|
Growing Your Business |
How to Keep Your Power Sweeping Company SuccessfulSome of the industry's best reveal their winning strategies.by Ranger Kidwell-RossMeet Our Panelists
WORLD SWEEPER: What's the advice you'd give to less experienced sweeping contractors, or to those just starting out? Jacketta: First off, don't sell your company on the basis of having the lowest price in town. Most of our customers could get someone cheaper if they wanted to. In the parking lot business in our area, most people are still looking for the cheapest price - unless they're unhappy with their present service. Then they're willing to pay more. Our best growth area has been with our broom sweeping. We've also been able to grow with our customers. We still have quite a few customers that we had when we started in 1968. As their businesses have gotten larger, or they've opened more locations, we have grown with them. That's the value of developing strong customer relationships. Brent: Many contractors price too low. They get the job by bidding low, and don't realize that they're losing money. People need to be educated on the cost of running their machine. When it's a one-person business with the machine parked out front, maybe they can do it. But they run into trouble when they hire their first employee and try to grow. You simply can't ever get bigger if you do all the work yourself. You have to make the decision to hire people, and design your system around them. Barker: Our business, MetroSweep, has grown at a pretty astronomical level. We're not the cheapest, we don't even try to be. When people ask about how to succeed, we say, "Establish who you are." We're not a clone of anyone else, and no one else could simply follow the model of Metro-Sweep and be who we are. Understand who you are and what your business is all about. Establish an identity. Just like a signature, your corporate identity should always look the same. All of our trucks look identical, every single truck is spotless. Our marketing is always the same; we emphasize why we are better than any other sweeping company on the street. Pricing is never our issue. Braun: I agree with that completely. We could never have grown to the size we are today by being the cheapest in our marketplace. What others are doing doesn't even concern us. Instead, we choose to concentrate on being dependable and taking care of whatever the customer needs to be done. They know that if they have a problem with virtually anything to do with maintenance, they can call us and it will be taken care of. We're not going to be doing sweeping at a rate that won't make us money or keep our equipment looking good and in good operating condition. It just doesn't make sense to do that. Barker: Many people don't really know their real costs, they're not balance sheet driven. They don't understand the capital invested, the number of hours it truly takes to make a job break even, and to add in all the hidden costs. They really can't sweep a lot for only $15 an hour; it simply costs more than that. And with heavy equipment, it's even more expensive. We run four Elgin Eagles and two Whirlwinds, and we can't do municipal work. In our area, municipal work [no longer pays] ...someone came in and grabbed the municipal market inappropriately and took the $58 a mile down to $24. Now every municipality tries to run for $24 a mile. As a result, our market is real closed right now. The bigger equipment is a really serious investment. They're very expensive and that equipment can't run 12 months out of the year, at least not in my marketplace. So, know what your costs are, know how long it takes to do the job. Establish some marketplace. Take, for example, the footprint of a Walmart -- they all look the same. It only takes doing the motion study once. Sometimes I go in and take an account for a little less, and get my pricing right by doing it. By and large, in our market, we don't find it advantageous to be the lowest price. Some thrive by specializing; some by a commitment to full service.Brent: There are some given markets that stay in certain price ranges. Some of them just don't care as much for the quality, and you can't raise your prices. I think the marketplace kind of segregates. Everybody has their own niche in the market. I don't tend to get smaller centers, because I can't compete with the people who do that. Identify your niche, where you can not only compete but can make money. There are some markets I don't even bother with. Everyone has areas where they can be competitive. Barker: Everyone wants to be a 'me too' sweeper. We all want to look the same. We're all running after the same market. That may not be the best idea. It's better to find your niche where you can be competitive. So many companies want to be able to say, "I do it all." I think that's a big problem, it's where you can lose yourself real fast. Brent: If you diversify yourself too much, you don't become good at any one thing, and you end up mediocre at a lot of things. I find that the way we retain customers is to be reliable, dependable. That means we always have an extra sweeper so, if one breaks down, we can still get the job done. We always show up. That's why we get the larger jobs. With only one sweeper, a business can do all right for awhile but, when it breaks down, there's real trouble. That's why you need to find your niche. You can progress and grow within it, and eventually reach out to other markets. But if you spread yourself too thin, you'll kill your business. Braun: I disagree with that to an extent. We have made a success out of making arrangements to do whatever a client needs in terms of maintenance. We fix the signs, we fix the lights, we go in and clean the empty stores out, we get a locksmith in if that's what is needed. For many of these services, we have someone else we use. We make the arrangements and pay them, then add a 