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It is a fact of life. Most (not all) commercial contract cleaning has to be performed at the worst hours for you as a business owner AND as a loving father/ husband/ mother/ wife. In a business sense; think about it. How alert are you going to be making your DSM sales calls if you were pushing a wand till 4 AM? And for most of us nights and weekends should be “family time” to be spent with your kids (and the friends of your kids- you can’t be too careful nowadays!)

So as your commercial route reaches “critical mass” you are going to get yourself off the truck and hire employees to do the physically and emotionally demanding work found in regular commercial contracts. However, you must structure this work so a) you are not held hostage by any single employee with all the job details tucked away in his head plus b) make it easy enough any one of your people can be switched into the job even without ever having seen it. Here is your answer …

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If you follow the industry discussion forums (and you should!) you’ll see a huge disparity of opinions on carpet cleaners using Groupon. Some love it- some don’t.

For the uninitiated Groupon, is a web-based company that offers daily coupons to consumers on products and services. Here is the way Groupon explains it:

“What is Groupon?  Each day, Groupon features an unbeatable deal on the best stuff to do, see, eat, and buy in your city. By promising businesses a minimum number of customers, we get discounts you won’t find anywhere else. We call it ‘collective buying power’!”

Now for the cleaning industry this “unbeatable deal” often is an offer like “3 rooms of carpet cleaning (normally $79.00) now only $49.50!” The cleaning company states how many customers must purchase before they will honor the offer.  To keep up the excitement Groupon maintains a “running live balance” during the day’s offer and lets people know “when the deal is on”.  Groupon keeps half of the 49.50 and you receive less than 25.00 for the whole job!  Hmmmm, see if this “deal” could work for you …

PROS:

a) This offer may bring in 200 (Or more!) customers and that means an infusion of 5000.00 plus into your bank account. During the slow times of the year this could be huge help to your company. b) Your Groupon promotion will also put you in front of 200 new potential Cheerleaders that will tell their neighbors about your wonderful service.  Then you can clean the neighbor’s homes for full price or even at the 49.50 amount (your gross just doubled!) as Groupon does not get a cut on this business.  Even in the homes you booked through Groupon you’ll have the chance to add on other profitable “up-sell services”. (And you’ll keep ALL this money since Groupon only gets a cut of the original 49.50.)

So for a new company Groupon-offers may give you a quick “jump start” when you have few or no customers to begin with.  (This reminds me of the venerable industry “free room offer.”)   NOTE:  Regardless of which offer you decide to do, don’t forget to schedule the jobs geographically to minimize drive time.

CONS:

My biggest “con” for Groupon is the same as my first “pro” above!  (Hear me out!)   a)  “This offer may bring in 200 customers” so it may very well overwhelm you!  What if 500 customers sign up for the offer? (I’ve heard some areas will have over 2,000 homeowners sign up!)  If you are a solo owner-operator and you can clean 6 “3-room Groupons” a day even 500 jobs will take you 4 1/2 months!  So are your Groupon customers going to happily wait 4 months or more for what they have already paid for?  I doubt it!  And it gets worse …

IF you are banging out six jobs a day how will you have time to sell and/or perform any high profit add-on services?  More importantly, how will you create Cheerleaders running through each home with an average cleaning time of less than one hour?  NOTE:  Remember that the danger with social media sites such as Yelp is that people are very quick to complain online and these unhappy customer’s griping can quickly go viral which could destroy your company!  Seriously!

While Groupon is the big dog in this field, many imitators are jumping in. For example,  Angies List has “The Big Deal.”  Groupon definitely has the big numbers right now.  But I feel Angies List has a better demographic than Groupon since customers pay a yearly fee to join Angies List. This “pay to play” tactic tends to filter out the cheaper clientele. The other benefit of using Angies List is that they only ask 28% instead of 50% of the offer with Groupon. This almost doubles the amount the cleaner keeps. On 500 jobs this would put more than 10,000 extra bucks in your pocket. That could make a huge difference.

