Things are quiet at the moment so here is something some of you might like to think about as a marketing system.
We use a reactive market / sales system which is something we use each day to make sure that every week we maximise our sales and therefore our profit. Some of you will like, this others won’t but here it is see what you think.
This system is based on you knowing where your breakeven point is which is a point at which your sales have reached a level where all of your business expenses / running costs have been met but you haven’t made a profit. If anyone doesn’t know how to calculate your own breakeven point I will post the formula on here, but you must know it otherwise you cannot make any of the decisions that are required to make your business profitable.
So the first objective in your week is to reach breakeven, fall short of it and you are making a loss. So lets say breakeven is achieved at £450 sales, divide that by 5 days and you know that you need to earn £90 per day, divide that by 6 hours each day and you find that you need to be charging £15 per hour in order to breakeven. You can carry on from here and work out that if you clean 35 sqm per hour you need to charge your customer 42.8p psqm. If takes you 2 hours to clean a suite you must charge a minimum of £30 to clean the whole suite.
From these very simple calculations, all of which come from the calculations you did to get your breakeven point you now know that the absolute minimum you can charge a customer to clean a suite is 42.8psqm and £30 to clean a suite, go below these figures and your losing money which is not good.
So , to reach breakeven point you need £450 worth of sales. A reactive market system is a system that reacts on a weekly /daily basis to two things, the number of bookings in your diary and the number of times your phone is ringing. If you have a full diary then you don’t need to react to anything but if the phone isn’t ringing and your diary has gaps then you have to fill those gaps and so you have to do things to make it ring. We use leaflets an awful lot and we never advertise a price just prices from as little as £’s and the price is obviously at the lowest end of the scale to provoke the phone calls. We use leaflets because they are targeted and all of the work you get from them is in one or two areas so less fuel and travelling costs. In quiet spells you do more leafleting, door knocking and advertising in papers etc and the level of advertising you do should be a reaction to the state of your diary and the number of phone calls you are getting.
So during a quiet spell you react by increasing the leaflet deliveries which increases the phone calls. So here is the controversial bit. When the phone rings the girls already know that they cannot sell carpet cleaning for less than 42.8p and suites for less than £30, our usual prices are around £2.25psqm and £100. Most established business will have there diary pages part filled by existing customers but what about the gaps especially when we are in a quiet spell, do you risk those gaps remaining blank and earn nothing or do you reduce your price a little and fill them with off peak jobs that have say a 25% reduction. The suite job is still £100 job and the bill shows –25% off peak discount so the customer knows she has got a £100 job done but has to do it at our convenience and not hers. I have seen people on here who say I only work for x£’s which is fine if your diary is full but are you seriously going to allow gaps in your diary to go unfilled week upon week and right off all of that profit just because your too pigheaded to do a £100 job for £75? What about the weeks where the phone is so quite you won’t even reach breakeven are you going to allow that before you react to the market?
The only thing that matters especially to all you newbies is filling your diary so react to the market, increase your flexible advertising when its quiet and reduce it when your busy. If you are not busy this week look at next weeks pages and move as many jobs as you can to this week (give them a discount to do it) and worry about next week when you have filled this weeks pages. All that matters this week is that you pass breakeven and hopefully go on to make money.
Flexible advertising is leaflets, door knockers, the five around becomes 10 then 20 when your guys aren’t busy, a website which must have a special offers page which you can change at a moments notice.
Let me make it absolutely clear I am not suggesting that you clean suites for £30 or carpet for 42.8p the reason you should know these figures is because you should know that if you clean a suite for £75 you will have made a profit of £45 which is better than nothing.
Col