Setting Goals for your Janitorial Business

Happy New Year! Are you ready for a more successful year with your cleaning company? Are you setting janitorial business goals? Regardless of how you answered the first question, your company will not be as successful if you answered no to the second one!

The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.  King Solomon, 970 BC

You’ve all heard the saying, “failing to plan is planning to fail.” Sounds a bit corny, but it’s wholly tried and true, especially in business. Solomon understood this 3,000 years ago, and I hear he was pretty wise.

CleanlyRun blog post image - Chart your Janitorial Business Goals

Here’s a few telling statistics for you to ponder and yes, be encouraged by:

More than 80% of the 300 small business owners surveyed in a recent 4th Annual Staples National Small Business Survey, said that they don’t keep track of their business goals, and 77% have yet to achieve their vision for the company.”

According to the Small Business Association (SBA), 30% of new businesses fail during the first two years of being open, 50% during the first five years and 66% during the first 10.

Is it a wonder that so many small businesses fail due to lack of Goal setting and planning? The good news is that 23% HAVE indeed achieved their vision! Again, the good news is that 70% are STILL in business after two years, 50% after five years and 34% after ten years in business!

If you’re just starting out in business, have faith and trust that you can do it! Set clear janitorial business goals and plan a path to achieve them. If you’ve been in business for a while and have had any level of success, I’d bet you’re in the 20-25% of companies that take their business seriously and have a vision with both goals and a plan to get there!

There are countless books, eBooks, online courses and available resources on the internet today about Business Plans, Goal Setting, Financing, Planning, Management, Reporting, Cash Flow, Budgeting, Training, Supply Chain Management, Organizational Structuring, Motivating Staff, and the list goes on. The purpose of this blog is not to tell you exactly how to establish goals, but rather to convince you of the importance of it and encourage you to start if you haven’t already.

Based on my faith plus experience in the Janitorial Industry, here are a few things that have worked well for me and kept me in business for three decades!

  1. HAVE A VISION:
    A vision for your business is, where do you “see” it going. What do you want it to become? If you don’t know where you’re going, you simply cannot and will not get there. It’s as simple as that. Everyone’s vision is a bit different, and that’s ok. It’s been said, “without a vision, the people perish.” For me I want my vision to align with God’s vision and plans for my life. I want my motives to grow my business, not to be based on selfish ambition, but rather to be in alignment with the more significant purpose and plans for my life and the lives of those I touch. To me, that’s the vision that brings me closest to perfect peace, which is my #1 Goal.
  2. ESTABLISH YOUR GOALS:
    I have many short-term and long-term janitorial business goals. My vision is the foundation of each goal, which becomes my target. And each Target Goal needs to be observable with measurable (Quantifiable) objectives to be achieved within a given time frame.
    For example –  Increase Janitorial Proposals submitted by 20% in the first quarter of 2019 compared to the first quarter of 2018.
  3. MAKE A PLAN:
    Your plan is the “How” to achieve your goal. It’s a “written” plan how you work out the details beforehand with the necessary steps to accomplish your objectives. You’re the coach, and it’s the action/game plan to help you win the game. For example: Goal: Increase Janitorial Proposals submitted by 20% in the first quarter of 2019 compared to first quarter 2018. Plan to achieve Goal by March 31, 2019: Determined # submitted in 1Qtr/2018 was 25. The goal is 30. Increase email marketing list of potential customers by 20%, from 600 to 720. Increase the frequency of email marketing and direct mail campaigns by 20%, from once a month to once every three weeks. Increase current cold calls from 10 per week to 12. By Feb 1, 2019, Start a monthly email and direct mail, Monthly Informative Newsletter to existing and potential customers, establishing us as an expert in our field.
  4. TAKE ACTION:
    Just Do It! Do what you can and delegate others to your staff.  Say, you create the customer lists because you know your target customer better than anyone.  Give Tom the newsletter assignment, with parameters and objectives, since he’s great at stuff like that.  Have Sara and Jane tweak some ad content with different calls to action and schedule the mailings every three weeks. Make it a team effort!
  5. REVIEW RESULTS, TWEAK, REPEAT:
    Review results weekly. Were they realistic? What’s working? Have you accomplished any of them? Are you happy with the outcomes? If not, tweak it a bit, it’s not set in stone. Repeat, keep reviewing and tweaking (if necessary). You can do this! It’s really not that complicated. Have faith!

