Developing Your Plan
Some entrepreneurs would rather walk on hot coals than sit down and write a business plan. Other would-be business owners get so caught up in planning every detail that they never get their businesses off the ground. You need to find a happy medium between these extremes.
Begin your venture with a written business plan. Writing your plans down forces you to think them through and gives you a chance to examine them for consistency and thoroughness. Whether you’ve got years of cleaning service experience behind you or you’re a novice in the industry, you need a plan for your business. This chapter will focus on a few issues particular to planning cleaning service businesses, but they are by no means all you need to consider when writing your plan.
If you’re excited about your business, creating a business plan should be an exciting process. It will help you define and evaluate the overall feasibility of your concept, clarify your goals, and determine what you’ll need for startup and long-term operations.
Bright Idea
Update your business plan every year. Choose an annual date when you sit down with your plan, compare how closely your actual operation and results mirrored your forecasts, and decide if your plans for the coming year need adjusting. You’ll also need to make your financial forecasts for the coming year based on current and expected market conditions.
This is a living, breathing document that will provide you with a road map for your company. You’ll use it as a guide, referring to it regularly as you work through the startup process and during the ongoing operation of your business. And if you’re going to be seeking outside financing, either in the form of loans or investors, your business plan will be the tool that convinces funding sources of your venture’s worth.
Putting together a business plan isn’t a linear process, although the final product may look that way. As you work through it, you’ll likely find yourself jumping from equipment requirements to cash flow forecasts to staffing, then back to cash flow, on to marketing, and back to equipment requirements. Take your time developing your plan; whether you want to start a part-time residential cleaning service or build a major janitorial service, you’re making a serious commitment, and you shouldn’t rush into it.
Business Plan Elements
Though the specific content of your business plan will be unique, there’s a basic format that you should follow. This will ensure that you address all the issues you need to, as well as provide lenders and investors with a document organized in a familiar way. The basic elements are:
• Front matter. This includes your cover page, a table of contents, and a statement of purpose.
• Business description. Describe the specific cleaning service business you intend to start, and list the reasons you can make it successful. This section should also include your business philosophy, goals, industry analysis, operations, inventory, and startup timetable.
• Marketing plan. Include an overview of the market, a description of your potential customers, a discussion of the advantages and drawbacks of your location, an analysis of the competition, and how you plan to promote your specific business.
• Company organization. In this section, describe your management structure, your staffing needs and how you expect to meet them, the consultants and advisors who will be assisting you, your legal structure, and the licenses, permits, and other regulatory issues that will affect your operations.
• Financial data. This is where you show the source(s) of your startup capital and how you’re going to use the money. Include information on real estate, fixtures, equipment, and insurance. You’ll also include your financial statements: balance sheet, profit-and-loss statement, break-even analysis, personal financial statements, and personal federal income tax returns.
• Financial projections. Take your financial data and project it out to show what your business will do. Include projected income statements for three years, cash flow statements for three years, along with worst-case income and cash flow statements to show what you’ll do if your plan doesn’t work.
• Summary. Bring your plan together in this section. If you’re trying to appeal to a funding source, use this section to reiterate the merits of your plan.
• Appendices. Use this for supporting documents, such as your facility design and layout, marketing studies, sample advertising, copies of leases, and licensing information.
To Market, To Market
Market research provides businesses with data that allows them to identify and reach particular market segments and to solve or avoid marketing problems. A thorough market survey forms the foundation of any successful business. It would be impossible to develop marketing strategies or an effective product line without market research.
The goal of market research is for you to identify your market, find out where it is, and develop a strategy to communicate with prospective customers in a way that will convince them to buy from you.
Market research will also give you information you need about your competitors. You need to find out what they’re doing and how that meets—or doesn’t meet—the needs of the market.
One of the most basic elements of effective marketing is differentiating yourself from the competition. One marketing consultant calls it “eliminating the competition.” If you set yourself apart because no one else does exactly what you do, then you essentially have no competition. However, before you can differentiate yourself, you first need to understand who your prospective competitors are and why your prospective customers might patronize them.
Smart Tip
When you think your plan is complete, look at it with a fresh eye. Is it realistic? Does it take into account all the possible variables that could affect your operation? After you’re satisfied, ask two or three professional associates you trust to evaluate your plan. Use their input to correct any problems before you invest time and money.
