Cleaning Talk - Professional Cleaning and Restoration Forum banner
1 - 13 of 13 Posts

·
Registered
Joined
·
9 Posts
Discussion Starter · #1 ·
Our business is fairly successful for only being around for 2 years or so but the one issue we keep on having is employee turnover. I have read some of the other posts on here so let me get specific...

A) Started off paying $12.00 an hour. We used one Maid per home and they were given two homes per day. This worked well but the two home a day deal was pretty hard on a single Maid I found. Especially when they were always use to 5 to 6 person teams tackling a single home.

B) Moved to a two person team system and rather than 4 homes per day only give them 3 homes a day. Dropped pay to $10.00 an hour and they were only paid for the time in each home. 3 Homes per team meant that some teams were left without work on some days or I should say without a full days work.

C) After speaking with some of our team members they told us that even though our competitors are paying less they are not having the turnover. So we have moved to a system very similar but pays more. Basically it pays on senority and starts at 9 per hour and goes up to 11. Each pay increase is only after 3, 6 and 12 months so it is not as if they are waiting long for a raise. Also they are guaranteed 35 hours a week.

We have only been on the new plan for a couple days now so no telling if it will work but I think that the math, albeit simple, is not simple to them. I would prefer to just move to an hourly pay and may just do that but there is no way you can put 2 - 4 people in a home at 12 an hour.

Thoughts?
 

·
Registered
Joined
·
9 Posts
Discussion Starter · #3 ·
There are a couple companies here that pay % rather than hourly. I assume you pay them x% which is divided by the goup of cleaners, if you in fact send in more than one. I do know of one company here that does the same type deal. However, I cannot for the life of me understand how they send four people into a home which is Grossing $100 and then pay out $60. Either they must be doing an incredible amount of homes and make good money on volume or they just don't make money. Not sure but I just cannot wrap my brain around it.
 

·
Registered
Joined
·
326 Posts
There are a couple companies here that pay % rather than hourly. I assume you pay them x% which is divided by the goup of cleaners, if you in fact send in more than one. I do know of one company here that does the same type deal. However, I cannot for the life of me understand how they send four people into a home which is Grossing $100 and then pay out $60. Either they must be doing an incredible amount of homes and make good money on volume or they just don't make money. Not sure but I just cannot wrap my brain around it.
As I am finding out more and more, most aren't paying much for labor and are relying on staying very busy in order to profit. Also, perhaps the house clean could have been sold at $150 insted of $100? I'm not really a good one to advise on this, as I prefer the Low Volume/ High Margin type of work.
 

·
Registered
Joined
·
9 Posts
Discussion Starter · #5 ·
As I am finding out more and more, most aren't paying much for labor and are relying on staying very busy in order to profit. Also, perhaps the house clean could have been sold at $150 insted of $100? I'm not really a good one to advise on this, as I prefer the Low Volume/ High Margin type of work.
What is your definition of low volume? 40 homes a week or what?
 

·
Registered
Joined
·
326 Posts
What is your definition of low volume? 40 homes a week or what?
Depends on the margins.
Recent example... Sold an account for double the next lower bid. Our bid... $2064/month Thier bid... $940/month

Same scope of work and production rates same. The difference is that they will use cheaper labor($8/hr) 80 hours/month and net $300 month. We use higher wage earners ($12.50/hr) 80 hrs/month and net $1000/month. Volume difference is that they will have to do 3.3 more accounts than Us to make same money.
To enhance that same example is when we have a better production rate. Do that same account in 70 hours because of better employees/methods and our margin increases.

But like I said, this is my model versus a high volume/low margin model. Both models work but one works harder than the other.
 

·
Registered
Joined
·
9 Posts
Discussion Starter · #7 ·
Depends on the margins.
Recent example... Sold an account for double the next lower bid. Our bid... $2064/month Thier bid... $940/month

Same scope of work and production rates same. The difference is that they will use cheaper labor($8/hr) 80 hours/month and net $300 month. We use higher wage earners ($12.50/hr) 80 hrs/month and net $1000/month. Volume difference is that they will have to do 3.3 more accounts than Us to make same money.
To enhance that same example is when we have a better production rate. Do that same account in 70 hours because of better employees/methods and our margin increases.

But like I said, this is my model versus a high volume/low margin model. Both models work but one works harder than the other.
You still did not answer my question. What do you consider high volume? Forget one single account and what you get for it. How many accounts per month do you consider low, medium or high? I bet we all have sold high margin accounts. I would also bet that we have all took on jobs which may not make the margins we would like to see. For example, I have one lady I clean for free.
 

