Bidding potential accounts is one of the most critical yet frequently misunderstood and feared aspects of operating a cleaning business. No matter how long you’ve been at it, or the type or size of your business, you simply can’t afford to pass up an opportunity to learn something new about figuring out what to charge and finding new customers.

Knowing that if you bid too high you won’t have any accounts adds a few levels of stress to the process. If you under bid, you may get the job and yet still lose money. Then you face the possibility of not being able to do the work, pay your people or make a reasonable profit. So it’s easy to understand why the subject of bidding and estimating is always of interest to contract cleaners. I could list a hundred suggestions to help you bid more accurately and be competitive in the market place. But all the tips in the world won’t do you any good if you don’t use them consistently. Thus, this report discusses the ten best tips for better bidding.

Success in bidding is based on four principles. This article will help you focus your energies in these important areas:

A. Professionalism

B. Accuracy

C. Marketing

D. Competitiveness

Tip #1: LISTEN TO THE CUSTOMER

Take notes as they speak; this shows interest and respect, and it helps you focus on what the customer sees as his/her primary concerns and problem areas. It lets the customer know you are listening and are interested in details. Most cleaning companies get in trouble because they don’t pay close attention to the small details, which then turn into big problems for the customer and the cleaning company.

Don’t risk losing details by just listening. Write it down. Ask questions and dig deep to get the facts. You will need as much information as you can get to bid accurately, perform the work to the customer’s expectations and make a reasonable profit.

Tip #2: READ THE CONTRACT, SPECIFICATIONS, AND REQUEST FOR PROPOSALS

Hopefully these written documents will be readily available for you. If not you may have to develop them in cooperation with the customer, as part of your bid. I like to read this information twice–quickly the first time so I see what’s there; then I read it slowly the second time, going over it in detail, making notes in the margins about special concerns and questions I want to ask.

On smaller jobs, things are less likely to be prepared for you. Some customers don’t even want a contract. Others will expect you to provide a simple 1, 2 or 3 page specification and work agreement. On larger, multi-story work, the documentation can be sophisticated and total 60 pages or more, not to mention blueprints and legal requirements from purchasing and other departments.

Tip #3: WALK THE PROPERTY SEVERAL TIMES

Measure, verify, look, ask, inventory and think. Don’t assume information given to you is correct. Things change. Blueprints and square footage figures aren’t always accurate, and remodels are frequently not included. Use an electronic measuring device or a rolling wheel to confirm that the square footage figures you’ve been provided with are correct.

It’s your responsibility to know the job before you bid. Going back later to ask for more money or complain that the information you received wasn’t right looks like incompetence and starts the relationship off on the wrong foot.

As you tour, open every door, ask questions of people you come across, look in the janitor closets and inventory square footage of various floor types. Note any special problems, areas or requirements so you can ask the potential customer how they want these things handled, both in the contract and once you start service, and–most importantly–are these extra or included in the contract? As you go, think about how you’ll staff the job and what types of equipment and supplies will be needed. Again, make notes for reference–this will save you a lot of time by not having to go back repeatedly to gather this information later.

Doing these things takes time, but it shows the customer that you’re a professional who knows what you’re doing and are prepared to provide the level of service they want.

The bottom line is: to bid accurately, satisfy the customer and make a profit, you need to know what is required and expected of you. Take the time to find out before you submit your bid.

Tip #4: LOOK FOR WAYS TO CUT COSTS, IMPROVE QUALITY AND SHARE THE SAVINGS

The market place is very competitive. Companies big and small are cutting back, down-sizing and looking for ways to reduce costs. You need to do the same. Contrary to popular belief, cutting costs does not mean the quality or level of service has to be reduced. Quite the contrary, what you need to look for are:

A. Efficiencies. Better and faster ways to do the work yet still get the same or improved results.

B. Realistic Frequencies. Are there some duties that can be done less frequently without a loss of quality, safety, appearance, or health? The answer is always yes, but you may have to look hard to find them.