Consider this:  One of your janitorial business goals should be generating more cleaning bids than last year. When you get requests for a Janitorial Proposal, that’s when you’ll need to create professional, profitably priced Cleaning Proposals to win the jobs… If you’re looking for a proven competitive edge – my automated best practices – I encourage you to try a free 30 day trial of CleanlyRun Janitorial Bidware.

Check us out at CleanlyRun.com… Let’s grow your business!

CleanGuidePro Successful bidderDrake

Count The Cost of Your Janitorial Proposal

Suppose you wanted to build a tower. Wouldn’t you first sit down and count the cost to see if you have enough money to complete it?

CleanlyRun blog post image - Crane

For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you saying, this person began to build and wasn’t able to finish.

These wise words written 2000 years ago are still true today. And these foundational truths has guided me well for many years, from running multiple businesses to navigating life.

In this Blog Post, I’m focusing on how to determine what it will cost to clean a building before you set your bid price. You MUST “Count the Cost” first!

Based on my three decades in the Janitorial Industry, here’s my Top 10 list of considerations required to calculate a profitable Janitorial Bid!

  1. GENERAL BUILDING TYPE: Different building types have different cleaning times/production rates. A 3,000 sq’ fully carpeted Library may only take 2 hours to clean, while a 3,000 sq’ Medical Clinic with 1500 sq’ of waxed VCT floors may take 4 hrs.
  2. CLEANING FREQUENCY AND LEVEL OF DIFFICULTY: Cleaning difficulty level is gauged not just by the size of a building, but rather by looking at the number of employees in the building (Building Density), plus the number of customers or patients or clients – the “Traffic” – that frequents this building on a daily basis. Higher building density/traffic results in longer cleaning times, which equates to a slower cleaning production rate for you and your cleaning staff. Basically, the more people in and out each day equals more trash, spills, messes, etc., which means it takes you longer to clean.
  3. CLEANABLE SQUARE FOOTAGE AND FLOORING TYPE: Whether you count ceiling tiles, get the number from your potential customer, or look online at the County Property Appraiser, make sute that you get the actual Cleanable Square Footage. Did you know that carpeted floors clean 15-20% faster than hard floors? And that waxed, vinyl tile floors with a shine can take 10% longer to sweep and mop than other hard floors like ceramic tile?
  4. DETERMINE PRODUCTION RATE: A facility’s Production Rate refers to how many square feet of a building can be cleaned by one person, in one hour, performing a set of standard cleaning tasks. Of course, you will have a much slower production rate when doing residential and construction cleaning.
  5. TOTAL DAILY CLEANING/LABOR HOURS: Once you have your Production Rate, this rate is then used to compute how many hours are required to clean a building per visit (i.e., the Daily Cleaning Hours). And once the Daily Cleaning Hours have been workloaded – that is, labor and wages have been distributed across these hours – then the bid’s Labor Costs can be computed by the system.
  6. LABOR COSTS: Once the Daily Cleaning Hours have been workloaded – that is, labor and wages have been distributed across these hours – then the bid’s Labor Costs can be totaled.
  7. ADDITIONAL PAYROLL COSTS: These costs typically include applicable Federal, State dan Local Taxes, as well as Work Comp, etc. There are government websites that can give you your state rates to go by. Your Accountant can help you. Also, there are many payroll software programs as well as many Employee Payroll Companies and Employee Leasing Companies that will give you an exact percentage.
  8. CHEMICAL /SUPPLY COSTS: These can run 3-10% of your monthly costs and expenses. These costs typically include floor cleaner, glass cleaner, all-purpose cleaner, disinfectant cleaner, bowl cleaner, stainless steel polish, etc. Buy chemicals in dilutable, concentrate form to keep costs down. Chemical mixing stations are great also. Products like bowl cleaner and stainless steel cleaner are usually sold “ready to use” (RTU), and cost a bit more, so shop around for reasonable pricing. Equipment like vacuums, buckets, floor buffers, etc. are an upfront cost that can be depreciated over time (talk to your Accountant).
    Chemicals like floor stripper, floor finish and carpet cleaner are an expense if you provide your customer with extra Specialty Work, but is included when and if you add these services in your bid.
  9. OTHER MISCELLANEOUS COSTS / EXPENSES / OVERHEAD: These typically include things like.. higher level managers over multiple buildings doing inspections, training, cell phone costs, fuel, etc. When you’re just starting out with only a few buildings to clean, these costs are minimal and can be hard to define, but figure in at least 2-3% to be on the safe side, even if you are the only employee and do all the work.
  10. TOTAL JANITORIAL COSTS / EXPENSES: Congratulations, now that you’ve calculated all of these costs and expenses you’re ready to “SET YOUR PRICE” (via Profit Margin or Cost Markup)!