15% handling charge to the bill. This is shown right on our statement when we do our billing. We also include a copy of the statement from the company which did the work, just so there is no confusion. Our market niche is that our customers know if they call, we are there. We have 24 hour service, with somebody on call every hour of every day. In a recent situation, the lights went out in a shopping center. They called us, and we had somebody there who had the lights back working in something like 35 minutes. That kind of response time will build your customers' loyalty. Jacketta: I want to go back to what Kelly [Barker] was saying about professionalism. I see businesses that don't even have their name on their sweeper, or aren't in the phone book. I don't know why they would do that, unless they're dumping illegally. I try to stress to customers that it's best for their interests to know who is sweeping for them, and that it also can be an environmental liability question. If you want to become successful, you need to be legitimate, carry insurance, put your name on your sweepers and dump legally. Brent: There are several companies in my town that don't put their names on their trucks. We may be one of only one or two who do put our names on. We wash our trucks every day and our name is on them. It's part if our statement. Part of what makes a company successful is not just having and running the equipment, but having decent equipment that can actually do the work. For me, our preventative maintenance program is the basis of our ability to grow. Braun: I have a comment on advertising. Every new customer that we get, we ask where they heard of us. Almost none of them say from the yellow pages, so I now put a very cheap ad in. On the other hand, I'd estimate about 50% say it's from the name on our sweeper. We spend about $1500 to put our name and logo in reflective 3M tape on every single one of our sweepers. That's where I get most of my business, from those sweepers. I really like the shroud on Schwarze's 3 yards because it makes such a great billboard for us. People can see our name, even during night work. Most of the rest of our customers come from referrals, or from other developers or contractors. Again, though, our greatest draw for business is that we keep someone on call 24 hours a day. We have developers who own centers who call us any time they need to get something done right away. They know they may pay a little more for it, but when the sprayer for the deicer they hired didn't show up, they know they can count on us to cover the job. We always have someone available when they need it. We got a contract on a new center after they had waited months for another company who just never showed up. The day before they opened they called us, and we got the job done in time for the opening. Even though we cost more, they were glad to keep us contracted on an ongoing basis. I'm not cheap. There are people in my market who are cheap and you can't compete with them on price. We compete in a whole other area. We also get a lot of referrals. Sometimes, they come from our competitors, when they don't have the equipment to do a certain job. It's important to know what your equipment can or can't do. If you can't do a job right, always let the customer know. Brent: I think it's response, dependability and communication. Customers want to know that you're going to work with them, that you will be there when you said you would. We go to the trouble of calling to let them know when we're going to be there. They can mark it on their calendar and they can check to see how we did the next day. Probably about 15-20% of our customers are swept less than once every two weeks. That'd be 50-60 customers a month that I call, to let them know when I'll be there. WORLD SWEEPER: Let's go back to knowing how to set your prices so they reflect the true cost of sweeping. Braun: There are a lot of little one truck operators in our area that can be difficult competition. I can't run my truck for $35 an hour. You've got to get that $50-60 an hour to make a profit, or you may as well let the sweeper sit. We have the same problem with the broom machines. These guys come in and try to run a city for $25 an hour. With a $100,000 piece of equipment you've got to get that $80-90 an hour or you're better off letting it sit. Three towns last year went with one of these cheap outfits. I said, "Okay, let them have it for a year, they'll be back." They have to be, because you can't run at that price and still upgrade equipment. Brent: Still, you hate to lose the client while they're learning their lesson. The tack I try to take in those situations is to meet with the customers and educate them on the level of service we are providing in relation to the price. The more they understand about the extent of the service we are now providing, the better. They are assuming the next contractor will be giving them the same level of services at the same price, however many times that simply isn't the case. WORLD SWEEPER: How do you deal effectively with the high turnover in property managers? Braun: In the last year, 10 of the shopping centers we sweep have changed hands. What the new people want is surprisingly different from the ones before. We sit down with them, and find out exactly what they want. Brent: We want to know their pet peeves, what they seem to really care about. It's a fact that different companies care about different details. Educate customers about the level of service you are providing for the price.Barker: As a former property manager, I can tell you the industry of property management is very transient. It is a high stress field, and managers constantly move on. Therefore, although it's important to talk about what each different customer wants, it's also up to us to show that we are the professional here. Let us teach you about our industry. Let us