| March
11, 2011
Case Study: How One Successful Maid Service Business Began
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| Maria Green decided to start a maid service
business in July 2005. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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! |
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| 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. |
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| 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. |
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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. |
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| 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.
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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. |
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| 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. |
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| 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.
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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.
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| 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. |
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| 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... |
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