Keep in mind:  When you get requests for a Janitorial Proposal, that’s the time to create a winning bid! If you’re content with the way you’ve been calculating your Total Janitorial Costs/Expenses,” that’s great. But if you’re looking for a proven competitive edge – my automated best practices – I encourage you to try a free 30 day trial of CleanlyRun Janitorial Bidware.

Check us out at CleanlyRun.com… Let’s grow your business!

CleanGuidePro Successful bidderDrake

Janitorial Email Marketing to Grow your Business

Over five years ago, I began a blog post about Janitorial Marketing with the following two paragraphs:

CleanlyRun blog post image - Left Quotation mark

To fail to have a Janitorial Marketing Plan is to plan to fail at marketing your janitorial business. But a plan is only as good as the method(s) it employs. And the best methods are the ones that not only generate the most customer interest and sales, but do it cost-effectively. So where should you focus your limited marketing dollars? Television, Radio, Billboards, Telemarketing, Yellow Pages, Hired Sales Reps, Newspaper Print Ads, Cold Calls, Direct Mail?

Twenty-five years of janitorial business experience has taught me that the best marketing method is (hands down, no close second, leader of the pack) Direct Mail Marketing! It’s cheap and effective and almost always generates a good response.

CleanlyRun blog post image - Right Quotation mark

— Cleanly Run, Inc. – Drake’s Blog – A Proven Janitorial Marketing Plan That Works! – May 2013

 

Flash forward:  I still support those options, but with one crucial addition – Direct Email Marketing!
CleanlyRun blog post image - E-mail Marketing

In fact, Direct Email Marketing is now my number one Marketing Method for contacting a prospective Janitorial Customer about placing a Cleaning Bid. ( My former #1 – Direct Mail – is still a good option, but it’s shifted to a distant second.)

Of course, Email Marketing has a bit of a learning curve in the beginning. You need to build your contact list, create a clear (and personal) message, list a call to action, and link to your website. But once you get it, you’ve got it; Bid Requests Will Happen!

The purpose of this post isn’t to teach you how to create an email campaign – (that’s what Google is for) – but rather to give you some reasons why you should add this tool to your marketing arsenal. So here are my Top 6 Reasons to use Janitorial Email Marketing to grow your Cleaning Business:

