Some great comments here. Love the pics ;-)
Just to be clear; I'm talking about 30k net profit AFTER your owners drawings. According to window cleaning legend Ian Lancaster; a good rule of thumb for small businesses is: 1. 33% profit, 33% wages, and 33% expenses.
Maybe super-rounds are fantasy; maybe they are not.
Perhaps one question we can ask is:
HOW do we build Super-Rounds?
Is it perhaps a combination of:
1. Ruthlessly effective marketing and sales. This means the service MUST be stellar; because these days; if something is really good; it won't be long before everyone knows about it.
2. Pre-qualifying customers politely; and giving them solutions if they are not a great fit. We find that some of the local JW window cleaners (Jehovas Witnesses) are sometimes happy to take on one-off work.
2. Pricing. You can see my prices online. I'm not pretending that all my customers pay these prices; there are many customers who aren't. But all the newer ones are paying these prices; and if they have an extension; they are paying slightly more.
3. Marginal gains. Grabbing every marginal gain you can; because they really add up. By marginal gains I mean things like: 1. Have payslips filled out before you start work. 2. Get people to pay by Go Cardless so they are not faffing around with cheques. 3. Have a spare reel in the van so you have a spare if it breaks and if needed; no parking is not an issue becaause you have 200m of line when you need it. 4. Have spare pole hoses with all the fittings on them in the vans so you can just swap over pole hoses if one breaks. 5. Have needles in the van so you can quickly clear a blocked jet etc, etc.
3. List Segmentation. List segmentation is all about working out what the profit margin is on every job and segmenting / banding the list into A-customers, B-customers. and C-customers in terms of their CTP (Contribution to Profit).
This is what we do:
1. Work out expenses and all wages, including your own.
2. Divide the above figure by number of minutes in the week you work (don't forget to multiply this figure by 0.84 to allow for holidays and illness.)
3. This gives you a figure of how much it costs you per minute to run the business.
4. Time all jobs.
5. Using a bit of spreadsheet mathematics on excel you can now work out the net profit margin on each jobs.
6. Be sure to factor in your productivity ratio in your calculations. Ours is 75%. Basically, we are productive 75% of the time. So if we are billing £20 for a 20 minute job; then we always multiply one of these numbers by 0.75 to get actual earnings per minute.
As we all know, adding more staff and more vans does not always equate to more net profit in our game.
If you segment your list into profitable customers, marginally profitable customers, and customers that cost you money to work for; then you can increase your profit margins WITHOUT the risk, hassle, and expense of adding capacity.
Basically, list segmentation means that small businesses like ours can increase profit margins as they reach capacity, WITHOUT adding more capacity.
Just kiss off unprofitable customers nicely; because what comes around goes around.
I'm honest with my customers that I'm not the most competitive in terms of price; and if they are nice to work for; I try to hand them onto an up and coming window cleaner who will be happy to have them on their books - Don't forget to nominate me for Nobel Prize :-))
