- May 18, 2020
- Posted by: admin
- Category: Accounting Advice Videos
In the third of four webinars titled “COVID-Proofing Your Pest Control Business,” PCO Bookkeepers’ Dan Gordon and Coalmarch’s Donnie Shelton welcomed Hank Hirsch to discuss the virucidal disinfecting service his pest control firm launched in the wake of the COVID-19 crisis. Hirsch is the president of RK Environmental Services and Comprehensive Food Safety Consulting, Auditing & Training In Westwood, N.J.
PCO Bookkeepers is presenting the webinar series in partnership with Coalmarch.
Watch the entire webinar replay here.
Edited transcript of Hank Hirsch:
So why don’t I just give a little background about my two companies and what we do and how we started what we’ve coined our VPS service, our Virucidal Protection Services.
My one company, my main company, is RK Environmental Services. We’re based in northern New Jersey, although we have operations in 27 states, mostly along the East Coast. We work exclusively with the food and pharmaceutical industries. We work with food manufacturers, food distributors, retail food chains, which are mostly grocery store chains, and some restaurants. Then I also do a lot of work with pharmaceutical companies. Our signature service is our IPM program combined with a food safety audit. So our service professionals are cross trained to be food safety professionals as well. And it’s really a nice little niche that we’ve developed with the food industry.
We’ve been in business since December 2000. In 2011, because we were doing a lot of food safety related work, we launched our separate business called Comprehensive Food Safety. And that business provides food safety consulting, auditing and training for the same types of clientele: food processors, distributors, retail food chains and pharmaceutical facilities. And although I run the two companies independent of one another, there’s a lot of synergies between the two companies that have helped us grow over the years. And quite frankly, it’s been a great ride for me for almost 20 years now. And I don’t want to stroke his ego too much, but Dan’s played a big role in our company’s growth and is providing great service.
Sometime in probably mid-March, and I think a lot of people on this call can probably relate to this, we began to see the escalation on the news with regards to the coronavirus, which then got coined COVID-19, and it started to escalate really quickly the second week of March for us. Most of the work we do, like I said, is in the food industry. I will share with you though that I have a handful of clients that are premium hotels in Washington D.C. and in Boston, and the hotel industry probably got hit first. We had those clients coming to us, reducing their service frequency from daily to twice a week. And all of a sudden, we started to just read the tea leaves here and realize that we’re going to take a little bit of a hit because of what’s going on here. None of us knew at that point how rapidly things were going to unravel and how much it was going to really impact the entire country and the economy the way that it has so far.
Identifying a need for COVID-19 disinfecting services
One of the services that we offer also through our food safety consulting business is we do grocery store audits, and I remember it happening vividly. It was March 13, it was a Friday morning, and my three consultants all left work that day and said, “We’re not working in the grocery stores right now. It’s pandemonium in the grocery stores.” The grocery stores were just packed with people, people didn’t know what was going on. They were buying as much toilet paper and other products as they could, and my consultants were really scared for themselves.
Within the next couple of days, the grocery store chains that we worked with told us, “Don’t come for the rest of the month of March, we don’t know what’s happening, we’ll reevaluate in April.” And I started to get really concerned about just the loss of revenue that was happening right at that moment. And I said to myself, “What can we do differently to generate revenue to support our clients right now and to make sure things don’t unravel for us?” I’ve always felt like I have a really solid business, and when you have a hundred employees, you know that even if there’s bad times, the business will probably survive. But there was just an unknown element with COVID-19. We didn’t know what was going on, we didn’t know if the government was going to shut us down.
In just thinking what we could do, how could we support our clients, I figured maybe we can offer some application for a material that be effective at knocking out COVID-19. And I started to do my research, I knew that we had a lot of fogging equipment that we could use, and that’s what I thought we would offer. My food plants that I work with already have materials and staff and equipment that they use for applying materials to sanitize their processing lines, etc. I didn’t know if they would have much of an interest in anything else that we could do. But I figured if we could come in with our fogging machine, we could do something that they can’t do because they don’t have that equipment. So I researched and we decided that we were going to use a material that, by the way, is available to the entire pest management industry because it’s made by Nisus and Nisus manufactures pesticides.