  1. PEOPLE USE EMAIL – A LOT!  85% of adults send or read daily. 99% of those check their email an average of 20 times per day. (I’m probably checking my messages closer to 50 times a day, but that’s just me…)
  2. PEOPLE ACTUALLY OPEN YOUR CAMPAIGNS:  The stats show an average of 21% Open Rate of your Campaign. (In my experience, that stat is spot on accurate.) Adding videos can increase open rates up to 3 times.
  3. OTHER COMPANIES USE IT:  An average of 81% of small, medium and large companies use email as their primary customer acquisition channel (and 80% use it for customer retention). Companies keep using what works.
  4. DASHBOARD STAT TRACKING:  Let your numbers guide you to winning campaigns. Numbers such as who’s interested, who’s not, website clicks, emails opened (and opened multiple times), best day and time to send and many more useful statistics. For example, when you notice that someone has opened your email multiple times but hasn’t replied, you may choose to target a direct mailing to them.
  5. IT’S AFFORDABLE:  You can run multiple janitorial email marketing campaigns for less than $100 a month. Or you can always start small for as little as $10-$15 per month.
  6. IT WORKS OUTSTANDINGLY WELL FOR ME!  Yes, I’m an actual eyewitness to the success of email marketing. My janitorial marketing campaigns result in multiple requests for cleaning proposals (and I typically win a high percentage of these)!

 

Looking ahead:  Once you’ve created a successful email marketing campaign – and you will – the requests for a Janitorial Proposal should start coming in. That’s when you’ll need to create professional, profitably priced Cleaning Proposals to win the jobs… If you’re looking for a proven competitive edge, I encourage you to try a free 30 day trial of CleanlyRun Janitorial Bidware.   As a Co-founder, it’s been extremely gratifying to see thousands of companies sign up and win new cleaning bids using my automated best practices!

Check us out at CleanlyRun.com… Let’s grow your business!


CleanGuidePro Successful bidderDrake

Customize your Janitorial Bids

CleanlyRun Janitorial Bidware Features

From time to time, we like to highlight some of the system features of CleanlyRun (aka CleanGuidePro) Janitorial Bidware.

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Background Note: CleanlyRun Janitorial Bidware provides a time-tested set of standard pre-populated Proposal Sections for each Janitorial bid. (A lot of trial and error has gone into determining what proposal lengths and layouts generate the best customer response.)  But you always have the option to:

  • Edit as you see fit: You can include (or exclude), rearrange, and Add/Edit/Delete any Cleaning Proposal section by using our feature-rich Proposal Section editor (which contains three rows of toolbar options).
    CleanlyRun - Editor Toolbar

  • Colorize the Header, Footer and Table of Contents: Sure, you can easily change the text color of any Proposal Section.  But you also have the ability to change the color (or suppress the display) of the Header, Footer and Table of Contents for any proposal.
    CleanlyRun - Color Switcher tool

  • Upload your Logo and other images: You can include photos/logos/images on any page of a Janitorial Bid. And once your images are uploaded, they can be resized and manipulated within the Proposal Section editor.
  • Upload supporting documents (like a Certificate of Insurance): You can also upload documents to a Cleaning Proposal section (like Proof of Insurance).
  • Create your own templates: If you opt to build your own proposal templates from scratch, feel free to use the “My Data” drop-down list to insert data placeholders on any page.

 

CleanGuidePro Successful bidderHave it your way!  At CleanlyRun, we want the presentation of your Janitorial Bids to benefit from our experience and expertise, but in the end, you're in charge!

Janitorial Employee Turnover

What’s your Janitorial employee turnover rate? Simply put, an employee turnover rate is a measurement of how many employees leave a company (for whatever reason) in a given time period versus how many new ones are hired. For example, if a company has 30 employees and 15 quit (and are replaced) in a year you have a 50% janitorial employee turnover rate.

Turnover rates are usually measured annually and vary widely by industry. For perspective, below are a few industry average turnover rates (as of 2017):

  • Public Utilities (water, gas, electric): About 8% per year.
  • Banking and Finance: About 19% per year.
  • Hospitality: About 38 % per year.
  • Fast Food Restaurants: About 150% per year.
  • Janitorial Industry: About 175% per year!

    CleanlyRun blog post image - Janitorial Employee Turnover

As a rule of thumb, career positions (potentially long-term/lifetime jobs) have a low-ish turnover. Jobs where people tend to work temporarily until “something better” comes along, naturally have a much higher turnover rate. Our Janitorial industry turnover falls in the latter category where it even edges out the Fast Food industry.

So what’s a janitorial business owner to do?

