4 Main Focuses to Maintain a Government Contract

The coveted government contract is what many contractors strive for but rarely are contractors ready to handle the administrative tasks associated with delivery.

Here are the 4 main focuses to maintain a government contract.

1.      Credibility

2.      Predictability

3.      Transparency

4.      Consistency

Later we will discuss the pitfalls of government contracts, and there are pitfalls. Some easy solutions to those pitfalls but a need to be concerned is valid. I’ve seen many contractors struggle with the four main focuses and the pitfalls.

Credibility

Unfortunately, the burden of credibility falls on the contractor completely. Only because your organization values the steady month-over-month service payment. Even if the client is a beast to handle and should probably be passed up. The advantage of having a government body client adds to your cash flow.

Credibility comes in two forms, credibility to complete service contract, and credibility to not belly up because of underfunded or underinsured.

Credibility to complete service contract is the headache all government entities wish for; the contract holder is most likely over always overworked and under scrutiny. Signing a contract is both a blessing and a nightmare on that person’s shoulders. Reducing this stress will make you a hero contractor.

Credibility to not belly up because of underfunded or underinsured situations, this one can black mark you in the industry. Failing to keep this portion of your business in tip-top shape with secure credibility amongst those looking for bidders. This hurdle usually manifests itself at the midpoint of a contract, usually from front loading the beginning of the contract with the intent of securing the friendship quality. Contractors, watch out for this when bidding. Either add in the proper increases with CPI figures plus you increase of administration fees or track your own overhead multiplier.

Tips to avoid this funding issue – Work with a credit consultant (like Growth Architects) to help the small business entrepreneur weather any late payments to vendors or from clients. Most non-government clients pay within 30 days, but government contracts can take upto 90 days due to the paperwork shuffle. Having a high business credit can help you negotiate short-term loan agreements.

Predictability

Social scientists love to think the world and the minds of others can be ushered into norms and predictable scenarios. There is some credibility in those theories, however predictability has many situations to focus on but here are two, the client asked for this (or that) and you said “yes” (for this amount). Government organizations hate changing this, or asking for more money, and here’s why – it takes an enormous amount of time and approvals to get the “yes” to proceed. Mostly because the scrutiny from oversight is so large with respect to using public dollars for anything.

So here is the warning – if you are going to lowball a contract just to get a foot in the door be ready to fight tooth and nail if you want more from the client. Also recognize the tarnish on your armor when that happens. Augmenting your social presence to combat any tarnish and/or sales target would be beneficial with having your marketing staff learn affiliate marketing to learn the benefits and how-to to gain social leverage in these situations.

Nirvana Approach!

When sending in the sales/bid documents be cautious about selling the “Nirvana Approach” (actual outcome vs. the ideal but unattainable alternate outcome) (Wolf, 2004). Within your documents avoid subjective language that might be seen in every other bid document, instead give sound evidence as to why your price is what it is. Government entities do not always go for the lowest bidder but keep that pencil sharp just the same. Stay competitive.

Transparency

Be ready at any time to share documents, yes there is the Freedom of Information Act, and your HR/Business Manager should know the regulations of what is allowed and not. In that vein transparency helps with the other 3 categories. Transparency can also come in many forms, for instance if you’re a service provider be clear on what the outcomes should be and that should be listed in a Service Agreement, not the Request for Bid documents as I have seen too often. Within the Service Agreement should be metrics that have to be hit and items that must be provided daily/weekly/monthly/year/etc. and without this the credibility/relationship credential will be put to the test.

This is however the extra administration tasks that must be factored in the bidding process and too often I see these moments are not included so other services go untended to make up time for the others. So be ready to share schedules, work logs, pay documents, manpower figures (if your contract is for manpower).

Tip for smooth communicating – having a process for gaining materials, and approvals, will aid in supporting front line managers when working with clients.

Consistency

If all the above 3 are going well then, this one is most likely going to be fine. Service Agreements are great that way, they give each side a place to start with when something is not attended to, or conditions change.

