- THE MAGAZINE
- Sam Levenson 1911-1980
Her name was Carole Smith. A close family friend who 30-odd years ago bravely (and foolishly) offered to let me practice my profession on her shag carpets with my new portable carpet extractor. Four days later she called me:
“Steve, I hate to bother you. But should my carpets still be wet? And there is a really strong mildew smell that wasn’t there before the cleaning. I hate to be a pest but…” Ah, the memories!
Yep, in my 20-year career as a carpet cleaning/restoration business owner I made every mistake in the book, and then went on to invent new ones! And over the last 15 years as an industry consultant I’ve had a great view of many other business errors. So as I waxed nostalgic, I made my very own Top Ten List of the Most Common Dumb Start-up Mistakes and yes, I made every one of these blunders when I began my business. Last month we looked at the first five:
Mistake No. 1:
Failure to set personal life goals. How can you achieve long-term goals if you have never defined them?
Mistake No. 2:
Letting others define your “success.” Far too many insecure individuals pattern their business (and life course) on the advertised and supposed success of other people.
Mistake No. 3:
Lack of expert support and advice. This is a lonely business and learning by experience (re: your mistakes) is a brutal and expensive teacher.
Mistake No. 4:
No grasp of the Emotional Dynamics of working in the customer’s home. Eighty percent of how the homeowner determines whether you have done a good job or a bad job (and if they will recommend you) will be based on the relationship they have with the person working in their home. Failure to grasp this means lots of complaints, plus falling into…
Mistake No. 5:
Not Making the Cheerleader. You must dramatically exceed the home-owner’s baseline expectations so that they become Customer Cheerleaders, actively promoting your services to everyone they meet at no charge to you!
Any one of these first five mistakes may stunt your business growth and condemn you to a marginal and frustrating life. However, even if the average just-starting-out carpet cleaner manages to avoid and/or survive the first five, they often fall prey to the following business boo-boos, any one of which can be fatal to a new company.
Mistake No. 6 – Trying to be all things to all people
Starting out it is so very easy to fall into a desperate “survival mode.” After all, none of us decided to become carpet cleaners for the sheer joy of stroking a scrub wand! Instead, since you have to eat and pay the rent, you grab every job that comes along. But especially in a large population base, it is much better to specialize. Will you go after large-scale contract commercial, apartment move-outs (don’t laugh – there are some very successful operations that only clean apartment complexes), restaurants (once again, don’t laugh. Properly done, regular “route cleaning” of restaurants can be very lucrative), high-end “prestige” homes or large-volume residential? Remember, it usually makes sense to focus on one geographical area in a large city. Less driving time and fuel wasted and a bigger bang for your marketing buck. And speaking of marketing…
Mistake No. 7 – Not defining your visual image
Once you have decided on your market segment you must get your graphics in order. By consistently using a professionally designed logo/ color scheme on all your vehicles, signage, uniforms and advertising, you will greatly increase the effect of your marketing dollar. Remember, graphic design does not need to break your start-up bank. There are many marketing consultants working out of their homes who will be delighted to give you personal attention and design a full graphics package for you very inexpensively.
Mistake No. 8 – Blowing your marketing budget on mass-media advertising
As a small operator you just can’t afford to compete advertising-wise with the established big boys. A large metropolitan area will require countless thousands of dollars to even make a dent in the consciousness of your market base (And remember, with Yellow Pages you will be committing for an entire year!). Instead, look at targeted niche-type marketing such as hand-delivered flyers, postcards and regular newsletters. Don’t forget the simplest, fastest, cheapest and most effective marketing method – you personally sucking it up and knocking on doors, “Face to face, belly to belly” with the owner, asking for the work, will always be your fastest way to get that essential cash flow started – and yet almost no one will get out there and make sales calls. Trust me, I dreaded face-to-face selling too. But I had an even bigger fear of going broke. Desperation is a wonderful motivator!
Mistake No. 9 – Not buying the best equipment and chemicals
Notice I didn’t say here the “most expensive.” Obviously, a start-up entrepreneur must control his overhead. But your personal labor and time will always be your most expensive cost of doing business. So buying reliable equipment that will let you work faster, better and/or more efficiently is a no-brainer. Effective chemicals also fall into this labor-saving area. Even if you buy the most expensive juice out there, you will spend only two to three percent of your gross on chemicals. It just doesn’t make sense to buy less than the best.
Mistake No. 10 – Not ‘doing it right’ when hiring employees
Maybe this business boo-boo should be titled “not deciding right from the git-go if I will hire employees.” You can be very successful as either a solo “lone wolf” owner-operator or as a large scale company with many employees. The problem is many carpet cleaners wind up in an excruciating area somewhere between- what I call “too big but too small.”
Now let me share what is possibly the most common and often fatal blunder new operators make in the carpet cleaning industry.
Bonus Mistake – Not charging enough
It is truly insane. Most carpet cleaners out there are terrible managers and have no clue on the true cost of doing business. Yet a start-up carpet cleaner usually sets his or her pricing by checking the bait-and-switch ads, making a few anonymous “price-shopper calls” and then charging even less than their idiot competitors are! Letting your marginal competitor serve as your “pricing consultant” is a sure-fire route to disaster. And yet this is exactly how most carpet cleaners price their services.
What is so sad here is most customers will pay more if you ask them to. In fact, most homeowners can’t even remember what they paid for their last carpet cleaning. But no one is going to say, “I think you should charge me more.” You will never get what you deserve until you request it.
If your business conscience is kicking you right now, don’t feel bad. You are not the only one. I also lost far too many years (and missed out on a lot of money) by playing the “setting-my-prices-based-on-fear-the-phone-wouldn’t-ring” game. Then one day I woke up and started to use my admittedly inexact “POP” pricing model. I wanted to my prices to be right on the edge of the customer’s “point of pain”! My goal was for my prospects to consistently exclaim, “Wow. That is quite a bit more than I was expecting. (Long pregnant pause) But my neighbor said you folks did a wonderful job. How soon can you fit me in?” If I had this conversation at least once a day I know I was in the “sweet spot” on pricing. What I did not want to hear after timidly quoting a price was, “Oh. Is that all it is?” Ouch!
Setting your prices should not be a fearful, emotional exercise. Instead, just add up all of your current and projected future monthly expenses. Then include an additional amount for repairs, equipment replacement and to cover the ever-present “Murphy” (unforeseen problems). Don’t forget to pay yourself a living wage, and your spouse too if he or she works in the business. On top of this, you deserve something called “profit” which is your reward for all the agony of avoiding the previous ten mistakes! Now divide this shockingly large amount by the number of working days per month. Now you have your daily “nut.”
Throw your fears aside and set your prices accordingly. As my mother always used to say, “It costs nothing to ask.” I would add, it may cost you your business if you don’t ask for the price you need and deserve!
So there you have it. Eleven huge “starting out mistakes” and yes, I made every one of them when I opened my business. And sadly, right now many new carpet cleaners are making the same boneheaded blunders. Even more embarrassingly, some carpet cleaners with many years of experience are still trapped in the dead-end existence these mistakes lead to. Learn from my screw-ups and you’ll save a huge amount of money and, even more important, you’ll cut years off your business learning curve. Go get ‘em!