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NOTABLE! [Progress] Growing a Cleaning Business

Kastosaurus

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I spent some time speaking with Andy Black yesterday about my AdWords Campaign for my local service business.

You can listen to Part 1 of the call HERE. (This is the chat.)
You can listen to Part 2 of the call HERE. (This is the review of the AdWords account.)

He suggested I start a progress thread to report back on how everything worked out.

Seems like a good suggestion, so that's what I'll do.

Updates will probably be every couple weeks if the data makes sense. Might need to wait 30 days for the initial campaign to show some numbers. Obviously something that doesn't have enough data points is irrelevant to report back.

The big change Andy made with this campaign versus what I was doing before is implementing Modified Broad Match Keywords.

Essentially I was listing every possible variation of every keyword, and bidding on each and every one of them. From what I've learned, this isn't the most effective way to approach this, and can actually have negative effects on your CTR and Conversions. Which in turn affects how Google views your ads and the costs associated with them.

Modified Broad Keywords Andy has discussed at length, but is basically this:

Keyword = +City +TargetKeyword

The reason for this is to take what he calls the "low hanging fruit". What he means is a local service business like myself only wants to pay for those visitors that are ready to buy. We don't want the tire kickers, or people researching how to do the work on their own. We want customers in need of our service as soon as possible.

By using modified keywords, we ensure we only show for search terms that include both our city and keyword. This is key because people don't search "Great Neck Home Cleaning" unless they are looking for a local cleaning service. People who search "Home Cleaning" may be looking for a local cleaning service, or are just as likely to be looking for tips on how to do it themselves.

The other key piece Andy and I discussed, was the 3 key things that must match up for any campaign to be successful. Those things are the Keyword, the Ad Copy, and the Landing Page Copy. All three of these need to convey the exact same message to client.

When a client searches "Great Neck Home Cleaning", our ad must say "Great Neck Home Cleaning". Then, when the ad is clicked, it must take them to a page that reads right in the headline "Great Neck Home Cleaning".

Obviously this doesn't guarantee somebody books a service with us, but it's intuitive to see why somebody would be more likely to book versus if those pieces did not match up.

***************************************************************************************************************************

I haven't been active on the forum, but I'm happy to discuss anything regarding my business or building a local service business in general.

Andy and I discussed a lot of things, but I couldn't go all that deep in any one particular area. Glazing over things makes them seem a lot easier than they are in practice.

I know one question I'd ask if I were a listener is, "What cash flows do you have that allow you to put everything the business earns back into the business, yet still pay your bills, and still have the time to grow the business".

I wouldn't call it divine intervention, but I certainly didn't have the balls to leave my job on my own. I went in that Monday morning just like any other, yet walked out with no job. Whatever allowed that event to happen, waited until I had just enough things lined up that I wouldn't run scared to another job.

It's worth mentioning, I have student loans, a mortgage, two car notes, NYC rent, and a girlfriend who's currently in grad school.

I had every reason to be dependent on my salary, and I was.


Alright so to answer the question, what cash flows keep me afloat.

Rental Income - Own a 2 bedroom home in Baltimore Maryland. Bought this three years ago and lived there briefly before moving to NYC. This covers my mortgage payment and student loans. (1 Hour Per Month)

NYC Rental Income - I saw an opportunity in the short term rental market, and decided to lease apartments and rent them out short term. These are thru partnerships with guys who own the properties. It's a great income stream but certainly isn't passive like the property in Baltimore. Other downside is there's no end game to this. I can't sell the partnerships. The systems I've built allow the income to be more passive than not, but this will eventually just shut down. If your familiar with the field at all, there's a ton of regulatory concerns in NYC so this won't be a long term endeavor for me. (10-15 Hours Per Week)

Ecommerce - Girlfriends dad manufactures women's jeans and leggings. I offered to build him a website for free as long as I kept the profits from whatever sold online. It's had it's ups and downs, and is fairly stagnant at the moment since I'm not all that motivated to build it. Apparel is boring, and making trips to USPS sucks. (2 Hours Per Week - Trips to storage, then USPS. Could use fulfillment center, but like I said I don't really even want to grow this)

Freelance Wordpress Support/Consulting - Spoke about this a bit on the call with Andy, but I basically offered a service on Craigslist setting up Wordpress sites for people. Some of that is billed hourly, others are project based and I give a set price for it. This has been the most valuable in terms of learning and personal growth. I'm not technical, so offering to provide a technical service to a complete stranger is intimidating. It forced me to learn on the fly and each client chipped away at whatever fear I had going into it. (8 Hours Per Week)

In between all of this the real focus in on growing the Local Service Business. Answering the phone, responding to emails and online chat, drafting email campaigns, local outreach to bloggers and newspapers, social media, client relations, contractor relations, etc.