In the case of janitorial and carpet cleaning services, you’ll be able to find many of your competitors listed in the Yellow Pages of your local print or online telephone directory. For residential cleaning services, identifying your competitors are will likely be more challenging because many small independent operators may not have business listings.
However, an increasing number of residential cleaning services of all sizes are creating websites, which you can visit to find out the type of services they offer. Or you can simply call them, posing as a prospective customer, and ask about what they do, how they operate, and how much they charge.
To find out how to differentiate yourself, consider doing a survey of your competitors’ customers. If you’re starting a cleaning service that has primarily businesses for customers, this won’t be a difficult proposition. Identifying customers is pretty easy in this arena. Most office buildings use janitorial services of some sort; call them and ask for the building manager. For businesses, look them up in the phone book and ask if they use a janitorial service. If they say yes, go ahead with the survey.
However, if you own a residential cleaning service, surveying your competition’s customers is likely to be quite a bit trickier. You could survey apartment building managers, of course. And you can ask people you know if they use a service.
After you’ve compiled a list of prospective survey respondents, call them and explain that you’re not selling anything but rather are doing a marketing survey of consumers of the particular type of cleaning service you plan to offer. If the customer is a business, ask if the work is handled in-house or contracted with an outside company.
Ask what they like about the service they’re using and what they wish that service did differently or better. You may even ask what it would take to persuade them to change companies. Take detailed notes, and use that information to formulate your service package and policies. Knowing what consumers want will help you create a business that’s unique in your market. Once you’ve started your operation, you can sell to the people and companies you surveyed.
Are You on a Mission?
At any given moment, most cleaning service business owners have a clear understanding of the mission of their companies. They know what they are doing, how and where it’s being done, and who their customers are. Problems can arise, however, when that mission isn’t clearly articulated into a statement, written down, and communicated to others. A mission statement defines what an organization is and why it exists. Writing it down and communicating it to others creates a sense of commonality and a more coherent approach to what you’re trying to do.
Even in a very small company, a written mission statement helps everyone involved see the big picture and keeps them focused on the true goals of the business. At a minimum your mission statement should define who your primary customers are, identify the products and services you offer, and describe the geographical location in which you operate. For example, a residential cleaning service’s mission statement might read something like this: “To provide customers in single-family homes in the Cobb County area with high-quality, personalized residential cleaning done by a well-trained, trustworthy staff.” A janitorial service’s mission statement might read: “To serve commercial accounts in the Chicago area by delivering high-quality, professional cleaning services that keep our clients’ facilities clean and attractive.”
A mission statement should be short—usually just one sentence and certainly no more than two. A good idea is to cap it at 100 words. Anything longer than that isn’t a mission statement and will probably confuse your employees. To help you get started on your statement, use the “Mission Statement Worksheet” on page 88.
Once you’ve articulated your message, communicate it as often as possible to everyone in the company, along with customers and suppliers. Post it on the wall, hold meetings to talk about it, and include a reminder of the statement in employee correspondence.
Bright Idea
Your business plan should include worst-case scenarios, both for your own benefit and for your funding sources. You’ll benefit from thinking ahead about what you’ll do if things don’t go as you want them to. You’ll also increase the comfort level of your lenders and investors by demonstrating your ability to deal with adverse and potentially negative situations.
It’s more important to adequately communicate the mission statement to employees than to customers. It’s not uncommon for an organization to try to use a mission statement primarily for promotion and secondarily to help employees identify what business they’re in, but that doesn’t work very well. The most effective mission statements are developed strictly for internal communication and discussion. Your mission statement doesn’t have to be clever or catchy—just accurate.
Though your mission statement may never win an advertising or creativity award, it can still be an effective customer relations tool. One idea is to print your mission statement on a page, have every employee sign it, and provide every prospective and new customer with a copy. You can even include it on your brochures and invoices.
Smart Tip
Know someone who might be interested in investing in your business? Don’t ask them for money right away. Ask them to read your business plan and give you some input. At best, they’ll like the plan and offer to invest before you ask; at worst, you’ll get some valuable input and they’ll let you know they don’t want to invest before you have to risk rejection.
Finally, make sure your suppliers know what your mission statement is; it will help them serve you better if they understand what you’re all about.