There are innumerable internet articles with “experts” touting how you can reduce turnover rates in every industry imaginable. More training, more pay, more incentives”, more benefits, more communication, more time off, more recognition, more empathy… The list goes on and on. Don’t misunderstand, these things are not only important and good for reducing turnover, they’re morally – (yes morally) – the right things to do for your employees to the best of your abilities and company’s resources. After all, employees are your greatest asset.

But as a 30-year janitorial industry veteran, I’ve I learned that the most successful method for dealing with our industry’s historically high turnover rate is not to focus on it… Instead, I concentrate on providing consistent quality service to my customers. And it turns out that by being laser-focused on this goal, a host of other issues – including employee turnover – get handled in the process.

Here’s how I make sure that my customer’s facility needs are met in this high turnover industry:

  1. I take care of my employees: It’s true what is said by Zig Ziglar, “people don’t care how much you know, but rather how much you care about them”. Treat them right, pay them right and cherish them as a very valuable asset! People stay with you longer if they feel appreciated.
  2. I never stop looking for new employees, even for accounts that are fully staffed: I have office staff that works full time to place job ads, set up interviews, meet with our supervisors daily for openings, coordinate building budgets, perform employee evaluations and listen to employee feedback and concerns. Even for accounts that are fully staffed, I continue to recruit and interview potential employees for the inevitable turnover. You simply cannot afford to be understaffed and let your customer satisfaction suffer.
  3. I get rid of the bad apples: I never like to let people go, but sometimes it has to be done. Bad attitudes, poor work ethics, being out of uniform, running constantly late, habitual last-minute call-outs, conflicts, etc., are all a cancer that left untreated, infects the morale of other hardworking staff and causes them to leave. Get rid of the bad and the good will stay longer. People like and respect discipline and order in the workplace!

Trust me on this one… The most important way to deal with janitorial employee turnover is by making sure that you are continually recruiting new staff to step in. In this labor intensive industry, continuous hiring is vital.


CleanGuidePro Successful bidderDrake

Determining the cleanable square footage for a janitorial bid

Ask Drake

Grand Master Janitor

With the truly, humbling success of CleanlyRun (aka CleanGuidePro), we’ve received a lot of questions (from companies all over the world) about a variety of topics in the janitorial industry. Allow me to share yet another one of them with you.

Hi Drake: I’m new to the cleaning business, and I have a couple of questions. Does “lot size” mean “square footage”?  And how can I find the square footage of a building without measuring, but rather searching the business information?

CleanGuidePro blog post image

Answer:  First, thanks for growing your new business with us! I’m glad you asked about these metrics, because it’s knowing the cleanable square footage that is key for your janitorial bid.

First, lot size is the size of the land, rather than the size of the building that sits on it. Total building square-footage is the actual size of the building, which may or may not be the same number as the total cleanable square footage.

You can get the total facility size in any number of ways: from your potential customer (e.g. pre-bid info pack), by counting ceiling tiles (2′ x 2′ or 2′ x 4′), or by using a measuring wheel or fancy laser meter.  However you derive this figure, it would be due diligence to double check it on the local property appraisers website.

However, your client may not need you to clean every square foot of their facility. For instance, a medical facility might restrict you from cleaning rooms that contain special equipment. So you can determine the cleanable square footage by scheduling a Pre-Bid Walkthrough.

I think of janitorial bidding as an art as well as a science, and it took me a long time to hone my bidding skills and determine what produced the most consistent and accurate results for my business. It always came back to starting off with the exact cleanable square footage for the job. In my experience, when I took on a job without knowing the exact area that I’d be cleaning, too much guesswork often caused me to lose money on the job. In some cases, I was essentially paying someone to clean their building.

So decades later, that’s why we designed our online bidding system, CleanlyRun Janitorial Bidware, based on the expectation that every effort has been made to get the proper figures for the cleanable square footage. For me, this is a basic requirement to bid a job.