Alright, so enough about me. I'll continue this progress thread as the campaigns runs, and hope for the best.


Wish me luck.
Just curious; can you elaborate on why you choose to focus on residential and not on commercial?
 

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nzott

nzott

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Just curious; can you elaborate on why you choose to focus on residential and not on commercial?
You need to be too involved in commercial. Also requires different insurance that doesn't fit my model. Going to a site to meet with management, walk the property, draft a proposal and negotiate that proposal is an annoying process. We get invited for bids constantly and I turn them all down.

By and large I can charge what I want with residential. If I screw up an estimate, I might be out a few hundred dollars in additional labor. Commercial can be far worse.
 

GoGetter24

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What about small businesses instead of larger ones? I'm not sure, but I suspect it's easier to give a quote on the spot to a small business with a frazzled owner who's putting out fires than to the manager of some big company who's job basically requires they drag the process out.
 
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nzott

nzott

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What about small businesses instead of larger ones? I'm not sure, but I suspect it's easier to give a quote on the spot to a small business with a frazzled owner who's putting out fires than to the manager of some big company who's job basically requires they drag the process out.
I’d say if you’re going to focus commercial, you want big contracts. Small businesses will want the lowest possible rates. Likely we’ll below what can ever make sense for you.

There’s two big reasons I don’t like commercial.

1. Takes up too much of my time. I currently spend an hour each week on the cleaning business. Commercial would require an endless calendar full of meetings, walk throughs and proposals. I prefer getting clients while I sleep. They go to our website, see our pricing, and book service. I could hire a salesperson, but that completely changes my current business model.

2. You can easily become too dependent on one client which is a huge risk. We bid and won a contract that would have been about 25k revenue each month. It would have taken all of our resources to do properly. I turned it down because I don’t want one screw up and blow 25k in revenue. I’d rather have 50 clients that pay me a combined 25k/month and screw up one every so often. The affect would be negligible.

It’s no knock because there’s a lot of big profitable companies that do commercial work. I just think it’s more headache than people assume.

I like the automation aspect of my current model which allows me to compound my time into other profitable things each day.
 

GoGetter24

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Small businesses will want the lowest possible rates. Likely we’ll below what can ever make sense for you.
Have you checked it? Don't see why someone would want the lowest possible rates for their small business, but not for their house. Tax deductability and all that.

I’d rather have 50 clients that pay me a combined 25k/month and screw up one every so often
Same story, there's more small businesses than large ones.

Small businesses would consist of a small number of people, often just the owner, who has to do everything. So if you're the guy who removes "clean the shop every day" from that list, perhaps it's an operating expense they're happy to spend? Don't know of course, just thinking out loud.
 
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nzott

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Have you checked it? Don't see why someone would want the lowest possible rates for their small business, but not for their house. Tax deductability and all that.


Same story, there's more small businesses than large ones.

Small businesses would consist of a small number of people, often just the owner, who has to do everything. So if you're the guy who removes "clean the shop every day" from that list, perhaps it's an operating expense they're happy to spend? Don't know of course, just thinking out loud.
Small businesses call us constantly. I give them our hourly rate and move on. Small business often means working outside their business hours. Major headache to scale with 6-10pm 5am-8am shifts.

A small business isn’t calculating its tax write off when looking for a cleaning service. They are looking at their bottom line cash flow and what they can afford.

We get gyms, salons, restaurants, professional services, etc. None value cleaning highly enough to pay our prices.

That’s fine with me.
 

GoGetter24

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We get gyms, salons, restaurants, professional services, etc. None value cleaning highly enough to pay our prices.
Interesting and surprising. So with residential people are willing to pay high hourly rates for cleaning versus businesses? Maybe it's something to do with the frequency of cleaning required?

Perhaps there's a specific type of cleaning, rather than customer sector, that you could target? For the sake of exaggeration: radioactive waste cleanup. Doesn't happen often, but when it does it really needs doing and you can quote whatever you want, no time for dilly-dally "request for proposal" crap etc.

A small business isn’t calculating its tax write off when looking for a cleaning service. They are looking at their bottom line cash flow and what they can afford.
I meant like versus residential, since that's out of their personal pocket and more "luxury" versus necessary expense.
 
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Interesting and surprising. So with residential people are willing to pay high hourly rates for cleaning versus businesses? Maybe it's something to do with the frequency of cleaning required?