The two side of the coin – the “if” scenarios

If your company is heavy on relationships and wants to avoid contracts, government contracts will pose a difficult situation. However not completely undoable, working in and on government facilities will need constant socialization to create that relationship.

If your company mostly completes work out of sight of staff, then diligent consistency to perceived results will be necessary and the moment that areas or details are not attended to will spring up fast. Keep the Service Agreement handy.

Bibliography

Wolf, M. (2004). Why Globalization Works. Yale University Press.

Avoid Equipment Failure in 4 Easy Steps!

Failure is eminent in every organization, but it shouldn’t be.  Failure comes in many forms, from bad hires, to underfunded budgets, etc. 

Obviously, budgets have an impact on our programs, we shouldn’t deny that reality, and run-to-fail reactive programs keep budgets in an unpredictable state. Leaders find this challenging.  Although emergency equipment breakage can happen, equipment failure can be costly as supply chains are in flux, even though we are recovering from the epidemic years.

Point in hand, circuit boards are still long lead items for many types of equipment.

Equipment maintenance and/or replacement has tell-tail signs to avoid the situation of run-to-failure embarrassment with leaders.  How so?

Failure analysis is your solution!

This practice can change your program from a reactive program (run-to-failure) to a predictive (gold standard) program.

Here is a scenario, you have worked at a company for years and no money has been put into equipment and repairmen must be called out often just to put Band-Aids on the clunking machine.  Is it really doing its job well?  Probably not, but it is working (at least enough to stop people from complaining).

Until the unit fails again, and a technician is called again.  And of course, failure always happens at the importune time.  For instance, the sump pump only fails during heavy rain, then the basement floods.  Or another instance, the HVAC only fails on the hottest days. These failures are also when the clients will complain the most.

There must be another way, right?

There is – perform a failure analysis.

Figure #1

An example of a real-life piece of equipment. It was installed in 1997, and the unit ran until almost 2018, see figure #1 on the next page.  The red line indicates the expected manufacturers life. 

When should this unit have been changed out or replaced?

The clear answer was before the yellow circled expenses. With the parts and the service calls the dollar cost for use has risen substantially.

Companies all around the world try to play the game of getting the most use out of a piece of equipment.  This happens by making it last longer the expected.  However, the depreciation has long been spent, in most cases the depreciation is over 5-7 years.  And the warranty has been used up also.

Running a failure analysis can help make that decision based on math, not opinion.

In the image, figure #1, it appears that the unit was headed for a failure based on the number of calls in the year 2016 to 2017.  At this point a decision needs to be made by the administrator. 

Whether to replace or continue the dilemma.

Waiting for failure is not ideal. And often comes with a ton of questions from superiors. Don’t let that happen to you.

You can…

Step #1

You will need a little more data.

The data used for Fig. 1, were the number of work orders, the manufacturers expected life, and the costs for every work ticket, and the dates of every ticket. Figure #2 is the work order history for example.

Figure #2

This step requires a good CMMS (computerized maintenance management System).  One that is actively used, and good data put in.  As the saying goes “junk in, junk out”, so the date needs to be good data with a goal in mind.

Or it’s just data for data’s sake. There are several great systems out there depending on your industry.  I’d be happy to share a few good ones.

Within this data entry be as detailed as you can because the next steps are where the cost factors and predicting come in.

To make the system work even better data will need to be collected on all the equipment you have to make sure averages are well established for the industry you are in.

Step #2

Find a techy person that is familiar with excel.  Although most CMMS systems can do these calculations, a simple excel program that is standard on most computers is fine. Looking at figure #1 again, plot the dates and the number of tickets on a graph.

Figure #1

You should end up with something like the example. This is good. It’s horrible to see but an eye opener just at this step to understand what your maintenance department is doing.  This simple graph alone can start conversations with your trades and line managers on making better decisions to avoid failure of equipment.

