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Cleaning Company: Need Help With A Bid

samsig03

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Fastlaners,

I have created a new (1 year old) retail cleaning business (Day Porters) and have my first major bid for 6 retails centers. I currently only bid and have contracts for smaller centers that do no need service 7 days a week. Therefore I am having problems coming up with a solid hourly rate.

Are there any fastlaners that own a commercial retail cleaning business (parking lot sweepers, pressure washers, security, etc) that can chime in on an hourly rate or how they go about giving a solid bid? I am not clueless, just having a hard time nailing down an hourly rate. I do not want to come in too low or too high for obvious reasons.

Yes I know this is taboo or whatever to ask, but I am a small company with 4 employees looking to break into the big time, the help would be much appreciated.

Cheers!
 

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samsig03

samsig03

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Jun 8, 2016
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Fastlaners,

I have created a new (1 year old) retail cleaning business (Day Porters) and have my first major bid for 6 retails centers. I currently only bid and have contracts for smaller centers that do no need service 7 days a week. Therefore I am having problems coming up with a solid hourly rate.

Are there any fastlaners that own a commercial retail cleaning business (parking lot sweepers, pressure washers, security, etc) that can chime in on an hourly rate or how they go about giving a solid bid? I am not clueless, just having a hard time nailing down an hourly rate. I do not want to come in too low or too high for obvious reasons.

Yes I know this is taboo or whatever to ask, but I am a small company with 4 employees looking to break into the big time, the help would be much appreciated.

Cheers!
 

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Depending on your comfort level... You could ask what it's going to take to earn their business then accept or offer a counter that works for you. That gives a bit of a baseline.

If you don't like asking... Come in high and then ask if they decline.

I don't consider this taboo. I consider this prudent. They aren't some magical mystical unicorn that are going to immediately cease talking to you after your first offer if you're making efforts to make it work.
 
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samsig03

samsig03

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Depending on your comfort level... You could ask what it's going to take to earn their business then accept or offer a counter that works for you. That gives a bit of a baseline.

If you don't like asking... Come in high and then ask if they decline.

I don't consider this taboo. I consider this prudent. They aren't some magical mystical unicorn that are going to immediately cease talking to you after your first offer if you're making efforts to make it work.
Well that is what I do for the smaller clients/bids, but this is a 4 year deal that they created an RFP for formal bidding. This is a one shot type of bid where we submit by mid February and they let us know who won the bid the following Monday, so no negotiation.
 

Faithlaine

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Well that is what I do for the smaller clients/bids, but this is a 4 year deal that they created an RFP for formal bidding. This is a one shot type of bid where we submit by mid February and they let us know who won the bid the following Monday, so no negotiation.
If they have a database, you can check on theirs and see what have been done in the past. I hope that can help.
 

minivanman

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Depending on your comfort level... You could ask what it's going to take to earn their business then accept or offer a counter that works for you. That gives a bit of a baseline.

If you don't like asking... Come in high and then ask if they decline.

I don't consider this taboo. I consider this prudent. They aren't some magical mystical unicorn that are going to immediately cease talking to you after your first offer if you're making efforts to make it work.
I didn't bid on many commercial jobs as I tried to stay residential, but the commercial jobs I did bid on, this was exactly the way it wasn't. Yes, they were some magical unicorn that once you put in the bid you are done. The only thing you find out is that you did or did not get the job and by the time you find out, the company that did win, already knows.

On another note, if you like doing chains, there are a few companies that are hq'ed in New York & Chicago and back when I was cleaning they controlled stores such as The Buckle, DSW, The Gap.... stores like that. Anyway, they look for a quick clean... in-out-over. Maybe someone here knows what I'm talking about? It was MANY years ago and I don't remember the names of the 3 or 4 companies that controlled those stores. We did not do in-out-over type work but my buddy did and he made pretty good profit. In that type of business it's all about how many stores you get cleaned in a night, not about how good they are cleaned. The people in Chicago aren't worried that you missed a spot or totally forgot to clean a restroom in Idaho.
 

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Well that is what I do for the smaller clients/bids, but this is a 4 year deal that they created an RFP for formal bidding. This is a one shot type of bid where we submit by mid February and they let us know who won the bid the following Monday, so no negotiation.
Gotcha. If you want the business, figure out what makes sense and what doesn't. Where is the line? Get close to it.

I didn't bid on many commercial jobs as I tried to stay residential, but the commercial jobs I did bid on, this was exactly the way it wasn't. Yes, they were some magical unicorn that once you put in the bid you are done. The only thing you find out is that you did or did not get the job and by the time you find out, the company that did win, already knows.
Yeah RFPs change the game. Thought it was a sales call.
 
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samsig03

samsig03

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Gotcha. If you want the business, figure out what makes sense and what doesn't. Where is the line? Get close to it.