Perhaps there's a specific type of cleaning, rather than customer sector, that you could target? For the sake of exaggeration: radioactive waste cleanup. Doesn't happen often, but when it does it really needs doing and you can quote whatever you want, no time for dilly-dally "request for proposal" crap etc.


I meant like versus residential, since that's out of their personal pocket and more "luxury" versus necessary expense.
There’s massive opportunity in niche specific cleaning like that. Crime scene clean up, waste material, etc. But you’ll likely need to shell out some cash for the training and insurance elements those would incur. I’m not against it by any means, I just prefer to throw my hat into where there’s already a lot of money flowing and win on the branding and customer service side of things.

You want the clients that view it at a luxury item. If they don’t, you’re fighting every husband wife couple with a mop and bucket. The barrier to entry for cleaning is insanely low. You have to be above this level in order to make any money. Otherwise, you’ll be busy and broke.
 

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You need to be too involved in commercial. Also requires different insurance that doesn't fit my model. Going to a site to meet with management, walk the property, draft a proposal and negotiate that proposal is an annoying process. We get invited for bids constantly and I turn them all down.

By and large I can charge what I want with residential. If I screw up an estimate, I might be out a few hundred dollars in additional labor. Commercial can be far worse.
Where are people getting your info that they are inviting you for bids?
 
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They Google everything just like homeowners do. I'd imagine some go strictly off referrals, but almost everything we get is through our website which is primarily driven by Yelp and Google.
 

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CPisHere

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Small businesses call us constantly. I give them our hourly rate and move on. Small business often means working outside their business hours. Major headache to scale with 6-10pm 5am-8am shifts.

A small business isn’t calculating its tax write off when looking for a cleaning service. They are looking at their bottom line cash flow and what they can afford.

We get gyms, salons, restaurants, professional services, etc. None value cleaning highly enough to pay our prices.

That’s fine with me.
Hourly rates are WAY lower for commercial than residential, but services are more frequent and space is bigger so more hours. It varies by market, but here a residential cleaner might be $40/hour where as commercial is $25. And it's not valued very highly, where as people with money value not having to clean their own home.
 
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nzott

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Hourly rates are WAY lower for commercial than residential, but services are more frequent and space is bigger so more hours. It varies by market, but here a residential cleaner might be $40/hour where as commercial is $25. And it's not valued very highly, where as people with money value not having to clean their own home.
Right, Commercial you need a good bit of scale before you personally make any money. Residential you can make money from day one. In my experience, residential has been leaps and bounds easier to both manage and grow profitably than anything commercial would be. Commercial seems like such a time suck and constant headache.
 

Gidoza45

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Very interesting thread. It's hard for me to grasp your business model though. So the customer goes to your website and books your service. The website spits them out a quote based on what they say they need. You hire some sub-contractors to perform the work then you collect payment from customer?
 
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nzott

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Very interesting thread. It's hard for me to grasp your business model though. So the customer goes to your website and books your service. The website spits them out a quote based on what they say they need. You hire some sub-contractors to perform the work then you collect payment from customer?
Yeah, at it's core that's it. Then split the payment with the sub.
 

21elnegocio

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Very good thread @nzott

Is there a thread on how to start a cleaning business ?

What tools are needed? How did you acquire your first clients ?

What programs do you use for your clients to book appointments ?

How about what website did you use ? Do you do good ads or facebook ads for marketing ?


What is your % of profit that you would consider worth your month ?
 

Roughneck

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Residential you can make money from day one. In my experience, residential has been leaps and bounds easier to both manage and grow profitably than anything commercial would be. Commercial seems like such a time suck and constant headache.
Firstly, I want to say thanks to nzott for the information posted in this thread - it has been helpful and also inspiring. I did have a few questions though.

My partner is currently running a cleaning business. It has only just started, she is the only worker at the moment (apart from 1 contractor that has helped on a few larger cleans). It's something that while she is good at, it's not what she wants to spend all her time doing - cleaning up other peoples mess...but she is great with customers and after only 4 weeks, she has been receiving great feedback and plenty of work too! So, we have started to look at the option of hiring staff, although I understand this is different to your situation as you are subcontracting your work out to other companies - we would like to employ workers in house to keep an eye on the quality of the service as we are aiming to be a premium product.

What ROI are you looking for when you are using your subcontractors to undertake work for you. One thing I am having a hard time getting my head around is being able to pay our workers plus equipment, insurances, products, training, sick days etc etc etc and make a reasonable profit.

Your website, which allows booking - obviously details all the costs associated with your cleaning and services? Or do your customers need to go through a quoting process?