However, if you really want to take your program to the next level, finding the right point for your organization to replace units BEFORE failure expenses start move to step three.

Step #3

For this step you will need a batch of units.  Run the same information for each then on the excel program look for the Bell Curve graph.  Configure the data for that style and you should get the below graph, Figure #3.  This example includes the piece of equipment we started with and 10 more in similar situations.

Figure #3

The bottom horizontal line is the number of years between end-of-life expectations and the beginning of critical failure. 

For instance, in Figure #2 the dates used would be 2014 to 2016, before critical failure starts.

The graph indicates, at the peak of the Bell, that the organization gets roughly 2 years after the manufactures expected dates before failure starts to happen.

Step #4

Using this data You, or your frontline manager/staff have the knowledge to predict expenses for your operations budget several years out to replace an aging fleet of equipment. 

Then your work really starts.  Now you need to write and present a story to your budget holders on how your department wants to save the world and raise the bar. There should also be a follow up conversation with the trades to see if there is any outside factors that might contribute to early failure or in lengthening the time between expectancy and failure.

Some topics could include:

1.      Water quality

2.      Electrical surges

3.      Air flow

4.      High dust or debris

5.      Amount of use

After all, a great service department should catch issues before they are issues.

Additional Resource of knowledge on this topic can be found in the books that were handy to me as I was writing this. See below:

How the 37% Rule can apply to the cleaning industry.

Have you ever heard that “the relationship is the strongest part of any contract”? I’m betting yes.  You can do a mediocre job but if the contract holder likes and believes that you have their back you are still hired. Or allowed to continue the work.

Why is that?

There is an interesting concept called The 37% Rule (also called The Optimal Stopping Problem, or The Sultan’s Dowry Problem, or Secretary Problem), mostly found in dating, but the concept is like what happens in contract cleaning.   

Loosely put the Rule, backed by math and probabilities, see the article by CT Post, Calculate Your Exact Chance Of Falling In Love, based on Dominik Czernia’s (physics Ph.D student) calculator – is finding the best possible option from “sequentially observed random variables” (Desk, 2020).

What does that mumbo jumbo mean?

If you go on 100 dates and pick someone at random to be your mate, you have a 1% chance of finding a match.  In the contracting world that would be a disaster.  Any owner will tell you that this will not work.  Any dater would be playing with fire looking for compatibility in the relationship.

However, if you use the 37% Rule, weeding out the first 4 out of 10 dates.  In this case potential clients, your chances of finding a match increase by 37%.  Imagine increasing your chances of finding a great client by 37%.  That would be great, especially if the goal is to get repeat business and renewed contracts.

So how should we apply this dating rule to get better at choosing the right clients for our services?

If you have ten contracts you are thinking of bidding on, remove the first four contracts that do not meet the criteria of your ideal client (clarifying point for your organization).  Bam! Your chances just went up 37% to finding the best client.  It’s that simple, right?  Nope! The Rule instructs to go on the dates of the first four first, then reject them as your definition of what a perfect match will be redefined.  This helps you define the “ideal client.” That’s right, you need a few bad clients to get the ideal client criteria established, unfortunately.

Side note – if you are interested in using the actual calculator to find your perfect match click this link.  It’s wild.  https://www.omnicalculator.com/other/dating-theory#what-is-the-optimal-stopping-problem

And check out this Ted Talk video below from Hanna Fry, insert “client” for “date” as you watch: https://youtu.be/yFVXsjVdvmY?si=XcnmEy7zCzZut_Qv

Back to the problem at hand, finding the right client. 

There are some variables that must be determined for this to work.  The calculator is based on having no idea who to pick.  So, for a new cleaning contractor this blog can be a guide to find out what your criteria are for supporting the best client.  For more experienced clients, the criteria should have been defined already. Which only increases your chances of finding the right client exponentially.