C. Eliminate Wasted Time. Make sure employees have specific duties with time expectations. If employees are given too much time to perform tasks, they’ll either work more slowly or find other things to do with the time. Or they may do things the long and hard way, wasting lots of time. Considering that labor accounts for about 90% of your costs, labor efficiency should be a top concern.

D. Specify Procedures. Use written procedures that tell and show employees exactly how each task should be done, how long it should take, and what to expect as a result. Basic instructions like “clean this area” aren’t useful. Provide initial and on-going training so employees know how the work is to be done and what’s expected of them.

E. Equipment Savings. Can you use an auto-scrubber, a larger vacuum, or a floor machine to reduce labor hours? Can you use a cart to cut down on the number of trips needed? Generally, equipment that reduces time and labor costs is a good investment. Remember, labor accounts for about 90% of your costs.

F. Preventative Measures. If things don’t get dirty, they don’t need cleaning as frequently or as thoroughly. Use walk-off mats at all entrances and sweep, vacuum or hose frequently to prevent tracked in soil. Place trash cans where they are easy for people to use.

G. The Right Attitude. Constantly look for ways to cut costs while improving quality. That’s what Continuous Quality Improvement (CQI) is all about. You need CQI to keep a competitive edge. Develop this concept into an expectation and a way of doing business.

H. Share The Savings. When savings are found, thank people and share the savings with your customers and your employees. This is contrary to some short-term business thinking, but it is the way of the future. Passing along savings is a way to keep your customers loyal and your employees happy–and happy employees work hard for their employer. There’s tough competition in this market, and this is one way to provide something extra for customers and/or employees. Also, if you don’t share the savings, someone else will and they’ll probably under bid you.

Tip #5: LOOK FOR INNOVATIVE APPROACHES

These will vary in each situation, so you’ll need to try new and different ways of doing the work, as well as partnering with your employees and customers to improve quality while saving money. To achieve success today and retain it in the future, you need to take some risks and stay on the edge of changes in technology, procedures and management philosophies.

It’s not easy–in fact it’s hard work and a little scary. But in today’s fast changing and highly competitive market place, change is the only constant. Embrace it and accept the challenge–to find a better, more economical way to service the customer.

Some innovative examples include:

A. Cost plus contract with a cap

B. Partnerships and joint ventures with employees and/or customers

C. Night care for children of employees

D. Profit sharing with employees

E. Management service contracts using in-house employees

F. Flexible service schedules

G. Incentives for exceeding production, profit, safety and attendance goals

Tip #6: RESPOND TO THE SPECIFICATIONS AND CONTRACT, THEN OFFER ADDITIONAL OPTIONS

Give the potential customer what they ask for, then go a step further by offering other options that will save them money and make your bid more attractive than others. This keeps your bid competitive, and also puts you in a position to negotiate one on one.

Some possibilities include:

A. Pulling some items/tasks out of the bid

B. Altering the frequency of some tasks

C. Recommending new equipment, procedures, or products such as burnishing, or using jumbo roll towels and toilet paper

D. Implement a recycling program

E. Interim carpet cleaning/spotting

F. Incorporate a service that meets one of the needs they mentioned as you did the walk-through together

Tip #7: CHECK YOUR BID CALCULATIONS THREE TIMES

Errors are unacceptable–in fact they frequently mean the difference between profit and loss on a job. The larger the job, the greater the risk. Not only do errors look unprofessional, they can cost you the account, and in some cases your business. To help assure accuracy, check your figures twice and then have someone else check your calculations and proofread what you have written. You’ll be glad you did.

Tip #8: BE REALISTIC ABOUT YOUR ABILITY TO DO THE JOB

An apple is good one bite at a time, but swallowing it whole will kill you. The same is true with business growth; take it slow, one step at a time. You can’t provide everything to everyone.

