As a business owner not only do you have to run the business day to day, but you are responsible for the growth as well. A demanding responsibility anyway that you look at it.
Finding more leads and selling new customers is an expensive, difficult, competitive, and time-consuming process. It’s tough to beat all the competition out there on a regular basis. You not only have to sell new clients to add to your list, but also to replace any that you have lost along the way.
There has got to be a better way to scale your revenue and profits other than find more leads and close new customers all the time. I’d like to share 3 of over a dozen ways that you can use to scale your business and start relying less on leads and sales for profitable growth. And at the same time improving your margins.
Are these methods really secrets? Probably not. But the powers they have when implemented are not regular topics of focus in average business conversations These 3 ways by themselves can add 9% to 12% right out the gate for most businesses. And this is at zero to minimal additional expense.
Have a pricing strategy for your commercial cleaning services.
One of the most common areas overlooked in pricing strategy is asking for a price increase every year from every client.
The cost of labor, environmental regulations, and equipment upgrades can increase a business’s operating expenses. As a result, prices may need to be increased annually in order to maintain the profitability of the company. But this does not happen just because you will it: It takes 15 – 18 months to change price habit with your customers for them to accept a rate increase so add an annual hike as part of your costs/prices strategy or risk going broke!
In other words, regular increases are strategically wise and should be a part of every business plan – because over time we all know things go up in terms of cost that necessitates pricing adjustments on products or services. If you do not keep pace with changing rates and valuations upwards periodically
Over the years I’ve found that most contracts do not consistently raise their prices every year. The main reason is that they fear they won’t get it or worse, the customer will put the work out to bid.
I would suggest never putting a cap on your prices, and instead increasing them annually. In other words, regular increases are strategically wise and should be a part of every business plan – because over time we all know things go up in terms of cost that necessitates pricing adjustments
Let’s take a look at an easy example On $1MM of revenue with a simple 5% increase on the base contract is $50K of new potential gross profit.
Oh yeah, and this is without any new sales or start up costs to the business owner.
Create more transactions and sell more services to your current customers.
The second area is to create more transactions and sell more services to your current customers. What does this mean? Have you ever wondered why, after you first get a new credit card, you get an onslaught of ads for that credit card in the mail? The credit card companies want you to use their card as much as possible – after all, they’re making money off of every transaction.
This same concept can be applied to your business – more transactions means more cash in the bank. So how does a service business apply the method of getting their customers to spend more with them?
A service business should of course have a lot of services to offer, but the reality is that a customer can only use one or two at a time – so cross-promoting services and offering discounts can really bring in more money.
For example, When you are walking through an account keep an eye out for areas that you can provide additional services that your customers don’t regularly see. You’ll make more money and your client will be happy that they are getting more bang for their buck.
So lets look at the numbers that make this work. On $1MM of revenue you can ideally add another 10% or $100K of new revenue at higher margins because you are already there servicing there building.
The methods employed here are upsell and cross sell your services through a regular marketing campaign program. Again, there is no additional costs of more leads and new sales.
Review and reduce your costs on a regular basis
Third area is review and reduce your costs on a regular. Amazingly there can be a lot of low hanging profit opportunity in this area. Why? Most business owners don’t have a plan to do this.
They are too close to the business to admit where costs can be eliminated.
It is important to review and reduce costs regularly because it usually takes a lot of time, effort, and money to locate and fix any problem with the efficiency or effectiveness of your business.
It can be frustrating when you don’t know where you are spending too much money and taking away from the company’s success.
They don’t see it as a valuable way to make the business more profitable. They’d rather be looking for new costly sales.
Again let’s take a look at some simple numbers. An expense reduction plan can yield 2% to 5% gain in profits depending on the business. That is at least $20K in a $1MM business right to the bottom line.
If these methods are so great, why aren’t they mainstream?
The first reason that a service business has not used these methods is usually because they are lacking key components that should be second nature.
Most Service Business owners don’t have the time , knowledge (or both) to
- correctly analyze their business to identify the best areas to start with that can yield the highest and quickest payoff .
- put a system in place that can provide them with proven organized processes.
- have someone successfully lead them through the process.
- keep them accountable for results.
The Second Reason is that most service business owners don’t have a proven road map to follow. Finding all the right information that works and implementing it. If would take hundreds, if not thousands of hours, to find and test all the information easily found on the internet and come even close to the same results if done on your own.
The areas discussed in this article are often not a part of their ‘tool box’ because they were never trained, educated, or experienced.
Most business owners never realized they don’t know enough to manage a profitable service business – and those that do come up short due to lack of implementation.
The good news is that there are most likely many low hanging opportunities for everyone to increase profits without any new costs or risks.
So have you considered the areas of your business that may be costing more than they should? Have you ever looked at how to reduce expenses in a way that increases profitability?
A service business owner’s focus on new sales is understandable, but it can come with heavy costs and less profit. If this sounds like something worth exploring for your own company, contact our team of expert for help today! We’ll work closely with you to create a plan that focuses on ways to increase revenue while slashing unnecessary spending – without sacrificing quality or customer satisfaction.