The building service contracting industry has evolved over the decades.
And as the economy grows and the building and construction industry flourishes, the need for building service contractors (BSCs) continues to grow as well.
With that growth comes the development of more janitorial companies — and more companies usually means more competition and slimmer profit margins.
However, the industry remains an enticing business venture for many people. And the variation in companies is vast — from their capability and size to their specialties and ultimately their quality.
But a sticking point to your profit margin remains that the bottom line for many customers is often just the cost for service.
The thin profit margins in the industry are not a secret.
In fact, larger corporations request in their bid packages that the contractor provide a "billed rate" and a "paid rate."
In other words, they know exactly what the workers are paid and what percentage markup the BSC is charging.
The smaller companies with little overhead often turn in requests for proposals (RFPs) with lowball figures just so they can win another client to add to their roster.
A larger company usually cannot do this. It must consider such things as the cost of supervision, insurance, training, new equipment, vehicles and inspection software — just to name a few expenses — when submitting a quotation.
This can make the price variations for the customer quite significant.
When confronted with a customer that places price over quality of service, BSCs are often put into a corner.
Do they take on a client for a small profit and hope that labor, equipment and insurance costs won''t devour their profit?
Or do they say "no thank you" and move on?
If they move on too often because of slim profits, eventually they''ll run out of opportunities.
Fortunately, once you have the account, there are several ways to increase profit margins.
Open up the umbrella
BSCs today are usually much more than crews emptying wastebaskets and vacuuming carpets.
Today''s facilities have so many contracting needs that by creating an umbrella of services, BSCs are finding new ways to make profits and boost profit margins on their accounts.
Traditional add-on services often include carpet cleaning, floor stripping and waxing, and window washing.
And many BSCs have added landscaping, security, emergency flood service, floor restoration, snow removal, and disaster service to their arsenal.
The new services allow BSCs to build stronger relationships with clients and, best of all, offer new opportunities for revenue.
While the janitorial profit margin may still be slim, the extra services can be much more profitable.
In fact, security services are growing so much that they are now part of the Building Service Contractors Association International (BSCAI) membership pool.
Our company, like others, is also now offering some nontraditional services for our clientele, including:
With the workers to handle these tasks and a little research and ingenuity, BSCs can fulfill most customer requests.
Fewer and fewer perks
Another way BSCs can fight diminishing profits is by cutting back on what used to be a "wine and dine the client" sales process.
Providing tickets to baseball games and concerts and paying for dinners at expensive restaurants is no longer the norm in the industry.
Rather, BSCs find it more beneficial to invest in training, more advanced equipment, and skilled managers to better serve the client.
In addition to offering more services, BSCs have gone into the "product business."
Many contractors provide toilet paper, paper towels, liquid hand soap, and dispensing units for their clients'' facilities.
Because the cleaning crews are in the buildings every day, they know best when stock is low and can easily do the replenishing.
This is yet another way for the contractor to make some profit on an account.
New, advanced equipment helps
Along with offering more services to their clients to improve profits and profit margins, astute BSCs also are looking into more advanced JanSan equipment that can improve productivity and cut costs.
Virtually all JanSan manufacturers are developing cleaning tools and equipment that are lighter, more ergonomic and easier to use — all in an attempt to minimize worker fatigue, improve productivity, and, in the end, help bolster profits.
Here are some examples:
Putting dollars to better use
A BSC''s reputation is built on its frontline employees — the crews cleaning the buildings.
By investing in tools and training to make their work more effective, BSCs put dollars to better use.
That increased productivity, coupled with new service offerings and a reduction in unnecessary expenditures, can help BSCs maintain or improve their profit margins.