So when dealing with large national companies due you error on the side of a low bid or do they expect to pay more than the average price? In other words since they are a huge company are bids usually higher or lower than average?

Note: I have to get workers comp insurance etc, my own onsite dumpster and supply all materials. This is to be rolled into the monthly fee so I am leaning on the higher bid size. I calculated all my potential profits with all expenses, just don’t want to leave a lot of money on the table.


Yeah RFPs change the game. Thought it was a sales call.
 

IceCreamKid

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@Andy Black Thanks for tagging me.

I don't engage in the standard bidding process because it often becomes a race to the bottom price. True story: I typically charge 50 cents/sf in the Bay Area and Wendy's wanted 5 cents/sf. Yeah, you read that correctly... they wanted the price to be 1/10th of my normal rate. My competition can outbid me because a lot of them hire illegals.

Here's what I recommend you do:
1. Hire a cute girl who can hold a conversation. Or do this yourself if you lack funds and have free time.
2. Create a route map of A LOT businesses that fit your ideal client profile
3. Have cute girl visit them once a month to drop off goodies and brochures. For the first dropoff there is to be zero selling. Just a, "Hey I'm not here to pitch anything...just here to drop off some goodies for you and a brochure!"
4. If they haven't given you any business or referrals after 7 months, drop them from the list. 7 months is the sweet spot for my niche, yours may be different so you have to test this.
 

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samsig03

samsig03

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@Andy Black Thanks for tagging me.

I don't engage in the standard bidding process because it often becomes a race to the bottom price. True story: I typically charge 50 cents/sf in the Bay Area and Wendy's wanted 5 cents/sf. Yeah, you read that correctly... they wanted the price to be 1/10th of my normal rate. My competition can outbid me because a lot of them hire illegals.

Damn that is crazy!

Here's what I recommend you do:
1. Hire a cute girl who can hold a conversation. Or do this yourself if you lack funds and have free time.
2. Create a route map of A LOT businesses that fit your ideal client profile
3. Have cute girl visit them once a month to drop off goodies and brochures. For the first dropoff there is to be zero selling. Just a, "Hey I'm not here to pitch anything...just here to drop off some goodies for you and a brochure!"
4. If they haven't given you any business or referrals after 7 months, drop them from the list. 7 months is the sweet spot for my niche, yours may be different so you have to test this.
I have been able to stir up some business pretty easy, but this is the first time with the big boys. I think I will come in a bit lower with my bid than anticipated. Still enough meat on the bone.
 

minivanman

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I never was a wheeler/dealer in the cleaning business. If I wanted $100 to do something, I never went down to $99.99. My grandson has a story he loves to tell about that, he thinks it's funny because I wouldn't go down 1 penny. lol My reason was, I had already figured my costs and given the best price I could or wanted to give. But that's just me. Oh yeah, what I did do was give more than 1 price. I'd give 2 prices, sometimes 3 and explain what was included for each. Maybe that's an idea?
 
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samsig03

samsig03

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I never was a wheeler/dealer in the cleaning business. If I wanted $100 to do something, I never went down to $99.99. My grandson has a story he loves to tell about that, he thinks it's funny because I wouldn't go down 1 penny. lol My reason was, I had already figured my costs and given the best price I could or wanted to give. But that's just me. Oh yeah, what I did do was give more than 1 price. I'd give 2 prices, sometimes 3 and explain what was included for each. Maybe that's an idea?
Not one penny? Well at least you have discipline.

For the small/medium I give tiers of service with different prices, but this bid is so structured I can't do that.
 
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samsig03

samsig03

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Not one penny? Well at least you have discipline.

For the small/medium I give tiers of service with different prices, but this bid is so structured I can't do that.
I will keep let yall know how it goes. Bids are due Feb.13th.

Appreciate the help
 

nzott

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Fastlaners,

I have created a new (1 year old) retail cleaning business (Day Porters) and have my first major bid for 6 retails centers. I currently only bid and have contracts for smaller centers that do no need service 7 days a week. Therefore I am having problems coming up with a solid hourly rate.

Are there any fastlaners that own a commercial retail cleaning business (parking lot sweepers, pressure washers, security, etc) that can chime in on an hourly rate or how they go about giving a solid bid? I am not clueless, just having a hard time nailing down an hourly rate. I do not want to come in too low or too high for obvious reasons.

Yes I know this is taboo or whatever to ask, but I am a small company with 4 employees looking to break into the big time, the help would be much appreciated.

Cheers!
I don't do commercial work due to the increased insurance costs in my market, but prior to learning that, I did win a few big contracts.

The business wants a service done well. They don't want the lowest price. You'll win the contract based on your ability to sell the fact you can deliver what they need. Doesn't mean you can price whatever you want, but it's not the biggest factor in how they will decide.

