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We Lose A Little Bit On Every Job, But Make It Up In Volume?!

Ever heard that line before?

It’s supposed to be funny.

And it is – if you realize it’s poking fun at one of the most ridiculous business strategies ever.

And, what’s that?

Well, the idea that knowing if you’re making money on each job isn’t important as long as you’re doing – lots of them!

I know, sounds crazy, right? And it would be funny, if it wasn’t for the fact that so many hard-working cleaning businesses run their business as if it were TRUE!

I hope you’re not one of them, but if you are, don’t despair!

That’s right, you can start now to move in the direction of having all, or nearly all (we’ll talk about exceptions later), of your cleaning jobs making money.

And, sure, it’s simple yet powerful advice – but how?

Well, as always, here’s where the ‘heavy lifting’ comes in.

You need to take a financial snapshot of each of your cleaning accounts regularly – at least monthly, to see how profitable or un-profitable they are.

By the way, if you’re not already using accounting software, you should seriously look into it sooner rather than later because manually having to pull together your sales and expense info is well, let’s just say – hard.

Oh, and when you do start checking your profitability on a regular basis – be ready for some surprises!

Yeah, you’ll have some – we all do.

There’s the accounts you think are great, but when you look at them, you find you’re really losing money on – when you consider ALL your expenses.

Then, there’s the quiet accounts you check in with from time to time, but otherwise,never seem to hear a peep from. There not real big or flashy, but it turns out – they’re some of your profit (in real dollars) champions!

Now, I’m not saying, dump the big accounts you found were losing money for a month or two.

And I’m not saying, you should consider a small account that happens to be showing great profits for a while is on – auto pilot, either.

Nope, that’s too simple. Real life and real business success is more complicated than that.

No, real business success requires paying attention. Not once, but regularly.

And, so, it is with profitability.

You want to make good financial decisions. But to do
that you need good information.

So, that’s job 1 – specifically, getting good information. Only then can begin to think about what it means.

And, it may mean a number of things.

It may mean doing nothing, and simply watching the reports a few more months.

Sometimes even a great account loses money for a while, maybe when you’re first starting it up, for example.

And you need to think about whether the lack of profitability is temporary, or the sign of a more long term problem.

It may mean adjusting the budgeted hours at one account, while sitting down to ask for a raise at another.

It may mean even mean dropping an account or two if you can’t find a way to turn the financial picture around.

But whatever it means, it should be based on gathering and reviewing good financial information.

You and I don’t have to be the smartest business people in the world to realize – having each of your accounts make money is better than only some of them making money.

But sometimes, it gets down to things as simple, but important, as that!

Plus, there can be exceptions to a rule – once and a while.

For example, you may clean one small building once a week at a loss because you make great profits at three other large buildings you clean for the same client.

Or you may not make as much as you’d like on your monthly general cleaning with another customer, but you allow it because you do really well financially on handling their extra project work like tile and carpet jobs.

But again, these are exceptions, and the main thing is to make those decisions with your ‘financial eyes’ wide open and clear.

6 Responses to “We Lose A Little Bit On Every Job, But Make It Up In Volume?!”

  1. Anthony says:

    Great a vice as always. You kicked me in the gut with tracking my profits and lose with some type of accounting software. Thanks

  2. Becky says:

    I did this once with a small account and found I was cleaning one week each month for free. When I showed them the figures asking for an increase they dropped me and found someone cheaper. The sad part was that they were financial advisors. It felt good to let them go. I wouldn’t have trusted them with my money.

  3. DLiebrecht says:

    Thanks Anthony! Glad you found the information valuable. Wishing you much success with your cleaning business!! Dan

  4. DLiebrecht says:

    Becky, lol, I enjoyed your note! Glad you found the info valuable. Wishing you much success in your cleaning business! Dan

  5. Les K says:

    Well Dan, very surprised that they are people out there running any contracts and not making a profit!
    Well now I understand why after 20 and plus years of running a cleaning business you opted to switch in a consulting business!
    There is a huge demand!
    Amazingly sad!

  6. DLiebrecht says:

    Hi Les, thanks for your note. Unfortunately, as hard as it is to imagine, this situation happens a lot. Why? Well, often it’s, cleaning business owners:

    1. Don’t KNOW they’re not making money (don’t know HOW to track it),

    2. Don’t WANT to know (afraid of possibly getting bad news – like not wanting to go to doctor), or

    3. Don’t want to LOSE the remaining accounts they have. (misguidedly thinking, having an unprofitable job is better than not having the job.)

    This can happen a lot because it’s easy for all of us to fall into the trap of rationalizing that ‘things’ will somehow get better, almost magically, on their own – somehow, someday.

    And, to be fair, Tony and I experienced all of these traps ourselves over the years at one time or another. The important thing is to recognize it when it happens – and get yourself out of it.

    As you said though, it’s definately satisfying now, to help other cleaning business owners face these problems and figure out a way to fix them.

    Wishing you much success in your cleaning business! Dan

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