I am wanting to start my own carpet cleaning business. Do you have a checklist of the things I need to accomplish to start and also maybe a list of the do’s and dont’s? Thanks.

Best Regards,

Thinking It Over in Omaha

I’m pleased to see you aren’t falling prey to the “Ready- Fire- Aim” syndrome, Thinking.  I cringe to think how many sleepless nights I could have saved myself … but I digress!

There is no question the cleaning and restoration industry has virtually unlimited potential- IF you “do it right”.  On the other hand, “do it wrong” and you will be condemned to a miserable, high pressure, lower class existence- and that doesn’t sound like much fun!

This “Just Starting Out Checklist” is a VERY important topic so I’m not going to just blurt out a few platitudes and move on. (My usual strategy!) Instead, let me share a big one and then I’ll come back to the topic after some meditation …

Steve’s “Just Starting Out” Strategy #1:  Begin with the end in mind

I know this is a tough one, Thinking.  After all, my guess is you may just want to pay the bills or make a few bucks to spend on Saturday.  (Nothing wrong with either one of these goals!)

BUT remember that having so MANY options can be a two-edged sword- wonderful but overwhelming.  Too many cleaners stumble through life flitting from one business model to another.  So here’s a “menu” of business and life models open to you.  My suggestion is you choose ONE and work toward it.

NOTE:  However, remember you can always morph into a different business and life model later if you wish.

1.  Part time supplemental income- You may have a regular job (maybe with great benefits) and you just want to make extra money.  Then great- carpet cleaning will work for you.  Residential cleaning can be done on Saturdays and commercial work on Sundays and the evenings.  Even just a few jobs per week can add $20,000.00 to $30,000.00 or more to your yearly income and that’s not bad! This part time gig is also a good way to decide if you like this work and if so you can step it up a bit by becoming a…

2.  A full time “Lone Wolf” owner/operator- My guess this is where the majority of carpet cleaners fall.  (Probably because this model does have many advantages.)  Almost all o/o’s work out of their homes- low overhead and their commute is great!  Even better, a solo Lone Wolf doesn’t have the inevitable issues (OK, headaches!) that employees bring.  Plus O/O’s get to keep virtually all the money they bring in.  Once you build a reputation and a client base and with proper pricing you should easily top 100K per year.

NOTE:  One trap for many O/O’s is trying to compete on price with the Big Boys- don’t do it!  Instead, market yourself as a “boutique cleaner”.  Your clients can and will pay more, much more, for the privilege of having the “fussy owner” of the carpet cleaning company caring for their home.  BUT they won’t volunteer this “bonus”- you have to ASK for (even demand) it!

However, even with all the benefits of staying small as a Lone Wolf sooner or later you ARE going to need help- vacations, injuries and (dare I say it?) advancing age are going to require “reinforcements on the wand”.

3.  Full time with part-time help- You may be in the “sweet spot” here- having a helper on many jobs lets you 1) get the job done faster and especially so if your truck mount allows dual-wanding plus 2) you can spend more time “chatting up” the home owner while production continues forward and 3) the work will just be easier on your body!  If you go this route remember that you are legally obligated to withhold taxes from your helper’s pay plus come under a whole host of other labor law requirements.  (These rules are often broken- just don’t blame me if you get caught!  Plus honestly with QuickBooks accounting software it just isn’t that hard to “stay legal”.)

NOTE:  You really ought to check out Jeff Cutshall’s Special Report on using part time employees with their own vehicles for encapping regular commercial contract accounts.

4.  Full  time with a full time helper- This can be a tough area simply because you are making a serious commitment when hiring a full time employee- “I (as in me the business owner!) am going to provide for YOUR family!”  Of course, this accountability can be a GOOD thing to force you to get out there and sell! Do you have the fire in the belly?  If so, GO FOR IT and the subsequent growth strategies!

CAUTION!  As you morph into a company with full time employees you must pass through a difficult area I call:  “The Road In-Between”.  (I’ve even written a very popular Special Report about this challenging path.)  This is a challenging business model where you are too big to enjoy the care-free life of an owner-operator but haven’t yet achieved “Critical Mass” where the company will float along just fine- with you or (even better) without you! And speaking of “Critical Mass”…

5.  A “real company”- Wealth, prestige, power and the pride of having created “something of value” are all yours in this business- BUT at a price!  The “Road In-Between” you must travel to get to this exalted business state is tricky indeed.  Even worse, it requires years of shared sacrifices from your family.  Think carefully about what you want, my friend!

