For consummate entrepreneurs like Donnie Hazelwood, one big success isn’t enough to quench the entrepreneurial spirit. Rather, building a thriving pest management company is something to be done again and again.
Hazelwood had retired after spending a 25-year career building and selling several pest management branch locations; then, in 2000, he decided to start a new company. Today, 16 years later, American South Termite and Pest Control in New Market, Tenn., is thriving thanks to an all-inclusive pricing structure for a unique clientele of property management companies.
FROM THE BOTTOM UP. Like many PMPs, Hazelwood’s start in pest management was a humble one. “It was the mid-1970s, I was 19 years old, and I needed a job,” Hazelwood said. “I saw an ad in the paper for Orkin. I went in looking for a technician job, but they happened to be looking for a salesperson. At the time they were offering a whopping $500 a month draw, and to me that was good money.”
Hazelwood did well in sales and ended up working for several different Orkin offices from Tennessee to Florida. After several years with Orkin, Hazelwood went on to work for a variety of small pest management firms. “Like any young person, I kind of bounced around until I learned to settle down. Some I regret ever working for, and some I regret that I didn’t stay with,” he said.
By the early 1980s, Hazelwood was working for the then-merged Terminix and Sears Authorized Pest Control location in Knoxville, Tenn. Shortly after his arrival, however, the two pest giants decided to part ways, which presented an opportunity for Hazelwood to manage his own branch: Mid-South Exterminating, dba Sears Authorized Termite and Pest Control. “Sears was looking for someone to manage their newly independent branch in Knoxville. I had a license and some experience, so they gave me a shot. I was in the right place at the right time and felt like it was finally my opportunity to shine,” he said.
A deal was made with Hazelwood that when the branch began producing $250,000 in revenue, they would give him a one-third stake in the branch. It took him less than six months to reach the goal.
As an up-and-coming branch owner, Hazelwood began making connections with Sears Authorized managers and other leaders in the industry, one of whom was the legendary Charles Steinmetz.
“Chuck had built All America Pest Control into one of the largest pest management businesses in the world and was doing something like $100 million in revenue. I was amazed by that, so I went down and visited with him and tried to copy what he was doing,” Hazelwood said. “Chuck was doing things very differently from what I had been exposed to with previous companies, but it was hard to argue with his success.”
As Hazelwood achieved continued growth in Knoxville, Sears execs allowed him to expand and launch branches in Charleston, W. Va.; Cincinnati; Louisville, Ky.; and Indianapolis. “I started with one truck at a time in each location, doing the same things that had worked in Knoxville, and pretty soon all of those branches were doing $250,000 a year or more,” he said.
Unfortunately, a few years later, about the time that Hazelwood’s branches were really gaining traction, a series of Sears’ mergers and acquisitions, including a national merger back with original partner Terminix, began to change the tenor of things at the company. “The management was now mixed with many competing views on how to operate a pest management firm as they tried to blend into one company,” Hazelwood said. “I was stuck in the middle, so I decided to sell my branches and sign a non-compete. My wife and I got a motor home, and we spent the next two years traveling around to see every state we could.”
STARTING ANEW. After traveling for a few years, Hazelwood was still only in his late 40s — too young to settle down, he thought. “I realized that I had to do something, I didn’t really have enough money to totally retire and the only thing I knew how to do was pest control.”
So, in October 2000, he opened American South Termite and Pest Control in New Market, a small town a half hour north of the Great Smoky Mountains and the popular tourist destinations of Pigeon Forge and Gatlinburg. “We started small, but relatively quickly, we were up to the $250,000 annual revenue range,” he said. “We kind of hovered at that level for several years. There’s something about that $250,000 mark — there are a lot of pest companies that can’t quite get over that hump.”
Hazelwood sold the work, his daughter, Deidre Hubbard, answered the phones and his son-in-law, Joey Hubbard, served as the company’s only technician. Things carried on that way until 2008 when bed bugs hit big and proved to be a boon to the company.
