Wisconsin’s Schulteis Pumping finds success by focusing on one profitable specialty and letting go of related wastewater services.
Service diversification benefits many companies by generating multiple revenue streams and minimizing exposure to market downturns. But as Schulteis Pumping grew and evolved, the family-run business elected to jettison several services and instead focus on doing one thing really well: Pumping and repairing residential septic tanks.
“We’ve downsized over the years,” says Nate Hill, 38, who now owns the Slinger, Wisconsin-based business with his cousin, Tim Schulteis, 43. “We’ve also become more efficient, especially by running bigger trucks. Bigger payloads equal more money.”
Diversification made sense for many years, explains Jim Schulteis, whose father, Robert, founded the business in 1966. “Our generation was different,” says Jim, 67, who went on to own the company with his brother, Ron. Both he and Ron are now retired. “My dad’s emphasis always was on diversification, so that if one thing faltered, something else was there to take its place. We even dug graves — whatever it took.
“But things have really changed,” he continues. “Nowadays, things are more specialized. But there’s nothing wrong with that, because the customers get better service. If you specialize in one thing and do it well, you don’t always need so many businesses.”
Schulteis Pumping was established when Robert bought a trenching company in 1966. Jim and Ron eventually worked with him. To capitalize on a residential construction boom, the business expanded into septic system installation in 1971, after Robert earned a plumber’s license. Later, the company added septic pumping to its roster of services, for two reasons: It made sense to offer customers a complementary service, plus it would provide a job for Jim, who had come home after a stint in the U.S. Army. By 1975, there was enough pumping business to make it a full-time job.
In search of further growth, the company widened its service scope once again, this time branching into portable restroom rentals and service in 1980. “It was a natural extension of our services and we could make money on the weekends,” Jim explains. “It all went hand in hand (trenching, septic services and portable restrooms).”
“We never had any kind of master plan,” he continues, referring to the company’s growth. “We flew by the seat of our pants. … As our children grew up, we expanded the work so they could have jobs.”
Nate and Tim learned the business from the ground up. Nate started working with his stepfather in 1993 at age 15, pulling hoses and the like. When he turned 16, he handled portable restroom runs. At age 18, he got a commercial driver’s license and started driving septic vacuum trucks. Later he operated the company’s portable restroom division. Tim joined the business in 1992 as a septic system installer and licensed perc tester. The two cousins bought the business in April 2016; Nate is the company president and Tim is the vice president.
The company’s growth peaked in recent years, as reflected by its stable of equipment. The company owns a 2005 Peterbilt 378 outfitted by T-Line Equipment with a 5,800-gallon stainless steel tank and Masport pump, a 2008 International 7600 built out by Imperial Industries with a 4,400-gallon aluminum tank and Masport pump, and a 2016 Mack Granite with a 4,400-gallon aluminum tank and National Vacuum Equipment blower (540 cfm) outfitted by Imperial.
The three trucks are equipped with large tanks because big septic tanks are common in the area. In addition, the local water table is fairly high and many homes are located on narrow lakefront lots that aren’t big enough to hold a septic system. As such, many homeowners rely on large holding tanks that require frequent pumping.
On average, the holding tanks hold 5,000 or 6,000 gallons, and some commercial septic tanks hold more than 10,000 gallons. So to minimize disposal runs to treatment plants — as well as minimize wasted time and wear and tear on trucks — it made sense to invest in larger tanks.
As luck would have it, Schulteis Pumping has no issues with waste disposal. In fact, it has permits to unload waste at eight different disposal facilities, all within the company’s general service area. “We’re pretty fortunate,” Nate says. “In most cases, we can pump and unload just a half-hour later. And the village of Slinger treatment plant is less than half a mile from our shop. That definitely adds up on the bottom line.”
The company at one time ran as many as four portable sanitation service trucks and 350 restrooms. But in 2015, the family sold the portable restroom division.
“We were just too small to make an impact on the local market,” Jim says. “And the profit margins weren’t high enough to justify all the labor and machinery. Plus we were tired after 34 years of working on weekends. In the end, we just decided we could use our resources and expertise more effectively in other areas.”
