Growing and Scaling Your Cleaning Business

Episode 88

Growing and scaling a cleaning business is an intricate dance that requires strategic planning and nearly ruthless financial focus. In this podcast we examine the complexities of expanding your cleaning business while highlighting the unique challenges faced by business owners.

Scaling too Fast Can Kill Your Business

Unlike other industries where products can be shipped, cleaning services require a mobilized workforce to reach their clients’ locations. This necessitates both a strategic approach to hiring and logistics as well as significant financial preparation. The simple step of covering those costs has sunk more cleaning businesses than you and I will ever know! And having to cover the costs on multiple new accounts before revenue starts flowing on any of them can be a business disaster. I cannot over-emphasize the importance of understanding the financial dynamics that underpin your successful scaling in commercial cleaning.

When Scaling Your Business Cash is King

The critical role of cash flow management in scaling a cleaning business must be fully understood. That does NOT mean you need to act or understand like an accountant. I DO emphasize the necessity of having enough cash reserves to cover the upfront costs. Hiring personnel and purchasing essential equipment are both a must when starting most new accounts. Due to the nature of payment cycles in the industry, companies may wait up to 120 days to receive payments while still needing to cover payroll and operational expenses. This prolonged financial gap can strain resources, making it imperative for business owners to have a robust financial strategy in place. Do your employees and yourself a favor. Maintaining a savings account or a business line of credit can ensure liquidity during these periods.

Bidding & Estimating are Key to Scaling

Accurate bidding and estimating are critical for securing new contracts. You may want to check out our podcast on that. Part of your strategy for negotiating impact clean payments upfront is to mitigate the financial burden on the business. This upfront payment can help offset initial labor costs and ensure the company doesn’t operate at a loss while bringing a new client’s facility up to standard. The balance between being assertive in financial negotiations and maintaining a transparent, honest dialogue with clients, is key. This transparency can build trust and facilitate smoother business transactions

The Human Element of Scaling Your Business

In addition to financial strategies the human aspect of business negotiations cannot be overlooked. You may be a weak or strong negotiator. Commercial cleaning company owners may not be naturally inclined to negotiate. You can build your skills. Practicing negotiations, whether through role-playing or seeking honest feedback, can bolster an owner’s confidence when discussing terms with potential clients. In my opinion, your emphasis should be on honest communication and setting clear expectations from the outset. Carrying through can lead to more successful client relationships and sustainable business growth.

Understanding the financial landscape, honing negotiation skills, and maintaining transparent communication with clients, cleaning business owners can better position themselves. When you’re ready to sharpen these skills, Contact me here.

 

This Week’s Podcast transcript can be found below.

 

00:08Ray

Joel, we are back and we are talking about growing and scaling your business.

 

00:12 Joel

Scaling, like weight?

 

00:14 Ray

Well, I didn’t want to bring it up. It was a kind of a heavy a lunch. I’m sorry.

 

00:18 Joel

Yes.

 

00:19 Ray

One at a time, please.

 

00:22 Joel

Growing and scaling. I get probably 30 to 40 emails a week from people trying to grow my business and saying that they could provide me with 15 more lead opportunities per month. The problem with these companies is they don’t understand my industry. And they probably don’t understand the industries of anybody that they’re marketing. The cleaning business is very difficult. Because when you’re scaling, there is a huge outlay of money on the front end, and some of that you can work out with your new clients. But for the purposes of this episode, we want to talk about as you’re growing, because I have seen so many companies grow so fast, and people are just, wow, how the heck they doing it? And next thing you know, they’re filing Chapter 11, Chapter 13. They’re out of business because the money ran out. But they looked at their P&L statements and said but, what we’re money ahead. We’re money to the positive, but they didn’t have money to pay their bills because the float is a killer. Cash is king. If you don’t have cash flow, you don’t have a business. It’s understanding that, but it’s even more than that when you’re building your business in the cleaning industry.

 

01:23 Joel

Unlike a lot of industries, when people buy your goods or services, you either ship it out to them from a location or they come to you. In the cleaning industry, you have to go to them. So, you have to have a mobilized workforce. Now, does that mobilize mean that they’re walking, riding their bicycle, riding a bus, driving a car to a location? So, you have to find the right people. Well, how do you find the people if you don’t have the money to be able to pay them? So, you have to have some money set aside. In a previous episode, we talked about having a savings account and having to pull from that or a business line of credit to be able to pull from. Having the people and the funds to pay them. In this industry, you often don’t get paid for 30, 45, 60, 90, even 120 days. So, if you’re getting paid in 120 days, while then the person worked for 30 days before you could build a client, You’re holding that money for 150 days. You have to have 150 days worth of payroll built up. Oh, but they need vacuum cleaners, brute barrels, they need an auto scrubber, they need all these other tools of the trade to use, so you have to buy this equipment.

 

02:28 Joel

That’s usually if you have terms, you can get it net 30. A lot of the larger pieces of equipment, you have to pay COD.

 

02:36 Ray

The float you’re describing is that sum of cash that the cleaning company owner has been wise enough to set aside, whether in lumps or in dribs and drabs, so that it’s there for them to call on for those needs. Covering payroll, covering new supplies, covering whatever the startup costs are for a new account. Because that new account is the lifeblood of your business.

 

02:59 Joel

It is. In addition, your bidding and estimating better be fairly spot on. You’re hoping, again, we talked about this in a previous podcast, about trying to get that impact clean money up front so that you can do it. Otherwise, you’re paying for the man hours or the person hours to do the cleaning until you bring it up to a level that’s acceptable on your dime instead of the client’s dime.

 

03:21 Ray

Now, I know during the episode on the impact clean, you’d urge, collect as early as possible, collect as COD if possible. That available cash right there for the owner is always going to be important. Push for that, but also know when to eat it.

 

03:37 Joel

Yes. On a small once a week account, it’s two or three hours a night to do, you might be able to eat it on a small account. But if you have a 10-story building that’s going to require 20, 30 employees, you’re not going to be able to eat that money. So, you’re going to need something up front. And you talk about it early on in the conversation with them, even maybe on the walkthrough, that, Hey, these are the things that are going to need to done. These are the things because you want them to start thinking about it. We usually tell them that we need a startup package. And that startup package, if you agree to us, is going to be a set sum of dollars, and this is what it’s used for.

 

04:11 Ray

Joel, before we close up, what would you advise the cleaning company owner who’s not accustomed to negotiating? Some folks just aren’t good at it.

 

04:20 Joel

That’s very true. I wasn’t early on either.

 

04:22 Ray

We’re here, they have an opportunity. This is a good account. But they’ve really got to get that lump of cash to get started, whether it’s for the impact clean, whether it’s to buy the equipment, whatever it is. They can’t get going without it, and they’re not strong negotiators. What do you tell them?

 

04:38 Joel

Still try to have that honest conversation with that client or that prospect. Because the more honest and transparent you are from the start, the easier the startup will go. And if they really want you, they’re going to be willing to give you that money up front with some, “Well, what are you going to do for me because I did this for you?” So, there’s still some negotiation that goes on. Can the first billing happen two weeks later since we’re going to pay you money up front? The other thing is we talked about the perfect practice. Before you even go out, you should be standing, looking at yourself in the mirror and practicing or role playing with somebody that will give you honest feedback so that you get the confidence you need to ask for the money upfront.

 

05:18 Ray

You know I know a cleaning coach.

 

05:21 Joel

Oh, that’s right. Me.

 

05:21 Ray

You! Folks, when you’re looking for a great cleaning coach, someone to really help you grow your business, contact Joel. Joel, thank you.

 

05:28 Joel

You’re welcome.