Month: September 2013

Janitorial Growth Without Burnout, Top Tips!

When starting out in your janitorial business, you’re usually doing all the work yourself. We’ve all been there in the beginning, including me. Recently, I received email questions from one of our CleanGuidePro.com members. With his permission to post it here, this is what it said.

“Good News! I was awarded the new cleaning account. The only thing is that I’m nervous about all the hours I will be working. My day will start at 5:30am to 10am, then I go out again from 4pm until midnight, 7 days a week. On Saturdays it’s pretty much an all day marathon. What are your suggestions on hiring someone, am I looking for someone to clean some accounts on their own or should I get two people to clean together? At what point do I hire a supervisory type position? A bunch of years back, I became severely burnt out, so I made a career change while running my cleaning business part time. I’m now in a rebuild process and don’t want this to happen again.”

Sound familiar?

The answers to these questions are not a quick fix, one size fits all answer, but there are some common steps that myself and countless other companies (including some very large national companies I’ve known doing hundreds of millions of dollars a year) have done in the beginning to grow their businesses without “burning out” in the process. There are many additional things that go into each of these steps, i.e., labor law compliance, management skills, communication skills, marketing, training, cash flow management, etc., but in their simplest form, they are as follows:

  1. CLEAN BUILDINGS YOURSELF: In the beginning, clean your accounts yourself. Determine a reasonable number of hours you can work per week before hiring help. If you have a full time day job, probably about 20 hrs is the max. If you don’t have a regular day job, I would suggest no more than 40-45hrs. This could be one building or 3 or more, depending on the size of each. For our illustration purposes, let’s just say you don’t have a day job, clean 3 buildings alone and work 45 hours a week.
  2. ESTABLISH A GOAL: A goal to eventually not clean any of the buildings yourself. If these 3 buildings you clean, combined generate monthly revenue of $4,000 and about 90% (because you have no employees) net profit to you of $3,600. Once you start hiring employees to clean for you, your net profit will drop to about 30% per building. OK, let’s do the math, for you to generate that same $3,600 in net income without cleaning yourself, you need to do $12,000 per month in revenue. $12,000 x .30% = $3,600. Keep in mind that any monthly revenue generated above $12,000 is additional income for you and you’re no longer working a job, but rather running a business that is positioned to grow!
  3. LOOK FOR CLEANING EMPLOYEES: It takes time to find the right employees. Start looking for good employees now, before you even get the next account. Have time to check references and do background checks. Have 4 -5 people ready to go.
  4. GET 1 MORE BUILDING: At the same time, have a marketing plan and bids out and get the next new account.
  5. CLEAN NEW ACCOUNTS YOURSELF: When you get the new building, you clean it and assign the new employee to one of your existing accounts.
  6. ASSIGN NEW EMPLOYEE TO EXISTING ACCOUNT: You already know exactly what needs to be done there, so it’ll be easier to train someone there.
  7. INSPECT NEW EMPLOYEES BUILDING: : You are now their Supervisor. Work with them the first week for training. Then the second week you inspect their work each night for a week or so. When you’re confident in their work, reduce inspections to once a week.
  8. GET MORE BUILDINGS/REPEAT STEPS 5-7: Continue in these planned out, systematic steps with your goal in sight! Track it somehow, on a spreadsheet, a note pad, etc. Review regularly.
  9. REDUCE YOUR CLEANING, INCREASE YOUR INSPECTING: Your time cleaning buildings will start to decrease now and your time inspecting buildings will increase, but you’re making the same net income and your goal is fast approaching!
  10. HIT YOUR GOAL: Congratulations!! You’ve hit your goal. It may have taken you 6 months -2 years or more, but you don’t clean the buildings yourself, except for the occasional fill in. You’re doing $12,000 in monthly revenue and making the same net income as when you were physically killing yourself doing all the work yourself! Best of all, you’re positioned to continue growing the right way and you’re running the business instead of the business running you, into the ground.
  11. YOU’RE THE SUPERVISOR: You’re now the full time supervisor. When you start Inspecting and Supervising more than 45 hrs a week, you can start planning to hire a “working supervisor”. One that produces income by cleaning a building or two themselves, fills in when other employees are out and inspects their work at your accounts. This is usually one of your current employees that you’re promoting. This will start to reduce your night time supervisory time and eventually get you to running the business during the day, if that’s your goal. I can tell you it was a big goal of mine. I’m much more effective running business during normal daytime hours and now spend my nights and weekends with my family..

