New businesses are popping up everywhere in your neighborhood. Chances are you’ll find plenty, from small shops to restaurants and even cleaning businesses. According to Industry Canada, between 2002 and 2008, and average of 100,000 were launched each year. That’s almost 1 million businesses launched during that eight year period. But there’s a bad part: after five years in business most of them disappear. Only half of small and medium-sized businesses make it to their fifth birthday, and about 15% don’t even make it through a full year.
Even though I’ve been in business for nearly five years now, I can say that most things related to my cleaning business come second nature. However, that wasn’t always the case, especially in the very early going when I just started out. I made many mistakes along the way and continue to learn my lessons even today. Part of the growing process for any small business owner is the ability to recognize their mistakes and hopefully learn from them along the way.
Looking back now I’ve made my fair share of mistakes and wasted a lot of money in the process. For instance, I mixed my personal and business spending from my cleaning business’s account. I also spent some money stupidly on newspaper ads, only to realize that they were very ineffective for my type of business and who I was going after. Needless to say, I wasn’t perfect. I learned from it all, and more importantly recognized that in order to have success there needs to be failure along the way.
So here are a few reasons why I think small cleaning businesses fail, and how you can avoid becoming part of the failure figure.
Mixing Personal and Business Spending
Almost every entrepreneur overestimates their ability to generate revenue, or underestimates what it’ll take” to start making money Eventually once the money does start rolling in, many result in spending their hard earnings by the inability to separate personal and business spending. When a business is started, there’s an early period where you’re just digging a pit and throwing money into it, and making money could take longer than expected. Some firms, however, aren’t prepared for revenue delays and simply run out of time and money. So, they start pouring in their own money in order to sustain the business, then revenue starts coming around, and then they take the revenue away from the business in order to return the money that was “borrowed” earlier from the personal account. In order for your company to sustain itself, you as the owner and mastermind behind your company need to get your hands dirty, do some of the cleaning or anything else for that matter. Because the more you’re capable of doing yourself, the more money will stay in your pocket, and the stronger your business will become over time.
Subbing Out The Work
The main idea behind a cleaning business is cleaning its self. If you don’t enjoy cleaning, you’re not going to succeed and your cleaning business will fail. Far too many people get a nice business account, but either make up a great excuse as to why they can’t do the cleaning them selves or simply don’t want to do any cleaning – so they sub the work out. Beginners need to understand the financial implications of subbing the work out. If you have only one or two accounts, and subbing the work out (or majority of it), you’re essentially taking out profit from the bottom line.
Hiring Others to Solicit New Business
Far too many people want to wave a magic wand and just get accounts by hiring someone else to do it for them. Beginners need to understand the financial implications of getting each account. I mean, at the end of the day you only want profitable accounts. Having just “any” account is pointless, you need profitable ones! Hiring someone else to do your cold calling essentially eliminates yourself out of the picture. You lose your ability to negotiate, add or subtract details and you rely on someone’s closing skills. So if they’re incapable of properly closing a potential deal, well that’s your loss.
So, rather than hiring someone to make calls for you, you should be soliciting for new business yourself. Most newbie business owners either hire someone on part-time basis or hire some appointment setting company that just calls around and in hopes of finding companies that wouldn’t mind having a competing cleaning company price cleaning their facility. The type of companies that say “yes” to appointment setters are just PRICE SHOPPERS. They are out for the lowest bid in many cases. Even if the business owner lands this type of account, the profit margin will be slim to none.
Little Value Offered
So you’ve started a new business nd you think it’s great. Even your cranky in-laws think it’s a winner. What could go wrong, right? For a number of reasons, entrepreneurs often have an inflated sense of their businesses value offering worth in the marketplace. If your new business doesn’t offer a solid value in return, why would anyone want to do business with you? They certainly can do business with someone else who’s far more established and brings a lot more credibility. If what you’re offering is only a little better, it’s not going to be enough to generate the traction that you need to keep your business sustainable in 2 or 3 years. Your cleaning service needs to be 10 times better than your competitor’s.
Spending money before you ever make any is a dangerous scenario that you should avoid. Rather invest your time and learn the process for yourself. Your success depends on it. I’ve been cleaning offices for nearly five years now, and I did it all mostly myself. Maybe my business could have been twice as bigger than it is now, but I chose to take the slow route, one that’s also more secure. All the accounts I have today I got myself or through a referral. I never spent a dime to have someone else solicit for me. I handed out flyers, attended group networking seminars, and cold called hundereds of businesses.The people who run into trouble outsource a lot, because they don’t take the time to learn the business themselves. Instead they willingly spend their personal money hiring others to the work that they can do..