“The trend is toward either very big or very small (restroom operators),” adds Nate. “We didn’t want to make the investment required to go to that next level. Instead, we decided to focus on septic pumping because that was growing and required more manpower.”
The company also stopped installing septic systems in 2015 because Ron wanted to retire. Moreover, to stay in the market would’ve required further investments in expensive equipment, and it was becoming harder and harder to compete with larger excavating companies, Jim notes.
In the mid-1990s, the company went through another dramatic change when it stopped land-applying waste in favor of taking it to waste treatment plants. Primary factors driving the switch included the emergence of large residential subdivisions, which made it tougher to find enough farmland suitable for land application, and increasing difficulty in obtaining pollution insurance, Jim explains.
“Without insurance, you’re vulnerable to lawsuits,” he says. “All it takes is one complaint. And when you take waste to a treatment plant, everything is documented and the waste is disposed of in a very professional manner. With all those factors in play, we felt land-applying just wasn’t the way to go anymore.
“It was hard at first because land application is much more cost-effective and a lot of our competitors were still land-applying,” he continues. “So our profit margins suffered, but not enough to put us out of business. Land application was also very time-consuming, which kept us from doing other work and earning more revenue.”
KEYS TO SUCCESS
Nate says the company’s employees have been critical to its success. Many have been with the company for decades, and some are plumbers who are adept at diagnosing and fixing onsite problems. “Our experience and knowledge is a big advantage,” he points out. “We all grew up in the business, including my mom, Cindy Schulteis, who’s played a gigantic role in our success (as the company’s office manager). She’s the face and voice of the company — the first person customers come in contact with. Not all customers are happy when they call us (because they’re having septage problems), but she handles it very well.
“You only go as far as the people you have, and we have really good people,” Nate says. Aside from Nate, Tim and Cindy, the staff includes John Bera, a septic technician; Nate’s brother, Gus Hill, who’s a shop laborer; and Pat Wondolkowski, a septic technician.
Looking ahead, Jim says he believes the company will continue to grow with Nate and Tim at the helm. He has no regrets about retiring.
“It’s their turn,” he says. “I did it for 40 years and that’s a long time. … I’m actually kind of relieved that they’re taking over. It’s time for some new blood and new ideas. And I’m always here to help if they need it.”
Nate says he doesn’t anticipate going back to adding more services. Nor does he expect — or want, for that matter — explosive, exponential growth, favoring sustainable growth instead.
“We almost can’t help but grow because the county where we’re based is growing so fast,” he says. “I eventually would like to add another truck. But we don’t want to outgrow our capabilities. We want to focus on one thing and do it well.”
One big, happy family
Anyone who works with family in a business knows some conflict is inevitable, no matter how well everyone usually gets along. Just ask Jim Schulteis, the former owner of Schulteis Pumping.
The firm is a family-run company in every sense. For many years, Jim Schulteis owned the business with his brother, Ron. Before that, he and Ron worked for their father, Robert. And Jim’s stepsons, Nate and Gus Hill, and Ron’s son, Tim, also worked for years with Jim and Ron. Cindy Schulteis (Jim’s wife) still serves as the company’s office manager. (Nate Hill and Tim Schulteis now own the company, and Jim and Ron are retired.)
While the family tree is complicated, Jim Schulteis’ advice for keeping peace within a family-run business is simple: Be patient and don’t speak rashly, which he concedes can be easier said than done. “Family businesses are very nice and also very unique,” he says. “The challenges arise because you’re always dealing with family. … The person you yell at in the morning you still have to sit with at the supper table at night.
“As such, you have to weigh words carefully and be more considerate,” he continues. “You have to be patient and be more careful about how you phrase things.”
On the other end of the spectrum, Nate Hill says it’s important to always listen and learn from those who are more experienced. “There’s a lot of knowledge there,” he says. “Over the years, we’ve learned a lot from my stepfather and step-uncle, like how to deal with customers and how to collect money, too. He taught me to treat everyone with respect and like you’d want to be treated.”
Nate and Tim also point out they picked up a family trait they both admire: The gift of gab — making small talk that puts customers at ease. “Not everyone is born with that. … We acquired it by observing,” Nate says.