Launching a COVID-19 disinfecting service
So we found Nisus DSV. DSV stands for disinfectant, sanitizer, virucide. As I said, this is a perfect material. I read the label, learned how to use it, spoke to my manufacturer rep, and within two days our team put together a marketing program and started offering this to our clients. Within minutes of our email blast, we started getting phone calls from clients that wanted to learn more about the service. That email blast went out sometime in the mid-afternoon. By the end of the day, we had two or three clients that had already signed up within the next day, and here we are three weeks later and I have about 180 different locations that we service now on a set frequency for our VPS program.
To take a step back, the very first job that we did, we went in with our fogging equipment and then we quickly learned that this material doesn’t disperse well out of foggers. It’s not like a pyrethrin-based material that fogs easily. So we wound up just doing a little bit more work and we learned by doing that using backpack sprayers in sensitive areas, we would do a spray and wipe. This particular material cannot be used on food, so there’s precautions that need to be taken at food facilities.
We’re really proud of (launching the service) for a lot of reasons. No. 1, we feel like it’s just business continuity for our company because right now our account executives can’t get sales calls. Another thing that we saw real quickly were every single one of our clients was sending us these visitor policies, and their visitor policies were for any vendor that they work with saying “You can’t come to our facility.” Fortunately, we were able to talk to most of those clients and say, “Well, we’re an essential part of your food safety program, we should still come.” And in most cases we were able to continue with our IPM program.
Some clients just dug their heels in and said, “No, you’re not coming right now.” I’ll say for our pest management business we’re down two routes in lost business because clients just don’t want us there or there’s a reduced frequency. Some of those clients are service industry or hotel industry or schools and they just don’t have business right now for themselves. Others just were really strict with their visitor policy and said, “Listen, we understand that you say you’re essential, but we just don’t want anybody in our facility right now.”
The grocery stores immediately were very interested and make up probably about half of the different clients that we’re providing the service to right now. And then the other half are food processors or distributors. So I can’t speak to churches or schools or companies that do residential work. But I will say this, I can imagine that everybody out there would be interested in this type of service.
In my office, which is almost closed, we had one of our consultants show up one day who worked with another one of our consultants who did test positive for COVID-19. And the people in my office got very emotional over it, totally understand that. So we started servicing our office. I don’t think there’s a business out there or even homeowners who wouldn’t be interested in this type of service right now, I believe that. Another thing we’re doing is we’re offering it on a set frequency.
One of the things we decided to do because DSV has no residual to it, we have all these clients on a set frequency. Most of them are weekly, some of them are even daily, some of them are twice a month or monthly. We have people who will do one-times, but we find that the reason that these facilities are doing these applications is clearly to protect their staff. But in addition to that, they want to build confidence in their staff to show up for work every single day and have confidence in management that they’re taking actions to protect all the employees.
In that regard it’s been good for us, and we’re really hopeful that this is going to be something that we’re going to be able to maintain as an ongoing line of business past this crisis because there’s a lot of benefits to doing these applications besides combating COVID-19.
Staffing and operating a COVID-19 disinfecting service
We took some of our consulting staff and transitioned them over to doing this right now because the consulting side of our business was pretty flat when this happened. So we have four full-time RK Environmental staff or Comprehensive Food Safety staff that came over to the other company that are doing these applications. And then we’ve hired eight temps who we’ve trained and are working for us full-time right now and maybe some of those temps will become permanent, but we didn’t plan on them being permanent when we first started this. We just needed additional labor, so we had hired temps to work for us who are right now and that headcount continues to grow because we just keep bringing on more and more of that business every single day. At this point, the amount of VPS services that we do is almost same amount of IPM revenue that I generate on a monthly basis.
To get started we spent some time with the people at Nisus. We spent time with our rep, we spent time with Greg Baumann, who is their technical expert, and we did some training with him. He really walked us through the process and the most effective way to use the material. After that, it was really on-the-job experience that we learned and started sharing internally with our staff. We shot videos that we shared with each other and quickly wrote service protocols with regards to protecting our employees. Our employees are going into all these places, so we wanted them to be really strict with their process for their PPE, so they were protected not only from the material that they’re using, which requires PPE, but also COVID-19 and how to gown, how to de-gown and how to really protect themselves out there. It was really on-the-job training and experience and some good internal communication that has made us really efficient at doing this right now.