Define a realistic service area, target a specific size and type of account. Define your specialty and strive daily to be the best service contractor in the country. It’s a waste of your time and the customer’s to go after an account that you really aren’t able to handle it. This relates to the size, location and types of services provided. Don’t sell yourself short, but don’t sell yourself out of business either.

Tip #9: SELL QUALITY SERVICE AT A FAIR PRICE

Quality is the only road to long term success in the cleaning business. A good reputation will help sell and win contracts. A bad reputation will take years of hard work to overcome. What you want and need are profitable accounts that enable you to pay your bills (taxes and wages included), pay yourself a decent salary and have enough money left over to reinvest in the business for future growth. You can’t afford to have accounts that are financial losers, unless there is some special reason for it, such as public relations, or expectation of profit on a long-term basis.

What is a fair price?

There are no concrete formulas for the fair price question. In reality, the answer lies somewhere between what competitive pressures require to get the job, what you need to charge to cover your costs and earn a profit, and what the market will bear.

Generally, the following are indicative of a fair price:

A. A customer who believes he/she paid a fair price for the services received.

B. A price within 10% to 20% of what might be considered the industry average going rate for your area.

C. A price that allows you to pay all expenses and earn a 15% to 30% profit on the cost of the job after all expenses, including overhead.

It’s important to keep in mind that the above formula would apply to accounts in the 5,000 to 50,000 sq. foot range for 5 days a week basic janitorial service. Smaller accounts, those serviced less frequently, and special projects would earn a higher rate of profit. Larger accounts would be bid at a lower profit rate (between 5% to 10%) due to competitive pressures and economies of scale.

Tip #10: REINVEST IN YOURSELF, YOUR BUSINESS, YOUR INDUSTRY AND YOUR COMMUNITY

Yourself

You can’t afford to fall behind the times. Things change everyday, and while you can’t know it all, you can constantly seek new knowledge. The most important thing is to know where to go to get answers when you need them.

A business owner/manager should subscribe to and read at least two or three industry magazines, and attend any seminars and conventions related to cleaning and small business that are held within 50 miles of home. And, once every three years, attend one of the national cleaning industry conventions. On top of this, be a learning sponge–absorb information from everyone you meet. Read books on cleaning and small business–at least two a year. Following these guidelines together with hard work and quality service dramatically increases your chances for success.

Your Business

Always put money back in the business. You don’t want to eat the goose that lays the golden eggs. Buy new equipment, pay better wages and benefits, computerize, and set aside and spend a certain amount of your income on advertising and promotion.

Your Industry

Join and actively participate in cleaning industry trade associations. Over 40 such groups exist across the country, with many having local chapters in major metropolitan areas. Joining these associations has all kinds of advantages, and is well worth the cost. You have an opportunity to network with other successful cleaning business owners. You can discuss things like innovative methods they may have discovered, average bid specs they’ve received and how they bid them, their evaluation of new products they’ve tried, and any new trends in the cleaning industry that you should be aware of. You can bring questions to these gatherings. For example, if you’re considering buying cleaning-specific software, ask others what they’ve bought and how it works for them.

Your Community

Give something back to the community: money, time, and thought. Get involved, go to meetings, organize activities, vote, write letters to the editor.

It’s good business sense to establish a relationship with the community. Providing support for charities, leadership for a cause or just taking an active part in community events is an important part of your public relations. A company that is known to be responsible and helpful to the community will often be chosen for a job or awarded a contract. There is a feeling that you earned your money from this community and you should give something in return. The reverse is also true. Those known to keep their profit to themselves are sometimes avoided. Additionally, keeping the community thriving will keep your business thriving. What you’re really doing is establishing a mutually beneficial relationship.

Good luck with your bidding and your business. If you use the tips outlined here, I’m confident you’ll see a substantial increase in the accounts you are awarded and the profits you earn.

Filed under: Bidding and Estimating by William Griffin
Originally Published: CBM September 1999