At this juncture, Thinking, you will need to decide if you want to spend your life working with a helper on the truck full time or GO FOR IT!  Both options work- most of the time.  The problem is too many O/O’s build a larger, multi-truck company but continue to run it by the “seat of their pants” management style of an Owner-operator!  This almost certainly will spell disaster for you and your family emotionally and very possibly financially.

Let me reflect on things and I’ll follow up with some more “Just Starting Out” reminders …

Steve

In my local area we have several property management companies. I know them and have their regular business.  However, in my nearby Phoenix market we have a very large property developer, management team and leasing company.  They build and manage millions of square feet of flooring space. My challenge?  I do not know anyone that personally knows the team or the decision makers. I have no doubt that they need maintenance of some sort.

Steve, I want to reach out and begin a conversation but I need your advice. What department do you believe I should approach first? What type of language should I use? What benefits would hit home with executives overseeing multi-million dollar properties. I want to be as professional as possible. I do have a website of the home office with email addresses for everyone from the top down. I also have access to most of the top executive’s profiles with education background and work resume. I know that “if I want to win big I have to swing big”! Thanks so very much for any information or insight you can provide.

Moving On Up In a Phoenix Suburb

Thanks for writing, Moving.  And I commend you for swinging for the fences!  Remember that these “Big Boys” put their pants on one leg at a time in the morning just like you do!  So don’t be intimidated by them.  Your challenge is A) getting to them and B) breaking through their inevitable cynicism painfully gained through years of being let down by Big Talking sales people.  Here’s a few ideas:

1) You mention your local PM’s already trust you.  You might ask them if they know and/or do business with the folks you want to approach?  If so, they might be willing to call or write them with an introduction for you.  (Be aware that some PM’s are wary of sharing a competent contractor for fear you will “over expand” or leave them for the greener pastures of Phoenix!)

2) Look for networking opportunities in your new target market. For example, check out BOMA (Building Owners and Managers Association).  This very large and influential group has active chapters in most metropolitan areas, including Phoenix.  Like any other networking group you need to “earn your stripes” first by attending meetings and volunteering to help.  But over time you will build many valuable relationships.

3) Show up. That’s right- just march right in to their headquarters.  A) Dress up, B) march right into their headquarters, smile and give your name and company and then say, “I was just walking a property down the street and saw your office.  I do a lot of work for (mention the largest PM you work for) and they suggested I get in touch with you folks.  Who would I talk to about…”  As my mother always told me, “Steven, it never hurts to ask!”

4) Remember that these Big Boys will already have long lasting relationships with other vendors.  And if they are any good these contractors will be jealously guarding these accounts.  So don’t expect any of your property management prospects to just give you the keys to the vault immediately!  But by nibbling around the edges and doing superb (and most importantly RELIABLE) work you’ll find yourself transforming into a “go to” person.

Let me know how it goes!

Steve

PS  One key phrase I learned when approaching big companies is to just say, “I’d like to be added to your vendor list”. Then be prepared with your 30 second “elevator speech” that concisely answers “What we do and why we are better than our competitors”!

I am looking for a way to keep customers and not lose them. I’ve been around, both in and out of this biz, but need some expert advice in how to structure a system to convert phone calls to profitable jobs.  Also, Steve, do you recommend marketing packages? I’ve heard of Mark Kennedy’s marketing materials and presentation CD’s. Do you have any feedback?

Looking for Answers in Houston

Good to hear from you, Looking.  And you are correct to focus on a) making the phone ring and b) “converting” every single call into a booked job.  (Don’t fall into the trap of blowing off every person who asks you “how much?” as a “dirty, rotten price shopper”!)

Re: Mark Kennedy’s stuff I’ve never looked at it in depth even though he is recognized as a pioneer in marketing.  Of course, Mark isn’t a carpet cleaner so while his marketing principles are no doubt sound you probably won’t find much “industry specific” information in his packages.  (I’ll rag on Big Billy Yeadon to chime in on this as well. Bill is our SFS marketing guru and he may have some fresh ideas for you.)

