With costs seeming to rise on a daily basis and inflation rising, the DCBN is on a mission to help you manage the costs and make more money in your cleaning business. So here are our top ten tips for reducing costs and increasing your profit margins:
1) INCREASE YOUR PRICES
Just a 10% increase in your hourly rate can make such a difference to your bottom line and even if you lost 10% of your customers you’d still be making the same money, but working less hours! If you feel you can’t increase, then perhaps invest in some sales skills training so you can. Remember that you are selling value and solving a client’s problem! You will have to ensure service levels justify the price increase, but so long as you are delivering a great service then most customers will value you and stay loyal. In the DCBN training library there are webinars on raising prices without losing customers, selling at the price you deserve and more… https://dcbn.org.uk/training/
2) SACK C AND D grade CLIENTS
A grade clients are amazing, they value what you do, pay on time, give constructive feedback, recommend you to their friends and are your most profitable clients. Your B clients are great too. Maybe they don’t recommend you, but they always pay on time, you and your team like cleaning their house and they are geographically close to others so make you a decent profit.
C and D grade clients (Cheap and Dreadful) on the other hand are often the time soak clients. Maybe they won’t book enough hours for you to deliver a great service, maybe they are always late paying, perhaps at 2 hours a fortnight its just not really profitable, or maybe you took them on early on in your business and the geography doesn’t work for you any more?
Focusing on A and B grade clients is the way forward to better profit margins for your business. In the DCBN training library, there are webinars on marketing and selling that will really help you identify who your A and B customers are and how to get more of them!
3) USE A CREDIT CARD AND STORE CARDS FOR EASIER TRACKING AND BONUS POINTS
This can be a great way of getting some ‘free money’ as well as making it easier to track your business spending.
Maybe you buy a few bits for the business at Tesco or Sainsburys or others? Make sure you have a store card so you can collect points to discount your purchases next time.
Having a business credit card can be a useful way of tracking what you spend, which will make your book-keeping and tax return much easier. Some cards will give you cashback, air miles and bonuses so worth shopping around for the one that suits you best. Make sure you pay it off each month to avoid interest and it will also build your business credit profile in a positive way too!
4) IMPROVE STOCK MANAGEMENT
Are you a bit of a cleaning supplies hoarder? Do your team have free access to all the supplies in your stock cupboard?
If cleaning supplies stock is a bit chaotic as you’ve overstocked, it’s easy to lose things and then end up buying them again, wasting money and reducing profit margins. Keep a stock list and implement a better stock control and ordering system to ensure you’re not using up space and money on products you don’t need
When supplies seem to be plentiful its human nature to take more than is needed, so ensure you have a way of monitoring and measuring usage and perhaps consider ways of managing supplies better so there is less waste, or less of a free for all in accessing supplies by limiting access to storage areas.
5) SWITCH TO COMMERCIAL CLEANING PRODUCTS
Those discount shop bargains aren’t really a bargain when compared to professional cleaning products and the DCBN has worked hard to ensure that all sizes of cleaning business have access to several great suppliers that will provide commercial, dilutable cleaning products to members at brilliant discounts and with UK wide delivery. Not only are these products far, far cheaper than household cleaning products, they are also much safer for you to use and are less wasteful and damaging to the environment due to less plastic use.
6) NEGOTIATE WITH SUPPLIERS AND CHECK YOUR BILLS
The DCBN regularly negotiate new deals with our Partner Suppliers so members get amazing deals on a daily basis, however you can also negotiate yourself with suppliers. Don’t be afraid to ask for a discount for bulk orders and use your buying power effectively. Buying local can often save you a lot of time and delivery costs too so worth looking in to suppliers in your area.
Make sure you check your bills too. Are you still paying for the phone part of the mobile phone contract you took out over 2 years ago? Most providers don’t put the price down once you’re out of contract so if you’re still using the phone, switch to a SIM only deal, you’ll save £100s!
Maybe, you’re on estimated electricity and they’ve been over estimating (hopefully!) and you’re actually due a refund? Worth a check.
