Carpet Cleaning Business Management / Web Exclusive Features

Ask Steve: Is Growing My Company into a Critical Mass Business Right for Me?

This can be an excellent option if you have the fire in the belly to git ‘er done and do so fairly quickly

(Editor’s Note: This week’s “Ask Steve” is a continuation from last week’s column, which you can see here. For information on how to grow into a critical mass business, see the June 27 "Ask Steve" by clicking here.) 

I know you were successful in this game. After 18 years pushing the wand I find myself still struggling. I make a fair living but the pressure is always there and somehow it seems like every day/ week/month contains a crisis of some sort. 

I’m still alone on the truck (I hire occasional helpers for big jobs) and am finding working alone seriously cuts into time for family and other obligations and personal opportunities. I’ve tried hiring employees and expanding. But it always seemed like between marginal employees and uneven cash flow, my expansion plans never have worked out well. 

So here is my big problem. At 44 years old, I find my body is not “cooperating” sometimes and of course, I doubt this situation is going to improve. So if you were starting over what would you do differently? Or more accurately, if you were 44 years old and stuck in the owner-operator rut what would you do? 

-Feeling a Bit Beat Up On in Omaha

 

Note: OK folks, so in last week’s “Ask Steve,” I answered Feeling’s concern with one option - staying small and prospering as a higher-priced “boutique cleaner.” (While maybe adding a helper to assist with the physical side of the work.) This will require him having the courage to dramatically raise his prices and increase his focus on delivering a higher level of perceived service. 

However, I also promised Feeling that this week we would explore his other option - growing his company quickly into a “critical mass” business, or one that will run with him or without him. Either of these options works. What doesn’t work is for him to continue as he is, as a struggling and underfunded owner-operator trying to compete with the big boys! So let’s get started… 

So Feeling, if the “boutique owner-operator” scenario just isn’t for you, then your other business route is to grow your company so it can run without you (while still spinning off enough excess profits to pay you a good retirement income!). 

This can be an excellent option if you have the fire in the belly to git ‘er done and do so fairly quickly. Remember, at 44 you’re not exactly a spring chicken! The worst thing you can do is continue as you are! So if you want to go for it… 

  1. Set a five year goal.Five years is going to put you at 50 and by this age you really should be financially stable. (I’m assuming you don’t want to depend on Social Security for your golden years!) Be very specific in your planning and write down exactly what you want to create. For example: “I want a three truck company with four technicians, a ful-time office manager and a full-time operations manager/sales rep who also functions as a production technician when needed. There will also be a part-time commercial/restoration sales person paid on commission. My work mix will be 60% regular commercial work (80% being regular contract accounts) and 20% high-end residential carpet cleaning (50% just servicing pre-paid “Stay Beautiful” contracts) along with 20% in emergency water damage mitigation. This company will gross around $500,000 yearly and spin off an after-tax net profit of $80,000.00.” Now, Feeling, I recognize for a struggling owner-operator this transformation in five years might seem impossible. (And yes, remember you must analyze yourself and decide if it will be worth the struggle.) But assuming you decide to go for it, then you will achieve your goals by following the old saying...
  2. Divide and conquer:OK, so I’m assuming you are grossing maybe $100K per year. So how are you going to jump this up four fold into a $500K plus per year company in five years? Let’s do some simple math. Divide 400,000 by 250 (The number of weeks in five years since we are going to give you a two week vacation every year!) and you’ll see it comes to $1,600 per week. Now doesn’t that seem more manageable?
  3. NOTE 1: It would be more accurate to weigh the growth with a bigger proposed weekly sales growth as your business increases, you add employees and you are freed up more personally to get out there and sell. However, let’s be aggressive up front to super-charge your growth and give you some fudge room if you hit a few bumps in the road later!
  4. NOTE 2:“Personally to get out there and sell...” Yes, no one ever said growing into a critical mass operation would be easy. You will need to personally sell and market to grow your company. Don’t want to or can’t do this? No problem - go back to my “Ask Steve” column last week and read about success as an owner-operator because with this attitude your critical mass option is off the table!
  5. NOTE 3: Bear in mind building a critical mass company and achieving that elusive personal freedom is about much more than only money. You’ll also need the right people guided by a business infrastructure formed out of written procedures and systems. But still… none of this will happen without money!
  6.  

So how are you going to grow by $1,600 per week and do this every week plus make sure it repeats year after year into a cumulative $500K company? I suggest focusing on… 

Regular Commercial Contracts

That’s right. No matter how good you are with residential work there will always be steady “customer erosion.” (Even though the “Stay Beautiful” concept I shared last week will help greatly.) 

So think seriously on adding regular contract commercial accounts which will provide consistent cash flow that will be the backbone of your company. (That’s why I suggested your critical mass business model receive 60% of its gross from commercial work with 80% of this in contract work. This translates into doing $3,500 a week into contract work.) 

NOTE: Don’t know how to sell or even bid on contract commercial carpet cleaning? No problem! For a complete free Special Report on How to Sell Commercial Carpet Cleaning (including scripts and negotiating tactics) just write me at stoburen@StrategiesForSuccess.com and put “Commercial Sales” in the subject line. 

P.S. So you have five years to arrive at these numbers above which means ya gotta sell. In my next “Ask Steve,” I’ll share some simple ideas on how an owner-operator can add commercial accounts to his or her work mix without killing themselves!


NOTE: Steve and ICS want to consult for you! For a personal reply write Steve HERE with your questions, problems, struggles and challenges! Your help is on the way! And see a new “Ask Steve” in the ICS eNewsletter, which deploys every Thursday. Click here to subscribe.

Did you enjoy this article? Click here to subscribe to i Cleaning Specialist Magazine.

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