BEFORE you invest in any of the high-priced marketing packages out there I would urge you to a) read the hundreds of marketing posts Mr. Yeadon has put up in his “Big Billy’s Books and Blogs” section and b) download all of our FREE Special Reports that FOCUS on the cleaning industry plus c) attend our five day Strategies for Success seminar. (Which by the way you can come to FREE and free is always good!)

THEN if you want to become a “student of marketing” start delving into the deeper stuff.  But the advantage of our SFS marketing materials is a) they are FREE (have I mentioned that?) and b) they are designed specifically for the cleaning and restoration industries and c) we are constantly improving our stuff thanks to reports we get from our over 3,000 SFS members working away “down in the trenches”.

On converting phone calls into jobs I have just the thing for you- download this free phone script that perfectly answers the good old, “How much do you charge?” phone script.  Then get back to me on how it worked for you and even better what improvements you have made to it.  See how I am already enlisting you into our little “band of brothers”?  As I tell every SFS class, “We’re all in this together.”

Steve

PS: Here’s Bill …

Looking for answers,

No one has all the answers especially in marketing. I have not seen Marks information but I have heard him speak before and he is an intelligent man. My thoughts are that you should look at every package. Many marketers are saying the same thing but with their twist on it.

Ultimately marketing is about turning customers wants into their needs. That has not changed since the dawn of marketing. For the cost of one marketing package you could fill your library with marketing classics. These books have been rehashed into newer formats at increased prices.

Without sounding pompous just take a look at the books I have listed and you will go a long way towards becoming proficient at understanding what your customer desires. Sometimes they don’t know until you tell them.

If you are looking for more specific books let me know.

Big Billy

I read and enjoy your insights often via this Strategies for Success web site. So here is a quick and easy question for a guy like you.  What is a recommended average percentage that a business like ours should spend per year on marketing to our clients and getting new business?

Here is a basic profile of our business:

• - One truck
• - Owner-operator is on the TM twice a week. One employee works three days per week.  All one-man crews.
• - We did 700 jobs last year
• - We have set a goal of doing the same number of jobs this year plus 100 more
• - 17th year in business
• - 3000+ customers

Thanks very much for your help.

Pondering in Philadelphia

Steve: Thanks for writing, Pondering.  However, I am not the financial guru for SFS.  (And by the way nothing in business planning and marketing is “quick and easy”!)  But on stuff like this I defer to my esteemed colleague Chuck Violand. Let’s see if Chuck has time to chime in back to both of us.  (If not I’ll hack my way through.) And by the way, sounds like you have a nice business!

Chuck: I’m happy to weigh in on your question, Pondering.  Based on your numbers it looks like you plan to increase your customers by just shy of 15% this year. Pretty nice given the current economy! Based on this limited understanding of who you are and what your long term goals are I would suggest limiting your marketing expense to somewhere around 10% of sales.

But, all this brings out the consultant in me. So here are some questions I’d suggest you consider as you consider increasing your customer base:

1. Are you planning to also increase your share of your existing customers’ wallet? How much?  Would reaching out to your current clients help you reach your sales goal more easily and less expensively?

2. Regarding your new customer targets, will their demographics be similar to your current customer base? If so will this help you achieve your long term goals?

3. Will these new customers increase your overall profitability? As Steve has grown tired of hearing me say “Increased sales without increased profits is lunacy”.

So, there’s my two cents. I hope you find it helpful. Naturally, if you have any other questions don’t hesitate to contact me at cvioland@violand.com

Pondering Even More: Thanks so much for your reply, Chuck.  Let me try and answer your questions.  We are always looking to increase our per job/customer dollar amount average.  I’ll admit even after all these years it takes real discipline to routinely tell the customer about our additional services and as for our employee, well, he just won’t sell, regardless of the incentives I offer him!

Having said that, we’ve found that even “passively communicating” our list of extra services makes a huge difference to our bottom line.  If we offer three add-on’s between the time we book the job and say goodbye, almost every single person has us do at least one extra service.  I love this because everyone’s happy!  We make more money and our customers get their needs satisfied and are delighted with their home.