·
Registered
Joined
·
326 Posts
Not really sure I understand what you are asking.
What I consider low volume is completely dependant on income goals. Obviously the lowest volume you can have would be 1 account. If that 1 account was priced enough to reach your goal, then I guess that would define low volume.

Give me a call.... Easier to explain. Still not sure what you want to know. I basically consider low volume to be the least amount of accounts to acheive a revenue goal.
 

·
Registered
Joined
·
620 Posts
Good post, Michael. Revenue goals should be set first then the path to gain the revenue is up to the business owner. I have analyzed numbers over, under, sideways and down. High volume does not work for me. Its a downward spiral. All I see from it is that you get busier.
 

·
Registered
Joined
·
9 Posts
Discussion Starter · #10 ·
Good post, Michael. Revenue goals should be set first then the path to gain the revenue is up to the business owner. I have analyzed numbers over, under, sideways and down. High volume does not work for me. Its a downward spiral. All I see from it is that you get busier.
True. However, if all you do is Maid Service and nothing else then you would want volume combined with excellent profit margins. I don't set any financial numbers as goals. What would the point of that be? For example, if you say to yourself that I want $xx at the end of every week, what happens once you reach $xx. You re evaluate and bumb up $xx. Now how do you get there? Certainly you don't raise prices. You raise volume of business at your already established prices. Or you just sit there and be satisfied with the original goal.

I set volume goals. I know right now I clean 40 +/- homes a week. Once I hit 120 homes I will start to look for a new office in a surrounding area. Then I set volume goals for that office. See $xx is really whatever you want it to be and I would be foolish to think anothing else than we all would want our own $xx to be $xxxxxxxxxxxxxxxx.

I spoke with Michael and he is a very smart guy. We run very similar businesses. Where we differ is in goals for our businesses. I have expansion in mind where to me it seems like Michael wants nice side income. I respect that. Just not what I am in this for.
 

·
Registered
Joined
·
620 Posts
bad, what you are missing is the wonderful sideline of charging higher prices.. you have money to grow and your customer database is loyal. I started by charging double what other companies charged. I didn't get a ton of customers my first year but I made nice profit. By taking that extra profit I had more and more money to market my business each successive year. I have sinced raised prices 45% and keep three crews busy during my season. My advertising expense should fall to 3% of my gross in '08. I was also able to hire an operations manager with a $42,000 salary and not miss a beat in net profit because of the increased efficiency. I understand this may not work for your business as there are a ton of companies selling your service solely on price.

Which brings the conversation full circle to your original question. If you want to do volume and compete solely on price then you need to cut your expenses to the bone. Your efficiency needs to be razor sharp and your payroll better be as low as you can make it. Volume work is a losing proposition. On my contractor forum I just wrote an article about raising price. If a company raises their price just ten percent they can see a jump in net profit of 35%-40%. That sure beats nickel and diming and dredging the labor pool to save a few points in costs.

I say this with no disrespect to anyone but volume (when driven by price) is for the ego driven. I'm in business to make money. Everyone always says "Walmart" as the arguement to that. I say a) you are not Walmart b) Walmart did not start out as a price house and c) Walmart does not sell service.
 

·
Registered
Joined
·
9 Posts
Discussion Starter · #12 ·
I think you make great points above, however, I am by no means cheap on cost or on labor. Shoot if you ask around we pay our staff more than anyone else. We are also fairly pricy when it comes to our competitors. Not because I am just charging more but because I believe they are getting better value for their dollar. Our expenses are basically nothing. Less than 1k a month including office, utilities and supplies.

So yes this brings us full circle because even though we pay our employees more, are fairly priced ($25 - $40 work hour) and growing we still cannot recruit or keep solid employees.

So as to your statements above I completely agree. A 10% shift in any of the five areas to grow a business can reep great rewards. However, if I don't have the staff to do the work then it is all for not.
 

·
Registered
Joined
·
620 Posts
Very true.. its the problem that has plagued my growth as well, bad. I don't know if there is a definitive answer. Every owner I have talked to has had the same issues. I am also a believer that good employees are born not made. In my youth I had jobs that paid lousy and I busted my tail at them. In turn I have paid well what I thought were good employees to only have them follow the path of a JADO rocket. I call them the blue flamers.
 
1 - 13 of 13 Posts
Top