Starting your own drainage company

The UK population has seen continued growth within the last few years and this has correlated with the demand for industry services. Over the past five years, industry operators have seen an increase in demand for industry services due to the growth of housing and industrial activities.

According to UK research by Ibis World, the drainage industry revenue is expected to rise at a compound annual rate of 1.8% over the five years through 2018-19 and reach £8.8 billion in revenue. There has never been a better time to start your own drainage company.

The expanding UK population and increased industrial activity mean that there will more than likely always be a need for drainage and sewerage services. With this in mind, it can be quite an attractive proposition for potential start-ups to take a share of the drainage and sewerage market.

In this article, Drain 247 Ltd.’s managing director – Jim Rabulan shares his tips, advice, and experience on how to plan and create an established drainage company.

Financing your drainage company

When it comes to the very basics and the essentials of starting your own company, regardless of the type or industry, there are a few fundamentals that you need to iron out. Once you have these basic measures in place, you will be at a stronger position to drive and grow your drainage company. Here are the essential financial items:

1. Open a business bank account

If you are planning on going the sole trader route for your drainage business, then a business bank account may not benefit you greatly. For others however, opening a business bank account provides a range of benefits for your start-up business, including:

• Your drainage company will appear to be more established and professional.
• Your customers can pay you via credit card which means that you can open up your customer pool and payment options.
• Your business records will be organised.
• You can benefit from accurate taxes and deductions.

2. Develop a business plan

One of the most important parts of starting up your drainage business is the planning stage. Every drain business is unique and some businesses may focus on sewers and manholes, whereas others may focus on surveying and mapping.

A sound strategy can be the major difference in helping your company to grow as you need to be sure that your business has the potential to be a valuable investment.

By developing a business plan, you can:

• Gain a better understanding of your target market, whether it’s for domestic customers or commercial.
• You can locate external funding from lenders or investors once you have a business plan.
• Enables you to predict financial projections for your business and plan for expenses.
• You can pinpoint the best strategies for your business and come up with marketing plans for generating sales.

3. Forecast for the next 12 months

For drainage start-ups and small enterprises in particular, being able to forecast your business for the next 12 months is a skill that proves to be crucial. Although forecasting isn’t always accurate, it does provide the bigger picture for your company. Here are some of the benefits of forecasting your business:

• You can forecast your cash flow which enables you to make informed decisions, reduces the risk, allows you to plan your growth, and it can also highlight any potential problems ahead of time.
• When you forecast your business, you can set priorities to help you keep track of the important objectives. This allows you to allocate your time more efficiently.
• If you have investors on board, then forecasting your business enables you to build your investors’ confidence. You can demonstrate your levels of fiscal responsibility and increase their trust.

4. Ensure that you get your pricing right

Pricing is one of the major factors that determine whether a customer goes with you or with another drainage company. How you price your drainage services will depend on where you are located, the value added for your customers, and the customer’s willingness and ability to pay.

You should price your drainage services relative to your target segment. For example, corporate customers will be looking for drainage businesses that are stable and strong, so they will be expecting fair prices for your services. Whereas, for a domestic target segment, you will want to price your services on the affordable end to attract more domestic customers. It’s generally a good idea to take a look at your competitor’s pricing to see how you can compete with their pricing.

5. Ensure to save money

Keeping a pot of money to the side can be very beneficial especially in unexpected circumstances. It’s not unusual to have unexpected expenses crop up here and there, whether it’s due to broken-down drainage equipment or a flat tyre on your van.

By saving money when you can, you can prepare for these unexpected occasions and for the quieter times of the year. People tend to experience more problems with their drains during the colder months, which means that you can expect a decrease in demand during the warmer months.

6. Allocate finance for insurance and maintenance

When it comes to providing drainage services, you need to have the right types of insurance in place to ensure that everyone is covered. You may even need to invest in the relevant drain permits, depending on the project. Insurances such as General Liability Insurance, Property Insurance, Commercial Vehicle Insurance, and Worker’s Compensation Insurance, are all essential types of insurance that you will need to take out as a drainage business. These will all be recurring costs which means you will need to allocate a budget for your insurance and maintenance costs.