No truer words have been spoken than yours regarding profitability, Chuck.  It’s all that matters in business.  Approximately 65% of our gross sales were profit last year.  I think that’s good, right?  So, we will continue to try and find ways to minimize cost of doing business and maximize each customer experience both for them and us.

Thank you both again for listening and as always I appreciate your perspectives.

Steve: May I interject one thought in this dialogue, Pondering?  You already appear to have a comfortable lifestyle and what most cleaners would consider a fairly successful business.  Soooo … where do you want to go?  What is your Desired End Objective?  WHY are you considering this new (and fairly ambitious) marketing campaign?  Or more simply- what do you want to be when you “grow up”?

Remember the old counsel- “Begin with the end in mind?” You don’t have to answer me but at least as an introspective exercise I’d like you to meditate on the questions above to define “the end” you are trying to achieve.  (We’ll do a lot of this “business meditating” in your SFS seminar.)  And thanks so much for letting all of us at Jon-Don be your “Partners for Success”

Steve

I hope all is well. I took SFS at Florida last year. I have a big problem with a huge water damage job I just finished. The insurance company cut a check out to the Insured for like $55,000.00 and now the Insured is giving me problem on releasing the check to me. I’ve told the property owner I am willing to settle total job for that amount and not charge him a deductible.

Fortunately my company’s name along with his name is on the check. (Too complicate matters the property which is a 100,000 Sq Ft building is in foreclosure!) Is there any law that says the owner has to release the check to me? Its not like he can do anything since both of our names are on it! Help!

Struggling In Orlando

Cut to the chase time, Struggling!   You need an attorney’s advice and you need one right away and especially with the foreclosure situation. While you are consulting with your lawyer on this situation also check on how you can change your procedures and legal paperwork to avoid the same problem in the future.

More and more of our SFS members are hitting problems where the home or building is “underwater” (forgive the pun!) as in the current appraised value is worth much less than the amount of the mortgage.  So in some cases the owner (or the mortgage company) lets the restorer do the emergency mitigation work, cashes the check and leaves the restoration company “high and dry”!

So in addition to tightening up your legal paperwork you should also search for “Early Warning Signs” that there may be an issue on any incoming loss.  If possible, you should run an Internet search of the address BEFORE starting emergency work and if there are some legal clouds take steps BEFORE you start work.

For example, it is entirely appropriate to take a page from a lawyer’s playbook and ask for a retainer up front and graduated payments (either from the property owner or the insurance company) as certain steps are completed in your work. Just explain that this is your company’s “standard operating procedure” and you’ll be amazed at how many will play ball.

After all, the property owner is standing in 3″ of water at the time!  You have them exactly where you want them since they are DESPERATE! The problems come AFTER you have done all the work and they have YOUR check.  That is where (as you are finding out) the problems start since they no longer are desperate and YOU will be the DESPERATE one!

I FINALLY learned that when I became the “knight in shining armor mounted on a white horse” too often I would get bucked off.  Or as my mother always used to say, “No good deed goes unpunished!”  So a major part of your success will be knowing when to walk away!

Let me know what happens.

Steve Toburen

NOTE: I am not a lawyer and none of my comments should be considered legal advise.

I purchased a carpet cleaning and janitorial business about 2 ½ years ago. Since then I have built up the janitorial part of my business. However the carpet cleaning side has stayed flat. I would like to take it to the next level and appreciate your articles and Special Reports. What I’m lacking are a few simple things to get me started.

First thing is a work order form. Do you have anything like that or is it best to create a work order from scratch? I would like to use these first to have the customer and the tech know what is expected and second a way to ensure proper follow up with my customers. I have searched all over the SFS website and in the Practical Paperwork section but have not found anything. Unless I just missed it somewhere!  Can you help me? Thanks very much.

Looking To Grow My Business in San Diego

Dear Looking,

I’m pleased that you are focusing on the carpet cleaning side of your business.  You will find it is a great and very synergistic mix with your existing janitorial accounts.  In fact, in Jon-Don’s SFS seminar I call the combination of a) residential carpet cleaning, b) restoration work and c) commercial carpets/janitorial the perfect “Three Legged Stool” of our industry.  One leg supports the other!  Plus you will find carpet cleaning accounts provide a much higher profit margin and lower labor costs than janitorial.

