Speciality Services Offer Profits, Pitfalls
When building service contractors look into expanding their business, they may examine several methods — spreading out geographically, growing with their customers, or branching into a new specialty.
Those specialties, which can include exterior maintenance and graffiti removal, fire and water damage restoration, duct cleaning and mold remediation, look lucrative at first blush. And they can be, with significantly higher profit margins than janitorial work.
However, contractors who’ve expanded into specialty services caution other BSCs not to rush into those markets — diversification takes education, dedication and often significant financial investment and risk.
One such investment — and risk — can be from setting up the specialty service as a self-contained division.
“When we diversify, when we decide it’s worth our while, we make the investment to make it a separate division of the company — we have different people, a necessary complement to do everything from start to finish,” says Jeff Bishop, technical advisor to the Institute of Inspection, Cleaning and Restoration Certification (IICRC) and a BSC in Albany, Ga. The IICRC certifies firms in a variety of specialties, including fire and water restoration, mold remediation and commercial cleaning.
“We do janitorial work in about 100 buildings,” he explains. “We also have a fire restoration division, and a water-restoration division.”
His fire and water restoration divisions are separate from the janitorial business, and from each other, and that’s key.
“It’s definitely a commitment,” agrees Matt Mongiello, vice president of Interior Maintenance Co. in Lansdowne, Penn., a BSC with a duct-cleaning division. He also is treasurer of the National Air Duct Cleaners Association (NADCA). “We made, as a company, the decision to go into a whole different division — it’s difficult to do this on the side. You have to commit to doing it full-force.”
Both Mongiello and Bishop say it’s a good idea to keep separate staff for each division of the company.
“You could imagine what would happen if I had my loyal janitorial crews and told them there’s a fire claim in the morning,” Bishop says. “They’d ask, well, what about the janitorial contracts we have to clean that night? It’s a totally different business, but some people look and see the profits and think it looks easy — but we’re performing on a whole different level.”
Compare and contrast
All cleaning specialties have their quirks, and BSCs who are interested in diversifying need to remember that many tasks are unlike regular janitorial work, and that staffing, marketing, and purchasing will all need to be adjusted.
For instance, if a company is doing disaster restoration, the staff will need to be flexible and expandable.
“Janitorial service is performed primarily in the evenings; disasters come in at any time,” says Bishop.
Other one-time work, including graffiti removal and mold remediation, will be done during the day, but still requires flexible, on-call staff for a quick response.
In addition, specialty crews require different, more complex skills and training.
“There is a certain amount of skill and training involved in duct cleaning,” adds Mongiello. “You still have to have some knowledge of an HVAC system and be trained to cut into sheet metal, and have some knowledge of tools.”
Also liability is greater than with standard janitorial work, Bishop points out — if a water-damage or mold-remediation job goes wrong, there can be long-lasting IAQ and health problems. This all translates to higher training costs, and a higher wage for the worker.
“It’s nothing you can’t train, but we use different staff, and higher-paid staff,” Mongiello says.
Marketing targets also would be different, says Bishop.
“For disaster restoration, instead of marketing to building managers, you’re marketing to insurance companies,” he points out.
And, where duct cleaners, mold remediators and those doing exterior cleaning or graffiti removal might look to their existing customers for business, it doesn’t always work out.
“It depends on who your base is,” says Mongiello. Facility-management companies don’t generally contract with duct cleaners unless there’s a problem, he says. However, hospitals, schools and others might be more inclined to hire duct cleaners, as are residential customers.
Contractors doing speciality project work also need a significant amount of equipment, and a place to store it.
“The equipment has to be sitting around your facility, and ready to respond day or night,” Bishop says. “For a water restoration project, you’d need to start diversification with 50 air movers/carpet dryers) and probably 20 dehumidifiers in order to be able to operate correctly. Most janitorial companies will have 4 or 5 dryers to be able to dry floors and carpet when they clean it. It’s like talking day and night.”
Even with all of these caveats, contractors with diverse operations say expansion can be worth it.
“The profits are much larger — if you can make three to five percent on a typical janitorial operation, it’s pretty good,” says Bishop. “With restoration, you can expect to have profits of 15 percent to 20 percent because it’s a lot more specialized, and you have to have pretty skilled personnel.”
Before taking the plunge into a new specialty, experts recommend getting as much education as possible.
“If I were a contract janitorial company, and I thought I wanted to diversify into, say, water – I’d go into a water restoration class just to find out if I want to go into water restoration in the first place,” says Bishop. “The best way to get a feel for it to go to an IICRC-approved course in the area, and find out what it’s about. There’s a lot more to it than listening to someone at a bar at a convention say you should go into restoration.
“Go to the seminar, sit through it, and find out what it’s all about,” he continues. “It’ll be worth your while, and you will not be stuck in something you just can’t do because you did not prepare yourself adequately.”
When Mongiello’s company decided to diversify into duct cleaning, its principals got training and joined NADCA.
“It certainly helped in getting us the training and getting us to the suppliers and the equipment, and some networking opportunities and it opened our eyes,” he says.
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