Ear To The Ground

Building service contractors aren’t quite ready to take to the streets, singing “Happy Days are Here Again,” but they’re also not nearly as pessimistic about business prospects as they were a year ago. According to a reader survey conducted by Contracting Profits, a significant portion of BSCs polled feel the poor economy and the negative customer purchasing mindset of the last few years is giving way to new opportunities for business growth.

A majority, 52 percent of those surveyed, believe the overall U.S. economy will improve in 2004. Also, 83 percent expect their company’s revenue to increase; 67 percent and 80 percent, respectively, anticipate increases in their profit margins and total square footage cleaned (See chart for more detailed statistics).

But why all this ‘04 optimism? Part of it is that late in 2003, certain indicators, such as sales, were positive: 76 percent of contractors surveyed reported an increase in sales over the last two fiscal years.

Doug Cobb, president of Brightway Cleaning Services Inc., Everett, Wash., believes the economy will improve in 2004, based on his own company’s indicators.

“My revenue is already improving, and I’ve already hired more employees,” he says. “I have even turned down some new client opportunities. Also, my retail clients are very optimistic about next year.”

Clients’ budgets for housekeeping and floor care mirror that optimism, he adds.

Other signs
“I’m basing my optimism on faith,” says Reggie Warde, owner of The Cleaning Edge Inc., Mandeville, La. “That may seem frivolous, but if you look at the stock market and other indicators, there’s a lot of improvement in the economy. I look at our customers and the money they’re willing to spend — even cold-call responses look good. In this state and locally, the feeling is that the economy’s on an upswing. People’s attitudes are improving.”

One sign? Customers aren’t accepting “the economy” as an excuse for dirty buildings, Warde says.

“In the past, complaints were handled with, ‘well, yeah, we know, but what can you expect in this economy?’ My observation, now, is that customers are becoming more concerned about indoor air quality and cleaning quality,” he explains. “They’re looking at absenteeism and they see the relationship between cleanliness and production.”

Shaun Davis senses that the industry is recovering from the economic slump, but he won’t go so far as to predict boom times in 2004.

“When the economy goes south, the first place clients look to make cuts are in services such as janitorial, they approach us about scaling back on the services,” explains Davis, vice president of R. B. Davis & Co., Salt Lake City. But the problem is, customers aren’t yet ready to pay for returning service frequencies to their prior levels.

Lance Waite isn’t as bullish on the economy — he believes that, in spite of certain positive signs, we will continue to battle through economic uncertainty. But, he thinks it won’t have much impact on his business either way. He expects to pick up government contracts, because certain government facility services are hard to cut back on, regardless of the economic climate.

“Government outsourcing will help,” says Waite, co-owner of Waite Commercial Services LLC, Madison, Wis. “The government is taking a hard look at services — it’s cheaper to get a contract than it is to do it in-house.”

Doomsayers, however, haven’t gone away completely; 16 percent of respondents expect the economy to falter in 2004. Mitchell Hardin Jr., CEO, Hi-Lite Enterprises Inc., Antioch, Calif., tends to be pessimistic about this year’s prospects.

“The economy has done very well in the ... months of the holiday seasons,” says Hardin. But he believes come February, after the holiday rush, jobs will begin to slow again. He also cites out-of-control government spending as an economic deterrent into 2004 and beyond.

Challenges ahead
Some things never change, regardless of which way the Dow Jones points. Some of the things that have and will continue to challenge BSCs in 2004 include working with unions, effectively dealing with immigration issues and competing for business in an era of Internet bidding. And, of course, the quintessential challenge that transcends economic trends: product pricing.

“Everyone is looking to save money, so when bid proposals are sent out, the driving factor will always be price,” says Davis. “Who can do it for the lowest price? Everything else being equal, the lowest price will win out 95 percent of the time.”

Davis offers his own advice for dealing with price — have patience.

“Keep turning in bids and things will eventually improve,” he says. “Customers nowadays want a Cadillac car for a Pinto price. I have come in second place on over a dozen large contracts, but with persistence, I believe those second-place finishes will turn into first-place contracts.”

Still, there always will be property managers who want their cleaners to work faster, better and cheaper, says Mike Fletcher, owner of Environmental Control Inc., Columbus, Ohio.

“The only way we can accommodate [that] is to look into more efficient equipment and more creative cleaning methods, [such as] team cleaning, alternating days,” he says. “I will always be looking for a cost-effective floor-care procedure that will appeal to the eye, with less maintenance [for] us and [one that is] less costly for the property manager. We must continually move forward with ideas...if we are to be in business tomorrow.”

Warde suggests setting long-term goals in spite of persistent economic or morale slumps.

“I tell you, as optimistic as I am, in this business, there are times you feel like, why am I doing this?’” says Warde. “But there are ups and downs in any business; your moods go up and down based on attitude. This is just a normal progression you go through. I’ve written out five- and 10-year goals, why I’m working for them, and objects in the way,” he says. “If I’m down, I look at them and remember that’s what keeps me going.”

Ambitious plans
Whether they’re optimistic, pessimistic or uncertain, contractors agree they’ll have to work harder than ever to have a successful 2004.

“Circle the wagons,” advises Brian Fitzgerald, sales and customer service manager for Alps Professional Service in Syracuse, N.Y. “Wherever you used to be, you’ll have to work harder.”

And many readers indicate they have ambitious plans for the upcoming year.

For instance, Waite plans to implement a computerized customer-service system in 2004.

“The [customer contacts] in charge of cleaning contracts range from receptionists to vice presidents,” he says. “I want to get away from log books. I want to know if there’s a problem, the next morning, in my inbox. With a log book, I won’t see it until the next walk-through.”

Regardless of the economy, account retention is vital, says Waite.

“We don’t have long-term contracts,” he says. “We’re as good as the last time we cleaned. Our customers can fire us, pay us what we’re owed, and we’re gone.”

Fletcher plans to expand his company’s presence in the surgical and urgent-care facilities that rapidly are popping up in the Greater Columbus area, and will continue to increase as the population ages.

“Every company feels they have a niche in the market,” says Fletcher. “I feel our niche, or expertise, falls in the medical industry. I believe the addition of these buildings is going to give us a greater opportunity to add revenues and employees throughout 2004 and beyond.”

Specialization is key, agrees Hardin.

“We will weather the storm by providing specialized services, such as construction final cleaning for general contractors; mini-blind cleaning; window cleaning; exterior pressure washing; computer cleaning; and providing cleaning-business-opportunity packages on the Internet,” Hardin says.

Bruce Causey, executive vice president of Corporate Care Inc., Houston, expects rapid expansion in 2004, and says optimism and preparation will be key.

“Growing rapidly as a national company takes planning, systems and controls,” he says. “It’s a challenge that we face with great anticipation. We recruit [and] carefully hire the best people, and then train effectively and support them with proven systems to provide the highest level of service to be found in the open market.”