I am going to send you a sample work order form from the SFS seminar workbook.  Feel free to use any ideas from it or send me any questions you have. However…

I may be going out on a limb here but my guess (and it is only a guess) is that your challenge is much greater than the need for a sample Work Order.  May I humbly suggest that you stop and “Begin with the end in mind“?  (Right now, two years in to your business is the perfect time to do this!)  In other words, right now think about where you want your business to take you?  Some thoughts for you:

1.  How long do you want to run your company?  When do you want to “cash out” and sell it?  Or do you want to transfer it to your children? The answers should affect what you do now.  (Even though I recognize you may just want to be paying the next grocery bill!)

2.  How big do you want to get?  Set a goal both on number of employees, net profit and WHEN you want to achieve these goals.  Too many cleaners just sort of lurch through life and never achieve the true potential of this industry!

3.  What market sectors are you going to attack?  Too many cleaners are unfocused and try to do too many things (and be all things) all at once.  Here’s an idea …

May I suggest you piggy back off of your commercial accounts and experience and first go after the regular commercial carpet cleaning area?  In fact, you may find this part of the industry so easy and profitable you may never diversify into residential cleaning and that is OK!  If you are going to get serious about commercial I STRONGLY suggest you check out the Cimex Cyclone and encapsulation technology.

In fact, our VAST instructor, Jeff Cutshall, runs a commercial carpet cleaning company on the side and here is what he says about the Cimex.  Jeff owns 5 or 6 Cimexes and has crews running them 24-7.  (He recently told me he hardly ever uses his truck mount any more!)

If you like this idea I would highly recommend you download Jeff’s free Special Report on “How to Build Commercial Encapsulation Routes”.  I love this concept simply because you can build a multi-employee company with high net profits BUT with virtually no fixed overhead!

Of course, Looking, the fly in the ointment with the “encap route” idea is you need the “fire in the belly” to get out there and SELL!  Sadly, most carpet cleaners just can’t seem to muster up the will to do this on a REGULAR BASIS!  Instead, they engage in “binge selling” which of course never works long term.

I share a simple system that works for anyone (even a solo owner-operator) on how to get regular contract commercial accounts in this free Special Report. (The tactics also works great for selling janitorial accounts.  In fact, you can sell both on the same sales call!)

Finally (I don’t want to overwhelm you!) once you do get in the door of a prospective commercial account you are faced with “what do I say?” challenge!!!  Instead of doing the usual “blathering on about how great I am” sales pitch just ask the prospect if you can quickly interview them to “find the best solution for your maintenance challenges”.  (This is Sales Training 101- “involve the prospect”)  Do this with the SFS Commercial Carpet Analysis form.  Download the CCA form for free right here.

Let me know how you are doing, Looking, and I gotta tell you the Strategies for Success seminar would be a huge kick in the pants for your success.  But if you just can’t make it to SFS right now Jon-Don and our SFS team will keep helping you through this website!

Steve Toburen

PS  I don’t have all the answers, Looking.  But my guess is our thousands of SFS website users do!  So please, all of you readers chime in with your ideas for Looking in the comments section below.

Well I’m facing a big decision in my life.  I’m the oldest in my family and my parents are close to 80 years old.  So I see the need coming up to be closer to them for care-giving, etc.  They are located in rural Missouri and the town where they live has about 3000 people who live there. If I continue to clean carpets I’d have to service a wide area.  I’m right now in suburban Chicago with the luxury of over a million people easily accessible.  Do you feel I can survive running a rural carpet cleaning business?

Undecided in Naperville

Not to get off subject, Undecided, but what will happen to your current business/family in Chicago if you focus on this anticipated care-giving mission?  It is commendable to take care of your parents.  You will always treasure the time and care you shower on them. I know I did with my “Dad time”.

BUT does this family care and support have to include you “upending” your entire life/family/business career moving?  What about your wife/kids? Should they be yanked out of their life? I’m just saying to think “outside of the box” here.  I find that often the children of an aging couple are too eager to “pull the trigger” on care-giving when in fact a few minor adjustments may let your parents soldier on for years on their own.  (Which is probably what they want to do anyway!)

Also if you have brothers and sisters and you are facing a care giving situation it is imperative that you call a family conference and right from the git-go make clear that while as the oldest you are happy to “coordinate” the care you are NOT going to do all of it. It needs to be viewed as a shared venture from the very start. Been there- done that!