In regards to pricing, figure out what would make it worth taking the contract on and quote that. Who cares if it's too high? The only reason you'd get worried about not winning this contract is because you don't have 5 others pending.

The last thing you want, is to take on a contract for little to no money being left over for you, yet pulling all your time and energy away to manage which then doesn't allow you to grow other areas of your business.

It's an easy trap to fall into because growth feels good but, it's a vanity metric. Profit is what matters. Bid at a profitable rate for you, whatever that is, and keep bidding. Profitable work will come. It may not be this contract, but there will be many many more to come.
 
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samsig03

samsig03

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I don't do commercial work due to the increased insurance costs in my market, but prior to learning that, I did win a few big contracts.

The business wants a service done well. They don't want the lowest price. You'll win the contract based on your ability to sell the fact you can deliver what they need. Doesn't mean you can price whatever you want, but it's not the biggest factor in how they will decide.

In regards to pricing, figure out what would make it worth taking the contract on and quote that. Who cares if it's too high? The only reason you'd get worried about not winning this contract is because you don't have 5 others pending.

The last thing you want, is to take on a contract for little to no money being left over for you, yet pulling all your time and energy away to manage which then doesn't allow you to grow other areas of your business.

It's an easy trap to fall into because growth feels good but, it's a vanity metric. Profit is what matters. Bid at a profitable rate for you, whatever that is, and keep bidding. Profitable work will come. It may not be this contract, but there will be many many more to come.

This was the insight I was looking for. Thank you very much Sir. The company I bid on did harp in the pre bid session that they want quality and won't hesitate to fire someone in the first month (they have done it before). They are a publicly traded company and they have a new property manager overseeing the properties that is on top of his game. I know this because of the plethora of examples he gave of poor workmanship and stories of him catching the past vendors sleeping on the job.

Cheers!
 

minivanman

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Since they have had those kind of problems, maybe they need to be impressed. Check in to a tracking system and include it in the bid. It's not very much at all (less than $100 a month). You will be light years ahead of your 'competition' by adding this to your bid and make sure to make it stand out that you will be having your porters tracked. Just an idea....

I thought of this because in one of my buildings we had a problem with 2 security guards so we added this. We got rid of the guards and haven't really had the same problem since.
 
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samsig03

samsig03

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Since they have had those kind of problems, maybe they need to be impressed. Check in to a tracking system and include it in the bid. It's not very much at all (less than $100 a month). You will be light years ahead of your 'competition' by adding this to your bid and make sure to make it stand out that you will be having your porters tracked. Just an idea....

I thought of this because in one of my buildings we had a problem with 2 security guards so we added this. We got rid of the guards and haven't really had the same problem since.

Brilliant, looking into it now. This thread is great, I really appreciate the help.
 

CPisHere

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I'd shoot for 50% gross profit (COGS = which would be payroll + payroll costs associated with the account & equipment/supplies).

You might be willing to go down to 40%, but anything lower than that is a risk you aren't making money or it's not worth it.
 

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samsig03

samsig03

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Update:

My company did not win the bid, but I learned a lot. The company whose work we were bidding on gave a range of the bids after the bidding closed and I was pretty shocked at how low some companies went. For example: I charged about $20 -29 per hour for certain properties, which is below normal rate for my smaller properties. Companies in this RFP bid anywhere from $9 - $15 per hour which really makes me wonder how they make a profit while hiring good labor. The going rate for porters is $9-$15 dollars per hour......

What I learned:
1) With large bids it appears to be a race to the bottom
2) I did come in a bit too high and need to adjust my bids
3) Better margins in smaller retail centers
4) Larger companies are looking for companies that do more than just porter. They want a porter,sweeper and maintenance service.
 

Duane

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I know this is after your bid, but a lot of commercial properties have dramatically different price ranges that they pay based on how upscale their facility is.

There are high level commercial properties that want a high class, professional service and will pay top dollar for it. Then there are low quality properties that are looking for bare minimum and they probably aren't a good fit for you if you offer a high level service.

I've done tons of commercial bids and what I have found to be the best method for success in my industry is to find my supply, gas, and labor cost, add that up and then divide it by 0.45 (almost the same as what @CPisHere said).

I keep labor costs at 25% and supply cost is around 20%. After my fixed costs, this will usually net me a profit around 35% which is what I look for. If I'm not making 35% or more profit, then it's not worth it for me to do.

When I first started, I wasn't having any successful bids, and after they sent me that I didn't get the contract, I would always ask them why I wasn't chosen so I can work on my bids for future bidding.

I learned a lot from the ones that gave me feedback, I actually had ppl that said my bid was too low and it was a cause for concern so they didn't move forward with me. I gave other bids the same rates and they told me the price was too high.

