Find out how to control labor costs so your commercial cleaning business can turn a healthy profit
One of the most challenging aspects for almost any service business is figuring out how to control labor costs. It’s truly a delicate balancing act. You need to employ people to get the work done, and they need time to do it. At the same time, you need to pay them and charge your client, but the world is competitive, and you can’t charge too much.
So how do you find that sweet spot? Where is that fine line where you can charge enough to cover your expenses, make a profit, pay your employees well, and remain competitive with your pricing? Furthermore, how do you accomplish that while still providing a high-quality service for your clients?
For many small businesses, especially service-oriented businesses like commercial cleaning operations, labor is one of the highest expenses. And determining how to control labor costs can mean the difference between struggling and thriving.
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How to control labor costs: 7 ways to keep payroll under control
When we talk about how to control labor costs, it’s essential to keep things in perspective. If you want to keep a good team, you have to pay them well. As a result, they’ll be more likely to stick with you and put in more effort. That leads directly to two things that save you money and make you money.
First, if you treat your team well, including offering premium pay, you’ll probably find that your turnover rate falls below the industry average. Every time someone leaves your business, you have to spend time, money, and energy finding, hiring, and training someone new.
Secondly, your team is more apt to do higher-quality work, leading to customer retention and a reputation that will win you more business.
These are just some things to keep in mind as you think about how to control labor costs. In other words, labor costs aren’t only about payroll.
That said, you still need to keep your expenses under control. Here are some ideas to help you do just that.
1. Keep a regular schedule if you can. If you can keep your team working at the same places, they’ll get used to the work environment and develop an efficient and effective workflow. On the other hand, if you continually move them to different locations, it’s like starting a new job every time they go to a new place. It takes longer to get the lay of the land and figure out how to manage their time.
2. Schedule efficiently. If your teams begin and end their shifts at a central location, schedule your clients so your teams can work in a circle or square, geographically speaking. Don’t send them crisscrossing from one random location to another. You’ll not only save on labor costs, but it’s also a more efficient use of fuel and puts fewer miles on either your janitorial fleet vehicles or your employees’ personal vehicles.
3. Maintain your equipment. We’ve said this before, but it’s worth repeating. Properly maintained equipment will last longer, work more effectively and efficiently, and it’s often overlooked in thinking about how to control labor costs. When your equipment breaks down unexpectedly, you’re paying your team to spend time trying to repair it or track down an equivalent machine to borrow. That is not money well spent.
4. Make clocking in and out more efficient and secure. With software like Janitorial Manager, you get extra layers of security for employees clocking in and out. With features such as facial recognition, geofencing, and GPS tracking, you can be sure labor and travel time are accurately recorded for correct payroll amounts.
5. Train your team. From onboarding to learning how to run new equipment to janitorial certifications, training is key in how to control labor costs. With proper training, your team can work more efficiently and expand their knowledge, giving you more opportunities to expand your offerings to clients.
6. Track your inventory. This might seem out of place, but it’s not. Just like maintaining equipment, tracking your inventory can help ensure you don’t run out of the supplies you need to do your job. Invest in a good inventory management system to help keep track of your resources.
7. Look for tax credits. Federal and some state tax credits are available to employers based on certain hiring qualifications. For example, the Work Opportunity Tax Credit (WOTC) provides a federal tax credit of up to $2,400 for hiring qualified veterans, people receiving SSI or SNAP benefits, qualified ex-felons, and people fitting several other “targeted groups.” Be sure to explore options at the state or even community level, as well.
Certainly, there are other ways to keep your payroll under control. Just remember, as you think about how to control labor costs, that those expenses don’t exist in a vacuum. There are plenty of creative ways to keep your expenses down while still offering good pay to your employees and high-quality work to your customers.
Harness the value of Janitorial Manager to streamline your cleaning operation like never before. Learn more today with a free discovery call and find out how to make your cleaning operation more efficient and cost effective!