Now finally to your original question re: “surviving as a rural carpet cleaner”. A lot depends on the commercial and business base in the area. Our total population was right at 30,000 people in a very isolated area. So I have had a LOT of experience in surviving in a small market.  Of course, our county was in a major tourist/ski area.  This meant that there was more business plus it was a four season resort town.

In fact, we not only “survived”- we prospered!  By aggressively targeting both the commercial and restoration sides AND providing Value Added service to our residential clients we grossed over 1.3 million yearly with a very nice net profit!

BUT I sometimes reflect what we would have made in a large market base IF we had poured the same work and attention into it. Can you be successful in a small market? Sure. But it IS more work and with a much smaller margin for error. Or you may need to dramatically scale back your lifestyle and expectations. (Which is not a necessarily bad thing!)

Actually your question on “prospering in a small market” makes me think I should start working on a Special Report!  Stay tuned and meanwhile keep dipping into the resources we already have for you here!

Best wishes!

Steve Toburen

I know that a lot of us have been picking your brain lately about commercial work and I find that most of your responses really resonate with me. Is there anything that you can point me to in the way of a compensation package for a commercial sales rep.  I have taken on the challenge of creating this type of position and I am not comfortable paying for someone to work without producing results.  I have haphazardly started this position by agreeing to a salary with a draw.

It didn’t take long to start seeing some real caveats that I need to work out. Such as:

1. Compensation: I want to support him while he works to get this division of the company off the ground but I want to move towards full commission.

2. Information: Technology makes it easy to store client info on a phone. I want him to have the info at his finger tips but protect my investment in obtaining this info. Whats the best way to secure the info. Non-compete contracts are difficult to enforce at best.

Thanks in advance

Trying to Improve in Topeka

You are smart to be thinking about this stuff now, Trying.  (Actually BEFORE you started the arrangement would have been better but let’s move forward!)

First, just a general observation re: outside salespeople in the commercial carpet cleaning field.  The vast majority of these arrangements are a complete and total DISASTER!  Why?  Let me count the ways along with a few ideas on how to avoid the problems:

The average cleaning industry outside sales person quickly becomes a “Loose Cannon” in three ways:

1. Wasting your time and money. Especially if you have him or her on a regular draw salespeople will often start inventing “busy work” (I call this stuff  “Displacement Activities”) that is much more comfortable than facing the daily rejection of “cold calls”.

SOLUTION: Hold your salespeople feet to the fire by adding accountability every day.  Set a reasonable goal on how many new documented contacts you expect them to make every week. (Hint:  During your initial meeting setting up this arrangement get the new salesperson to come up with their own goal. Usually this goal will be absurdly high so right away you generously lop off 10 to 20 percent and you will look like a generous hero.)  Hold people to this goal with a brief daily meeting.  But actually abusing your generosity with a regular draw is the least of your sales person challenges.  A MUCH bigger problem is  …

2. Screwing up potentially good accounts through a generally bumbling approach.

SOLUTION: Insist on follow up.  Have a “route book” where your sales person has to log in each contact with every prospect AND what their next step is going to be PLUS when they are going to do it.  Then review these jobs by flipping through the route book on at least a weekly basis.

NOTE: I suggest a 10 minute early morning meeting as in “So whatcha got PLANNED for today?” and then an every Friday “Let’s sit down and analyze things” meeting. So now your sales person will have these daily and weekly “deadline meetings” hanging over them.  So maybe they’ll get out there and PUSH instead of whiling away the afternoon shooting pool and drinking beer.  (Actually that sounds pretty good!)

3. Under pricing jobs. The sales person’s temptation is to price each bid so low that you automatically get the contract.  So of course their gross sales look great. BUT meanwhile you may be losing money on every job!  This is bad enough on a one-time job but horrible if you are locked in to a long term contract.

SOLUTION: Tie their commission to the profitability of the job.  (Of course, this means you will have to actually know if you are making a PROFIT or not but that is for another article!)

NOTE: Given all three very real problems above I’m going to stick to my guns and say for 95% of the carpet cleaning business owners out there (up to let’s say 20 employees or so) your “highest and best use” is being your own outside salesperson!  If you do then make your time count by following my “How to Sell Commercial Work” Special Report. I’ll also mention if you want to clean up in commercial you really need to add encapsulation cleaning.

