High-rolling Las Vegas is like no other city in the world, not only from an entertainment standpoint, but from a business perspective as well.

Las Vegas building service contractors are challenged by high supply costs and increased competition for reliable labor, but they’re also encouraged by the number of opportunities in the nation’s fastest-growing metropolitan area. According

to the Las Vegas Chamber of Commerce, 6,000 new residents arrive every month, meaning construction starts are through the roof.

So, when BSCs join distributors and in-house service professionals in Sin City Oct. 18 to 21 for the ISSA/INTERCLEAN® trade show, they should be able to learn a few business survival tips from their Las Vegas colleagues.

Labor challenge
Las Vegas is home to a fiercely competitive job market. BSCs have to compete with the large, often higher paying hospitality industry.

“Every time a casino opens it’s a mad dash,” says Thomas Cotton, owner of Top Cat Cleaning Service Inc. “The Wynn just opened and hired 50,000 people, [who] came from casinos and all sorts of areas.”

To stay competitive, Cotton offers insurance, overtime and pays an above-average wage.

“I act very much like a Fortune 500 company,” says Cotton. “You have to offer what any other company would offer there, or you won’t get good work for minimum wage. You want them to stay and to make a living.”

Cotton expanded his successful office cleaning business from Fort Lauderdale to Las Vegas four years ago, and says finding labor in Vegas is definitely a challenge.

“It’s radically different [from] anywhere across the country,” he says. “It’s such a transient place.”

Las Vegas is populated with many young, single people who have no reservations about moving from one job to the next. But this demographic is a headache waiting to happen for BSCs. By the time training is finished, the new employee has already moved on, says Cotton.

“They get here and find out it’s a professional job market,” says Robert Murphy, owner, Maintenance Force LLC. “The labor market pays minimum wage to nine dollars per hour, and ‘affordable housing’ is in excess of three to four thousand dollars [per month]. They have to work three to four jobs to make ends meet. The kinds of properties they rent are being bought by developers for high rises for $800,000 to a million dollars per unit.”

On the other hand, Murphy has found reliable employees in seniors and retirees. But that too is becoming problematic.

“Retirees find the city so expensive, they can’t move here anymore,” says Murphy.

Even when BSCs find promising employees to hire, problems still exist. Because Las Vegas has such a high cost of living, most workers have two jobs. When they get to their cleaning post, they are either too tired from the previous job, or see this job as less important, says Cotton.

Unfortunately, because good, affordable help is hard to find, many contractors have turned to illegal employees.

“People are working for contractors, home owners and businesses who are not paying into social security and FICA, and don’t care if they’re insured,” says Murphy. “A lot of them pay cash...That’s hurting the industry.”
Business costs
Finding labor is a struggle, but other costs of doing business can be just as tough.

“Las Vegas is a unique market, and the biggest challenge is trying to find the right price, equipment and products,” states Murphy. “It seems like a gold rush town — everybody has their prices jacked up!”

“There is a lot of licensing,” adds Cotton. “The cost of living is more, insurance, vehicles and gas costs more.”

Murphy recently opened an account with a janitorial supply company he says has higher prices than others, but affords a wide selection — which means he can get what he needs when he needs it.

A small business is challenged to get the supplies and services it needs, and some customers even ask for 50 percent up-front, says Murphy.

“There are many scams going on because of that,” he adds. “People are definitely leery of giving anybody an up-front deposit. That may be the last they see of them. A lot of these guys work out of their truck. They’re shaking your hand and reaching into your pocket with the other hand.”

Murphy says he stays in control of what’s on the job, locks up equipment at night, and pays close attention to even small expenses like rags, which, of course, adds up.

“The things you buy to service customers aren’t high volume, so prices are higher,” he says. “Hotels buy light bulbs by the case at half what I pay. There are all kinds of little things you have to keep your thumb on or it will run your costs out of sight.”

Cash flow
Contractors, especially those starting out, often run into Catch-22s when seeking financing — they need the money but can’t get it, because they don’t have money.

Cleaner Than Clean Inc. owner Pierre Gourdet built a relationship with his supplier, who ended up providing him with important connections and the credit he needed to take his business to the next level.

During start-up, he shopped around for suppliers and selected the one with the best prices. Later, when a job came along that he couldn’t handle, his supplier referred him to another relocated New Yorker in the carpet-cleaning business there, and the two have been trading business and referrals ever since.

Gourdet’s supplier also helped him to finance his first truck-mounted machine, and says he’s sure he wouldn’t have had these advantages if he weren’t a people person.

“Whoever I deal with, I try to become their friend, not just somebody I’m doing business with,” he explains. “It’s not just money — I try to be more friendly-oriented.”

Slow payments can challenge the state of BSCs’ capital too, says Cotton.

“For any contractual job with hotels, the state, or the county you’re on a 30 to 40-day float for payroll, and if you pay weekly, you can be floating payroll for two or three jobs until those checks come in,” adds Murphy. “Have capital set aside.”

The growing market gives established BSCs increased opportunities, but at the same time, it is not an easy market for newcomers to get up and running, says Cotton.

“Call half and they’re out of business,” he says. “They come in thinking, ‘do it on the cheap,’ and there’s nothing cheap in Vegas!”

On another note, what Gourdet has lacked in capital, he believes he has more than made up for with his professionalism, ethics and sheer excitement about his prospects.

“I love doing business in Vegas!” exclaims Gourdet. “The city is growing, and you can grow with it. If you’re the kind of person that’s motivated, chases business, and has a good product, you’ll be successful. I truly believe that.”

A Cleaning Gamble

The Las Vegas Strip is a wonderland of flashy hotels and casinos. Along with the glitz and glamour comes lucrative accounts and cleaning headaches. Maintenance Force LLC owner Robert Murphy had one such account, cleaning pedestrian walkways on the strip.

“It was high paying but aggravating,” he says. “It got to a point where pedestrian traffic was so heavy we couldn’t keep up with the contractual work they wanted done.”

With 6,000 visitors walking through a day, by the time Murphy’s staff finished cleaning, the walkways would be dirty enough to start over again.

Just cleaning the escalators alone — 16 on one crossover — could take the entire shift. Flowing water was not permitted near the escalators or elevators, so the staff had to use a machine that cleaned dry with a brush. Hand rails covered with beer, vomit and urine were another time-consuming problem.

Another challenge apart from the mess: the public.

“Ninety-five percent of the people [using the walkway] are fine — tourists there on vacation, families travelling with children — but its the small percentage of people who live on the street that cause problems,” says Murphy. “And in Vegas, you don’t know if they are homeless or if they just don’t want to go home. They can become abusive,especially after a few drinks.”

Rowdy troublemakers urinated in public, cussed at the staff or threw bottles off the walkway. Homeless people would sleep in the elevators and have to be run out in the morning, leaving behind trash and debris.

Murphy eventually worked out some of the problems, but he decided the trouble wasn’t worth it and stopped bidding for the job.


Lauren Summerstone is a business writer in Madison, Wis., and a frequent contributor to Contracting Profits.




POSTED ON: 8/1/2005