Friday, December 30, 2005

Living Below Your Means

I'm always amazed at my hero, Warren Buffett. He's the second wealthiest human being on Earth, but you wouldn't know it based on his lifestyle. He lives in the same home that he purchased in the late 1960's. He drives used cars with high mileage. He prefers Dairy Queen hamburgers over fancy entrees. It's an understatement to say that he lives below his means.

I though that Warren was an anomaly. I was wrong. A man named Kerry Packer recently passed away in Australia. He was the country's wealthiest individual. He also preferred hamburgers over fancy entrees. Add him to my list of heroes.


My New Hero

Thursday, December 29, 2005

Wasting Away

I talk a lot about my hero, Warren Buffett. Warren has a famous cousin named Jimmy. Jimmy Buffett's music evokes a laid-back, no worries lifestyle. You think of water, boats, and frozen drinks when you hear his music. His music is a brand and he's made lots of money off the brand.

Brands get greedy when they get really successful. The brand gets caught up in itself and thinks it can use its identity to create new markets. Only two things can happen when you attempt to cross market your brand.

1. The market that the brand originally dominated is eroded.
2. The image of the brand is sacrificed.

Jimmy Buffet is no different. He became famous for playing music, but today he does all of this:

- Licenses the franchise rights to 24 Cheeseburger In Paradise restaurants
- Operates 13 Margaritaville Cafes and Stores
- Sells Buffett footwear through department stores throughout country
- Licenses microwaveable seafood products sold in grocery stores throughout country

There are no tour dates set for 2006. His music has to slow down in order for him to attend all the functions required by the different arms of his new empire.

A brand can only represent one specific thing. It can't be everything.

TwoMaids is a brand. One day, a lot of people will attach "customer service and housecleaning" to the brand. At that point, we could start manufacturing TwoMaids cleaning products or we could license our name for apparel such as aprons. But we won't. We'll just keeping cleaning houses. And we'll keep dominating our intended market.

I wonder what Jimmy's cousin would tell him?

Tuesday, December 27, 2005

This Week Is Thinking Week

The last work week is usually the least productive for most people. You've eaten all you can eat. You're looking forward to New Year's Day. You just want to get through these next few days.

This week is traditionally very slow for a cleaning business. People's wallets are thinner and many people are still on vacation. That's why I make this week my thinking week.

What went wrong this year? How can those mistakes be corrected? What went right this year? What should I continue next year? All in all, I use this week as my assessment week.

You don't need to be a business to utilize "thinking week". Thinking week is for everyone; business, people, your job, even your car. Use the dead time to make next year more productive than this year.

Always be climbing the mountain or you'll start going down the mountain.

Monday, December 26, 2005

Passion Makes Perfect

You can do anything when you have passion. This proves it.

Passion

Thursday, December 22, 2005

Merry Maids Financial Update

ServiceMaster is the parent company of a business called American Residential Services. American Residential Services owns one of our biggest competitors, Merry Maids . Merry Maids is big, real big. They have thousands of locations across the country. They've been around for a long time. And they're losing money. Check out this quote from a recent news article about ServiceMaster.

Through the first nine months of 2005, American Residential Services posted sales of $570.1 million, an 11% increase over the same period in 2004. Operating income for ARS surged 189% to $6.54 million. The cleaning businesses, however, remained under water, losing $9.25 million through three quarters, despite a 7.4% increase in sales.

Merry Maids cleans more homes than any other company in America. They're the first name that pops into a person's head when it comes to a professional maid service. Yet, they're on pace to lose more than $12 million this year. How can the nation's leader in residential cleaning lose that much money? Focus.

Focusing allows you to concentrate on the real problems. Focusing allows you to fix mistakes immediately. Focusing allows you to plan for the future. Focusing allows you to grow the business.

At TwoMaids, we're focused. Granted, it's not that difficult to be focused right now. We only have two locations. We only clean in four counties. And we only have forty employees.

Everybody knows our focus. It's customer service. Maintaining a high level of customer satisfaction is our number one goal. It is today and it will be twenty years from now. A person can't succeed without focus and a business can't either. You've got to have direction in order to know where you're going.