Look at everything you spend in the business on a monthly basis (if you use a credit card and pay it off monthly its really easy to check). Are you spending on things you don’t really need?
Perhaps on a personal basis, you’re still paying for the gym you’ve not been to for 3 months, or for Netflix and never get chance to watch it? It all adds up, so keep an eye and tighten the purse strings if you need to.
Make sure everything you are paying for is either essential or adding value to your business. DCBN membership starts at just £15 a month but you will save £100s a year using the partner discounts and add such value to your business through the free training and support you will receive that this is one subscriptions you definitely need!
7) REDUCE TRAVEL TIME
Travel time and fuel costs can be such profit eaters, so perhaps you could go through your client schedule and see if you could move people around a bit to make the geography work? Most clients won’t mind a change of day (unless perhaps they’re on a Friday!) if it means they are helping you out and doing this can make a significant difference to your profit margins, whether you’re a solo cleaner or have a team you are paying mileage and travel time to.
Maybe you could switch to video quoting rather than going out to visit every potential new client. Perhaps get better at giving a quote and taking bookings over the phone and you’ll never have to spend your evenings going to sales appointments again?
The DCBN have a few webinars on telephone sales skills including a role play on video quoting in the training library that members can access at any time:
8) NO DISCOUNTING
We get that it can be tempting to offer a discount to secure a booking, but you really don’t need to. Think about the knock-on effect that giving a discount will have on your profit margin. Plus, that client now believes that your service isn’t worth as much as your normal price so might not value what you do in the same way, causing issues down the line with complaints, cancellations and more. Because cleaning is such a labour intensive service with the bulk of the cost to your business being either your time or your team members time, there is very little room for manoeuvre on price and margins can be tight enough.
If you really feel the need to offer something to win the sale, perhaps just make sure you add value in some other way rather than reducing your price and therefore your profit margin. Offer something that has no real cost, but high perceived value – if there is time, perhaps clean inside the fridge (during the time booked so no cost), but something nice for the client. Empty their dishwasher and/or reload it. Offer to change the bed. All these things are done in the time the client has booked, so no cost to you, but they are a way of adding extra value to the service without impacting your all important profit margins.
9) SELL HIGHER MARGIN SERVICE
The easiest sell, particularly in domestic cleaning is a 2 hours fortnightly clean. However, they are also the lowest profit margin bookings. Travelling time, mileage, wages, insurance, cleaning products, cloth washing and more will all have a cost per hour, so it makes sense that the smaller the booking, the less you will make per hour. Maybe you could consider changing your minimum booking to say 3 hours fortnightly rather than 2 hours?
2 hours weekly clients can be nice schedule fillers and if grouped geographically can be ok profit wise, but actually going to them 3 hours fortnightly instead is much better profit wise per clean for your business.
Only you can decide your ideal client, but looking at each client on a profit basis really helps you focus on firstly who your ideal client is, but also on how you can attract more of them.
In the DCBN training library there are several webinars on marketing, social media and sales skills to really help our members attract and take on the best clients they can for their businesses.
10) RECRUIT THE BEST CANDIDATES AND TRAIN THEM WELL!
If you have a team, they are the representatives of your business, so it makes sense to attract and recruit the best candidates and then to spend time training them to ensure your service is consistent and valued by your clients. Call backs to fix mistakes cost money, staff sickness costs money, management time dealing with complaints costs money, training costs money and rescheduling due to absences costs money too!
Many of us have to learn to manage a team quickly in order to make it worthwhile, so getting up to speed on employment laws, health and safety obligations, building yourself as a leader in your business and making your business a great place to work will all help you increase your profit margins and build your business as well as make it much easier for you to recruit in the first place.
The DCBN provide an online workshop, health and safety for cleaning business owners, to ensure all our members can work safely in the industry, plus with several webinars in the training library on employment laws such as SSP, employing under 18s, TUPE, managing staff contracts, national minimum wage and more, along with template employment contracts, our members are well covered to be the best they can be when taking on team members.
There’s even several webinars on how to attract the best candidates and recruitment processes in the training library as well as we are fully aware of how difficult it has been to recruit in the industry.