Operations and Systems Video

Why Does My Company Stay Busy but Still Feel Financially Fragile?

What You’ll Learn

Estimate the work and time needed when bidding a job
Set an hourly budget for the night on each job
Track actual hours versus the budget each week

Short Summary

The schedule stays busy, yet money still feels shaky. This often happens when the math behind the job is off. A busy crew can lose money when work hours creep up over time. When pricing a job, figure out the work before it starts. The company must estimate the work hours needed for each visit. That number sets the nightly hour budget for payroll. Each week, compare the real hours worked to that budget. When real hours run over, the company fixes the math and updates the budget or the price.

Frequently Asked Questions

Why can a busy cleaning company still feel shaky on cash?

The price may not cover the real work hours. Payroll can eat the profit.

What should be checked first on each job?

Check the work and the hours used to set the price. Then set a clear nightly hour budget.

How often should hours be compared to the plan?

Watch real hours against the plan daily or weekly. Update the math when hours run high.

What causes work hours to grow over time on a job?

Small extra tasks can get added over time. The team may take longer to finish.

What if real hours are higher than the planned hours?

The company resets the hours limit or raises the price. Keeping the same numbers can cut profit.

Full Transcript

Well, hi there. Welcome back. Dan again at CleanGuru.

So, you might say to yourself, “My cleaning company feels busy. Why do I not feel solid? Why do I feel financially at risk, vulnerable?” It’s a good question, and it’s common.

One of the first big fears you have is, how can I start getting steady monthly business coming in versus once in a while getting a job? But today we’re talking about you’re getting a lot of work. The schedule’s full, buildings are getting clean, invoices are going out. Why do you still feel financially rocky and nervous?

It’s a very common thing. A lot of times it’s not that you’re not working, and your folks are, but that’s just the busy part: people are working. What’s not working is the math underneath the business.

Now, maybe the math wasn’t right from the very beginning, or maybe the math got bad over time. It eroded. Either way, though, the good news is it can be fixed, but we need to look at it to take away that fear and that problem.

From the very beginning, we’ve talked about this: we need to really study, at the time of bidding a job or pricing a job when you already have a contract, what is the work to be done? How long should it take to do? What kind of labor hours do I have available to make sure, based on this revenue, here’s the profit we’re going to make?

So, here’s the payroll. Here’s the labor. So, what does it get down to for the nightly budget? It’s establishing the payroll for the night. What are we going to call that? Let’s call that the hourly budget.

So, if the hourly budget is three hours per night, what can happen? What can go wrong? Over time, folks might start working three and a half or four hours a night, and we don’t make any adjustment to the budget or the price.

Or maybe the building owner, the property owner, people start asking for more to be done. So, the job requirements change. You may or may not know about those job requirements changing. Either way, the budget may not have been changed, and the price may not have been changed.

And then over time, you get this feeling: we’re spinning our wheels. What are we doing?

Again, the best companies have all gone through this too at one point, because you want to say yes to any new jobs that are called in. You want to, and that’s how you grow. So, it’s real natural for you to keep your eye off the ball when you’re doing this.

But to get our eye back on the ball, which is profitability, we need to revisit the math underneath the work. So, take the time to find out, if you haven’t: what is the available payroll, the budget per night? Have I set that? Have I trained to that? And am I watching on a daily, weekly basis where the actual hours are coming in versus the budget, to maintain that profitability for that job?

Then, for all of your jobs being done the same way, that can turn around that feeling of worry.

Till next time, remember: you can do this. You really can.