Don't Let Your Cleaning Company Grow Too Quickly
By John Waters
The need for commercial cleaning services has increased with the continuation of the COVID-19 pandemic. As businesses bring workers back to the office, cleaning service providers must ensure those offices are properly sanitized and safe. This offers an opportunity for growth in the cleaning industry, but business owners are warned that growing too quickly can hurt more than help.
To help cleaning companies manage their growth and maintain a successful business, I've compiled a few warning signs that building service contractors are growing too quickly and how to manage it.
Strained Cash Flow
A strain in cash flow is the most common sign that your cleaning business is growing too fast. This occurs when companies start taking on too many clients and the increased cost of labor and cleaning materials means you don’t have the capital reserves to cover those costs before clients pay you.
Most commercial clients pay for services monthly and if you don’t have the cash reserves to cover the cost of taking on these new clients, your business will not survive to payday.
Johnny Pallares, the owner of De La Rosa House Cleaning, learned first hand how growing too quickly can strain cash flow when he expanded his services to commercial cleaning.
“We started to see a lot of growth, which was exciting, but we learned pretty quick that we took on too many new clients,” Pallares said. “We did not have the gross margin and cash reserves to take on those clients and we couldn’t handle the workload.”
Pallares now takes an incremental approach to growth by taking on his clients more strategically with cash flow and his team’s workload in mind.
The best way to know what growth you can handle is to properly model and forecast your growth. Ask yourself what your business would need if you went from $100,000 to $150,000 in monthly revenue. Be proactive and forecast your growth and figure what the cost of goods and labor would be when you grow so that you can determine gross margin and cash flow required. This will ensure you are growing at a rate your business can handle.
Quality And Efficiency Decline
Strained cash flow is not the only issue when your business grows too quickly. When a business grows to fast the quality and efficiency of your work will suffer.
When you take on more clients and you start to see inefficiency in your general operations and quality declines in your work, it is a sure sign your business is growing too fast.
Quick growth hurts the efficiency and quality of your cleaning company because the sudden increase in new clients pressures the infrastructure of your business that is not set up to do that volume of work. You are doing more work with the same amount of office people and with the same processes meant to deal with a smaller workload.
The best way to avoid this issue is to ensure you hire properly to meet the new labor demand and create new processes to deal with more clients.
Pallares maintains quality and efficiency by committing to hiring new managers who have experience training new people. This ensures that labor demands can be met while training new employees to maintain quality.
Meanwhile, Brad Pierce, owner of OSA Specialized Cleaning, does not take on new clients unless he has the right number of managers to ensure a job is done with the quality their customers expect.
“Understanding how many managers you need to oversee a new amount of work is key to continuing to work at a high quality when you take on new clients,” Pierce said. “If I don’t hire enough good managers to oversee the new work, then things will slip through the cracks and hurt our reputation as a diligent cleaning company.”
Pierce went on to say that not having enough managers to delegate the increased workload is a mistake that inexperienced cleaning companies make all the time.
A growing business is something every cleaning company strives to be, but growing without a plan is cutting the nose to spite the face. Taking the time to model and forecast your growth will help your business succeed without having to deal with the growing pains.
John Waters is the President and Owner of Waters Business Consulting Group LLC . Waters helps cleaning companies scale-up business, improve cash flow, reduce cost and work more efficiently. He has over three decades of strategic business development experience with proven results.
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