As far as technicians go, I think most of them have been really appreciative that they have jobs right now because they see what’s going on: 17 million people unemployed in three weeks. They understand that they’ve got a responsibility, as well, to support the food industry, help protect our clients’ brands and their products and their staff. So most of them I think go to work every day wearing a badge of honor, whether they’re doing IPM work or whether they’re doing these VPS applications. They take a lot of pride in what they’re doing, which by the way just makes me beam with pride that they’re my staff.
A couple of them have approached us and inquired about hazard pay or got really upset at clients more than us when they found that the clients had a positive for COVID with one of their staff members and didn’t let us know. So it’s been a challenge at times, but for the most part things are going really smoothly, adding several clients every single day. And it’s been a saving grace for us, quite frankly.
Regarding pay, what we did is this: The people who are full-time for us doing these applications, they were our consultants who we transitioned over to do these applications right now, so they were on salary. We’re maintaining their salaries as they were and they’re getting paid handsomely to do this work. It’s just different for them than doing the consulting work, and they’re not complaining about it. They’re really a great group people. The temps that we have working for us, we’re not doing anything special for them, but for our service professionals who in addition to doing IPM work are helping out with VPS services after hours on weekends and they want that extra work, to support themselves and their families, we’re paying generously. We’re paying time and a half for any VPS work that they do, even if they haven’t hit 40 hours. So we don’t call it hazard pay, we just call it VPS incentive pay.
Regarding insurance, we did check with our broker about any concerns and we were told no issues at all. So it hasn’t been an issue I could say right now with our clients. They love the service that we’re doing. I haven’t gotten any complaints from any clients about anything, they understand what their responsibilities are. So with DSV, by the way, you can’t treat open food, you can’t treat food directly. If you’re going to treat food contact surface, the requirement on the food facility is a wash down rinse afterwards just with water, and we haven’t had any issues. Our staff know how to apply it near food where it just becomes a spray and wipe with a clean cloth and there’s really no risk to product at that point.
Dan Gordon: We know most insurance companies do require a separate policy for this. So we’ve been able to work that out, but before you put a program in place like this, I highly recommend that you contact your insurance broker and make sure that you’re covered. And there are lots of policies, separate policies that you can write on top of that.
Positioning and pricing a virus disinfecting service
We’re continuing to bring on new clients every single day. Right now I’m really focusing on the messaging with our account executives and figuring out how we’re going to message with the clients who have already subscribed to the service with us so that we can continue to maintain it as an ongoing line of business for us. And that we take a lot of pride in being able to offer this to our clients. We feel like it’s a win-win for us. Clients are getting a lot of benefit out of it, we feel good that we’re able to offer it, and that we’re really doing our part right now: driving the economy, protecting our clients’ products, brand and staff, helping to keep our employees working. So really only good things have come out of this so far for us.
I believe if you frame it out the right way, it could apply to residential. Everybody lives in a home, so everybody’s concerned about COVID-19, and I think you have to handle it in a very tactful way so it doesn’t make it seem as though you’re being an opportunist in any way, but that those clients that you already have, who you’re providing residential services to, should absolutely be interested in you. You’re already protecting their home with other methods, and now you’re going to be able to enhance that by helping protect their homes from COVID-19 and give them a sense of comfort that they don’t have the virus in their house on any of their hard surfaces that are regularly touched. So I can imagine there would be a lot of interest from homeowners.
We didn’t have a good sense of the amount of hard surfaces that are commonly touched and the amount of time that we were going to have to spend at each location. When we really started to think about how we’re going to price these jobs, we didn’t have a good sense of the best way to do it, so we figured we’re going to base it on square footage. We’re going to put together a square footage matrix.
We’ll have a separate price for after-hours services and we’ll have a separate price for our retail clients because those are a little bit more labor intensive. You’re spraying and wiping cash registers, you’ve got to be really careful around produce and other areas where there’s exposed product. So those are a little bit more labor involved on the retail side. And then when we have a client that has a positive that they’ve shared us, we always ask and we present the whole separate investment and we expand the amount of application that we do to include walls and floors and other areas. So it comes a little bit more labor intensive for that again, and the whole thing for us right now is based on square footage.