Just as “Faith without works is dead” Remember that a goal without a plan is just a dream. I hope this blog answer was helpful and insightful to you my friend and many more!

 

CleanGuidePro Successful Residential Cleaning bidderDrake

Janitorial Cash Flow – Top Ten Tips!

The definition of Cash Flow is “The excess of cash revenues over cash outlays in a given period of time, not including non-cash expenses.” In layman’s terms, it simply means not only having more cash coming in than going out, but having that “excess” cash coming in when you need it!

For example, if you have $10,000 in revenue coming to you on the 20th of the month and $8,000 due in payables on the 15th, including payroll, what do you do? Do you simply tell  your vendors and employees, “don’t worry, you’ll get paid when I get paid” and expect them to be understanding? Sure, you’ll have a few understanding people, but DO NOT rely on people understanding your cash flow issues! Instead, take the time to create a cash flow system to eliminate the inevitable problems that come from paying late, i.e., employees quitting, vendor credit cut offs, bank overdraft fees, poor relations, credit score reductions and the list goes on and on.

If you’ve got bank lines of credit and can pay all you’re bills on the first of the month, that’s great and I’m happy for you, but I can bet that in the beginning you had to be very savvy with your cash flow to convince the banks to lend to you. Kudos and respect to you! But , remember, borrowed money is the most expensive money.

Let me just touch on my Top Ten free, time tested Cash Flow Tips that have served me well in 25 years in this great janitorial industry. Remember, it’s all about having actual cash on hand when you need it! It’s not easy, but it’s not hard, just have a plan!

  1. ESTABLISH CUSTOMER TERMS: DO NOT start an account and not know when you’ll get paid. My written terms were always billed on the 1st of the month, due on the 15th of the current month for the whole month. If they couldn’t do that, I’d bill them 2x per month, the 1st– 15th due on the 15th and the 16th -30/31st due on the 30th. Hear me, establish terms!
  2. ESTABLISH VENDOR TERMS: Once you’ve established terms with your customers, get with your vendors. If you know that customer payments come in on the 15th and 30th of each month, then set up payments with suppliers due on the 16th and 1st of each month with your vendors. Vendors WILL WORK WITH YOU if they simply know they can count on a payment date. Car payments , cell phones, suppliers, even rent landlords can all change due dates for you.
  3. ESTABLISH COMPANY BUDGETS: Know exactly what your numbers are. What’s your total monthly revenue and expenses each month? When are payments coming in and when are bills due?
  4. ESTABLISH A PERSONAL BUDGET: It’s true that “ the eye is never satisfied”, but have the discipline and restraint to live within your means.
  5. INCREASE REVENUE: No brainer, new customers equal more $Revenue. Continually be looking for more customers and have multiple bids out at the same time!
  6. REDUCE OVERHEAD and INVENTORY: A $2000 a month office requires $7-10,000 a month in revenue to pay for it. I’m not saying don’t have one, but customers don’t come to your office, so make sure it’s a “need” to have and not a “nice” to have. Work from a home office until it’s impossible any longer . Also, have a ”just in time” inventory on hand in your warehouse. Don’t have $1000 in floor wax on hand if you only use $200 a month. Use the other $800 to pay bills.
  7. DON’T FINANCE IT: Don’t finance a $4,000 new floor autoscrubber for 24 monthly payments and a total pay out of $5800, if you can buy a used one for $1500 cash that does the same job! Use your head!
  8. EDUCATE YOURSELF: Do internet searches on cash flow tips, read books on it, read blogs on it, then implement it!
  9. SUPERVISORY EMPLOYEES MUST PRODUCE REVENUE!: Make sure all supervisors, managers, etc., are producing monthly revenue! They should be filling in, cleaning buildings, delivering supplies, training new employees, solving problems, keeping costs down, etc. ! They should be the hardest working and most productive employees in your organization!
  10. REVIEW IT: Review your cash flow daily, weekly, monthly and make adjustments accordingly! Do it this month and the next and next and so on. BE DISCIPLINED FOR CASH FLOW SUCCESS!

 

Follow these simple guidelines and watch your Cash Flow in the right direction and most important, when you need it!
CleanGuidePro Successful Residential Cleaning bidderDrake