INCREASING PROFITS WITHOUT INCREASING SALES

INCREASING PROFITS WITHOUT INCREASING SALES

Wherever I go to work with BSCs, the one comment I always hear is "help me to increase my sales so I can add to my bottom line". Well, in this session I want to talk about the money that is in your company that will add to your bottom line without making one sale. Now, how can that be, you ask? I am going to tell you.

Finding hidden profits in your company is all about doing a periodic retuning of the accounts you presently service. I have for years used a simple process every 6 months to make sure that each account we have is running as efficiently as possible. You know what? We still miss some things. But let me give you some ideas on fine tuning the accounts you have. Not only are there profit dollars to be found but you will also create a much safer work environment for your cleaning staff which just might also reduce your workers compensation premiums.

1. Do you have current job specifications posted on the wall in each janitor's closet with a current date on them. Even if nothing has changed, I suggest you update the specifications with the current date. That tells your client you are on top of things.

2. Make sure you have a current book of MSD sheets. In this industry we sometimes change products that we use but forget to place the MSD sheet in the closet. By the way, if you are transporting any chemicals in your vehicles they also should have an MSD book.

3. Are the current company and client emergency phone numbers posted on the wall in each closet? Do you know how to get in touch with your client or your boss in the case of an emergency. I secured a large account one time because the building had a flood in the basement and when the client call my competitor, who was his contractor at the time, to get some help on the way, all the phone numbers listed were out of date or disconnected. I was happy to get the account plus I made sure our numbers were always up to date.

4. Do you have posted the emergency procedures for injuries to your staff? Who do they call, where do they take them for treatment? Do they have workers compensation accident report forms that can be completed ASAP?

5. Are all spray bottles properly labeled? Rosie's cleaner or Pete's spray buff is not a proper label. Fines from OSHA on this violation can run into the thousands of dollars.

6. Are all the keys properly marked and secured? Are all old keys properly disposed of?

Now, before I go on you may be wondering, how does this increase my bottom line? Well, let's see,
A. Not wasting time trying to figure out who to call will save you how many hours in the event of an emergency?
B. Not having huge fines from OSHA for improper labeling and out of date MSD sheets will save how many dollars?
C. Having keys properly marked and old ones disposed of saves how many dollars in lost time?
D. Having up to date job specifications saves how much time not cleaning what you don't need to clean and cleaning what you should clean?

Okay, let's go on.]

7. Is all equipment neat, clean, and safely working? Cords good, switches working, belts, brushes, bags, blocks in good working order?

8. Is the supply closet neat, clean, and in proper order? I had a customer tell me one time that was how he judged our work. If we couldn't keep our janitor's closet clean, how in the world could we keep his building clean? If your client should look in your janitor's closet today, what impression would he or she have of your organization?

9. Return all excess equipment and supplies to the warehouse. Now this can really add to your bottom line. We budgeted each account x dollars per month based on the dollar volume and other factors. Almost always we found that our staff did not need the entire amount and we could adjust the budget downward. When you take excess supplies and equipment back to the warehouse, that money goes right to the bottom line because it is now available for another job. By the way, that can include mop buckets, wringers, etc. as well as motorized equipment.

10. Has the cleaning schedule changed so that you can reduce budgeted hours? Also, it is a known fact that as the staff becomes more familiar with the facility they learn that hours can be reduced and by doing this six months review you can make the necessary budget adjustments.

Just think, if you can reduce 15 minutes a night on 10 five night per week accounts the equates to 54 hours per month. If your average wage is $10 plus 20% for taxes and insurances, you will save about $650 per month. That's nearly $8,000 per year. That, plus whatever you can save on supply and equipment costs. And what about the other intangibles like customer retention, insurance cost reductions due to increased safety etc. etc.?

Keep also in mind the chart I referred to in an earlier session when I discussed "It's only 5 minutes". If you missed it you can go to my web site at www.consultantsincleaning.com, click on the DVD icon, then go to the left of the page and you can download the chart FREE. Add that to the dollars above and you have some real money and as Yogi Berra said if you have money you can use it the same as cash.

