to operate the vacation-relief service. Create your pricing plan. You can charge a percentage of sales or you can come up with flat fees based on how much product you deliver in that week. Since the operators are the ones ordering the product, you can’t be accused of stuffing the routes to make more money. You can also think about extra charges to make sure you’re getting properly compensated for your time and effort. Charges such as an excessive stale charge, a backroom product charge (for product left in the backroom of stores), a charge for merchandising on the weekend, a charge depending on the equipment needs and anything else that adds more work.
Figure out what makes sense for you and put this information together in a flyer. The flyer should cover who you are, any experience that you have, all the information about the service you’re offering, how people can contact you and end with what they can expect when hiring you. Make it as professional as you can, but it doesn’t have to be college-worthy. Put together a calendar for the year where contractors can fill out the weeks they want for vacation.
3. Set up the legal structure and your insurances.
With a business like this, there will be a lot of ways to take on risk legally and financially. Your overhead will be very low and it doesn’t cost much of anything to start. Remember, you’re using all of the independent operator's things. But, you should protect yourself -- like in any business. Once you have a few clients, you should put a system in place to protect your business. You need contracts and business insurance. You should consult with a lawyer and accountant about the best kind of legal structure (Inc., LLC and such). Get enough insurance to cover accidents with the equipment or yourself.
4. Have a meet-and-greet to establish relationships.
It doesn’t take much to get the foundational operations in place. Once you have your flyers and understand where you will be based out of, it’s time to take action.
Independent operators get their product early in the morning to have it on the grocery store shelves before customers start showing up en masse. Your best chance to meet them and hand out flyers is when they are loading up in the morning, so go to the depot at around 4 a.m., hand out flyers, shake some hands and give them your elevator speech about who you are and what you offer. Be brief because they are busy. Have the calendar ready in case any want to sign up right away. Tell them you understand the importance of showing up every day.
The biggest concern independent operators have is that the person they hire will not show up while they are on vacation. Think about that. They are off somewhere enjoying life and they get a call saying no one showed up to deliver their product. The main company they contract with can hit them with a breach of contract and they could possibly lose their route. They need to be confident you will be there. Make it clear and have a plan to cover their route if you can’t show up.
5. Show up every day to prove that you’re who they need.
Once you get those first few clients, it’s time to put your money where your mouth is. Show up every day or have a plan for emergencies. The first time you leave an independent operator hanging will be your last time in business. You mess up once in this kind of a business and you’re done. The plan is very important. Show up and do a good job on their routes. Deliver the product, pick up all stale, and treat their managers and costumers with respect. Once you have proven you can do this consistently, the floodgates will open.
I started my vacation-relief business and did a good job for the first few operators. Within a month, I had a full schedule for two years. Within three months, I had to hire two other entrepreneurs to help me cover all the vacations. I was making at least $1,800 a week, and improving my life, from week one.
This is a business anyone who is willing to put in the work can start. There are thousands of independent operators all over the world for many companies that use this system. The possibilities are limitless. Use these steps and start the process this week.