Expanding a Business Regionally

I received this email:

I am the sole proprietor of a small, residential cleaning company in a fairly densely populated area of Connecticut. We have been in business for 5 years. While we have made a very good reputation locally for detailed, personal, personable housecleaning service done by professionally-trained, English-speaking housecleaners, I really have put very little effort - outside of Craigslist - into developing territories outside of our area. We are a few miles from New Haven, which I see as a very good opportunity to expand our residential base (New Haven is home to Yale, University of New Haven, and Southern CT Univ and has several quite upscale areas). We have a limited annual marketing budget ($3k) and I do not want to fritter it away on marketing that just doesn't work. Most of our customers are female, most are professionals who put in a 40-60 hour workweek and do not want to spend their free time picking up and cleaning up. We treat our customers well (we send cards for illness/birth of a child - we call every 6 months to make sure we're doing everything we can to make the customer happy - we do a little extra every cleaning (the "wow" factor) - etc. Our customers are very loyal and what growth we have seen in our residential service base is largely due to referrals from existing customers and from our website.

Secondarily, five of our residential customers liked our company so much that they contracted with us to clean their law/accounting offices. (We are fully insured and bonded for residential and commercial cleaning). I would like to open up the market for cleaning small offices (1-50 people) and haven't a clue as to how to reach this market. We have a website being built (same web designer) for commercial customers.

With our present customer base, we are doing 50 cleans per week. I would like to double that, and have the support staff on hand to help us grow (my right-hand woman for the past 3 years was the customer-service manager at Subway headquarters, very loyal, and customer-oriented and a very good people manager; we have a part time office worker, and presently use Quickbooks for our bookkeeping system and have our payrolls done by Paychex - as for myself, I worked in customer service at a national newspaper, was assistant to the President of an alarm company for 4 years; general manager for 5 years at a start-up microcomputer company; and g.m. for 4 years of a tobacco and sundries wholesaler (the owner was our SCORE counselor where I was working and hired me to run his own company).

We have very good cleaners and tend to keep them with us in an industry known for employee turnover, due to the fact that we are a family-oriented business - we never say no to a cleaner who needs to take a day off to care for a sick child or parent or who is chaperoning their child's class trip, etc. All of our cleaners are part timers, who are paid 50% of the cleaning job (net taxes) so that they are paid better than most cleaning companies, and are very high quality people (music teachers, stay-at-home moms, grad students, etc.) We've had a few customers try to "steal" our cleaners by offering them employment off the books - our cleaners are that good.

If you have any ideas as to how we can better market our services on our small marketing budget, I would love to hear your thoughts. Believe it or not, the recession hasn't hit us that hard - late 2008 were pretty much in the mud, but we've come back stronger than anticipated with new sales. I know the customers are out there - just don't know how to let them know we're here!

Thank you for your time.

C

My reply was:

Thank you for contacting me. I want to see your business SUCCEED!

You have given me more info on an expanding co. than I've ever received. GREAT!

Your backgrounds are great, but meets the rubber and the road when YOU are responsible and in charge, huh?

1st, You are large enough now that you need to see about Incorporating, especially if you are going to expand.

Right now as a Sole Prop, you are personally responsible for anything that goes wrong.

You might want to consider an LLC (+ S-corp, so income passes thru to you and is not double taxed) or Corp as your org. This is probably necessary, because you may need to increase your insurance, and put the liability on the CORP.

You may need to consider hiring a Marketing Rep who will go get the biz for you, design your materials and market on-line and off, as well as doing social marketing, where many of your clients probably are.

You need to keep up with your P&L, Balance and Cash Flow statements at least weekly (easy on Quickbooks). Businesses runon money, not on love (tho' your customer service seems to me to be exceelllenntt!) On one hand, you need to contain costs as you grow, and you need to watch profits, as YOU are the equity holder/owner and should get paid for increasing and managing a business. So put your budget together. It is not as simple as "doubling the recipe." And put more into marketing, it's your life line, "no marketing, no new clients, no new biz, no new money!"

You have your target markets picked out (F/pros/40-60 hrs/ want cleaning and free time) and businesses (not enough target data here) you might want to develop a flyer to give to local businesses and to existing customer, offer a "reward" such as a $25 restaurant gift card for signed referrals. This might also work if you go into college towns, as profs and other workers may need your services.

Do you have various levels of service? It can be a way to get clients started, then bump them up, using your current employees, giving them "commissions" for referred new business, which may stop the client enticements. You should also have a ban against enticements in both your client and employee contracts, which you should have or generate soon.

One area you might consider is local govt and state and fed offices. You may need to be incorp and for fed also hire some "men" and minorities, so you are diverse.

Marketing by referrals seems to be working, just expand on that. You need to find out what the amount you should be using for your Marketing budget is. I think for your size you will need to expand your marketing budget (double it!) if you plan to double your business. People tend to short change their marketing budget, which cuts the legs out from your expansion. Flyers and mailers may help get the word out. Hiring a Marketer, controlling your costs, and using the staff to market (and rewarding them). These should go a long way to helping you expand your business.

Keep me posted, I want to see you succeed. Thanks, Dan Cassin

Dan has a program for Marketing development, and can counsel, mentor or coach marketing for your organization. e-mail/Call Dan@dancassin.com or 502-554-2397