Three Keys To Profitability
It’s my goal with this column to guide building service contractors toward becoming elite service providers. To distinguish yourself from your peers, you must put in place processes and people that drive your organization toward superiority. Top-tier BSCs often leverage technology, hire the best workers, and provide exceptional customer service. But, perhaps most importantly, these elite BSCs are profitable.
Over the years I have found three processes to have the greatest effect on increasing profits.
Real-Time Labor Tracking: Direct labor accounts for roughly 60 to 70 percent of all costs associated with running a janitorial business. This labor determines whether our client’s needs are met each day. If employees are spending too little time on a job, quality could be suffering and client satisfaction dwindling.
However, labor can also lead to eroding profits. If cleaners are spending too much time on the job, money is wasted. Therefore, you must have a mechanism in place to monitor your labor hours in real time.
Digital timekeeping systems allow managers to know when employees clock in and out, track the daily hours worked on each job, and manage labor with budget hours reports. Managers should monitor hours reports daily to ensure work is being done within the specified time range, watching for outliers that could indicate poor quality or lack of efficiency. Additionally, many timekeeping systems will notify you when employees do not show up on the job, giving you time to make adjustments and avoid missed service to the client.
Partnership Meetings: Obviously, BSCs can’t make money without customers. Account retention rests on two factors: the quality of service and the relationship with the decision maker. To ensure both quality and relationships are strong, routine partnership meetings are essential. Basically, a partnership meeting is a proactive, formal meeting with a customer decision-maker to achieve a few objectives:
1. Assess and shape the customer’s perspectives on quality.
2. Learn how to improve service to exceed customer expectations.
3. Discover value-added services that will improve profits and customer satisfaction.
4. Establish a customer satisfaction score.
5. Secure contract renewals to avoid the bid process.
Partnership meetings, held quarterly or monthly, promote strong relationships, leading to long-term profits and client success.
Incentive-Based Compensation: Sharing profits is the best way to increase profits. The behavior of your managers can be shaped through incentive-based compensation, driving them towards the actions most beneficial to the company and its customers. When you tie pay to performance, you communicate which things are most important to the company. Quarterly profit sharing, account retention bonuses and extra-bill commission are all ways to “push” managers toward effective behavior.
Although there are certainly more ways to increase profits, these three have certainly had the biggest impact in my organization. Implement them in your contract cleaning company and see the difference it makes.
Jordan Tong is a BSC consultant and founder of Elite Business Coaching, in addition to being a third-generation owner of Frantz Building Services based in Owensboro, Kentucky. For more information on his coaching services, visit www.elitebusinesscoaching.net.