As with any new idea, Groupon now has many competitors.  Check out this link to see a list at TechCrunch- Deals Galore, Competitors Abound: A Primer On Groupon-Like Startups Is all this a fad?  Well, Google recently tried to buy Groupon for somewhere north of 3 billion dollars!  This tells me that these programs may be around for a while.  Just like with carpet cleaners, the marketing program that differentiates themselves from the pack will win.

To get another perspective on these sites check out Laura Ries blog on the subject: Ries’ Pieces: Coupons, Groupon and Cocaine

Laura comes from a good marketing background as her father Al Ries is the coauthor of the marketing classic Positioning and many other books over the past four decades.

As I write this blog I’m frankly still ambivalent on Groupon.  You must analyze if Groupon will work within the framework of your company. I’d appreciate your comments and/or experiences below.  As Steve Toburen always says, “We’re all in this together.”

Bill Yeadon

I am starting to get larger jobs and want to look into either the RX-20 or the DriMaster. What is the difference in the two? What effect will a power wand have on my production?

Weighing My Options in Gainesville

RX-20

Bill: If these are trashed out commercial jobs you are talking about then the RX-20 is the hands down winner. The RX-20 has floating heads which allows it to compensate for the unlevel areas in the concrete. The DriMaster which is my choice for residential since the heads do not float and is designed to work on carpet over pad. The DriMaster is also lighter and will get under furniture better.

The RX-20 is a proven design as it has been the standard for several decades. In fact, many cleaning veterans would sell their businesses if they had to give up their RX-20′s.  (Our very own Island Boy, Steve Toburen, still misses his RX-20 and Steve retired from full-time cleaning almost 20 years ago!)

DriMaster

Steve: Ah yes, the sheer joy of transforming a trashed out residential Saxony carpet!  Couple the incredible pile restoring and agitation of a RX-20 along with good chemicals and the high heat/high extraction of a truck mount and the effects are magical!  The same goes double when dealing with a seriously greased up restaurant carpet and especially so if it is over pad.

HOWEVER, I found any rotary machine could have issues on a low pile direct glue down carpet on an uneven floor. But then a standard cleaning wand isn’t going to get a good seal either!  I’ll also mention that IF a commercial carpet is bad enough to need rotary extraction you probably aren’t going to see any great speed improvement.  You WILL see a dramatically better job which you should charge more for and therefore make more money!  Don’t charge quickie wand prices for a “carpet restoration job”.

Bill: Glad to see you are looking at expanding into larger commercial, Weighing. Many cleaners have found new profits in this sector. Try it out and if it goes well you would do well in considering encapsulation. Encapsulation technology can nicely round out your offerings and give you options in expanding your commercial operation.  VAST Instructor and Commercial Cleaning Specialist Jeff Cutshall has immense experience in this field and generously offered up his step-by-step guide to getting started in this Special Report “Building Encapsulation Routes”.

Steve: Nobody knows more about this business than Bill so I would never argue with him re: equipment or technical stuff.  (In fact, I only bicker with Bill over his drinking that dark brown horse pee called Guiness!)  However, I would gently suggest to Weighing that he consider buying a Cimex and getting into encapsulation even BEFORE marketing commercial.  (Not after as Big Billy suggests.)  Why?  Simply because of the the incredible pricing/bidding advantages the high production rate of the Cimex will give him.  Get the Encapsulation Report where Jeff and I actually break down a hypothetical 10,000 square foot job and show you how to price and present a killer monthly contract proposal.  And trust me- regular contract commercial “route work” will transform your business AND your net worth!

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Steve

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• “Share the wealth” of what can be a crushing responsibility
• Empower your people while at the same time “hold their feet to the fire”
• Introduce security measures into your company that will help “honest people stay honest”!

In this Special Report Steve Toburen explains how to achieve the above and much more. Your company doesn’t have to be a source of headaches and heartburn!