The Gatlinburg area is dense with rental properties, particularly log cabins. In many cases, property management firms rent, maintain and administer the cabins on behalf of the property’s owners. “When you have a property where there is constant turnover of guests, you are going to get a few pest problems, including bed bugs,” Hazelwood said. He was one of relatively few PMPs in the area with a fumigation license, and fumigation proved to be a popular and effective option for bed bug control. Where other bed bug treatments, such as steam, heat and traditional pesticide applications, were failing to get full control, Hazelwood’s fumigation treatments were getting results. Faced with a significant loss of rental income, property managers and owners began seeking American South’s services in ever-increasing numbers.
For the second time in his career, Hazelwood was in the right place at the right time. “There aren’t actually all that many fumigators in Tennessee. And before bed bugs, any company with a fumigation license in Tennessee maybe did three fumigation jobs a year. During the height of the bed bug emergence, we were doing 10 to 15 a month,” he said.
In 2009, American South nearly doubled its revenue to $500,000; by 2011, it was earning $750,000; and in 2015, revenue crossed the $1-million-a-year mark.
Hazelwood currently employs nine technicians with plans to add one more this year. “Fumigation is not the largest percentage of our revenue, it’s actually less than a third; but when bed bugs hit, our fumigation expertise helped us convince the cabin rental companies that if these guys can get rid of your bed bugs then why not just have them do all your pest management,” he said.
BUILDING TO CUSTOMER NEEDS. Hazelwood believes one of the key strategies that has helped American South achieve such impressive growth over the last several years has been a willingness to tailor its services and pricing to the unique needs of its customers.
“One big thing I learned from Chuck Steinmetz was that if you are going to shine, you’ve got to be different. There must be a unique and specific reason for people to come to you,” Hazelwood said. So he applied the adage in his business.
Traditional pest management companies were charging customers separate fees for pest control, termite control, etc.; then adding additional fees for problem-specific treatments, such as a bed bugs or carpenter-bee flair ups — which is a common problem in the area, especially where it is heavily wooded.
“So you have a renter seeing bed bugs, and they call to complain to the rental company. The rental company then gathers a few estimates and calls the owner of the cabin. Well, in the case of something like bed bugs, you are talking a lot of money, and worse, a lot of down time; and, of course, you can’t rent the property during that time. So it can be a real hit to the rental company and the property owner,” Hazelwood said.
Seeing an opportunity, Hazelwood came up with a program to charge property management firms a flat, monthly fee. As part of that, American South technicians inspect the property each month, and, if any pest issues arise, they address them at no additional charge to the customer. It saves the rental company — and by extension the property owner — a lot of headaches knowing that pest complaints will not affect their rentals.
“Our customers really aren’t paying us to go out every month and spray the heck out of everything; they are paying us to ensure they don’t have any pest issues. So our main thing is inspect, inspect, inspect. We go out each month to the account and look carefully for potential problems,” Hazelwood said.
“Obviously, in a rental cabin environment, pest issues pop up now and again,” he added. “But because we are inspecting carefully and consistently, we usually catch anything before it gets too difficult to control. As a customer, once you pay the monthly fee, we take care of everything. You don’t have to pay anything extra, even if it takes a fumigation or termite treatment.”
Of course, the key to making that kind of service profitable for American South is pricing in such a way that covers the occasional pest flare ups, and that means keeping a close eye on historical data. To start the program, Hazelwood said they looked at the company’s average annual spending on each service provided and calculated the monthly amount needed per rental unit to cover that. From that number, they determine the monthly pricing. “If you keep good records, it is actually fairly simple to do,” he said.
The biggest challenge is marketing the program to potential customers who have been relatively untouched by pest problems, Hazelwood added. “The rental companies or property owners who have had to deal with bed bugs, termites, or carpenter bees in the past, and know the expense and inconvenience of it, understand the value of our program and are eager to sign up. But for someone who has never had any real pest issues, they think, ‘Why in the world would I spend so much more money just to have these guys come out each month and look around?’”
Luckily for Hazelwood and American South, there’s a plentiful supply of pests in East Tennessee, and the company has established a solid reputation for exceeding customer expectations. So much so that the company is considering expansion to other parts of the state.
“I realized early on that the successful companies in pest management offered something unique to customers and built a brand around that,” Hazelwood said. “We are at a point now where people understand who American South is.
“There is a lot of hard work that goes into getting to a point where people in your area understand what your brand represents,” he said. “Of course, once you get to that point, you have to work even harder to maintain it.”
Steve Smith is a Cincinnati-based freelance writer.