Today we’re talking with return guest and all around rockstar, Dave Foellinger, President of the Jack Laurie Group! This episode was full of so much Cleaning Nation goodness, we had to split it up into two amazing shows, so stay tuned for the next episode and conclusion of this awesome episode.
Today, Dave and Mike are discussing how to scale his already flourishing business. You can check out Dave’s company at https://jacklauriegroup.com/
Dave and Mike have worked together 1on 1 for a while, going through the Clean Profit Method and implementing it and more advanced strategies to grow his business. Dave is looking to 10x his business, but realized to do so it seems that he needs to expand his niche. Dave wants to know if he needs to expand his niche to scale his business or can he achieve his goal with his current niche?
RESOURCE ALERT: What You Need to Know Before Expanding Into New Areas
To answer this question, follow these three steps.
The first step is to define your goal, which is something Dave has already done.
His gross margins are 42% for a normal clean, 60% for a specialty floor clean and 35% for a janitorial clean. Even with taking competitive bids, he’s figured out that his gross margins for a normal clean can drop to 35% and his overhead would only shrink to under 20% of his gross revenue. This places him at 15-20% net revenue and ensures his cleaning company remains profitable.
Knowing that he can afford to expand out of his regular niche, the second step is to define what your regular niche is, who you’re willing to take on next and who is still a hard no. This categorizes potential clients and makes it a quick decision whether you should onboard them or not.
To categorize these clients, define who your green, yellow and red clients are.
Green clients are the customers you put your time, money and passion into. They are your ideal niche. For example, Mike’s green clients are cleaning company owners.
Yellow clients are customers who you don’t put effort or money into finding, but if they need help you’ll say yes. For example, Mike’s green clients are cleaning company owners and a yellow client would be a car dealership who needs lead generation help. Mike wouldn’t put money into marketing his services to car dealerships, but if a dealership came to him at the right time, he might say yes.
Red clients are the customers you say no to without exception. For example, they would be a furniture business who wants Mike to start a podcast on how to make your own furniture. Yes, he could do this but it would be so far out of his niche it would end up costing him time and money.
To this point, Dave has been very strict to say no to all of his red prospective customers. But, he’s done the math and sees that expanding his niche would not dilute his overhead.
Step three is to verify how much you can make in your current niches. The reason you do this would be to see if your current niche is able to get you to your long term financial goal. For example, let’s say your goal is to make $100 million dollars. Currently, you make $10 million dollars, so you need to make $90 million to reach your goal. If your current niche’s total revenue spent is only $50 million dollars, you know it’s not possible to meet your goal and you need to expand to reach the $100 million goal.
RESOURCE ALERT: Cleaning Service Pricing Mindset
There are three ways to contact red clients,
1. Remove one criteria from your original red clients
2. Add a new vertical, such as car dealerships, golf courses, square footage, etc.
3. Expand geographically
Scaling your business by expanding out of your niche can be a good idea when the right process has been followed to make the decision.
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