Steve

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I only do one restaurant now and they move all the furniture off the carpet into the kitchen and back in the morning. Now I am working on getting a small restaurant chain here in Orlando and there are lots of tables and chairs in each one and nowhere to put all of them. So I was wondering what you did with the tables and chairs during the cleaning?  I think we can find a place for chairs but not the tables. Also did you charge extra for moving the furniture in commercial work? Any positive suggestions would be appreciated as I am trying to get the commercial end of the business up, as the residential can be soft at times. Thank you very much,

Looking At My Options in Orlando

Well, Looking, I did things a “little differently”.  If a restaurant account wanted all the furniture moved (on some of them we just did the open areas on an every other time basis) we moved it AND replaced it. Why? I’m glad you asked:

A.  Less hassle for management. To be honest, I’m amazed you still have the one restaurant account where they stack the table and chairs in the kitchen.  I found that when my service became an “irritation” to the customer we weren’t going to be around long.  And I can’t think of anything more “irritating” for a restaurant manager than coming in early and finding a kitchen full of furniture!

B.  Faster production for us. If you are using two people anyway (which you probably should on commercial work for production, physical exhaustion and mental burnout reasons) one of them is just going to be standing (or sitting) around a lot of the time if there is no furniture.  Why not use the second person to keep moving furniture and replacing it?  After all, if the furniture is being moved faster than the wand (or Cimex) can move, then moving tables and chairs isn’t really costing you anything!

NOTE:  We normally would only move the tables and chairs enough to let us clean under them and then replace them immediately.  With most restaurant furniture and good extraction (or even better encapsulation cleaning!) I found that blocking and tabbing wasn’t needed. With a good system and two people working together smoothly the wand never stopped which was great because our mantra on commercial work was, “If the wand isn’t moving we’re not making money!” (And we made a LOT of money as my company cleaned over 50 restaurants and bars every month on a contract basis!  How did I get all those accounts?  Because I personally followed my weekly Dedicated Sales Morning concept! Download my free Special Report on “Selling Commercial Work” with all the details!)

C.  Not being able to “blend into the woodwork”. I found the commercial accounts we kept the longest were the ones where we didn’t get “noticed”.  We went in, did the work, sent the bill, they paid us.  Just like clockwork!  But if I had to call the manager or owner to remind them each month to move the tables and chairs it was too easy for him or her to say, “Let’s skip it this month.”  The kiss of death in commercial!

So to cut to the chase, Looking, I would strongly suggest you factor moving and replacing the furniture into your proposal for the restaurant chain.  (By the way, a great way to get all the information you need for your proposal and to “structure” your first visit with the Decision Maker is to use my Commercial Carpet Analysis form.)

More soon,

Steve

P.S. Commercial work is one area that the owner normally should excuse them self from ASAP. The problem is that these late hours will suck the life out of you.  I seriously question for most entrepreneurs if their “highest and best use” in their business is pushing a wand around some greasy spoon at 2 o’clock in the morning!

I am wondering if you can help me out with this issue we have.  I finally got the opportunity to put in a carpet cleaning estimate for a local restaurant in my area near St. Louis, MO.  My husband (owner of our company) tried to stay in the middle of the “going rate” for square footage cost.  (He called a couple of local cleaning suppliers to see what going rate was.)  The owner of the restaurant said if our bid was close or lower than current company he would be willing to switch to our company.  (He has 4 local restaurants so I was excited.)  BUT it ended up that their current carpet cleaning company is cleaning the carpets for one half of what our bid was for!  (This whole thing has really affected out marriage.)

So my question is this: When out doing bids for commercial accounts do we just go ahead and bid at .7 cents a square foot ? (My husband bid at .13 on the restaurant.) I really want (and feel we need) to get some commercial carpet cleaning accounts but my husband says they are too labor intensive plus cost of chemicals and wear and tear on truck mount, etc. and he has lost his motivation.  So what is your view on this? Is that how some companies make it big?  Is it by going in at bottom prices and cleaning commercial carpet but then eventually it eventually pays off somehow? I am so confused!

