One of the most common questions I receive as a BSC consultant is “How can I grow my business to 2x, 3x, or 5x my current size within the next three to five years?” Sometimes the question is posed a different way. “How can I get to $3 million or $5 million in revenue over the next 5 years so I can have the option of selling my business?” Regardless of the size, every cleaning business owner is asking this question. We all have our reasons to grow. For some it’s money, for other it’s the ability to have a sellable company, yet others want to diversify and limit risk.
Regardless of the reason, we all want the same outcome – growth. Now wanting growth and getting growth are two different animals. Getting the growth you want to achieve your goals can be a daunting task, a task the often turns would-be growers into always-wishing-never-acting stallers. But it doesn’t have to be that way. In fact, growth is much easier than you think if you have the correct plan in place. And I want to share with you what that plan should look like.
THE KEY? THINK BIG!!
John has a janitorial company doing $1 million in revenue per year, operating in a market of 300k people with a few smaller towns within a 1-hour drive. His $1M in revenue is comprised of accounts ranging in size from $250/month to $5,000/month, with most being under $1,500/month. For John, it has taken him 10+ years to grow his business to this point. In order for him to reach his goal of $4M in the next five years, he must change the way he looks at sales. Put another way, he must redefine his ideal client.
If his average account size is $1,200/month, simple math shows that he would need 208 new accounts, or 3.5 new accounts per month, assuming ZERO lost business. If you have done any sort of selling in this industry, you know that is a tough goal to hit. Has past track record would indicate this is not possible. Even harder than hitting the sales goal would be servicing 208 DIFFERENT new customers in order to make that $4M in revenue. So what must John do?
In order for John to hit his 5-year revenue goal, he must redefine has ideal customer and put a laser focus on targeting those customers. If John’s new ideal customer were 3x his current average size (or $3,600/month), he would only need to close 1.2 accounts per month and would only end up with 70 new customers – certainly a much more attainable goal. But what if John thought even bigger, and targeted only account $5k/month and greater?
By only targeting prospects $5k/month and greater, John would reduce total new clients to 50 over the course of 5 years, which is less than one new client per month. From an operational and sales standpoint, this is a very manageable number. And from our experience (at Frantz Building Services), a company can achieve roughly $1M-$1.5M in revenue per 100k in metropolitan area population.
Change Your Strategy
So for those of you wanting to scale up your business to achieve your long-term goals, you must change the way you think about growth. As the old saying goes, “What got you here won’t get you there.” To get larger revenues in a shorter amount of time, you must start thinking bigger – you must start expecting bigger. I promise you, the business is there! Your job is to identify it and go get it. Here is a short table of the account sizes you should be chasing if you want to scale up. The sizes of ideal prospects vary depending on janitorial company size.
Coming Next Blog…
In next week’s article, we will discuss the pros and cons of going after larger accounts, how you find them, what do they do to the value of your firm, and more.