I hope you will take the time to review your current accounts. I can almost assure you that you can increase your profits without increasing your sales.

Don't forget the BSCAI Executive Seminar coming up May 11 and 12 in Scottsdale, Arizona. I plan to be there and would like to meet as many of you as possible. You can register by going to bscai.org.

Till next time.

WHY YOUR EMPLOYEES QUIT

This week we want to continue on with the subject of training and the pitfalls of not doing it. As we stated last week, in this session we want to discuss the 5 major reasons why employees quit.

1. NOBODY TOLD ME WHAT TO DO---This is not to be confused with "nobody trained me on what to do". This goes deeper to the root of the problem. This says that when the employee was hired, they were told something like, "Go to the building and do janitorial work, you'll find everything you need in the closet". That's about the same as in an interview asking the employee about their experience and having them tell you they vacuum their house once a week and take the trash to the curb every Thursday so we all agree that must qualify them for the job.

What about your company? What do you say to your new recruit that you just invested hundreds of dollars in to find, interview, and put on the payroll?

2. NOBODY EVER COMPLIMENTS ME---This reason should come as no surprise. People working in the service business usually only hear about something when there is a problem. What about you? Is the only time you communicate with your staff is when there is a problem?

In the building service business, the usual procedure is for the supervisor or manager to come to work and ask the question, "Any complaints today? What problems am I going to face tonight? Who isn't coming to work this evening? How many people won't come to work tonight and not even call in"? Sound familiar?

Let me ask you, When was the last time you went to work and made a conscious effort to compliment your staff on a job well done? Today? Yesterday? Last week? Never? It's a jungle out there. True, but the compliment you give your employees today or tonight may be the only good thing they hear today. They may have spent the entire day fighting off creditors or arguing with a spouse or child. Try giving a compliment, you'll like it and so will they.

Why not create a file of your employee's birthday and the anniversary date of their employment and make a conscious effort to call them or stop by their work station on those important dates and congratulate them.

I know of managers and supervisors who will pick up pizza on a Friday night and deliver it to a crew if they have gone a period of time without a complaint or no one was absent etc. Create your own reason for doing something like this. By the way, stay and enjoy the pizza with them. Amazing what it will do for strengthening your relationship with them.

3. THERE DOESN'T APPEAR TO BE ANY ROOM FOR ADVANCEMENT--This reason is really interesting. At the time your employee is leaving your company because there is no place to advance, the employer is shouting to the world, "I can't find any good supervisors and managers". Sound familiar?

In my job as a consultant to many companies I get asked frequently if I know of any good managers etc. anywhere in the country. Most of the time I can answer yes, in your own company. They really are there most of the time. We just need to locate them and then give them the training and opportunity to succeed.

The current supervisors will generally tell you that they have no one to promote because if they give you one of their good people, that means they have to go to work and train a replacement. Bummer. They have their building running smooth and don't want to have to work harder so the answer is you have to dig deeper and become more familiar with the second level management. In my book, Finding, Training and Keeping GREAT Service employees, (available on my web site) I go into detail on how we developed that next level of supervison and created a stable of available site managers. Just as importantly, we had fun doing it and got to know a lot of good people.

4. NOBODY TRAINED ME--This reason is a continuation of the first one where they said nobody told me what to do. When I talk training, I am not talking where someone is hired and then sent out with a current employee to "learn the ropes". These may be the very ropes you want to get rid of. That current employee may only show them a series of WRONG ways of doing what it is you want done. My philosophy is ON THE JOB TRAINING ONLY IS A RECIPE FOR ON THE JOB FAILURE.

I know of many companies who justify on the job training by saying they want the new employee to see how it is really done out in the field. In many cases, that's the problem. It's being done WRONG out in the field and if you don't have a formal, written training program you only amplify the problem by sending out new employees to learn how to hang themselves with that rope you are needing to get rid of.

