In an industry where few companies can break past a profit margin of 10%, most janitorial contractors are easily enticed by the opportunity of higher margin work. We are always looking for that next golden opportunity to help boost our margins. But given the countless different ways you can earn extra revenue in your BSC business, how do you decide which opportunities to pursue? How do you know which add-services are good and which ones are not? Let me offer a quick guide.
First, a distinction needs to be made. An add-service is something extra you provide your customers in addition to your core service. An example would be carpet cleaning. A separate business unit, on the other hand, is a service that has its own unique customer base and operational model. For all intents and purposes, it is a different business altogether. Residential carpet cleaning or remodeling would be an example. In this article, I am talking about add-services.
Here are the criteria you should use to determine whether or not a particular add-service is right for you.
Does it complement your core service?
Imagine that your bank also offered oil-changing services. This sounds incredibly bizarre because it is not remotely related to professional banking services. In fact, it would hurt the professional image the bank had. In similar fashion, a BSC must be careful to only add services that complement the core service. If the add-service is not complementary, it could decrease your perceived value. If you fail at the service, your cleaning operation could be in jeopardy. Likewise, if the add-service is so different from the cleaning service, the customer may not see it as adding value. Add-services SHOULD ALWAYS complement and strengthen the core, but NEVER detract from it.
Does it give synergy to your operation?
Some add-services may complement your core janitorial service, but because of their difficulty to implement, they could become a drain on your operation. For instance, recycle programs may complement your cleaning operation, but the time and energy needed to successfully run a recycle program could weaken your core operation. Every company has different strengths and weaknesses, and some services may add operational synergy to one company while reducing synergy at another.
Is it profitable?
While an add-service may complement your core service and give synergy to your operation, if it is not profitable, you should not pursue it. There was a time when my company did not have the purchasing power to resell supplies at a healthy margin. While this add-service would be complementary and give us synergy, it was not profitable at the time. Therefore, it did not make sense to offer it to customers. Make sure that all of your add-services are profiting at least 30% (with the exception of supply resale). If you can’t get 30%, find another service.