Case Study: How One Successful Maid Service Business Began
March 11, 2011
Maria Green decided to start a maid service business in July 2005.
She wondered what skills and training she’d need to be successful in her new venture. She decided to explore a variety of options. It seemed she had three choices open to her. First choice: she could join a national franchise – there were several possibilities she read about in Entrepreneur magazine. The second option was to simply start up, and then learn how to make the business successful as she progressed – the trial and error method. The third option would be to hire a consultant or trainer who would teach her what she needed to know and guide her through the start up phase of the business. She considered the advantages and disadvantages of each approach.
If she joined a franchise, they would presumably help her get started by giving her the appropriate training. She’d heard that a good franchise organization would help you learn office and organization procedures, as well as learn the essential skills one would need to ensure the service being provided (house cleaning) was delivered efficiently. This meant that the business owner would need to have enough familiarity with the fundamentals of cleaning as well as the ability to train and supervise others in learning and carrying out these fundamentals to provide a high-quality service to clients.
She’d read studies showing that franchisees had a lower rate of business failure than people who went into business using the “go-it-alone” approach, so she felt this would be a good path to take. She interviewed several franchisors, and met some of the franchisees from a few of the major maid service franchises. Some franchisees spoke favorably of their franchisors, while some others were not so positive. These disaffected franchisees generally complained of the hefty monthly fee they had to pay; many felt they were not getting anything in return for the money they paid. Some complained that the franchisor demanded additional fees for marketing and other fees. They felt that these services should have been included in the basic royalty fee.
There were some clearly evident drawbacks to the franchise option, although there did seem to be advantages! One drawback was the initial cost of starting the franchise – the franchise fee. Another was the limitation of the territory. She wasn’t sure exactly how far she wanted to spread her net in the New York City area.
Williamsburg, where she’s based, is close to Brooklyn Heights, a high-end residential apartment area, but it’s also close to downtown Manhattan, where there are pockets of high-end residential buildings positioned amongst the office towers of the Wall Street area. There were, of course, other areas of Brooklyn which seemed like they would be good targets for residential cleaning services – areas such as Greenpoint, Fort Greene and Park Slope, to name a few.Each district had a good percentage of high earning couples inhabiting apartments, which would need to be cleaned. Of course, one big drawback remained the monthly royalty fee she’d have to pay to the franchise operation – if she didn’t have to pay this fee, the money could go towards providing a more competitive price to her clients and/or to increasing profits!
So, the go-it-alone, learn-by-experience method seemed to have several advantages: She wouldn’t need to limit her marketing boundaries, and she wouldn’t have to lay out tens of thousands of dollars for a franchise initially.
However, several friends and associates, and her accountant had counseled her not to go it alone entirely. They saw the need for a guided approach, a business growth path which would be guided by someone who knew the ropes – someone who’d studied the residential cleaning industry in depth and knew of the advantages of doing things the right way, as well as the perils of going the wrong route.
She wanted to get her business going as soon as possible. But she’d been warned by people she’d spoken with not to move too quickly in expanding a new business. There are many dangers in over-fast growth – the most significant one being the possibility of running out of precious capital, and not leaving yourself enough working capital to continue to run day-to-day operations, meet payroll on a regular basis, pay the rent, and so on.
After carefully analyzing the options available, Maria decided she would take the “self-education” route. Rather than purchase a costly franchise, which would limit her to a particular geographical area, and commit her to paying a significant percentage of her monthly earnings to the franchisor, she decided she would find someone who would train her to run a successful cleaning business.
She spent some time looking around, and finally found someone who was selling a package which contained a comprehensive set of tools and resources which could be used in starting and developing a residential cleaning business.
The package included several videos, books, sample forms and computer software.It also included a certain amount of free consulting from an industry expert.
Maria had also read some books about starting businesses in general and she was aware that she would eventually have to be consciously concerned with developing, managing and optimizing four aspects of the business.
The first covers those parts of the business involving the delivery and performance of the service the company is planning to provide. She reckoned that it would be important to provide an excellent service, one that she would personally feel proud of. If she was delivering an excellent service to her clients, they would be happy and continue to hire her and, importantly, recommend her service to their friends. She wanted to use the “networking” approach to marketing, as much as possible – that is, get significant amounts of new business through recommendations from existing clients.
Secondly, there existed the questions of managing the day-to-day operational organization – that is, the fundamentals of the day-to-day business operations. Someone would have to be fielding calls from prospective customers, and handling calls from existing clients – requests for additional services, complaints, etc. Then someone would have to be responsible for managing the cleaning staff – setting up their schedules, organizing pay, making sure they know their schedules, and the details of what to do and what not to do in each location.
Some clients would want special attention paid to specific areas of their homes or apartments, some would want the cleaners to avoid the pets, and so on and so forth.
Third, there would be the financial aspects of the business – ensuring the business had enough capital to get started, and there would be enough money on hand to employ and train a few employees initially when the business was in startup mode. There would also be a need for money for all the normal business expenses – rent of the offices, telephones, computer and other technical equipment, payment of secretarial help, etc.
Fourth, there is marketing and sales. A concerted effort would need to be made to ensure new clients were acquired on an ongoing basis. She realized that the costs associated with this aspect of the business could be considerable. She also recognized that this would be a critical aspect of the whole system (the business as system). She figured it would make sense to have a significant marketing budget initially to get the business started. Somewhere down the road, it would be necessary to allocate a certain percentage (to be determined) of sales each month for ongoing marketing.
The package of items she purchased through Thoughtful Systems helped in every aspect of the business. Firstly, there were several video tapes and manuals which explained the proper methodology for cleaning. She could use the video tapes to train new employees. It would simply be a matter of sitting new employees in front of the TV to watch the videos, and then testing them to ensure they had absorbed the essential elements of the required cleaning tasks. This would aid efficiency, and save time.
For office organization, she realized that she needed to hire someone who would be a reliable backup, someone who could multitask initially – speak with the clients, interface with the employees from time to time, and manage the paperwork. Of course, Maria knew that she would have to do all these tasks herself initially, but she thought she would be able to hand certain amounts of the work to the office person as things got busier.
As part of the package she purchased from Thoughtful Systems, she received a starter version of the Scheduling Manager, a computer program designed specifically for the management of cleaning businesses. She would be able to upgrade this software package as her business grew. This was a valuable plus, as some other software companies charged a single fee. She checked up on the software company, and found out they had a very good reputation for customer service, support and training. This was, of course, important to her. Having software without training is like being on the river in a canoe without a paddle.
This tool – the computer software – proved to be an invaluable ingredient in the development and growth of the business. It enabled her to systematize all sorts of tasks that needed to be performed on a regular basis – daily, weekly, monthly or annually…