Are you making enough money in your cleaning business? How do you get the cleaning business profit you need to grow your business and feed your family? Episode 148 Kenneth Henry Ready Maids Today Mike coaches Kenneth Henry from Ready Maids on how to get his Cleaning business profit high enough to put money back into his business to build it. First, Mike addresses the quick issues: Kenneth has a partner. As a single owner, if a good margin is 20% and you gross 500k, that’s 100k in profit..but if there are two owners that’s only 50k a year which isn’t all that great, especially for all the hard work you put in! In addition, that doesn’t leave a whole lot of margin left over for growth. So, how do you compete with other cleaning companies with only 1 owners? The reality is, you have a huge advantage over cleaning companies that only have 1 owner. The tremendous advantage you have with having a partner is you can divide and conquer If you want to take a vacation you can because the other owner is there to cover for you. If you need a day or a weekend with your family and just not think about the business to regenerate you can. More relevant to this question, if you want to take time to work on the business and not in it, you can because you have another owner covering that aspect. Consequently, with two owners, you should really be growing 2x as fast! When you’re as small as Kenneth’s, the business is more of a job than a business you can run. But as he transitions to a business and he has other people doing the work, you should be able to transition and grow twice as fast. If you are in that transitional phase and are ready to start hiring your first employees check out This Video. KEY POINT: You have to leverage that other person to be able to make the money for both of you. Both people have to pull their weight. But if only one person is doing everything and other other isn’t. That’s just not going to generate enough cleaning business profit to feed both of you. What about margins? One of the most common “biggest mistake you’ve made” we hear is not charging enough for service. There’s really only two ways that your margins can be bad or crunched. You aren’t charging enough You are charging enough but it’s costing you too much to do the service With bigger businesses you tend to have big offices, storage areas, cars, cleaning managers, sales managers, supervisors etc. It takes a major bit out of your cleaning business profit. But, just as important as hiring those people is having systems and a plan for your business to grow. When you’re ready to go through your Cleaning Business Plan Check out this Video Blog. In those cases the lack of cleaning business profit can definitely be spending too much to provide your service. But with smaller businesses like Kenneth’s 9 times out of 7 at his level, he’s just not charging enough. Why do you undercharge? Part of the problem with undercharging is when you love your customers, you want to take good care of them. But the bad part is you make a wrong connection. This happens all the time with business owners: They think A, and A is true, but then they assume B but B isn’t true and that screws up their whole business. So, if you think because I love my customers and I want to treat them well, charging them “too much” is somehow taking advantage. You worry they will discover that what you are doing is not really anything magical or worth any money. Let’s set your mindset straight! Two of the most “profitable” or “valued” companies in the world are Google and Apple. The reason they are most popular is not because their customers hate them or think they’re over charging them or are screwing them. in fact, they have some of the biggest margins in the world! Think about it, Google is just selling air, 1 and 0’s. Some people pay hundreds of dollars for a click from google Adwords. Apple sells their phones for $700-$1200 and probably pays less than $100 to have them made in China. But the reason their customers love them is that with that massive margin they can serve them better and provide unparalleled customer experience. KEY CONCEPT: Cleaning business profit is required to serve your customer. Some of our customers will say “I want the cheapest price”. “I want a dollar for a nickel”. And some of them really mean that, but they aren’t who you want as a customer. You can’t make any cleaning business profit from customers that aren’t willing to pay you for your services. What most of them really want, even most the ones that say they want the cheapest price is “I want superior service”. “I want to feel like I am being taken better care of than my neighbor”. “I want to feel like you are solving my problems and making my life feel better”. When you are selling cleaning, you are selling luxury. When you’re selling milk you’re selling a necessity. If I want milk, I don’t have a cow, I have to go to the store to get it. But cleaning is a luxury. Most everyone knows how to clean. No one calls you and says “I have a dirty house and I have no idea how to make it clean again”. Their pain isn’t the dirty toilet, it’s TIME. They just don’t have the time or energy to do it after working all day and dealing with their kids and/or spouse . Which leads to another missed mental connection: Because your customer knows how to clean, that your service isn’t worth any money. But it’s the exact opposite. Because they know how to clean and are willing to pay someone do it for them, they have enough pain in doing it themselves, they want it solved. So, you aren’t selling ” I have a dirty house, and I want it clean”. That’s where you get the customers that are trying to chince you out of every penny. As a result, your cleaning business profit takes a nose dive. What they are really saying is ” I don’t have the time or mental/physical energy to clean it myself after a long day” As soon as you move from ” I am going to clean your toilet” which is a task they know how to do and is a $5/hr task to ” I am going to solve a problem that you have” now cleaning business profits go up! If Mike were to say “Hey Kenneth, spend $1000 with me and I will give you an hour of my time over the phone”, he would likely say “that’s crazy, not thank you!” But if he said “Kenneth, give me $1000 and I will transform your job into a million dollar business” , suddenly that becomes something much more enticing and worth while. The over reaching point is, go in solving a problem for your customer i.e. giving you time back for your family, or a home that’s safe for your kids, or amore productive place for your employees. So how do you do it? Another big mistake cleaning business owners make is thinking ” I could never charge $40-50 an hour, I’ve cleaned and it’s not worth it, I don’t have a real skill they don’t already have”. So when you start cleaning by yourself, you tell yourself “well I’ll just charge $20-$25 an hour because that’s really good wages and I’ve never made that before. Let me just charge that” The problem with that is, you’re making a huge poor assumption: I am getting paid $25 an hour to clean and that’s really good wages. But the problem is you aren’t making $25/hr. Ask yourself: How did you get that account? Did you answer a call on your cell phone? Did they respond to a website that you built? What about going out there to bid the job? How long did that take? How long did it take to create the bid? Did you use bidding software? These are all costs, whether time or money to you! On top of that, if you have an office, insurance, buy supplies etc.. those are also all costs eating into your $25/hr and your cleaning business profit. You are really fooling yourself when you think you are actually making 25/hr. Sometimes, when you break it all out with your time and resources, it breaks down to something more like $3/hr. The key point is, your customer isn’t paying you $25/hr to clean, they’re paying for a system that ensures their home is cleaned. They want to know when they get home once a month, twice a month, weekly, that their home is going to be clean. They are paying for a result that solves a pain and gives them back something that you can’t outsource to India. TIME. Kenneth wraps it up in the….