How one “miscalculation” cost me over $14,000

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by Tom Watson on January 4, 2015

I’ve done a lot of things right in my career, and I’ve done of lot of wrong in my career. That’s to be expected I suppose.

Today’s post shares one decision that was neither a right or wrong move, just a miscalculation. One that cost me quite a few bucks to say the least.

A call for an estimate comes out of the blue

A few years back I had a doctor’s office call me and ask for a quote. It was outside of my service area by about 25 to 30 minutes, but I saw no harm in going out to look at it. Once I arrived and did a walk-through I had a real good feeling about this one. It was pretty clean, they needed 3 day per week service and the problems they were having with their current cleaning vendor were fixable.

Whenever I run across those these type situations, I’m going to throw my hat into the ring. I figured if I landed the account, I can figure out how to staff it later. Because it was outside of my service area by a good bit I was going to bid a little higher than normal. That way it would be worth my time to make it work. Obviously they liked the price and I was hired ASAP.

I bid the job at almost $1,200 per month. I figured the job was about three hours worth of work per visit, so it worked out to about 30 per hour. I figured even if I had to give the staff member an extra half-hour to do the job it would still be over 25 per hour. Just for kicks I started the staff member at two and a half hours per visit just to see if that was possible, but it they did need the three full hours.

All was well for 5 months, then… a “request”

I had a real good employee servicing this account, so I knew the cleaning was in good hands. He was someone who had worked for me a while back then had to quit due to his wife’s health. When we were trying to figure out who would clean this job, we remembered that he didn’t live too far away from the doctor’s office so we called him and he said he would come back.

Anyway… this arrangement worked just fine. No complaints, no worries at all for months on end. But then this office manager started to work late at the office, and noticed that the cleaning was being done by just one person. To me, that is not an issue. In fact it happens all the time, so that wasn’t going to be anything I was going to fret over. This office manager however didn’t like that.

For some reason she felt that two people needed to be cleaning the office, not just one. She was fixated on this to the point of addressing this issue several times with me. While I take all input seriously, this was one I was prepared to ride out and see if it would just blow over. From my perspective, it was going to be unlikely for me to find another good employee.

The job was out in the middle of nowhere, plus my current employee surely wouldn’t want to have his time cut in half. Honestly it would be hard to get two people to only come for one and a half hours. So it was one staff member for three hours or it wasn’t going to work from my end. I stuck with that line of thought, and as the title of this post suggests… it didn’t work out all that well for me.

A lot of money drifted from my hands into someone else’s

When you perform the math, the job brought in a little over $14,000 per year. After expenses the job netted me over $700 per month in profit, as all I needed to do was provide labor. So over $14,000 per year in revenue, of which about $8,400 in pure profit was lost. In hindsight, I should have just tried to find two employees that would do the job. I had the opportunity but I didn’t act on it.

I probably was a bit greedy to a certain extent too. The fact is I made a killing off an easy job and I could have easily added a helper to my one good worker then just made a little less per cleaning. I still would have made out pretty well! But instead I thought I could just “ride this out” and give the customer the brush off. A fatal miscalculation, one of many that I made over the years.

I guess the moral of the story is two-fold. A… don’t ignore the customer. B… don’t be greedy. I didn’t think I was being either at the time, but as I reflect back one could make the case I was guilty of both. Every single month since I was fired I miss that lost income. I could have had a lot of fun with that money!

{ 19 comments… read them below or add one }

1 Shannon Nix January 4, 2015 at 5:43 pm

We are bidding on our largest potential account next week. Here is the information. Can someone help me price this? Square Feet approx 18,000
# of Bathrooms 4
Additional Rooms 3 large open floors with some small rooms in the basement
# of offices 4
# of Breakrooms 1
Types of Flooring Carpet and sealed concrete (basement)
How many Levels Two or More
How often Weekly
What do you want done (Be Specific) Detailed Requests Basic janitorial cleaning services – would like you to meet me at our newly constructed building to put a quote together.

2 Maurice Gullatte January 4, 2015 at 10:40 pm

Thanks for sharing this. I will definitely keep it in mind in the future.

3 Tom Watson January 5, 2015 at 9:18 am

Hi Maurice! Thanks for commenting.

4 Tom Watson January 5, 2015 at 9:32 am

Hi Shannon! You have to look in person to see not only the size, but the condition as well. How many people work there would also factor in (more traffic more to clean up). You can get some idea for how long the job would take by matching up what you are asked to do with a ISSA 540 cleaning times chart. Here is a link… http://www.parish-supply.com/pdf/ISSA-Cleaning-Times.pdf

5 Shannon Nix January 5, 2015 at 6:39 pm

Thanks so much Tom!!!!!

6 Angela January 6, 2015 at 5:21 pm

I do not believe you made a mistake Tom. I have been following your blogs quietly by the way lol. Thank you for putting so much time and effort out there for all of us to glean information and helpful tips from.

I am in the process of rebuilding my commercial cleaning business here in Maryland. Years ago I had a VERY successful business however, through the course of life events I retired all but one account that had sustained me until the business closed down a year ago and now I have decided to go full force and rebuild. Now I am struggling in doing so but I am determined and I have my marketing hat back on. To make a long story short, back in 2001 I had $20 to my name, I went from $20 to $15,000 A MONTH in 90 days …when your hungry you do what you have to do 🙂 then actually got up to $30,000 a month all by commercial contracts…80% was through direct mail…grant it, it was a different time and place in 2001…phone books were still used…

Anyway….