tell you what our sweepers are capable of. We clean millions of square feet, so let us tell you what you need. When we have been proactive like this with our customers, we have been able to educate them. This helps us at the time, and as property managers move from place to place they are more likely to take us with them. Brent: I used to worry that when a property manager left, I would lose their account. Instead, I have had door after door open up because a property manager liked working with us. Again, it's establishing a relationship; communicating with and educating the customer. WORLD SWEEPER: What about keeping the cash flow under control? Jacketta: When you're growing, one of the hardest things to control can be your cash flow. You must plan for the money going out and how you're going to get it in. Establish a firm credit policy or you won't grow, especially when you have a seasonal market. Barker: A lot of little companies are afraid to go through and sort out their customers. They're afraid to say "I've done your work, you've had no complaints, now pay me." They're so afraid to ask for the money that they hurt themselves. How will they ever grow without cash flow? These smaller companies probably don't think it's the same for us big guys, but it is. We have a policy in our company that we don't want to work with high maintenance customers. If they don't pay or are on the phone every day complaining, we get rid of them. I don't need them. We, the sweeping contractors, are training the marketplace about how we should work together. When I was a property manager it was no different; the good companies that worked for me would train me in how to work with them successfully. Braun: In your area, do construction people tell you when they'll be paying? Barker: Yes, there are some people who do that. Our best contract is for a net 15 days, since that does affect my cash flow. Few meet that policy, however. After the 15 days, the interest clicks. We have gone through periods when we did and did not charge interest, and times when we did and did not send statements. We have found it extremely advantageous to say that 15 days is our payment policy. You can take 30 days to pay, but after 15 days we're charging interest. We may say, however, that if they're a great account we'll write the interest off. What it does, though, is to establish a precedent for us. There may be some customers who say they have a net 30 or 40 day payment policy, and we may even write that into some agreements. But the bottom line is no matter who the customer is, no matter how big or small, they will be expected to meet the agreed-upon payment terms. I strongly recommend never doing business on just a proposal, especially an open-ended proposal. Get it in a contract: these are the terms, the expectations. It keeps people accountable. We generate $8,000 to $12,000 in late fees a year, and that's bottom line income. If the customer wants to hold our money, fine, but they're going to have to pay for that privilege. Braun: When we put in our new computer system it began to put the interest automatically on the billing. Since then, we've cut our receivables on past dues down to about a half percent. You do have to be flexible with large companies; some of them have 60 to 90 day billing cycles. As long as that's in the agreement, there's no problem. In fact with the seasonal work, that can even be a nice way to have money coming in at off times. WORLD SWEEPER: In some large companies with remote headquarters, local managers will recognize there is a long payment lag and even allow billing ahead for services. Any final wisdom? Braun: Developing a good rapport with your customers will help them to trust you and not just go with the lowest bid they can find. Watch your back! Some of your own workers may try to steal business away if they break out on their own. It's a good reason to have non-compete agreements with them. Brent: I think going from one sweeper to two or three is a real change in business style, because the owner has to get off the machine. So, if the business is designed from the beginning to accommodate and plan for this growth, there will be no need to play catch-up. No sweeping company owners should consider themselves to be truck drivers. You need to design your system so that you can step out of any role and hire someone else to do it. You've got to be ready to grow to make money. And to make money, you've got to price your product right, then perform. Barker: That is really right. Price your product right, and have integrity with the industry. This industry is still in the infancy of professionalism. Many business owners are still apologizing for the fact that we're street sweepers, instead of recognizing that we are a leading edge environmental industry. For small contractors to make it, I think they will have to have pricing integrity and professionalism. Don't look around and try to be what some other company is. Instead, look into your own business and see what you need to do to grow. Be true to your own corporate identity. Being the biggest is not necessarily the best. The stress level goes up, the quality of life can go down. Being the most profitable is best, and even a small company can be extremely profitable. Braun: To get bigger costs more; as you grow your expenses will go up. To keep more of each dollar you make is the goal. Jacketta: In closing, I would say know what your costs are. Charge a fair price and be honest. Be as professional as possible, and don't worry about the competition. Just do what is best. Our company has also gained substantially from its membership in CSI (now naPSa). We have been members for many years, but only started attending meetings about five years ago. Being able to discuss our problems with other contractors around the country has been very helpful. |
 © 2005 - 2012
|
Parking Area Sweeping Contents
|
