In our industry today, we hear a lot about benchmarking. I have attended several conferences, where people asked me questions like, “Who are you benchmarking with?” and “What are you benchmarking?” My company performed benchmarking and learned a great deal from it.
Peer groups helped me a lot in this area. I belonged to a peer group for over 20 years, and it was a tremendous benefit, because it provided me with five other companies I could compare mine with on an ongoing basis.
While comparing your numbers and processes against other companies in the industry is a popular strategy, I want to present a different perspective on the benchmarking process. I think it is vitally important to benchmark against one major company—your own. I know, we are all generally aware of what is happening in our own company, but when was the last time you really looked closely at how you are operating? Just think of what you can learn and improve on by performing benchmarking in the following areas of your own organization:
• How are your sales this year compared to this time last year?
• Why are your sales up or down?
• What types of accounts did you lose and why?
• What types of accounts did you gain and why?
• How do the margins on various categories of accounts compare to the margins at the same time last year?
• How has the size of your average sale changed since this time last year?
• How has the close ratio changed from last year at this time?
• How many appointments does it take to close a sale this year as opposed to this time last year?
• If you are telemarketing, how many calls does it take this year to get an appointment versus this time last year?
• Are you more successful in selling certain types of accounts this year versus last year? If so, why?
• Are there some different market segments this year you should be pursuing versus last year?
• How does direct labor compare this year to last year at this time?
• Who are your top 10 profit accounts and how does that compare to last year at this time?
• Who are your 10 worst profit accounts and why? Do you need to decide on keeping them or canceling them?
• If your worst 10 profit accounts last year are still your 10 worst this year, why are you still doing them?
• What are your best supervisor territories and why?
• Who are your best supervisors and why?
• What additional training do you need to do since last year?
• How are your supplies running vs. last year and if up or down, why?
• Are there any new products or equipment that can reduce labor and supply costs? Have you checked lately?
• Are you scheduling ALL employees for focused retraining in your cleaning procedures?
• Has the ability to attract quality employees improved since this time last year? Why or why not?
• What different recruiting techniques are you using this year versus last year?
• Have you worked at improving your employee orientation procedures since last year?
• How does your turnover rate compare to this time last year? What are you doing to improve it?
• Do you know why people are leaving your company? What are you doing about it?
• If you don’t know why they are leaving, what are you doing to find out?
These are just a few of the areas you can benchmark against yourself. There are many more, and as you delve into the ones listed above, I’m sure you will discover other areas to analyze. I’m also sure you will be surprised at some of the things you will find, and you may even want to kick yourself for not catching them sooner. It’s also important to remember that, more often than not, it is easier and much less expensive to tweak existing accounts to produce more profit than it is to pursue new accounts. That said, if you are not pursuing new accounts, you will eventually find yourself out of business, so it takes a balance of both to develop a successful business.
You may have noticed that I did not include “administration” as an area to benchmark against. This doesn’t mean there is no need for benchmarking in that area. On the contrary, the accounting and administration areas are critical to the success of your organization. You will notice many of the items shown above are tied very closely to accurate record keeping and financial accounting.
Many years ago at one of my peer group meetings, I was somewhat chastised for not having a full-time accountant, and preferably a CPA, on my staff. I rationalized that my background was accounting, so I could do the job, along with my other duties. Anyway, I succumbed to the pressure, and though I felt I couldn’t afford a finance manager, I hired one anyway. It didn’t take long for me to realize that it was one of the smartest decisions I ever made. This gentleman paid for himself in a very short time. He analyzed things much deeper than I had and offered up suggestions and alternative ways of doing things that made us additional profit. You see, I was always very busy and didn’t review the numbers in the detail I should have, but I was spending a great deal of time looking at what numbers I did analyze because I knew that we needed to keep improving and could keep improving.
Of course, at the next peer group meeting I announced to them the intelligent decision I had made and the success we were having. They reminded me that it was their suggestion in the first place. Really?
Along with my finance manager, I worked very hard at procedures and processes within my own organization, looking at budget comparisons, market changes, branch profitability changes, etc. This analysis made us a much better company. While I may have waited too long to hire a qualified finance manager, there is no question we made substantial progress prior to him coming onboard—and you can too! Don’ wait! If you dedicate the time, your company will be the better for it.
Change from Within
You can change what happens in your own company. That is why I so strongly believe in benchmarking your own numbers against yourself. While it is nice to see what other companies are doing and how you compare to them, you have to execute the changes needed within your company—the other companies won’t do it for you.
I encourage you to take the time right now to analyze what is really happening in your company, make the changes necessary, and reap the many rewards you can gain from your efforts.
Richard (Dick) Ollek CBSE, RGC, is the senior partner with Consultants In Cleaning, LLC, where he provides consulting services to Building Service Contractors. Prior to forming his own company in 2005, he owned and operated his own cleaning and facility services company for 34 years after managing another company for nine years. He has written four books for the industry on selling, human resources, operations and the do’s and don’ts of contract cleaning. He also writes a weekly blog that can be accessed through his web site at www.consultantsincleaning.com.