This article was updated March 2022.
About the presenter
This article is based on a presentation given by Debbie Sardone, founder of Cleaning Business Fundamentals, at the 2020 Maid Summit. Debbie’s clients have rightfully named her the “King Of Profits And The Queen Of Quality Of Life,” and for a good reason. Known as America’s Top Cleaning Business Growth Expert, Debbie has the top Residential Cleaning Business Academy globally. In this post, we’ll highlight Debbie’s three rules maid service owners should follow for maximizing their profits.
It doesn’t matter where you started — it matters where you’re going.
Over 25 years ago, Debbie Sardone was 80k in debt and at her wit’s end with her business profits. So, she hired a team of business consultants to fly from Chicago to her home state of Texas. Although this cost her 40k, the team helped her reconfigure her business model and rethink how to run a cleaning business. Nine months after hiring the consultants, her business grossed over a million dollars in a year. In 2019 her business revenue reached 1.8 million. Now, she uses her experiences to help other struggling business owners — without the 40k price tag.
Debbie’s business is so efficient that it’s self-run. She has even more time and freedom now to help others. She shares this story to help you see that it doesn’t matter where you started — it only matters where you’re going!
See your business soar
Do you want to increase your profits without spending a dime? (This is a no-brainer— of course you do!)
If you own a cleaning business, then you know that increasing your profits is not just helpful, but absolutely necessary.
So why did you start your own business in the first place?
- Was it to find financial freedom on your own terms?
- Or was it to create a lifestyle that serves your needs?
If you’re like most business owners then your answer is probably yes to both of these questions.
Owning your own business gives you great opportunities. While lots of people can start a business and build something from the ground up, things can quickly fall apart when they don’t have a plan to manage their growth and profits.
If you’re not prioritizing profit, then you’re leaving money on the table and risking the longevity of your business. Even if your company is growing, you still might find that your business is unprofitable and a bit chaotic without the right profit model in place.
And when times are tough, it’s easy to question your leadership abilities. What am I doing wrong? I know I’m a smart person, but everything in my business is in chaos right now!
Luckily, there are tried and true ways to successfully manage your profits: create a solid plan, charge what you’re worth, and know what numbers to keep an eye on.
With a few small tweaks, you don’t have to work for your business. Instead, it will work for you. You don’t need to go to bed sick to your stomach and worried about tomorrow. If you want to make more money and live better, follow these three rules.
(Growing your profits is a big topic over at ZenMaid. For another great article on this topic, save this article to read next!)
#1 Plan your profit
If profit doesn’t come first, then it won’t come last either— unfortunately, it won’t come at all. You have to plan your profit first.
Look in the mirror and ask yourself this: What’s my profit plan?
Do you have a profit model? If so, what does it look like? If you don’t, then you’re relying on the “wishing and hoping” method at the end of every month. As you can imagine, this isn’t a great recipe for success.
No matter what, everyone’s profit model will look different. Your personality, vision, city, state, clientele, and employees all influence what type of business model you need.
A planned owner’s income and profit model
Some businesses follow a 10-12k planned owner’s income and profit model. This means that for every employee, you (the owner) should make $10,000 to $12,000 in profit —it’s that simple. (This model assumes the owner is not cleaning; they are running the business.)
If you have five full-time cleaners, then you will make $50,000-60,000 personal income each year. Eight to ten cleaners should bring you between $80,000 and $100,000 in a year. Essentially, each new cleaner you hire should generate at least $10,000/year in profit.
This model may seem like a hassle, but you’ll thank us later! These steps will eventually lead to the inner peace you’ve been wanting.
Once you’ve established your own income and profit model, take a look at your planned overhead expense model.
Expenses can fly out of control easily. That’s why you need to build your planned overhead expenses into your profit model. You tell your expenses what to do and where to go—not the other way around.
For example, if you want 20% profit as an owner, and you spend 55% on employee wages, then that leaves you with a 25% overhead budget. Your overhead budget includes your rent, company vehicle, gas, cleaning supplies, etc. Whatever percentage fits with your model should be controlled and monitored by YOU. You need to know exactly what these costs should be. After all, you need to know the exact numbers.
Remember, you run your business. Your business doesn’t run you.
For more on how to measure your profit growth, check out our post on the 3 KPIs for maid service profitability.
#2 Know your numbers
If you don’t know your numbers then you don’t know your business. This sounds harsh, but it’s true!
100% of high achievers know their numbers. Your income and your profits accurately measure the health of your business. To maximize profits, you need to know what percentage of your earnings you spend and how much profit you have leftover.
It doesn’t always matter how much you make, but rather, how much you keep.
If you’re not familiar with your business profits and losses, start by running a profit and loss statement every week until you understand your earning and spending patterns. Once you have a good idea of how much you’re making and spending every week, then you can start running these numbers once per month.
Pay attention to these four things on your profit loss statement:
- Revenue: You’ll want to keep track of your monthly revenues.
- Direct labor costs: These are the wages you pay to the employees who clean. Don’t forget to include your payroll burden costs such as workers comp and federal taxes. Then look at what percentage of your direct labor costs are within your monthly revenue. Is it 50%? 65%?
- Overhead expenses: These are all of your bills not including your direct labor costs: vehicles, computer subscriptions, marketing, cleaning supplies, repairs, rent, utilities, etc. What number is this compared to your revenue? 25%? 30%?
- Owners’ income and profit: How much is left over for you every month? This shouldn’t go up and down wildly every month.
If you do the math and pay attention to the finer details, then your business will inevitably improve. It’s not difficult work — it just takes a little bit of discipline.
#3 Charge what you’re worth
This is one of the top reasons that you’re not seeing the profits you want.
Most cleaning business owners believe that they’ve reached the limit of what they can charge. In reality, most business owners are undercharging for their services by 25 to 30 percent.
How do you know if you’re charging what you’re worth? Do an annual market survey. In fact, it wouldn’t hurt to do a market survey a few times a year, especially during volatile times (like COVID-19, for instance).
If you find out that you’re undercharging, then you need to raise your prices for all new business coming in. Don’t forget to increase your prices for your legacy clients as well. If you have clients that you’ve been serving for five years and haven’t raised your prices with them, then your profits are going to take a major hit.
Instead of waiting to make a huge increase every three years, raise your prices once or twice a year. If you raise your prices in small increments, you won’t receive as much backlash from your customers.
Your maid service’s long-term success is highly dependent on your ability to protect and increase your profits. So, take some time to inspect your current profit, revenue, and expenses and look for ways to be more diligent in tracking these numbers. Always make sure you’re putting profits first.
Following these three rules — creating a profit plan, knowing your numbers, and charging what you’re worth — will put your cleaning business in a position to grow year after year.
For more detailed information on these three rules, and how you can join Debbie’s exclusive 10-day challenge to permanently fix and grow your profits, watch the full presentation from the 2020 Maid Summit.
You and your maid service deserve a little peace and quiet. Try ZenMaid for free today!
If you found this article helpful for your maid service, you may also like:
- How I used Google Ads to grow my cleaning business to 4 Cities
- The 3-step formula for becoming fully staffed in 6 days
- Tips for finding the brand voice that’s right for your maid service
- The top ten reasons why employees might leave your maid service
- Watch your maid service profits balloon with an online presence