What systems do you have in place for jobs that require more hours then the booked in amount? We have found on multiple occasions that we have quoted on a specific amount of hours but once arriving at the job, seeing that the house is a complete mess and requires a lot more hours to get to the standard we would be happy with. In which case, I think we have been lucky with discussing with the customer that their house will require more then the allotted amount but I am sure this will not always be smooth sailing.

I have a ton more questions but will leave it at that for now! I hope I haven't repeated a previous question in this thread!
 

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Very good thread @nzott

Is there a thread on how to start a cleaning business ?

What tools are needed? How did you acquire your first clients ?

What programs do you use for your clients to book appointments ?

How about what website did you use ? Do you do good ads or facebook ads for marketing ?


What is your % of profit that you would consider worth your month ?
If business was easy, they'd call it school.
 
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nzott

nzott

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Firstly, I want to say thanks to nzott for the information posted in this thread - it has been helpful and also inspiring. I did have a few questions though.

My partner is currently running a cleaning business. It has only just started, she is the only worker at the moment (apart from 1 contractor that has helped on a few larger cleans). It's something that while she is good at, it's not what she wants to spend all her time doing - cleaning up other peoples mess...but she is great with customers and after only 4 weeks, she has been receiving great feedback and plenty of work too! So, we have started to look at the option of hiring staff, although I understand this is different to your situation as you are subcontracting your work out to other companies - we would like to employ workers in house to keep an eye on the quality of the service as we are aiming to be a premium product.

What ROI are you looking for when you are using your subcontractors to undertake work for you. One thing I am having a hard time getting my head around is being able to pay our workers plus equipment, insurances, products, training, sick days etc etc etc and make a reasonable profit.

Your website, which allows booking - obviously details all the costs associated with your cleaning and services? Or do your customers need to go through a quoting process?

What systems do you have in place for jobs that require more hours then the booked in amount? We have found on multiple occasions that we have quoted on a specific amount of hours but once arriving at the job, seeing that the house is a complete mess and requires a lot more hours to get to the standard we would be happy with. In which case, I think we have been lucky with discussing with the customer that their house will require more then the allotted amount but I am sure this will not always be smooth sailing.

I have a ton more questions but will leave it at that for now! I hope I haven't repeated a previous question in this thread!
Our quotes are just a flat rate based on bedrooms and bathrooms. Then you can add items a la carte. Things like inside the fridge, interior windows, basement, etc. With that flat rate, we include 1 kitchen/dining and 1 living room. Any other rooms are priced as an additional bedroom. Half Baths are same price as full.

With flat rate pricing you get people who play games fairly often. Especially if you never had them on the phone. They'll claim 2 bedrooms when it's really 3, or they want some additional items that's not in the base pricing. Just part of the game. We combat this with a check box people are required to select that essentially lays out that the price they see is subject to change based on what we find when we actually come to the property. It's said in nicer words, but that's the gist of it.

With that being said, you're going to get pricing wrong. Even when you quote a job in person you're going to be way off on occasion. Most of the time you'll be a bit under or over what you thought it'd be and it works itself out. Rarely will you be spot on. Again, it's part of the game. Not something to worry about.

Oftentimes, you can go back to the client and explain why it's taking longer and renegotiate price. If you're delivering a quality service and they can see that, they'll work with you. If they feel it's not, they'll whine. Sometimes they'll whine regardless. Who cares. Absolute worst case is you were way off and the job took hours longer than anticipated, or you even had to return the next day to finish because of how long it's taking. You take the loss, learn from it, and move on. In cleaning, that potential loss is at most a few hundred dollars. We're lucky in that regard. Large building contractors often run the risk of being off by tens of thousands that they may not be able to to collect on.

"One thing I am having a hard time getting my head around is being able to pay our workers plus equipment, insurances, products, training, sick days etc etc etc and make a reasonable profit"

Easy answer is, it's hard... I just deleted a long list of ways to analyze and come up with accurate pricing, but to be completely frank, it's bullshit. There's too many unknowns. Especially in the beginning. Nothing is set in stone.

Easiest way is to copy pricing in your market. Call a competitor and ask their pricing. Charge the same then deliver a better service. Every 6 months or so, increase pricing across the board. Not drastic, but $3-5/hr or something like that. Think we started at like 30-35/hr per cleaner. We do 45-50 now.

Goal is to win business early with low pricing a service that knocks it out of the park. Build up a loyal base and slowly raise prices until you're a premium service in your market. The price seekers will fall away and you'll be left with valuable high paying clients.
 

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