Thanks,

Puzzled and a Bit Depressed in the Midwest

Thanks for the letter, Puzzled.  I do understand your concern.  But may I say you are approaching this all wrong.  Listen carefully here:  IT DOESN’T MATTER “WHAT THE GOING RATE IS”.  What counts is:

a)       What your costs are plus

b)      How much you want to clear per hour personally after paying the “costs” in A above AND

c)       Any additional costs to factor in such as drive time or set up costs all divided by …

d)      What your production rate will be per hour on any given job equals

e)      Your charge per square foot

If I was a math whiz instead of a rug-sucker the mathematical equation would look something like this:  (a + b+c) ÷ d = e (your cost per sq. ft.)  But now let’s focus on your question:

“Is that how some companies make it big?  Is it by going in at bottom prices and cleaning commercial carpet but then eventually it eventually pays off somehow?”   My reply?  Maybe … for awhile.  But long term NO ONE can ignore the immutable law of economics profiled above.  Listen carefully here…  You cannot sell for less than your costs over a long period without paying the price.  (Sure, you can “get big” by under bidding the market.  But that is just the business version of slitting your wrists and slowly bleeding to death!)

So how can a company successfully operate at .07 per square foot?  Here are some alternatives.  One or more likely is in play here:

1.       Super efficient yet with high quality. They may have discovered “encapsulation technology” and yes, with the right equipment and type of carpet you definitely can make a profit at .07 per foot.

2.       Super fast with low quality. Simply put, many larger property managers and institutional accounts don’t even care if you do a “good job”.  So a company like this can slide by for months or even years doing very little and pocketing big profits.

3.       Super low pay. Many people are desperate right now and will accept even low paid work which in turn allows the company to make money even on low priced bids. (Labor is always your biggest line item expense- lower labor costs equals lower pricing/higher profits.)

4.       Super aggressive. These people probably have an aggressive sales force and marketing program in place.  So sure, they will lose work due to numbers 2 and 3 above.  But they don’t really care since a constant stream of new accounts will be arriving to replace them.  In fact, constantly losing (and replacing) work is likely part of their normal business plan.

5.       Super big. A really huge company can “amortize” much of their fixed overhead over a much larger quantity of work which many allow them to bid lower or more likely is one of more of the above factors plus they may be …

6.       “Super stupid!” Even big companies can coast along for years as the old saying goes, “Losing money on every job but making it up in volume”.  Simply put, they may not even know they are losing money!

So what can you do, Puzzled?  (By the way, I’m not promoting any of the business approaches above.  I’m just explaining to you and all the other “puzzled” carpet cleaners out there HOW a business can survive for years running at such low pricing.)  So a few options for you …

1.        Get faster/ get more efficient with production. Check out the Cimex Cyclone that will easily average 2,000 feet per hour cleaning commercial carpet.  (If you can’t beat ‘em you may want to compete at these prices and encapsulation will still let you make a ton of money at .07!)

2.       Quit setting your pricing emotionally. After ruthlessly cutting your overhead (which needs to be done anyway) and increasing your production per hour numbers (ditto on the “needs to be done” reminder) just look how long each job will take and you will easily arrive at your price per square foot.

3.       Do regular selling for commercial cleaning. Don’t forget to learn from the big boys and set up a consistent marketing program for commercial work.  Commercial is a game of numbers and you WILL lose work no matter how good your quality is.  Accept this fact, keep a stream of new accounts coming in and move on.

Let me know how you are doing out there.  After all, we are all in this together and Jon-Don, your SFS team and I all want to help.  You CAN beat the “big boys” at their own game!

Steve

PS  By the way, my Commercial Carpet Analysis form will be a big help in bidding and selling regular contract commercial carpet cleaning.

I always carry at least two funnels in my van.  A narrow spout for liquids and the other with a much larger spout for pouring powdered products.  Much faster chemical mixing/pouring and less waste.  I purchase the “radiator funnels” as these are perfect for pouring powders… and at .99 and up everywhere you can’t go wrong!