And don’t be afraid to politely ask the client for a little more time for due diligence during the walkthrough. I’ve never had any prospect tell me no when I’ve asked to walk the building on my own in order to make some calculations, review some areas and/or take additional notes. It helps you tremendously and lets them know that you’re thorough.



CleanGuidePro Successful bidderDrake

Janitorial employee theft accusations

In the cleaning business, accusations of janitorial theft are rare, but occasionally, you will get this customer call: “We came in this morning, and widgets were missing from someone’s desk. We’re not trying to accuse anyone, but… only the cleaning people were here last night… so it had to be them.”

Your business has been accused of theft! This is a very serious charge. In fact, it’s #8 (DO NOT STEAL) on the top 10 “DO NOT DO” list, just two below #6 (DO NOT MURDER).

Yikes! How do you handle this situation?


CleanlyRun blog post image

Years ago, a wise man told me, “Drake, do the right thing, and the right thing will happen.”

When your company receives an accusation, the right way to handle it is to empathize with and listen to your customer, get all the facts, get your staff’s input, ask your customer how they would like you to proceed, and then make a decision. The wrong way is to get haughty, angry or blow up at your customer. All that will accomplish is a lost customer, a lost/diminished reputation, lost revenue and possibly criminal charges — even if your business was falsely accused.

I didn’t say doing the right thing is easy, or even comes naturally — but if you want to keep this customer, you have to remain calm and do right by them. Remember, it’s the foolish person that says everything that’s on their mind. Trust me on this one. I’ve played the fool with my mouth more than once, and the wrong thing happened every time.

With that said, and in the hopes of helping someone who may be new to the janitorial industry, I’ll share a few real-life examples of how I’ve responded to accusations of employee theft during my three decades in business.

  1. Falsely accused of janitorial theft, and vindicated: This is the most common scenario. A customer calls to report that something is missing, and it has to be the cleaning people. You investigate, but soon get a call back noting that the missing item has turned up.

    Actual scenario: A client rep telephoned that she left her purse in her desk, and her wallet was missing. She was positive that it was in her purse, so it had to be taken by my staff. I listened more than I spoke, said I would talk with the staff that had been on duty, and told her I’d get right back to her. My employees that night were an elderly husband-and-wife team that I trusted completely. They vehemently denied even going through her desk, much less taking her wallet. A few days later, I received an apology call when the lady’s wallet was found in her car. The couple was relieved that they’d been vindicated, but they didn’t want to work at that site anymore. I didn’t blame them and assigned them to a different client. I also didn’t try to make my customer feel bad or (openly) get upset. Twenty years later, we still have this account, and it is one of the largest and most loyal accounts that we have.

  2.  Falsely accused of janitorial theft, and couldn’t prove otherwise: This is a tricky one. You don’t think it was your staff, but right or wrong, the cleaner is always the first suspect.

    Actual scenario: The client, a private school, calls to say that about 10 movies are missing from their daycare classes. Can we check to see if our staff took them, or knows what happened to them?  Keep in mind, there are hundreds of kid there, each with backpacks that could easily have the movies in them, but I digress. My staff denied taking them, and I believed them. I said the same to my customer and offered to pay to replace the movies, just to be above reproach.

  3. Simply informed of janitorial theft: This situation is more likely at larger facilities with hundreds of employees. The customer doesn’t call with a direct accusation, just a notification of a situation.

    Actual scenario: The facility manager at a building with more than 1,000 employees calls to let us know that there has been a “trend” developing. Disney trinkets have come up missing from employees’ cubicles.  This building has many employees of its own that work there late into the night after our staff has gone, and there are 24/7 security and cameras everywhere. I don’t think the culprit was one our folks, but alerting our whole staff that all eyes and cameras are on them is a good deterrent. Without accusing anyone, we informed our staff and supervisors there to keep their eyes open. By the way, this client is still a beloved customer, and we have a great relationship with them.