I have a contract now where I am kind of dealing with the same issue and it pisses me off.

The owner requests that we are there in the morning although we have the keys and can be there anytime but it is a restaurant and it closes at 2a.m. so I would rather go in the morning anyway. He actually keeps a time sheet when we arrive and when we leave. Its crazy and then figures up how much he is spending per hour on cleaning. I AM NOT OK WITH THAT. My company needs to make a minimum of $25 per man hour to sustain itself. I do not plan on continuing to do the labor and at this rate I can not put two workers in their and make a profit that makes it worth keeping this contract. He has voiced that we remain in their at least 2.5hrs. Well that is 5 man hrs well that is $125 and well he only pays $110 a day.

Tom that is not greed that is business. I am sorry but you did not make a bad move you made a business move because you would have began to put negative energy towards that contract resenting how they began treating you and you have been in business long enough to know that also begins to go downhill. Most likely you make a smart move and saved your reputation and any bad blood that could have risen between you and another business. They would have started complaining about your quality and that is what would hurt you. Instead it, if I am not mistaken, just remained a simple numbers game in their eyes because you were not able to proceed profit wise and that is ok and respectable. Does that make sense? You pulled out in enough time to save your well deserved integrity!!

7 Tom Watson January 6, 2015 at 8:39 pm

Hi Angela! I’m very happy to help and thanks for the kind words. Anyway… on the whole, I only want to have jobs that give me really good margins. I sometimes push that to the limit, and get canned as a result.

8 ify January 15, 2015 at 4:10 pm

Hi Tom,
I have been following your posts for a few months and o honestly believe that you are awesome. I just started a cleaning company and I initially thought it would be both a commercial and residential business but I am currently leaning towards commercial. My problem is that I have been unable to get any contracts yet. Most potential businesses I approach tell me they already have a cleaning company. Can you help me please? I need to understand how to deal with sugh rejections.
I plan to get your flyers next week.

9 Tom Watson January 15, 2015 at 7:24 pm

Hi Ify! OK… they will ALWAYS tell you they have a cleaner. That is just a stock reply many people give. I don’t know how you are trying to get accounts, but I am a big fan of the sales letter and flyer approach. I mail them to businesses and they call and inquire about my service. That is just one way, but it’s my favorite as it allows you to reach a bunch of people in a manner that doesn’t put them “on the spot”, and they get to look over your info at their leisure.

10 Angela January 19, 2015 at 11:43 pm

Here is my issue…. I am also a HUGE fan of mailing direct flyers, I have excellent sources of addresses with direct office managers names etc…a little homework goes a long way on that end… I currently have over a 1000 ready, addressed, sealed and ready to roll,

last week 200 went out, the week before 150, the week before 175

but wow, $257 JUST in stamps…. I’m bone dry…. how in the world can I spend $200 a week to send out 400 flyers when the money just isn’t coming in yet? I have the ability to find that many reputable companies in my area to send them too, yep no problem, but when we are just starting out that is like sending child support to the USPS….suggestions???

11 Tom Watson January 20, 2015 at 10:15 am

Hi Angela! My advice would be just to mail less. When I talk about mailing as many as possible per month, that is really for people just getting started. As that is what you need to do if you want to have a chance at results within a reasonable time frame. If you already have customers and income, just go with what you can afford.

12 Saia January 24, 2015 at 8:52 am

Dear Tom,your e-book Commercial cleaning is wonderful! It worth all money l spend for it!. Thank you very much!
And dont worry about lost account- you will get another one!
Of course, sometimes we miss and after few time we are thinking- was better to keep it. But if you did, you did. Yesterday we were cleaning residential property and lady asked to use JUST here very good Dyson upright hover! I was thinking l dont want to clean this house! Its 6 h per week, but job with upright hover is killing us!
P.s. sorry for my English!

13 Tom Watson January 24, 2015 at 12:15 pm

Hi Saia! I’m so happy that you enjoyed the course! I love hearing that. And… I know, another account is always right around the corner. Good luck with everything!

14 F.A. April 13, 2015 at 12:08 am

Hello Tom,

Thank you so much for this great website and all the useful information. Hope you can help please, trying to bid on a job.
– 1800 sq feet retail space
– 4 employees
– 1 washroom, 4 rooms
– one-time deep-cleaning request
– wants everything done (ceiling vents, light fixtures, windows, baseboards, walls, cabinets (alot), desks, signs, floors, chairs, top to bottom etc……).
– 2 person job
Would appreciate your feedback.
Thank you!!

15 Tom Watson April 13, 2015 at 3:27 pm

Hi F.A.!

Without seeing anything, there is no way to put a price to it. I need MORE INFO…

It all boils down to CONDITION. So answer this… How long is your BEST GUESS as to amount of time you will need to be on site?

16 Terry Clark April 21, 2015 at 4:36 am

Amazing. Thank you for the time-study.

17 Tom Watson April 21, 2015 at 8:46 am

Hi Terry! Happy to assist.

18 Kurt January 17, 2017 at 12:23 am

I’m curious how could you have done anything different? Since the one guy wouldn’t want his time cut in half by adding another employee?

19 Tom Watson January 19, 2017 at 9:39 am

The customer comes first, so I should have just done what the customer wanted.

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