Promoting your business

The drainage and sewerage market can be quite competitive which is why it’s important to be able to separate yourself and get your business in front of customers. There are a variety of ways to get your drainage business promoted and some methods may cost more than others. A construction marketing agency can help you boost your online presence. Most businesses tend to advertise online as it’s a very convenient and effective method of promotion.

1. Build an online presence

In an age of technology and digital advancements, there’s no surprise that having an online presence is crucial. Customers look for services online rather than in the phone book, so when it’s time to get the word out about your business, you need to have a presence on the internet. Great areas for online promotion include social media platforms, online directories, paid advertisements, press releases, and many more. Ensuring that you regularly interact and post on your social media profiles will help you build up a following over time which could result in more leads.

2. Develop a website

One of the essential parts of online promotion, is having a website for your business. A website is considered to be essential as it can be another channel for customers to find you on and it acts as an online shop window for your business. When you develop a website for your new drain company, make sure you include the key elements, such as a landline number, photographs of your work, and your customer testimonials. Drain 247, had a website developed when they started and it has become a great source of leads for them.

3. Build up your customer reviews

When customers are looking for the right drainage company to use, they will more than likely be looking around for a few choices. They will then be compared to see which company they feel is more suited for their jobs and this is where customer reviews can turn the tides. Customer testimonials or reviews add credibility to your business and when a prospective customer comes across your services, these reviews will help them to better understand your business and what you have provided for other people.

Drain 247 greatly value their customer reviews and encourage their customers to leave them a review either on Google or other review platforms. If customers can see that other people have had great experiences with your company, then they will be more inclined to trust you and use your services.

4. Van signwriting

Another way that you can improve your credibility is by having custom signwriting for your van(s). Although they are considered to be secondary marketing, they do provide very high-visibility for your brand and they are still very valuable for local promotion when travelling and on-the-go. The fleet of vans at Drain 247 all have custom vehicle graphics. Their vehicle graphics include their logo, tagline, accreditations, and contact details.

5. Consider 24/7 availability

There are a lot of drainage companies out there and standing out from a crowded market can be difficult. However, by offering 24/7 availability, it shows that you are willing to go the extra step where some companies may not. Customers will be able to contact you at all times whenever they may have a problem with their drains. If you do opt for 24/7 availability then be prepared for long working hours. Blocked drains or leaking drains can often cause serious damage to a property which means that the property owner will want the problem to be resolved as soon as possible.

6. Gain accreditations

To further establish yourself as a trusted service provider, you will need accreditations from external accrediting bodies. Having accreditations is important because it helps to determine whether your drain business meets the minimum standards of quality and safety. Customers may be looking for the relevant accreditations to see if your business is competent and capable, especially commercial customers. To give you an example of the types of accreditations you can achieve, Drain 247 are members of the National Sewerage Association (NSA), Construction Line, CHAS, Environment Agency, The SSIP, Achilles, UVB, NADC, and the Association of Drainage Authorities (ADA). They are also fully compliant with UKAS and the standards for 9001 – 14001.

Franchising your drainage company

As well as starting your own drainage company, there is always the option of buying into a franchise. Franchises are often quite expensive to buy into and many start-ups may not have the initial capital to buy into a big-name franchise. The initial cost for buying into a franchise can vary, but could approximately cost anywhere from £90,000 to £150,000, depending on the brand.

If you have the capital and want to fast track your business, then buying into a franchise will provide everything you need to run the business and this often includes marketing as part of the package. However, you will need to pay franchising fees and a percentage of your profits will go towards the franchise.

You can start your own business, but you will need to do the groundwork to get your business running and profitable. However, this also means that there are potentially lower running costs as there will be no franchising fees to pay, which means that you can pass this cost-saving back to your customers.

Ultimately, the choice of whether you should buy into a franchise or not, is a choice for yourself to make.

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By Jim Rabulan, managing director of Drain 247 Ltd specialists in CCTV Drain Surveys and Drain Mapping.