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At what point is diversification of services a good decision?
An appropriate response to that question is this: It depends.
A monthly janitorial cash flow can be helpful for a carpet cleaning company that experiences a major winter slow down. However, there are both pros and cons that should be considered.
During our more than 40 years in the business, we have served both markets. Here are some details you must consider before jumping into this diversification.
It’s not carpet cleaning
Servicing janitorial accounts requires training for a different skill set, and compensating for higher turnover rates. Pre-employment screening is crucial.
Another adjustment is the reduced hourly billing rates. If you are receiving $100 an hour in your trade area for carpet cleaning, it may drop to below $25 an hour for janitorial. However, you can hire most of the work done for you and still turn a 20 percent net profit.
Ramping up a janitorial operation requires additional supplies and equipment. It requires proper staffing and a rigid supervision program. The equipment is the easy part. Staffing is challenging, and the extra telephone calls, inspections and management demands can be taxing.
You may have to deal with early telephone calls when the customer claims your crew “Did not show up last night.” Then you discover it was only one trash can that was missed. You will always have a certain percentage of complainers who feel it is their duty to embellish any cleaning deficiencies. And, on the other hand, it is all too easy for a janitorial technician to overlook a needed task.
Advice from the trenches
Joe Brennan, owner of Service PLUS Carpet Cleaning, Restoration and Janitorial Inc. in Madison, WI, has found, “From a financial point, the janitorial side of my business provides a steady, consistent flow of cash which helps out a great deal during the slower carpet cleaning months of November through March.”
It is interesting to note that Brennan ran a janitorial service for several years and then added carpet cleaning.
Greg Badger, owner of Excel Carpet Care in Charleston, IL, found that, “Janitorial has worked out well. That side of my business has exceeded the carpet cleaning side by quite a bit. It also gives my carpet techs a certain amount of work, too (carpet cleaning, stripping and waxing, etc.), so it helps in the winter for them.”
Janitorial crews must be trained to perform at high levels of efficiency and quality. Regular building inspections must be provided, and you must quickly respond to telephone calls and handle complaints. This is a service business where your reputation is only as good as last night’s performance. So expect more demands upon your management and public relations skills.
Use what you already have
If you decide to expand into janitorial, it makes sense to start with your existing customer base and network with all of your contacts. Mike Swinson of American Carpet Cleaners and Janitorial Services in Indianapolis, IN, found they added nearly $200,000 a year in additional revenue after the second year of offering janitorial services, in addition to carpet cleaning.
Swinson points out, “Nearly all of this was closely related to the fact we were already in the facility cleaning the carpet. Once they had an opportunity to see the fantastic job they were getting with the carpet cleaning it didn't take them long to realize they needed an ‘all in one’ company.”
Was it a good decision? Swinson states: “It’s not easy, but it's great extra money if your company experiences slow times. Glad we did it, but carpet cleaning will always be my first love!”
Richard Colvin, president of Medical Cleaning Specialists and Absolute Clean Carpet Cleaning, Springfield, OH, found that 20 years ago it was an outstanding match to offer carpet cleaning, floorcare and nightly janitorial. But the janitorial market has become extremely price driven. Low margins can take the fun out of being self-employed.
According to Colvin, “The cleaning business has become a brutal contest of who can clean for the lowest price and, after 21 years, I have turned to 95 percent carpet cleaning with only the loyalist of customers left in the janitorial division. I can assure you it is carpet cleaning only for me now. I don’t believe I would ever go back and try to add a janitorial account again.”
Gary Mills, president of Millsy's Cleaning & Janitorial Supply Inc. Augusta, ME, found that customers would ask them, “You do such a great job on our carpet, can you clean our offices, too?” After turning down a lot of work, Mills decided it was time to crank up a janitorial division.
Mills comments, “I have never looked back on my decision to start cleaning offices and now we clean 88 offices every day with a staff of 55 people. The janitorial part of our business is now the largest volume part of our business.”
Weigh the pros and cons
Adding janitorial accounts is demanding at first, especially if you work all day cleaning carpet and then past midnight handling janitorial accounts.
You must consider all the costs before diversifying. Once you decide to become a building service contractor, make sure you have backup help whenever you find yourself short-handed.
One last caveat: Make sure your pricing is accurate, or the consequences can be costly. When you bid too low, you may win a contract and wish you hadn’t. When you bid too high, your time and effort has been wasted.
There is a lot of competition in the janitorial market, so make sure you get it right.
Gary Clipperton is president of National Pro Clean Corp. and has developed bidding software and training programs for janitorial and carpet care technicians. He can be reached at (719) 598-5112 or Gary@NationalProClean.com.