Business Plan Preparations – Part I: The Key Measures

The start of the new year is the natural time for any business owner to start thinking about the year ahead and cleaning businesses are no different. I am a member of many online forums and I have been watching lots of discussions around goals for 2019 for every kind of cleaning business you can imagine. While I am famous for doing lots of things on the fly, I am a believer that you need a solid business plan for the coming year. Now this does not and should not be a multiple page document. My business plan each year contains several key parts. First, what are the key measures I am going to track for the year and my goals for each. Second, what is my marketing plan. Third, what is my operations plan. Fourth, what is my personal development plan. Then finally, what are we going to stop or not start doing in the coming year. This is big topic so I am going to break this into a series of articles so I can go deep on each topic.

The first part of the business plan is the key measures. I try to keep it to five or under and they will vary for each business. If you try to track too many things they will no longer seem key or important, that becomes just another number so really try to limit this. These are the five most important things that you want to measure at all times in your business. For me in 2019 in the maid service I am a partner they are the following. If you want some help on how to track your Key Measures we did several videos which are also hyperlinked below.

1) Revenue – this one is pretty obvious and it is what most people talk about. Because of seasonal fluctuations we are looking for a percentage growth versus the same month last year for this.

2) Client Retention Rates – What percentage of my on-going client base cancels their contract each month. Once you hit a certain size this is actually the most important number.

3) Payroll as a percentage of sales. We are in a labor heavy business. If you cannot control payroll costs, we will never make money regardless of the revenue we bring in.

4) New on-going clients signed each month. Now this number really comes from two things. How many leads do I get each month and what is my conversion rate from lead to sale. However, remember I just want 5 numbers so this lets me cheat a little by just having one. If this number begins to drop I can then look into the details to decide if it is the number of leads or the close rate that is causing the problem.

5) Client satisfaction rates. This for me is a leading indicator meaning this number predicts the future. If this drops too low I am going to start to see my retention rate drop. I could argue that retention rate covers this too, and it sort of does. But the cleaning services I am involved with are large enough that client loss rate is more important to us that new clients so I am OK dedicating two measures to it. Your decision might be different.

If you are a young fast-growing company maybe you dig deeper into your SEO or your sales rates. Some of you do a lot more one-time work in which case you would not worry about retention rate as much. Any of these are fine. The point is to decide up front and then track them year-round. When the numbers begin to go outside the range you want, it is time to make an adjustment.

Next week we will get into the marketing and operations plans. Then on 1/17 we will do the final parts of the business plan, personal development and deciding what you are not going to do in the coming year.

By |2019-01-17T17:34:02+00:00January 3rd, 2019|Latest Articles, Leadership|