Now Trying, your second question appears at first glance to be about technology.  (Bad news.  I’m not a “techy” person!  Sorry!)  However, my guess is you are more concerned about security and especially what to do if the salesperson walks on you.  (Or worse gets hired by your competitor or goes into business for themselves.)

Now the conventional wisdom on non-compete contracts is that they are unenforceable.  That is normally true in low level positions like technicians.  But when you are sharing privileged, confidential information with an employee a judge tends to view this much more seriously.  Consult an attorney on this.

But an even better way to protect yourself is to have a close, trusting relationship with your commercial accounts along with running an efficient operation that lets you give low prices and still make a profit.  That way IF your past salesperson starts soliciting your accounts your client will a) be offended at the lack of loyalty by your ex-employee and b) will be comforted by the new company not being to substantially under-cut your pricing.

And of course the third way to prevent employee defections is to both a) hire good people and b) treat them so well they would be crazy to leave.  (I know this is harder to do than say!)

Now I know what you are thinking, Trying.  This sounds like a lot of work!  I agree!  In fact, doing it right with a sales person is actually MORE work than the owner just scheduling my suggested Dedicated Sales Morning once per week and just doing it themselves.

The temptation, Trying, is to just hire a warm body and sit back with a contented sigh now that someone else instead of you can suffer the abuse and rejection of the commercial market place.  BIG MISTAKE! Once again, in hiring outside sales people I urge you to either do it right or do it yourself!

Steve

PS: Another comment re: Goal Directed Behavior.  Right now you should be analyzing WHY you are hiring a sales person and WHERE you want them to focus their efforts.  For example, do you want long term, regular commercial contracts?  (Who doesn’t!)  Then pay a bonus when a PROFITABLE long term contract is landed.

HINT:  Pay the bonus out monthly over the first year which both protects you if the account leaves plus motivates the sales person to stay with you to keep getting paid! (Be sure to run this arrangement by your local attorney.)

Firstly I would like to say thank you for all the great resources on your SFS site! I have just started my carpet cleaning journey and this information is very helpful!

I was wondering if you would be able to answer a question. I have been struggling to work out how much to charge.  (“Per square metre” is what is used here in the UK.) Is there a formula to work this out?

Once again thank you and Happy New Year from London!

Thank you, Happy, for the kind words.  It makes us feel great to help new folks entering the business.  (Even if you are “across the pond” where Jon-Don probably isn’t going to sell you much stuff!)  And don’t forget we have a special “Just Starting Out?” section if you are new to the industry.

Of course no matter how many years someone has in business the eternal question   is: “How much should I charge?”  And of course the easy answer is, “As much as you can!”

After all, I tell every SFS class:  “There is no virtue in poverty”! and my favorite saying, “All things being equal- it is better to have money than not have money!”  But I digress …

Happy, here are a few philosophical thoughts on pricing.  I’m hopeful we can get Chuck Violand (our resident expert in pricing) to chime in later this Spring on how to set prices and maybe even share some worksheets with us.  Sooo …

