Diagnose before you scale

Everyone wants to scale. More customers, more cleaners, more vans, more turnover.

But scaling doesn’t fix a business. It makes it bigger. Whatever is true of your business today, good or bad, is about to become true at twice the size.

If every hour of cleaning makes you a healthy profit, growth multiplies that profit. If every hour quietly loses you 50p, growth multiplies that too. You just won’t notice until the bank balance does.

I learned this the expensive way. At Mackies I hired on hope, grew a business I couldn’t see, and lost £60,000 in a year. The growth wasn’t the problem. Growing without knowing what I was growing was.

So before you chase the next 20 customers, give your business a proper check-up. Here’s how.

Symptoms aren’t the problem

Most owners go straight to a fix for whatever hurts: “I need more customers”, “I need another cleaner”, “I need to put my prices up.”

Those are symptoms. The same symptom can have completely different causes, and the wrong fix makes things worse.

The six-test check-up

You’ll need your last three to six months of bank statements, your customer list and your rota. Give yourself an afternoon. It’s the most useful afternoon you’ll spend this year.

Test 1: What does an hour of cleaning really cost you?

This is the number that decides everything else, and most owners have never worked it out properly.

Add up:

• Wages per paid hour, including holiday pay, employer NI and pension. For a cleaner on the National Living Wage, that’s roughly £15.
• Unpaid time. Travel between jobs, waiting for keys, gaps in the day. Divide your wage cost by the share of paid time that’s actually billed.
• Products, fuel and kit per billed hour.
• Your overheads per billed hour: insurance, software, phone, accountant, van finance, advertising.

Here’s an example. Say you charge £27 an hour, 80% of your team’s paid time is billed, and your overheads are £1,200 a month across 320 billed hours.

That business turns over £8,640 a month. After everything, there’s £880 left to pay the owner and fund growth.

Now imagine it doubles. Twice the customers, twice the hours, £1,760 left over. But at that size you’d need a part-time team leader and more admin help, which could easily cost £1,000 a month. The owner ends up with less than before, for twice the stress and twice the risk.

Now go back and fix it instead. Charge £29 an hour and get billed time up to 85% with tighter routes. The cost per hour drops to £23.15 and you keep £5.85 an hour. That’s £1,870 a month, more than double, without a single new customer.

That’s the whole point of diagnosing first.

Red flag: less than about £4 left per hour after all costs, or you can’t work the number out at all.

Test 2: How much of the time you pay for gets billed?

Take last month’s total paid hours from your payroll. Then take the total hours you invoiced customers for. Divide the second by the first.

If your team was paid for 400 hours and you billed 300, you’re at 75%. A quarter of your wage bill is going on driving, waiting and gaps.

Most owners are shocked by this one. It’s often the single biggest leak in a residential business, and it gets worse as you grow into new areas.

Red flag: under 80%. The fix is usually your patch and your routes, not your prices.

Test 3: Are customers staying?

Count your regular customers at the start of a month, and how many of those same customers are still with you at the end. Do it for three months and take the average.

Losing 3% a month doesn’t sound like much. But it means losing nearly a third of your customers every year. With 100 regulars, you need 31 new customers a year just to stand still.

Scaling with a leaky bucket means pouring more and more marketing money in to stay the same size.

Red flag: losing more than 2% of regulars a month, or not knowing why they leave.

Test 4: Can your cash survive growth?

Growth eats cash before it makes cash. You pay wages weekly, but customers pay you later.

Say you win a £3,000-a-month office contract on 30-day terms. You clean all of month one, invoice at the end of it, and get paid at the end of month two. By then you’ve paid around two months of wages for that contract, roughly £4,000, out of your own pocket.

Win three contracts like that at once and a profitable business can run out of money.

Check two things:

• How many weeks of wages and fixed costs you have in the bank.
• How many days, on average, between doing a clean and getting paid for it.

Red flag: less than four weeks of costs in the bank, or overdue invoices you haven’t chased this week.

Test 5: How much rides on one customer?

List your customers by how much they paid you last year. Work out what share of your turnover the biggest one makes up.

This is the one that got me. When we lost three major contracts in a year, it wasn’t just lost income. It was lost income with a team, rota and costs built around it.

Red flag: any single customer worth more than about 15% of your turnover, or your top three worth more than 40%. Big customers are good. Depending on them isn’t.

Test 6: Does the business run without you?

The holiday test: if you disappeared for two weeks from tomorrow, what would go wrong?

Write down every hour you spent last week cleaning, covering, quoting, scheduling and answering questions. Then write down every decision your team brought to you.

If you’re still the cover for every sick day and the answer to every question, scaling means more of you. And there isn’t any more of you.

Red flag: you can’t take a week off, or you’re doing more than 20 hours a week on the tools while trying to grow.

Reading your results

Put a tick, a question mark or a cross next to each test. Then use this to decide what to do next.

Only fix one cross at a time. Start with Test 1 or 2 if either failed, because every other fix depends on each hour of work actually making money.

The one-question version

If you only have five minutes, ask yourself this:

Be honest. Maybe it’s your evenings, because you’d be doing twice the admin. Maybe it’s cash, because you couldn’t fund the wages. Maybe it’s quality, because nobody but you checks the work.

Whatever breaks first is what you fix before you grow.

Diagnosis isn’t a one-off

Your business changes every time you add a cleaner, a contract or a new area. A business that passed every test at £40k can fail three of them at £80k.

So make it a habit. Run the six tests every quarter, fix one thing, and check again. That’s how businesses grow without the crash.

Find out where you actually are

Not sure which ceiling you’re under? Take the quiz. It takes a few minutes and tells you what type of cleaning business you’re actually building, with a game plan for your result.

Rhianna