Tags: growth forecasting, profit planning, predictable outcomes
Introduction to Growth Forecasting
Many of us in the cleaning industry do not have an extensive background in professional management or logistics, and that’s one of many aspects about our vertical that makes it awesome: diversity.
There are however, many lessons and elements that can be incorporated into our companies from the world of professionally managed businesses. These elements are focused around ‘guiding an organization towards its goals’, and are powerful tools that we here at MaidCentral seek to instill into all cleaning business owners.
One such tactic will be the focus of today’s article: Growth Forecasting, but before we get there, we need to get acquainted with another concept that will help set the stage for us: Predictable Outcomes.
In the beginning, life was uncertain, brutish, and short. Was the creature behind the bush the hunter’s lunch, or was it looking for lunch? A moment’s hesitation, and the hunter went hungry or satisfied another hunter’s appetite. Over time, the hunter was able to predict, just by watching the creature’s shadow, whether it was suitable prey. Bands of hunters put their individual experiences to collective use… the probability that everyone would eat increased. Being part of a group(…) gave the hunters confidence in their ability to predict… Without such confidence, the members of the first organizations might well have starved. (Stevenson and Moldoveanu, Harvard Business Review 1995)
From Sales-Based to Profit-Based Models
As our culture has evolved, so has our dependance on predictability. In today’s world, publicly traded companies are required to make their quarterly predictions public, offering full disclosure to anyone, competitors included, interested in purchasing stocks.
But how are they able to make these predictions with such confidence (and accuracy)? Furthermore, why are these predictions so valuable? To answer these questions, we need to understand one more topic: Profit- versus Sales-Based Business Models.
Sales-based Models
These businesses are focused on everything surrounding the Sale: the lead pipeline, marketing efforts, close rates. Anything that has an impact on the Sale is taken into account and optimized.
This type of business model is very common in our vertical. To illustrate, let’s assume we start a house cleaning business as a solo owner operator. At first we clean one house per day, but word of mouth travels fast. We grow and grow until we hit our first wall: I can only clean so many homes in a day by myself. I can no longer continue to grow, so I am forced to scale. We do this by hiring a few technicians. Now we have a working schedule, but my cleaners have extra time in their workday that could be spent cleaning homes, meaning we need more sales to fill the schedule.
This is often the natural progression for many cleaning companies, and unfortunately, that’s how many of them stay. But there is another way!
Profit-based Models
These businesses are focused on everything surrounding Profitability, which is a broader perspective. (Side note: Profit is not a bad word! No one gets into this industry because they want to clean homes for free!) The profit-based model incorporates the Sale, and everything after – emphasizing long-term sustainability and growth. This approach looks at the entire customer lifecycle to identify any and all elements that can affect Profitability.
Evolving
This distinction between models is an important differentiator, separating companies into two categories based on goals.
Since profit-based businesses are looking at more data points, they are typically afforded better opportunities for optimization and more reliable and predictable outcomes. This core difference is also one that sets MaidCentral apart from every other application in it’s class: MaidCentral was designed from the ground up to drive Profitability in Residential Cleaning Companies.
Investing in the right technology is the most impactful way to enhance your ability to track and manage the many aspects of your business. If you’d like some time to discuss your own software needs, my personal link is available here. Feel free to book some time with me!
Sales based business models are only looking at half the story. Put another way, how could I even begin to predict the outcome of a football match if I can only see half of the field, or only one team?
MaidCentral users are already on the fast track to evolving from a Sales-based to Profit-based business model. Awareness is the first step, and simply by being equipped with the in-depth reporting and business analysis tools available through the platform, MaidCentral users are better prepared to Grow. Additionally, our thriving community of industry pros and thought leaders is an invaluable resource for networking and collaborating with fellow cleaning business owners.
Growth Forecasting
Now that we have all of that out of the way, let’s take a look at Growth Forecasting. Growth forecasting is the act of compiling relevant data and processing it in a way that models future trends. This forecast is then distributed throughout the organization, providing guidance to each department.
Many business owners do not look forward to this process, but it’s truly an invaluable tool for keeping the business on track.
Compiling
The first step in generating a growth forecast is to compile your data. Compiling data can take many forms depending on which tools you use, but current MaidCentral users have their data automatically compiled each week during payroll closure, streamlining the process of generating your forecasting metrics.
Forecasting
Forecasts themselves are typically generated through advanced modeling tools or spreadsheets which can be costly and tedious to configure.
Luckily if you own a cleaning company, MaidCentral has just released an easy to use tool for exactly this purpose, and best of all it’s completely free- you don’t even have to be a MaidCentral User.
Here’s how it works: First, gain access by signing up at corekpi.maidcentral.com. Then you can enter your KPIs in and save your current model. From there, you can move down to the forecasting tool to make adjustments to your model.
This video provides more detailed instructions on exactly how to use MaidCentral’s free Growth Forecasting tools.
Taking Action
Once you have your data keyed in, you can begin to make changes to the model to plan your growth strategy. See how small improvements in key areas of your business translate to big changes in your bottom line. After you have a forecast and an action plan, break it down into goals for each department, then share with the organization as a whole so all parties are given full transparancy into the direction of the company.
Pro Tips:
Don’t fixate on your strengths. This process is not about improving the things we’re already good at. Instead, growth forecasting lets us see where we can get the biggest impact for the least input.
When making an action plan, focus on just two key areas of your business. – which two would have the biggest impact? You know what’s happening in your business better than anyone else, focus on what you know is realistic and achievable.
Conclusion
Growth forecasting is the powerful practice of giving your business direction, but without all the data at your fingertips, you’re missing half the story. You don’t need to know what the Goal is, what your peers are at, or what the industry standard is. It just doesn’t matter! All you need to know is where you are at and what you need to do to improve. There are no good numbers or bad numbers, just opportunities. Remember, focusing on your weakest areas first is a great strategy