  4. Accused and proven janitorial theft: This has only happened twice to my cleaning company in 28 years. Call it luck, great hiring, or the grace of God –we have been blessed with few occurrences. (I’m going with the grace thing.) I was raised not to air your dirty laundry in public, and I’m a firm believer and practitioner of that philosophy. But because actual theft is so rare and I believe this story will help someone, I’ll share.

    Actual scenario: A customer calls, saying that we need to come in and take a look at a video. We meet and watch a video of a new staff member taking $6 off a desk. (It was a teenager that had been recently hired to pull trash.) I was truly shocked, saddened and disappointed to see this. I listened to our client and asked how they would like me to handle it. Of course, the client wanted the employee off of their campus and wanted the money replaced. They did not want to press charges. The employee was terminated from our company immediately. Our client was gracious in not firing us. They said that we were the best service they’d ever had and didn’t blame us personally for one bad apple. I still felt responsible, but grace does abound.

Some perspective… I take pride in running a company based on integrity, honesty and doing the right thing, always aiming to be above reproach and never giving the appearance of wrongdoing. For starters, my staff is highly screened, background-checked, and instructed not to even take a piece of candy off of someone’s desk (even if it has a “Free Take One” sign on it). And I’m pleased to note that over the years my awesome team has turned in lost wallets, cash, cell phones, diamond rings, credit cards, checks, laptops, iPads, jewelry, and the list goes on and on. Out of thousands of employees spanning three decades, the number of janitorial theft accusations has been minuscule, to say the least. I’ve very proud of these good folks!


CleanGuidePro Successful bidderDrake

Janitorial Profit Margin versus Janitorial Cost Markup. Which to choose?

Not understanding the difference between Janitorial Profit Margin and Janitorial Cost Markup is one of the most common pricing mistakes in the cleaning industry.  I’ve seen way too many new business owners decide to price their janitorial bids solely on Markup – “I’d like to make $500 on this job” – rather consider the Margin of Profitability for the work…

Both terms – Margin and Markup – help you calculate profit, but prioritizing the wrong one could hurt your bottom line.

Let me break it down.
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Margin: (a.k.a. Profit Margin) is the percentage of the final selling price that is profit. In the highly competitive janitorial services industry, Profit Margins can trend low for very large jobs — say, 12 to 15% — but that range is unprofitable for small to medium clients.

Markup: (a.k.a. Cost Markup) is either the (a) Dollar amount above cost, or the (b) Percentage of the cost that you add on to get to a bid price.

So which approach should you use? As a general guideline, it is probably better to focus on your Profit Margin rather than a Cost Markup in a service business. A higher Profit Margin percentage matters more than a higher Cost Markup percentage. For example, a 25% Cost Markup only yields a 20% Profit Margin, which means that your markup isn’t as profitable as it may seem at first glance.

With margins, a 50% Margin means that half the selling price is profit. So, a 50% Margin means there is a 100% Markup — as you have added 100% of the cost price to make the selling price. (With margins, a 100% Margin is only possible if the cost price is zero.) In short, a focus on Profit Margin is more effective when it comes to pricing your janitorial bid.

Of course, situations and customers vary, and the choice to prioritize Margin or Markup is yours. Fortunately, CleanlyRun Janitorial Bidware displays Markup and Margin right next to each other, so you always know what is your Profit Margin’s equivalent Cost Markup — and vice versa.  In addition, we’ll suggest a minimum Profit Margin/Cost Markup for each bid that you can adjust as you see fit.

On a related note, I’ve touched on how the Profit Margins of smaller businesses can be higher than bigger ones, even with a lower Fair Market Price.

That’s enough math for now! 😉

CleanGuidePro Successful bidderDrake

Janitorial Fair Wages

Ask Drake

President and Co-founder of CleanGuidePro

With the truly, humbling success of CleanGuidePro, we’ve received a lot of questions (from companies all over the world) about a variety of topics in the janitorial industry. Allow me to share yet another one of them with you.

Question: I’m new in the business and have been doing all the work myself, along with my wife helping. I want to go after larger accounts that will require me to start hiring employees.