Below is an example of the criteria to pick a perfect client:

Within the above Grid, you will have noticed that there are some empty orange squares.  Those are the variables that need defining for your company/organization. For instance, other criteria may be:

1.      the closeness of location to your office,

2.      number of square feet cleaned,

3.      stretch goal learning,

4.      relationship of the client to the owner, etc. 

These are orange for a reason, these must be met cautiously and should be watched for performance.

Green are ideal characteristics for searching for the right client.

Red square is the worst-case scenario, business will be troublesome.  Both financially and culturally.

Take for example, there are 32.6 million businesses in the U.S. (Council, 2018).  But you only want ones close (state of Illinois close for this example), reduce that number from 32.6 million to 1.2 million (you’ve just reduced your business clients to 3.6%). This reduction can be made down to the local streets near your business. If your boss only really knows 10 businesses (< 1% of businesses in illinois) or the number of square feet cleaned reduces it further. Your business might be in peril. 

Instead try looking for qualities that are written in your mission statement or resemble the green box criteria.

The resulting situation should be aligned with your company’s mission or cultural values.  Any indication that alignment is off will be a pain point for your company. Below is a list of pain points to be ready for:

Choosing the right clients will be challenging. Raising the stakes by 37% can only help your bottom line.  Date carefully and choose clients even more carefully.  Taking work just to take work or gaining market share to prove a point will only damage your core business. Michael Porter mentions that in a mature market, cleaning industry, “placing heavy attention on revenues is the maturing market instead of on profitability is a pitfall” (Porter, 1980). A better approach is to take a mathematical approach and remove the emotion.  By doing this your organization will be able to train other staff to do the same and scale up based on process improvements.

Clean safe, and cash checks.

References

Council, S. (2018). Facts & Data on Small Business and Entrepreneurship. Retrieved from sbccouncil.org: https://sbecouncil.org/about-us/facts-and-data/#:~:text=Out%20of%20approximately%2032.6%20million,is%20a%20small%20business%20economy.

Desk, H. N. (2020, February 17). Calculate your exact chance of falling in love. Retrieved from ctpost.com: https://www.ctpost.com/news/article/Calculate-your-exact-chance-of-falling-in-love-15061712.php#:~:text=If%20you%20pick%20someone%20randomly,up%20to%2037%20percent%2C%20theoretically.

Porter, M. (1980). Competitive Strategy. New York: The Free Press.

Economic Value of Custodial Work

What is the value of our teams and the work they do?

Our teams are the backbone of our results (it’s true) – at least that is what is shared with every customer as bids are placed in the inboxes of proposal recipients.  Although this is true, and the lives of the cleaning teams have value, the customers values are more based in Labor Theory of capitalism. 

What is Labor Theory of Value (LTV)?

Labor Theory of Value basically states that “the value of economic goods derives from the amount of labor necessary to produce said items” (Team, 2023), this then leads to the basic natural price of product.  In a shared space of commercial cleaning if the average number of hours to clean a floor is, for examples sake, is 10 hours, times the hourly wage, equals the natural price the industry will follow.

Two paths to watch out for at this junction:

1.      If a company has historically focused on the exchange of dollars for hours, you are following Labor Theory of Value (LTV).

2.      If a company has historically focused on perceived value of the product produced, you are following the Subjective Theory of Value (STV).  More to come on that.

Managing your Human Capital within your business model should be human centered.

Is there a middle ground? Should there be a middle ground?  Does your business model allow for the middle ground?

Focusing on natural prices comes with a warning, natural price is dependent on labor force availability and labor force upgrades in technology.  Natural prices vary based on the technological advances to staff and can be the profit generator.  Of course, supply chain reliability and staff acceptance will determine the effectiveness.

The LTV model also lends itself to a commodity-based model where time is the trading currency and will be dependent on the buyer for the gained contracts.  Being in the commodity market, defined as a useful or valuable thing, such as water or time, places the product in an emotionless path to swap goods.  This theory has been studied since the 19th century and applied as the earliest form of trade.  Karl Marx also was a large proponent of this model as he felt that Time was the only common ingredient involved in all trade.  Marx went a little further in looking past the time/labor relationship that must be equal to be beneficial to both parties, he also fixated on the need for sale to be “socially necessary” (Team, 2023). 