Create a training program, commit the resources to it and make it happen asap. You WILL see positive results.

I know of and have worked with companies where we have focused their efforts on these 4 of the 5 issues and have seen turnover rates go from 325% down to as low as 40%. Most settle in at about the 75% number. To a company such as a law firm or accounting firm that number will seem high, but if you are in the Building Service Contracting business, having a 40%-75% turnover rate is real progress in the grand scope of things.

5. BENEFITS/PAY--I fully understand that benefits and pay are very important issues and I have always tried to keep them in focus as well as the first four. The reality is this...many times service employment such as contract cleaning, food service, retail clerks and similar positions are considered entry level positions and benefits and pay will always be an issue UNTIL staff members are trained to a point that they can move up the ladder and make a career of it. Career opportunities abound in our service sector but we need to tell the story and make the commitment to recruit and train a primary focus of our individual company's growth. The GREAT people are there, we have the responsibility to recruit, train and keep them.

In the meantime, I tried my best, not always successfully , to be at the top end of the pay scale for the positions I had in my company. We tried to be sure that if someone committed to our industry as their career, we would be near the top in pay and benefits. You always want to put yourself in the position of having the best trained and compensated people. Believe me, this will pay dividends in the long run. Remember we are offering careers, not just jobs.

Hopefully this information has been helpful to you. There is so much to say on this subject and I am very passionate about recruiting and training and keeping GREAT employees that I could go on writing forever but you probably don't want to go on reading forever. (Hopefully you made it this far).

A couple of final points,

In May, BSCAI will be holding their annual Executive seminar in Scottsdale Arizona. I want to encourage you to attend if at all possible. I plan to be there. If you go, come up and introduce yourself. Would love to meet you.

The second thing is don't forget our weekly free podcast at www.tripodcast.com. Many are video and audio and you can sign up to get a notification every time we post a new podcast.

Until next time.

I DON'T HAVE TIME TO TRAIN

If only I had a dollar for every time I have been told that by a contract cleaning owner or manager. The most common statement generally goes something like this, "Why should I train them, they'll just leave in a week or two anyway"? And my answer is "You bet they will leave if that is the attitude you take toward the most valuable asset you have, YOUR EMPLOYEES".

There is no question there are a certain number of employees that will grab a paycheck and run or will take a job and not show up for work the first night or walk off the job after they get there. I suggest to you that more often than not, the reason these events occur is because of our failure to communicate properly the requirements of the job, the training needed and the important part they play in providing customer satisfaction.

Let me spend some time here making the case for taking the time to hire properly, train properly, and communicate properly. The points we make will be extremely critical to the success (or failure) of your business and we'll discuss them in greater detail in later sessions.

Retail stores and manufacturing facilities have a tangible product as their inventory to sell to their customers. Our inventory is the employee we place in the customer's facility to clean it for them on a regular basis. I don't mean to compare a human being with that of physical inventory in a store but the analogy is important in order to illustrate the importance of the employees you have in your organization.

When you walk into a grocery store you expect the inventory to be of top quality. Don't your customers have a right to expect the same from you?

In the contract cleaning industry, the average turnover rate is approximately 325% per year which means for the employer that has 100 employees, they will make 425 W-2s at the end of the year. Pretty overwhelming, isn't it? What about your company? Take the time to check what your turnover rate is. I'll wait here until you come back.

Okay, now that you are back, what is your turnover rate? For those of you considering starting in this business or have an emerging company, this area can cause you a lot of headache and heartburn.

Let's look at the economic impact high turnover has on our company. Studies have shown that the cost of turning over ONE employee in our industry costs about $500 computing all of the expenses involved with recruiting, orientation, and training etc.

Now going back to the illustration of 425 W-2s needed to staff 100 employees at 325% turnover, the cost to the bottom line is $162,500 per year. That's a pretty big number no matter who you are.

Okay, so you only have 10 employees and made 42 W-2s last year. It only cost you $16,000. Getting the idea that turnover is expensive?