As I refined my process, I picked up contracts and went above and beyond in my service and they were singing my praises to managers of other commercial properties they were friends with. Companies started calling me and asking for my services without me having to go through a competitive bidding format. Even if I'm a little more expensive then what they want to pay, they will pay it because they know I'll do an amazing job, and that's just as important as the price.


That's what I would recommend doing, and after you refine your bidding process don't forget everyone should not be saying yes to you. If everyone says yes then you're likely too cheap. That goes for both commercial and residential properties.
 

minivanman

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Dayum! Well, while the $9-$15 seems crazy, $20-$29 was my 1999 rate per man hour. So to me, they both seem mind blowing! That's why I never was much of a commercial cleaning guy. The $9-$15 has got to be some single worker that is not paying taxes.

Do you see why they have trouble keeping cleaners? They are getting what they pay for. I doubt they actually FIRED their previous cleaner, what happened was, the cleaner failed to show up (quit) so they said they fired him/her. It depends which one you talk to as to which happened.

You need to adjust your bid because you bid too high? How can you make any profit that is worth the trouble if you go any lower that $20-$29? Heck, I was paying $5.25 an hour and it was still tough charging those rates. I'm not trying to be mean, I'm trying to figure out the calculator.
 
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samsig03

samsig03

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Dayum! Well, while the $9-$15 seems crazy, $20-$29 was my 1999 rate per man hour. So to me, they both seem mind blowing! That's why I never was much of a commercial cleaning guy. The $9-$15 has got to be some single worker that is not paying taxes.

Do you see why they have trouble keeping cleaners? They are getting what they pay for. I doubt they actually FIRED their previous cleaner, what happened was, the cleaner failed to show up (quit) so they said they fired him/her. It depends which one you talk to as to which happened.

You need to adjust your bid because you bid too high? How can you make any profit that is worth the trouble if you go any lower that $20-$29? Heck, I was paying $5.25 an hour and it was still tough charging those rates. I'm not trying to be mean, I'm trying to figure out the calculator.
Yea it was unreal to me, the only way I see it was possible is that companies saw this 4 year contract for 15 properties and used that to calculate profit over 4 years and not each individual year for each individual property(economies of scale).
 
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samsig03

samsig03

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Crazy thing happened today, a guy I sent an email to like 4 months ago contacted me and wants to sell his current porter business. It is not his main job and doesn't have time to really manage it. He was 3 employees and 21 properties he maintains and he personally owns 6 of the properties in which he said he would extend the contract to me no problem. He has 1 year contracts in place and has had these clients for 5 to 6 years. No debt and no real assets. All he has is 21 contracts and 3 contract employees.

Has anyone ever put a valuation on a business like this? 1.5 X Revenue? He will send me all the details (p&L, budget, contracts) next week. PS I may start a new conversation for this.
 

minivanman

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That price still doesn't work in my calculator. I don't like those bundle deals when I'm on the receiving end of the penis. :p
 

Duane

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The companies I've bought in the service industry were 1x yearly gross revenue with a 4-6 month guarantee for each account, 1-2 month training/transition period, a 5 year non-compete, and I was able to make phone calls to the seller with questions for 6 months after the sell.

But these companies were takeovers of just their service accounts, I didn't take over anything of their actual business (ex: business name, employees, websites/advertising platforms).

Complete company takeover (business, website, employees, etc) is a higher multiple, I've seen it go for 2.5-3x yearly gross if the company is really automated and on the climb.
 
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samsig03

samsig03

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The companies I've bought in the service industry were 1x yearly gross revenue with a 4-6 month guarantee for each account, 1-2 month training/transition period, a 5 year non-compete, and I was able to make phone calls to the seller with questions for 6 months after the sell.

But these companies were takeovers of just their service accounts, I didn't take over anything of their actual business (ex: business name, employees, websites/advertising platforms).

Complete company takeover (business, website, employees, etc) is a higher multiple, I've seen it go for 2.5-3x yearly gross if the company is really automated and on the climb.

Awesome info and I appreciate the details on the transition and non compete. The guy seems pretty desperate because the company fell into his lap 6 years ago because the owner died and the wife offered it to him. So he took it on as a side hustle and lost interest now.

I wouldn't be taking over the name or website, just buying the service accounts and I will continue to use his contractors. I will keep you updated once he sends over all the details. Thanks again.
 
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JWM

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Awesome info and I appreciate the details on the transition and non compete. The guy seems pretty desperate because the company fell into his lap 6 years ago because the owner died and the wife offered it to him. So he took it on as a side hustle and lost interest now.

I wouldn't be taking over the name or website, just buying the service accounts and I will continue to use his contractors. I will keep you updated once he sends over all the details. Thanks again.
Sounds interesting, looking forward to seeing how this works out.

I am part owner of an electrical company. We are looking at getting into larger commercial jobs which would include the whole bidding process. A bit of new insight is always good
 

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