So, hats off to Merry Maids. You clean more houses in one day than we clean in one year. Of course, we didn't lose $12 million dollars this year either.

Wednesday, December 21, 2005

The Sign Of A Good Boss

I was getting take out food from a local burger joint and noticed a sign that said, "Don't Worry, We'll Be Open Monday, December 26th". That's the sign of a bad boss, literally!

We need healthcare. We need police protection. And we need many other vital services that day. But, we don't need another hamburger. I wonder if the person that made the sign will be there on Monday?

You don't need to shop Monday. You don't need to get your house cleaned Monday. You need to be with your family and friends on Monday. There is a time to make money and there is a time to value your employees.

Value your employees before you value your customers. That's the sign of a good boss.

Monday, December 19, 2005

It Starts Out Good, But

I hear it every day. "My old cleaning service started out great, but it got worse and worse over time. I complained, but things never got better. "

I know why this happens. The ugly head of employee turnover rears its head after about four cleanings (sometimes less). It goes a little something like this.

You're a new customer. You want to schedule the service once per week. The cleaning service manager knows that your first cleaning is crucial in order to secure future cleanings. So, she sends out her best team of cleaners. You're extremely happy, so you agree to weekly service. A new cleaning team arrives for your next cleaning. The cleaning is not terrible, but not nearly as good as the previous week. Mistakes happen, so you chalk it up to people being people. The third visit isn't so great. Mistakes are obvious, so you contact the office to voice your concern. They listen and they offer to correct the mistakes. The mistakes are corrected, but the fourth cleaning doesn't get any better. You contact the office again and you don't receive a return phone call. You give up and call Two Maids & A Mop.

That's how you see it. This is how the cleaning service manager sees it.

You're the priority that first day. It's her job to make you happy. She's got a handful of people that she really trusts. She sends them and they make you extremely happy. A week passes and its your turn to be cleaned again. Four people don't show up for work that day. She's overbooked now because she doesn't have enough qualified people. She can either cancel an appointment or she can send out unqualified people. She needs the business, so she's sends out the unqualified people. This same problem repeats itself every day, not just your cleaning day. Running a cleaning business is all about survival from one day to the next day.

That's the ugly truth. Turnover in the cleaning industry makes it impossible to create customer satisfaction. For most people.

The key to a successful cleaning business is employee turnover control. There's lots of ways to make this happen. For us, it's the pay for performance plan. An employee of TwoMaids can make more than $10 per hour if the employee makes a lot of customers happy. Customer satisfaction means employee satisfaction. Employee satisfaction means low turnover.

Low turnover means that it starts out good, and stays good.

Friday, December 16, 2005

The $950 Cocktail

Here's a great example of a company that creates value out of a commoditized product.

Click here...

Thursday, December 15, 2005

Create Value

The consumer price index (CPI) is a measure of the average change in prices over time in a fixed market of goods and services typically purchased by consumers. It covers about 80% of the nation's population.

A recent news article stated that the November 2005 CPI dropped more than any other month during the past 56 years. That's good news for consumers. You are paying less now for stuff than you were in October. But, is it good news for a business?

Not if your business operates as a commodity. A commodity has no specific advantage other than cheap prices. Look at the nation's commodity markets. Traders pay more or less for a good based on its expected price increase or decrease. Nothing else is analyzed except price fluctuation.

A business was not designed to operate solely on price. This has become the norm because business owners forgot how to compete. It was easier being cheaper than the other guy. Times are changing. A business needs more than just a low price today. A business now needs to offer something that provides value to the customer. A business is destined to fail if no value is created by the purchase of its goods or services. You can't always be the cheapest, but you can always be the best at something.

Need an example? Would you rather pay $350 per night for a room at the Ritz-Carlton in Manhattan, or would you rather pay $90 for a room at the Howard Johnson in Manhattan?

There's a lot of people that would select the HoJo. However, there's just as many people that would select the Ritz. It's called a market. A market has supply and it has demand. In this case, a cheap hotel has a demand. So does a hotel that provides you with unbelievable views, plush rooms, and tons of amenities.

