Let’s take a look at Johnny’s quote in a bit more detail.
After the site survey he decided that 10 hours was sufficient to clean his prospects premises to meet his client’s expectations.
2 hours a day Monday to Friday incl.
He decided to employ 1 cleaner.
His weekly wage bill for this cleaner is £60:00 per week.
The cleaner would be entitled to 24 days paid holiday, at the moment the employer can include Bank Holidays in this calculation, but this is set to change soon.
His Holiday Pay costs would be £288:00 per annum, which translates to an extra £5:54 (rounded up) per week, so his wage bill would increase to £65.54 per week.
Assuming that his employee only has the one job, Johnny would have no further payment to make regarding this member of staff as they would be under the NI threshold.
The above figures do not take into account any amount that he might wish to add to cover sickness etc.
We also now have to add on the cost of compliance with the “Lone Worker” regulations.
The cost of equipment also has to be added at this stage, let’s assume that only the following will be needed to service this contract.
Vacuum
Mop Bucket
Cloths
Triggers
Paper Bags (vacuum)
Mop Heads
Chemicals
The cost for the above equipment and supplies should be around £180:00 per annum (no allowance has been made for maintenance of the vac or PAT testing etc)
This adds an extra £3:46 per week to the contract costs, thus bringing us to a new figure of £69:00.
To this figure, we now have to add the cost of insurance, both Public Liability and Employers Liability, this will vary a lot, as some contractors will try to cut costs, but let’s assume a cost of £1:50 per week per employee, this now gives us a new figure of £70:50 per week.
Please remember, the above figure is just to service this contract!
The following now has to be added:
Advertising Stationary Recruitment Costs
Telephone/Postage Health & Safety Banking Costs
Accountancy Employment Law Legal Costs
Johnny’s Wage Company Profit Tax
Payroll Costs Equipment Maintenance Transport Costs
The above is again not an exhaustive list!
Now if we use Pristine Cleans method of pricing the contract would be £5000:00 per annum, which equates to £96:15 per week plus VAT.
This would leave a profit of £25:65 per week, before any of the above costs are taken into account.
Johnny would need 18 contracts of this sort of size if he wanted to earn the national average wage of £25,000 per annum.
In order to run a profitable business, Johnny would need more contracts than this, to cover the other costs
Now please don’t get me wrong, the above is possible, but in my opinion it is marginal, more clients, more staff, more stress, and more problems. As for levels of service, again in my opinion, it would be borderline.
However Pristine is quite correct in his opinion, regarding how the industry is perceived by many of its clients, that I am afraid is in large part down to the industry itself, and the constant influx of in-experienced owner operators and lack of knowledge of the clients themselves, who insist on low prices, then complain about poor standards.
The real answer is of course to offer clients real VALUE, like in so many other aspects of life, anything of VALUE has a price attached.
The crucial thing to get right is the survey.
Listen to what your prospect tells you during the survey, listen, don’t talk about how good you think you are, listen to them, get a feeling for what the client wants, not what you think they want.
After listening to them, base your quote on what they want, base you’re cleaning times on what they have told you.
Understand the real costs of business, if you really have no idea, ask your accountant/bank manager, draw up a business plan, and review it monthly.
Learn all you can about cleaning techniques; obtain at least, a fundamental understanding of business principles.
Don’t promise what you can’t deliver EVER!
Finally!
Johnny, I lived in Llandudno many moons ago, very difficult to make a go of it there, get your presentation right, if you like e-mail me a copy of what you sent to your prospect, will give you some feedback on it, no charge honest!
Regards,
Rob
