Accounting Principles, 11th Edition

Feature Story

Turning Trash Into Treasure

Vancouver teenager Brian Scudamore needed to raise money to pay his way through college. With $700 and a strong desire to do it on his own, he established a junk removal company. Fifteen years later, 1-800-GOT-JUNK? had 113 franchise partners across Canada and the United States, and projected revenues of more than $60 million.

“It was a high-school business project that was out of control,” says Cameron Herold, vice president of operations.

While the exponential growth of 1-800-GOT-JUNK? may seem unwieldy (at one point it had five consecutive years of 100% compounded growth), it has in fact involved sound financial planning, budgeting, and cash management. The company only spends money it has; it has no outside investors or debt.

Managing this growth involves forecasting everything by creating a “painted picture” of what the company will look like in three years. The company knows its staffing plans, training requirements, and overhead and office space needs well in advance. “That filters back to our budgeting process,” Herold says. “We'll sit down and say, ‘If this is where we're going, what are all the components of that?’ . . . Then we bring it back to zero and say, ‘What's it going to cost us? Where does it fit into the budget?’”