A business can't serve everybody. Some people want you, others don't. Start creating value out of your goods or services. If you build it, they will come.

Tuesday, December 13, 2005

Provide Something Extra

We're required to purchase an occupational license each year in order to legally hire an employee. I just searched all year-to-date occupational licenses for the janitorial/cleaning industry and found that just over four hundred licenses were granted. The alarming thing is that I only searched one county. We compete in four counties.

Think about that for a minute. Four hundred cleaning businesses have been in existence at some point this year for just one tiny county. I should restate that. Four hundred "legal" cleaning businesses have been in existence. There's probably a few thousand "illegal" cleaning companies out there.

In contrast, only twenty-six accounting firms were granted a license this year. Fourteen liquor stores. Seven boat dealers. One amusement park.

We compete against a lot of people. It's an easy business to start. A few bucks at the dollar store, a few flyers in a neighborhood, an inexpensive occupational license, and you're in business. It's easy to start, but difficult to maintain. That's proven time and time again. Check out your area Yellow Pages if you need tangible evidence.

Highly competitive markets are typically the least efficient markets. Businesses tend to take the easy way out and attempt to capture market share by being the least expensive option. It's harder being better.

The problem is that you can never be the cheapest provider in a highly competitive market. Somebody will always beat your price. Think about the airline industry. There's not four hundred airlines, but there might as well be. The cheapest provider gets the customer. When is the last time that you paid a higher price for air travel? If you have paid higher, then there is a reason. That airline gave you something extra.

The cleaning world better wake up before it's too late. You better start providing something extra.

Saturday, December 10, 2005

The Pessimism Disease

You've had a terrible day. Nothing went right. Everything went wrong. You're tired and frustrated. The day can't end quick enough. Sound familiar?

It should. We all have days like this. Life doesn't beat to the same drum every day. The question is, how do you react to these days? Do you wake up energized, ready to tackle yesterday's challenges? Or, do you wake up just as tired and frustrated as the previous day?

To me, it's easier to be optimistic. The glass should never be half-empty. Optimism gives you reason to live. You always have a purpose.

Pessimism is ugly. It permeates through people like a disease. One pessimistic person usually infects another person. Eventually, everybody is negative. The glass is half-empty all the time.

Who wants to live like that? Not me. And you don't either. The pessimism disease has infected you at some point in your life. Your disease needs problems in order to survive. How do you get rid of the disease? Easy, never have problems.

Make your problem a challenge. Be optimistic. It really is that simple.

Quit complaining and start fixing.

Thursday, December 08, 2005

Turnover In The Housecleaning Industry

I've seen some companies brag about 15% annual employee turnover in the housecleaning industry. They're lying.

A recent survey indicated that the average turnover level for a janitorial company is just over 600%. That means that the average company is changing its entire staff six times per year. Sounds about right to me.

Our early days were ugly. Employees were hired as fast they quit. Our turnover rate was so high that I never bothered to even calculate it. I didn't know what to do. I treated every single employee with respect. I never demanded too much because I was afraid that they would leave. I basically begged for every employee. It was a difficult time to say the least.

I was frustrated. My frustration lead to desperation. My desperation lead to even more frustration. How could I make the job better when nobody seemed to want it?

You all know the answer. Our pay for performance program changed everything. We still have turnover. In fact, our turnover level is still pretty high when compared to other industries. A law firm wouldn't be too happy with a 150% turnover rate. But we are.

We're happy with it because we know the realities of the housecleaning industry. You can't have anything less than 150%. The job presents too many challenges.

Most housecleaning companies require each employee to use their own car for travel. How would you like to put 75 miles on your car everyday? Most housecleaning companies require each employee to work very hard. How would you like to scrub someone else's toilets everyday? Most housecleaning companies require each employee to work for low wages. How would you like to clean your house three times per day/five days a week for minimum wage?

Of course, we pay our employees pretty good when compared to our peers. Nobody can beat our pay system, but it's still difficult to attract qualified employees to our business.