I feel that if I pay my cleaners $14-$15 an hour, they will all do a great job, thereby eliminating complaints. Also, I’ll let my potential customers know this and be able to charge more. What do you think?


CleanGuidePro blog post image

Answer: Sounds good in theory.  Pay them more, they’ll perform better and my customers will gladly pay me more!

Unfortunately, after 26 years in business, hiring 1,500+ employees, experimenting with wages and interacting with hundreds of customers, this approach simply does not work in practice. Your question has two parts. let’s take a closer look..

  • Q1: Pay entry level cleaners $14-$15 an hour, (when the prevailing wages are $8.05 -$9.00) and they’ll perform better.

    A1: Maybe, maybe not. My experience has been that the vast majority of “poor performers” will perform just as poorly at $12.00 an hour as they will at $9.00.  However,  a market–rate employee should quickly move up to higher wages as their performance warrants it.  (And performance can be improved with proper training, supervision and followup.)  In other words, higher wages are earned, not a given. So definitely reward your top performers in short order, but don’t assume that starting a new hire at “above market” rates will guarantee a high performance.

  • Q2: My customers will pay me more to get better service, “if” I pay my employees more.

    A2: Good luck with that. Listen for the deafening silence of the “crickets” when you approach your clients with that logic. Customers today “expect” great performance and outstanding value in their selected service providers. They want and deserve great service at a fair market price. Take great care of them, cherish and yes “love” them. You will make more money though extra project work, carpets, floors, supply sales, customer loyalty and invaluable references!

Trust me on this one. Pay the fair and prevailing wage, provide training, supervision and followup. Increase pay based on performance and charge your customer a fair market price, then take care of them and watch your profits and business increase!


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Janitorial Employees versus Subcontractors?

Who cleans your buildings? Your janitorial employees or subcontractors? Not sure what the difference is? Well, as a business owner you should know the difference and be committed to classify your cleaners correctly. It’s not difficult to determine and it would behoove you to do it right, thereby avoiding costly IRS penalties, fines and tax levies for unpaid payroll tax liabilities on misclassified workers.


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Over the course of 25 years in the janitorial business, this has been my experience…

An employee: If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees. Basically, if they answer to you, wear your uniform, use your equipment or vehicles, use your chemicals and you train them how to perform the tasks, they are definitely your employee. Therefore, you must deduct and pay the appropriate employee payroll tax liabilities of your state or jurisdiction.

There are numerous accounting software programs and payroll companies that can handle this for a nominal fee. They calculate the correct payroll tax deductions, write the payroll checks, file timely and accurate quarterly reports, such as 940’s, 941’s, UCT6’s, etc..

EMPLOYEE PROS:

  1. They do it your way! You hire your own people, train, supervise, inspect and personally control the quality.
  2. You know exactly who’s in your buildings.
  3. You make a higher profit margin percentage than using subcontractors.

A Subcontractor: If you can direct or control only the result of the work done and not the means and methods of accomplishing the result — then your workers are probably independent subcontractors (whose wages are reported to the IRS via form 1099). An example of using a legitimate subcontractor would be to pay another janitorial service company – (that has their own license, liability and workers comp insurance) – a percentage of your total contract revenue to clean a building.

I’ve used subcontractors on select projects and I’ve also been been a subcontractor for some huge national companies (on statewide cleaning contracts). I’ve made a legitimate and legally classified profit in both scenarios. But 99% of the time, I use my own employees…

SUBCONTRACTOR PROS:

  1. When you’re awarded contracts in other cities or states and the logistics and distance of the location behooves – (I just like that word) – you to use a local cleaning company.
  2. You just set the guidelines and expected results. The subcontractor hires their own people, trains, supervises, inspects and personally controls the quality.
  3. You cut one monthly check to your subcontractor, minus your profit.

Keep in mind my friends, whether using your own employees or a subcontractor to fulfill your contract service requirements, classify them properly.  (There are plenty of IRS guidelines and accountants to help you.) Want to sleep well at night? Pay the tax man correctly!



CleanGuidePro Successful Residential Cleaning bidderDrake