So what's the answer to reducing turnover and providing quality stable "inventory" for our customers? Studies have revealed in our industry that the major reasons that our employees leave are..

1. Nobody told me what to do.

2. It appears there is no room for advancement

3. Nobody ever compliments me on a good job.

4. Nobody trained me on my job.

5. No benefits.

Did you notice that pay is not at or near the top of the list? Surprised?

In our next session we will address each of these items and how we can solve the problem in order to reduce turnover and increase our bottom line and customer satisfaction. Hope you will return.

Later and MAKE IT A GREAT DAY. By the way, in future sessions we will be discussing the impact different generations have on your business and also how tuning up your company can provide enormous profit dollars without adding additional sales.

IT'S ONLY 5 MINUTES

As you start to build your business, managing your time and the time of your staff becomes more and more critical. Many people are pulling you in many different directions and your day can become one of frustration. Your time management is one thing you will struggle with constantly.

One area that requires your tight control is the actual cleaning budgets in each building. Let me emphasize that you need to be monitoring these at all times and doing every 6 month account retuning audits. We will discuss the audits in a future blog. You will find as your crews get more familiar with cleaning a facility they learn where to reduce time and in most cases are not forthcoming in telling you to reduce the budgeted time in the building.

One of my pet peeves has always been one of wasted time when we clean facilities. We live in a competitive environment and try to budget the time as accurately as possible and when we are wasting time in the building, chances are something is not being cleaned to the level we committed to the customer.

Let me give you a wasted time example that happened to me.

We had a 7 story office building that we were cleaning with a crew of 4 people, 4 hours per night for a total of 16 hours per night, 5 times per week. The customer would call quite regularly and complain that we were missing the little things like gum wrappers in the staircases or a trash can in a suite here and there. I could tell she was becoming quite agitated about these issues and I was constantly in communication with my crew to correct the issues.

The crew was adamant in the fact that they just didn't have enough time to do all the work that was required in the allotted time. If they just had 15 minutes more each per night , 1 hour total, the cleaning problems would be solved. I told them I would see what I could do. I worked up a new pricing model and was finally able to secure a 4 PM appointment with my customer and rushed up to see her and sweat blood as we negotiated for 2 hours and finally she agreed to my modest increase and explained she expected no more problems.

I left her office at 6:15 and decided I would go to the basement break area and have a soft drink, relax, and then find the crew to give them the good news. Well, as I got off the elevator and walked in to the break room, lo and behold there sat my entire crew visiting and enjoying their own soft drink. Do the math---4 people, wasting 15 minutes each equals 1 hour---the hour I had just worked so hard selling to a reluctant client. I counted to 10 (maybe 20) before I asked them when they planned on going to work and explained the difficult time I had just had getting more time for them to make their live easier.

It came as no comfort to me when they explained that, "This is the first time we have ever done this". I left the building without a soft drink. In the weeks to come, they became former employees.

What I have just explained is an example of other people controlling time and eroding profit dollars for the company. When incidents like this occur, they are controlling your destiny, you are not. Be alert to the time wasters that can devastate an organization.

Did you know that if you have 10 employees that waste 5 minutes per day and you pay them $10 per hour that equates to lost dollars of $2,520 per year? That assumes they only waste 5 minutes a day. I am guessing you have some employees that waste more than that. What will $2500+ buy for your organization (or for your spouse).

If you go to my web site at www.consultantsincleaning.com and click on the DVD icon and then click on the support material section entitled "It's only 5 minutes", on the left hand side, you will be able to download a free complete chart of what 5 minutes of wasted time equates to at different employee levels and different pay scales. It will amaze you.

I remember showing the chart to a contractor at a BSCAI convention and it made him physically ill. You see, he had 3,000 employees with an average wage of $15 per hour. That equates to $1,134,000 per year.

So the next time you or someone in your organization says "It's only 5 minutes", remember this article and what 5 minutes can really mean.

Thanks for reading and MAKE IT A GREAT DAY.