The experts tell you that your employees need to feel respected. They need to feel as if they are a part of the business. They need to feel like it's not a job basically. We're working hard to try and improve our turnover level, but we also know that some things can't be avoided.

We've faced the facts. Our industry is difficult. We can get frustrated and keep banging our heads against the wall. We can get desperate and hire the wrong people. Or, we can just live with it.

Turnover in the housecleaning industry isn't going away anytime soon. It's a reality. Live with it.

Tuesday, December 06, 2005

Nobody Needs You

You need everybody.

Your service or product is among millions of choices. You may think that you've created a revolutionary product or exceptional service, but you're wrong. Nobody needs you.

The postage stamp used to be a necessity. You needed it for all types of delivery. The internet changed that pretty quickly. The postage stamp is no longer a necessity.

The late night local news used to be a necessity. You needed it in order to catch up on global, regional, and local events. Cable TV changed that pretty quickly. The late night local news is no longer a necessity.

The normal cycle of a business goes a little something like this. It gains strength during the early stages. It begins to attract more and more customers. All of sudden, it is now dominating a market. That's when the curbs are put in place. The ambition, energy, and spirit of the start-up fades away. A new stubborn resistance to change sets in and allows another start-up to define another market. The cycle repeats itself.

A business must continually evolve in order to maintain its market share. It's a difficult proposition. The money is so good when you're on top. It's hard to mess with something that looks like it's working.

People never really needed you in the first place. You needed them and you gave them reasons to select your product or service. Those reasons have been replicated by other companies. Those reasons have been refuted by other companies. Those reasons no longer apply. You've got to give them new reasons all the time. Otherwise, you're destined to live the cycle.

Get over yourself. Nobody needs you.

Monday, December 05, 2005

When Price Doesn't Matter

There once was a time when I thought that we could be the most affordable cleaning company in town. I don't think that any longer.

Our original employees were paid poorly. They performed poorly.

We were cheap. As a result, we had no problem finding new customers. The problem was that we had trouble keeping those new customers. We signed up new customers just as quickly as we signed up new employees.

It was painfully obvious that we needed to raise our employee's wages. There was only one problem. We also needed to raise our customers rates in order to afford our employees. Try telling an unhappy customer that he needs to give you more money so that you can fix the problem. It wasn't a fun time, but it was essential for our survival as a business.

It hit me one day while in a department store. I was searching for a stapler. There were plenty of staplers to select from that day. About five if I remember correctly. What intrigued me was the price deviation from stapler to stapler. The really cheap stapler cost about $5, while the most expensive stapler cost just over $125. They each did the same thing, they stapled.

I thought, "Why would someone purchase anything but the $5 stapler?" I was intrigued, so I asked a store employee. What she told me was alarming. The $5 stapler was the most popular item, but the $125 stapler wasn't far behind. I still didn't get it. I pressed on. According to her, the expensive stapler belonged in a classy office setting. Professionals use the expensive stapler, while everybody else uses the cheap stapler. That's when it hit me.

People are more than happy to pay more if they perceive the higher price results in more value. I was scared to be the most expensive cleaning company in town. I preferred being cheaper because it was easier. Higher rates meant that I needed to provide more value.

We not only needed to raise our employees wages, we needed to increase our value. We did it and our customers are glad we did it now.

Your product or service must provide more value than any other available option. That's when price doesn't matter.

Friday, December 02, 2005

Countdown 30 Days

Thirty more days left. Thirty more days to the next phase at TwoMaids. Yes, it's a new year. But more importantly, it's a new office. A new manager. A new city to dominate.

The Operations Manager for the Panama City location starts on January 2, 2006. He will train for one month in each current location. March 2006 is go-time for Panama City. I can't wait.

Some of our customers in Pensacola or Fort Walton Beach will see him. His name is Tim Chappell. He'll be cleaning a few houses, inspecting a few houses, answering telephones, scheduling housecleanings, and providing estimates. He takes customer service to another level. I can't wait to watch him take his new office from zero customers to market leader.

Heads up Panama City, we're coming.