Payan Pool Service

Proving its resilience yet again, the pool and spa industry is coming through the other side of the pandemic relatively unscathed.

While the year of staying home has presented challenges — supply-chain issues and a shrinking labor pool, to name just two — many industry professionals report unprecedented growth. With nowhere to go, homeowners are turning to pool service technicians — newly christened essential workers — to rehabilitate their neglected swimming pools, now their sole source of exercise and play.

Many pros find themselves with more work than they can handle. “This will represent the best year that we’ve had in business ever,” says David Hawes, owner of H&H Pool Services in Dublin, Calif. Calls for equipment upgrades are keeping his San Francisco Bay-area service firm busy during a season that’s historically slow for the industry.

Likewise, Javier Payan is having to step out from behind his desk and get his hands dirty. While his service department remains steady, his repair technicians are swamped. There’s too much work for his staff, he says, so he’s spending more time in the field these days.

“We’ve already had our best December on record,” says Payan, owner of Payan Pools, serving the San Diego area.

Rich Gallo also closed out 2020 with staggering growth. He’s entering the new year with more trucks, more staff members and a suite of software programs to manage the influx of jobs.

“I’d say we scaled three times what we would normally do in one year,” says the owner of PureSwim, a service firm based in Valencia, Calif.

All three acknowledge that with growth comes risk. While it may be tempting to capitalize on the surge of demand, not every service firm is equipped to do so, experts caution. Carefully consider your available resources and how much risk you’re willing to absorb. And proceed with caution.

Employees and where to find them

One person can do only so much work. When you find yourself at maximum capacity, yet the market is ripe, the obvious solution is to hire more people. Just don’t expect an immediate payoff. You’ve heard it before but it bears repeating: Hiring is expensive.

When you factor in workers compensation, benefits, payroll tax, insurance and social security, among other expenses, a new employee is going to cost you considerably more than the hourly wage he or she is earning, at least starting out. And California’s ever-restrictive labor laws have limited the ability to rely on independent contractors. Hawes estimates that a $20-per-hour employee actually costs him $26 an hour.

So is it worth it? To get to the answer, you have to weigh the costs (and risks) against the earnings potential.

“I know what it costs to bring somebody on board, and I know that the first three to six months I might be in the red,” Hawes says, adding that it might be a risk worth taking if all signs point to continued growth. “I know about when that person is going to become a break-even and then start making me money. So I don’t hire someone with nothing for them to do. I go a tiny bit over capacity so I have some work to shift to them, and then I turn on the afterburners a little bit.”

Gallo took a different approach. He was willing to hire more employees than he initially had work for.

Several indicators leading up to the pandemic suggested that he should pull the trigger. Among them: an increasing number of calls from frantic customers who needed service urgently. A homeowner’s pool technician may have disappeared and stopped returning calls — a troubling trend Gallo chalks up to the state’s proposed law to reclassify independent workers as full-time employees. Sensing there was more work to be had than his crew could perform, Gallo staffed up. By the time many locked-down homeowners were reappraising their backyards, he felt poised to profit.

“If you can do that, that’s your best move,” he says. “It’s a big risk, but the reward can be just as big if it pays off.”

But even if you’re willing to hire, there’s the matter of finding people willing to work. Some service firms have found candidates through temp agencies specializing in manual labor, or by offering bonuses for employee referrals. As newcomers enter the field, the more experienced service pros graduate to repair technicians status so these firms can meet the demand for equipment upgrades.

Yet qualified applicants remain few and far between. “You’ve got people getting paid to stay home, making more money to stay home. That wipes out a certain percentage of the population,” Payan says. “For me, one of the most frustrating things is having more work than you can get to ... You would think there would be a line of people out the door wanting to work because of the unemployment statistics. It’s something that makes no sense at all.”

With manpower at a minimum, Payan is having to be more resourceful. In addition to spending more time in the field himself, he’s scheduling larger projects for the off-season when his crew has more time. He also sends emails to his customers, urging them to schedule their appointments now so they can avoid delays during the busy season.

Ultimately, it boils down to working smarter and harder for a limited staff to keep up with demand. For Payan, that means giving his crew weekends off so they can have time to recharge. Burnout is a very real risk, he cautions.

Risks, resources and your capacity to grow

If you want to grow your business, now is the time to take stock of your available resources and consider the areas you’ll need to build out to support an expansion.

Some questions to ask yourself:

- Will you need more trucks?

- Will you need a larger warehouse? Or if you intend to break into a new market, a second warehouse?

- Do you have the office personnel to handle the influx of calls and dispatching?

- How many established routes do you have?

- Will you need to invest in more technology to keep track of inventory, monitor field workers, etc.?

Each bullet point above represents opportunity as well as risk. Take trucks for example. Your liability multiplies with each additional truck on the road. So add another item to the list: Insurance.

“You’ll want to make sure you have higher limits,” Gallo advises.

This applies not only to vehicles, but employees as well. It’s a sobering fact: More employees means more likelihood that one of them will sue. Employment practices insurance (EPI) provides coverage in the event claims are made against you alleging wrongful termination or other complaints.

There’s also the risk of being so fixated on growth that your customer service suffers. Suddenly, you’re faced with a mountain of financial commitments — the trucks, the new warehouse — while losing accounts at the same time.

“I think there’s a propensity in these kinds of times for somebody to try to keep up with meteoric growth, and there’s nothing wrong with that,” Hawes says. “But sometimes you start ignoring the basic business principles. I think that’s where people get in trouble. In an effort to grow, they end up getting sloppy.”

Also consider your cash flow. This is one of the most important resources a business has for projecting growth. Money coming in and money going out can help you prepare for future expenses. Tracking your funds’ movements will help you determine when to, say, sign a lease on a second office or bring on an additional employee.

“You’re able to have a better sense of what the business really has on hand of cash,” Gallow says. “And in growth, you’re going to need cash. Cash is king.”

Profits, rewards and the question of longevity

There’s a very good reason many single-pole operators are happy working solo: They have relatively little overhead or liability, and some even outearn larger operators with multiple trucks and employees. They’re proof that bigger isn’t always better.

But with so many homeowners rediscovering their swimming pools, the market for capable pool technicians is too great to ignore. This leaves many pool professionals one of three options: turn away work, raise their rates, or grow. While it’s true that the latter holds the most risk, it also holds the most reward. If you can manage liability and increase business incrementally, there are rewards to reap beyond just higher profits: A service firm could sustain itself without requiring the owner’s constant oversight.

However, one question lingers that may give owners pause before investing: How long will this pandemic-driven windfall last? Will we go back to business as usual soon, or is this the new normal?

There’s good reason to believe that working from home is here to stay. Many managers have found that employees are just as productive working remotely. So long as that remains the case, Hawes believes families will use the pool as their primary source of recreation, a place where their kids can burn some pent-up energy.

“I think we’ve introduced a lot of kids to how fun swimming can be, by almost making them: ‘You’re going to go swim! Play! Play like crazy,’” Hawes says.

For his part, Gallo thinks demand will eventually level out as the country recovers from COVID-19.

“Things are going to work out,” Gallo says. “This will definitely be a bubble. It will probably go somewhere from nine to 18 months and then it will just start to go down. Instead of a rushing flow of water, it will go down to a drip and you just have to be positioned properly.”