So what other little tricks have you added to your business that have speeded up your production and/or helped you do better work? I’ll “prime the pump” with this idea:

Years ago my employees and I started carrying “duckbill napping shears” on our belts.  This way we could immediately trim a loose fiber, “dish out” a cigarette burn or do drastic surgery on a gum spot!  We used leather pliers holsters available at any hardware store to safely carry the scissors. This little TIP saved us countless trips to the truck and made for many, many positive Moments of Truth.  I found home owners loved my immediate (and free!) “fussy attention” to fixing their simple carpet problems right there during my pre-inspection. (And doing so BEFORE I had the job!  Just another example of the Law of Reciprocity!)

OK, now for the rest of you!  What are YOU doing to speed up/do better work? Big idea/ little idea- I don’t care.  Just send them in to stoburen@StrategiesForSuccess.com  you just might win this quarter’s TIPS Grand Prize- my six hour customer service course on CD- Winning on the Home Front. (Retail value- 139.95)

Steve

Congratulations to last quarter’s TIPS Winner- Chris Sutton of Carpet MD Inc. in Forest Grove, OR!  Click to see his TIP on gifting not only a FREE “Lifetime Supply” Spot-Out bottle but also a sparkling white “spotting towel”.

Hi Steve,

I was hoping you could help me. I am putting together a proposed contract for the first time and I’m having trouble calculating the cleaning bid. This assisted living facility wants me to clean 3 separate buildings 4 times/year. Each building is 2440 sq/ft and requires 2 separate takedowns and setups each. I can’t start until the residents are finished with dinner at about 6pm.

The janitors were cleaning them for a little more than eleven cents a foot but they left all kinds of residue in the carpet not to mention they were doing a sub-par job. I have never done a contract or cleaned for a business this often so I’m stuck here.  Please help me get unstuck!

Overwhelmed in San Diego

I feel your pain, Overwhelmed.  When something like this comes up it is easy to feel exactly as you signed-off … overwhelmed!  OR you can view it as a wonderful gift of a major profit opportunity. It is all in your attitude AND the logistics.  Let’s start with the nuts and bolts first …

When facing a complicated proposal I’m reminded of the soldier’s dictum:  “divide and conquer.”  So let’s break this baby down.  Ask yourself:

1. What’s my time to do the job? (TTDJ) How long will it take me including the dual set-up and break down? Is there furniture moving involved?
2. Will I need to hire a helper?
3. Given the 6 PM and later start time do I want to charge a “premium” for my time given I will be away from my family plus possibly trashed the next day thereby affecting my production and other work in my business?
4. Can I do all three buildings at the same time?  Is it possible time wise given my production above?  Do I want to?
5. What will my drive time (DT) be for each job?
6. Can I “mold” any of the contract specs to help me with any of the above answers?
7. Depending upon my answers to the questions above how much do I want to charge per hour (CPH) for my services?

Now once you have those answers (and especially the one on how long it will realistically take you to do each building) your price calculating process becomes a fairly simple multiplication process.  Here it is:

TTDJ + DT x CPH = Amount per building x 3 = Your price per service of the complex.

Now you can take the “price per service of the complex” x 4= Total Yearly Cost (TYC) and then divide this by 12 and bill them a monthly amount.  Many property managers prefer this and frankly it is better for you since you can “blend better into the woodwork” with a monthly billing.  Check out my free Special Report on Commercial Contract Selling for more info on this concept.

Let us know what you come up with.   If I can help you tweak the proposal before you present it I would be happy to do so.  After all, we are all in this together!

Steve

P.S.  One more suggestion, Overwhelmed.  This need to know your production-per-hour figure points up the wisdom of keeping a cleaning diary where you write down all the data on each commercial job you do in a “log book”.  Over time you will develop a very accurate average production rate for each type of facility/ carpet/ soiling level.

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I always ask our SFS students how many know exactly what their square foot per hour production is for different cleaning scenarios. Very few raise their hands. Stop the guessing now by implementing this “cleaning diary”. Over time you will arrive at exact production numbers which will help your bidding (and net profits!) immensely.

Steve

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