1. Know your true cost of doing business- Most cleaners don’t have a clue.  That is why a general price for a country (or even a city) is totally meaningless.  There is no “Magic Number” since every cleaner has different marketing costs. (Or they can use the free marketing Bill Yeadon writes about in his Hub Marketing Special Report!) Each company also has different fixed costs such as equipment leases or loans.  But simply put you must come up with a monthly total of every single cost you face.
2. Know your production rate- Once again, most cleaners don’t have a clue!  How can you assign a “price per metre” when you don’t know how long it will take you to process it?  (For help on this check out our Production/Pricing Analysis Log. Don’t worry- the download is free!) Religiously fill this Production Log out (even for your residential jobs) over a period of several months and you will learn exactly how many square meters you can clean per hour in any given scenario.  Then …
3. Pull the numbers together- Listen closely here, Happy.  Pricing is just a function of costs you must pay (including yourself!) and time plus quantity.  Sooo…
4. Calculate your True Cost of Doing Business (TCDB)- As in add up all your overhead/replacement fund for equipment/desired profit and include extra for “Murphy’s Law” because bad things happen to good carpet cleaners!   Now you have a rough monthly Gross Income Amount you should produce.  (If you include ALL your costs and charges you will be amazed at how high it is.)
5. Calculate how much you will work- Figure reasonably how many days/ hours per month (HPM) you can clean. Err on the low side here and allow for time off with the family, equipment breakdowns, slow work times, etc.
6. Divide and conquer- OK, down in the trenches time!
   1. Here’s the formula:  Take your monthly TCDB and divide by your HPM which in turn gives you your all-important Income Per Hour (IPH).  This is your “nut” as in how much gross income you must generate per hour of work.  NOTE:  It is good to also generate your “nut” per day and per week and TRACK IT.  I love surprises but being “surprised” at the end of the month by not having the money to make a lease payment it never fun!
   2. So now you know your “nut” per day and per hour. (If nothing else this will add the all-important “sense of urgency” to your daily routine.)  Now for “how much to charge” …
7. This is the easy part- When pricing any job (especially commercial) just calculate A) how long it will take you (refer to your Production Log for an accurate estimate) and then B) multiply your time required to do the job by your IPH and then C) divide the square meters by this amount which in turn will D) give you your cost per square metre!

Now you have a simple formula that lets you feel in control of pricing any single job.  Of course, just being on top of your pricing will not make the phone ring, Happy!  To do that you will need to get the word out but that is the subject for a different post!

Best wishes and let me know how you are doing!

Steve

PS  Happy, I assume they have heard about something called “encapsulation cleaning” in the United Kingdom?  If so, I would urge you to check out Jeff Cutshall’s Special Reports on how to build Commercial Maintenance Routes using part time employees in their own vehicles.

I have a one truck company with zero employees and I am very proud of it.  I don’t want (or even need) to do 5 or more jobs a day.  And I don’t want to work more than 5 days a week. (I’ve got three little boys under the age of ten in the house!)

I have been thinking of attending SFS but don’t see how it would apply to my situation. I just don’t want to “get big” with all the headaches that come attached. I just want to make enough to be comfortable, take care of my family and introduce them to the joys of travel!  So what would SFS do for me in this situation?

Florida Cleaner/ Family Man

Dear Florida,

First, Florida, congratulation on having defined your priorities AND for sticking to your guns.  I see far too many cleaners sort of limping through life, unsure of where they want to go OR how they are going to get there!  And yes, I agree that family always trumps business!

BUT last time I checked, growing families like to eat/ buy clothes/ have a roof over their head and even maybe go to college down the road.  All this takes money and a lot of it coming in consistently.  And while I know you are violently “anti-rich” as an owner-operator you are in a precarious position with all these pending obligations.

No matter what your personal definition of success is- at SFS we teach concepts  that will set you apart from virtually all other cleaners.  Implementing this approach will make a big difference in how your customer perceives the value you provide AND therefore let you charge more!  (Charging more is a good thing!)

My favorite SFS concept is that of the “Cheerleader Customer”. SFS teaches you the true lifetime value of a lifetime Customer Cheerleader.  (Hint:  It is well into five figures!)  We also teach HOW to Make the Cheerleader and give you a written, systematic infrastructure to developing these delighted clients.  The result?  A perpetual stream of repeat and new referral business with virtually ZERO money invested in marketing!

Frankly, Florida, the “Make the Cheerleader” philosophy is ideal for the owner operator.  It allows you to drastically decrease advertising expenditures thus putting more money in your pocket.  (You will also be able to free more time up for travel!)

But wait- there’s more!  Setting yourself apart allows you to charge more as well.  Why?  Because Cheerleaders are delighted to pay you “more than the going rate”.  Plus people referred by Cheerleader also expect to pay a premium price- so let them!

So Florida, even if you have NO intention of growing larger, SFS will help you do a better job, have much better customer relations, and create a much, much better and enjoyable work experience for you and your customers.

If after attending SFS you choose to stay small that is great.  In fact, quite a few of our SFS graduates make a conscious decision to stay small.  They use what they learned at SFS to dramatically raise their prices and take-home profit.  Works for me!

Steve Toburen

PS If you do decide to stay small it is even more important that you learn how to deliver Value Added Service so you can command premium prices to fund that comfy retirement!