Well, here we are closing in on the end of another year. Not much time remains for you to make that final push to make this year’s goals and finalize your plans for next year. How are you doing on both counts?
This time of the year has always been extremely busy at our place because we are very dedicated to updating the plan for next year that had been created earlier. Budgeting, while painful at times, is always a critical factor in preparing for the new year. So how do we make the process as painless as possible? Let me share with you some of the areas you should be concentrating on as you focus on the new year. These will help you considerably in creating next year’s budget.
1. Review each of your accounts to assure that they are profitable, and if not, what needs to be done to make them so?
Have you done a complete retuning of each account lately? This entails analyzing the current hours budgeted, supply usage and budgets, labor rates, cleaning specifications, production rates per hour, and safety analysis.
Do you need to adjust the hours? Have you found that you can actually clean the building in less time than budgeted? How about if you have been consistently over budget? Have you over- or under-budgeted for supplies? This was an area we usually found ourselves over budgeted and many times brought supplies back to the warehouse. Do you need to bring the crew(s) back into the training center for a refresher class on your system of cleaning?
Let me suggest you do an annual complete written review of each account to assure yourself that you are doing the right things and assuring that all budgets are correct or changed if need be. We used a simple two-page worksheet that was completed by the area manager and then reviewed by me or the vice president of operations when finalizing the account for the next year. This is a great exercise and frankly, quite an eye opener as to what is REALLY going on in the accounts. Want to give raises to the staff? This exercise will reveal if you can afford to do so because, after all, the dollars to pay the staff comes from the customer, don’t they?
Doing this exercise will help you stop needlessly spending money on an account unless it can be justified by the budget assigned to that account. By the way, part of the review process is a safety check in each building.
If you would like a free copy of the form we use, you can go to our web site at www.consultantsincleaning.com and click on the worksheets icon and scroll down to Account Re-Engineering worksheet and print the form. It’s free and there may be other forms there that are helpful as well.
2. Review and adjust your sales and marketing program as needed for the upcoming year.
Does your sales/marketing program need to be adjusted in the coming year? What worked and didn’t work this year? Do you have a systematic sales program for bringing in new business? Here are a few questions to answer:
• What types of accounts are we focusing on?
• Do those accounts fit the profile of when we have the strongest supervision?
• If not, what accounts should we be focusing on?
• What is our systematic campaign for getting the prospects attention next year?
• Who will see to it that the sales campaign stays on track?
• What growth do you intend to experience next year?
• Is the growth goal realistic compared to where you went this year?
The book Selling Contract Cleaning Services 101 outlines the processes and systems you can use to conduct an effective sales campaign. It helps you focus on the right accounts and then how to get the prospects attention along with other important sales hints like what to include in a proposal, what to say when the customer says no, etc. It is available at BSCAI, ISSA, The Janitorial Store, Amazon, Cleaning Management and a host of other sites.
3. Is your operations department running as efficiently as possible? What was your retention rate this year? Did you lose any accounts and if so, why? What are you doing to strengthen the department?
What are you doing to reach all of the different generations? Is your training program exciting, so it engages all people in the learning process? Are you using the latest technology to reach all ages of your workforce?
We all know it is important to bring in new business each month or we fall back. The next question though that needs to be answered is: is the operations department organized in such a way that they can take on additional business as it comes in? What if you got a large account next week? Do you have the site supervisor on staff that can step in? If not, shouldn’t you be training someone for that day? Obviously, this article could fill the entire magazine if we went into detail on all of these subjects, but we can’t and that is the reason we are providing so many questions in each of the sections. Our desire it to get you thinking and keep you thinking.
One thing that I believe is important to mention is the need to update all emergency numbers in the janitor’s closet, both your numbers and the customers. Make sure the customer has the latest list of your emergency numbers. One time, I obtained a large multistory building because all the emergency numbers of my competitor who was cleaning the building were out of date. The building manager called me, we did the emergency job, and the next Monday he provided my competitor with a 30-day cancellation letter. In addition, if you are posting the specifications in the closet, make sure they have a current date as to when they were updated. I recently visited a building where the specifications shown in the closet had an effective date of January 1, 1989. Well, maybe nothing had changed, but at the least a new page should have been posted with the current year’s date on it.
4. Is your administration and Human Resources department operating efficiently?
Is HR exploring all the avenues of recruiting? Remember, recruiting is important, so the pipeline continues to be filled. Hiring is the process of just filling positions with the latest person to walk in the door. Recruiting is having a systematic, ongoing process for keeping that pipeline filled. There is a BIG difference.
What about the administration department? Is it in a comfort zone of buying from regular suppliers because it is easier and comfortable? Have they checked prices lately on the standard items used in an office. Remember, our customers spend time checking our pricing against other contractors. Shouldn’t we do the same in our company? One contractor told me they liked buying from a certain supplier because they brought donuts to the office every Friday morning. I had to remind her that the donuts are in the price somewhere. Like Zig Ziglar always said: “There ain’t no such thing as a free lunch” (or donuts in this case).
After you have done a review of all the departments, it is very important to establish a budget for each department. As I mentioned at the beginning of this article, if you haven’t done it before, budgeting can be painful, but it gets easier as each year goes by. And NO, you don’t just take what you spent last year and add 5 percent.
An annual review will help you stop needlessly spending money on an account unless it can be justified by the budget.
Incidentally, my guess is that many companies are wasting considerable dollars in several areas because we tend to always focus on the labor in each account, but there are many dollars to be found in the other areas like administration, human resources, and sales. Think of where you buy your office supplies, have your vehicles repaired, where you fill gas etc. You may be as efficient as possible, but how do you really know that unless you do a double check?
Raising prices is a last resort
I strongly suggest you review all of the items listed above before you focus on raising prices for your customers. This business is still extremely competitive, and if you only focus on raising prices you may have several fewer accounts in the new year. It is a well known fact that it still remains much more cost effective to work at keeping the accounts you have, compared to the cost of bringing on a new customer. While we must always have a systematic sales campaign in place, you should also have a systematic way of running an efficient company and increasing profits in all departments of the company. Raising prices every year is not a good long-term strategy unless there are compelling reasons, such as a minimum wage increase, and those don’t normally happen every year.
There are many areas to review and find dollars in your company. Try following these suggestions to see if you are operating at peak efficiency. I know I got a surprise or two every year. It is a very enlightening process. The new year is rapidly approaching, and I hope your current year has been profitable and rewarding, and you plan on taking additional steps to dramatically improve in the months ahead. Happy New Year!
Richard (Dick) Ollek, CBSE, RGC is the senior consulting partner at Consultants In Cleaning, LLC, where he provides consulting services for BSCs. Prior to forming the company in 2005, he owned and operated his own BSC company for 34 years after managing another company for nine years. He has written thee bestselling books, the latest being the DO’s and DON’TS of Contract Cleaning From One Who DID and DIDN’T. He also writes a free weekly blog that can be accessed through his web site at www.consultantsincleaning.com. In addition he produces training and educational DVDs that are also available on his website. He can be reached at 573-374-1111.