The downfall of LTV is that all goods are sold at the natural prices (true value – labor time wage) profits are not enjoyed by the business unless payment for the workers time is less than what is charged.  Again, leading to a commodity-based market selling at the lowest price, workers are willing to perform at.

Subjective Theory of Values is…

Businesses looking to get away from the commodity-based model should look towards the Subjective Theory of Value (STV).  This model encompasses the ideal solution to a profit-plus-model that is more based on “individual subject evaluations of the use value of goods” (Team, 2023). Or perceived value.

Subject Theory of Values is the opposite approach to goods production. Based on the idea that labor is expended on the desire for the goods by a client.  Very similar to the value-driven market we are currently in.  The unfortunate down/upstream realities are all goods are subject to a subjective value base. Leading to supply/demand scenario of fluctuating prices, which can frustrate budgets and strategic plans.

Back to the two paths to watch out for:

1.      If a company has historically focused on the exchange of dollars for hours, you are following Labor Theory of Value (LTV).

2.      If a company has historically focused on perceived value of the product produced, you are following the Subjective Theory of Value (STV).  More to come on that.

Let’s answer these scenarios.

1.      Labor Theory of Value based – comes with the difficult relationship between labor and pay with employees, and customers are doubtful the employees are getting that profit paid to them.  However, in a labor/value situation profit is designed as a formula of a time swap for pay.

In this situation the real weapon against lost profits is a solid hold on performance and supply chain avenues.  This may mean higher pay or more training to support performance.  The supply chain will need a solid foundation to handle lost time due to lead times and cost fluctuations.

If your goal is to be best in class with production this path has a strong labor relation potential for the right results.

2.      Subjective Theory on Value based – the difficulty here is subjective is subjective. One customer may perceive a higher value and the other may not. 

Here the goal is to have the highest possible perception of being the right choice for your clients to get the highest possible price.  Hopefully over the natural price of work. This may lead to having a great marketing team, extended training for employees and management in relational building techniques.  This training is, must be, over and above the natural price training or you will be outed for all fluff and no meat.

If best in class is your goal in perceived value, training, training, and more training, needs to be a part of your business model.  As training takes time, having extra teammates will be needed to cover the lost production.  The good thing about this is that production is not the main function of this model.

Is there a middle ground between the two models to have your cake and eat it too? 

Business is a fickle little beast, and all management structures wrestle with the in-between ground.  After scanning several cleanings companies’ websites, the balance is tough to manage:

In all these instances below, the company messages appear to be focused on perceived values, hoping to have the clients choose them on good/better/best performance.  All perceived.

“Top Rated Commercial Cleaning Service”

“First in Commercial Cleaning”

“Cleaning that delivers a higher level of excellence and safety.”

“Cleaning services that go beyond basic cleaning.”

“Provide a healthier environment for your customers and employees.”

“Custom Commercial Cleaning Services for your facility”

“Committed to a higher level of cleaning & services.”

“A worry free commercial clean”

“First impressions are lasting impressions.”

Below are examples of labor-based models, focusing on skill.  These companies are also focusing on a value that is reproducible.

“To keep your business operations safe and efficient.”

“Integrity and innovation have made us a premier choice.”

“Experience a healthy-clean commercial facility.”

The daily battle of pricing and methods requires a business owner to be open to new methods and diligent in the methods they use.  Support can look different for each. Being conscious of the product you are selling is the focal point for the bid you are putting out there.  One method may work better in a government setting that is heavily regulated on certified payroll and equality standards.  The other method may be more open to client-based relations.

Whatever method used there are people on the very end of that plan doing the work. Enjoy the battle.

References

Team, T. I. (2023, June 26). Labor Theory of Value. Retrieved from Invetopedia: https://www.investopedia.com/terms/l/labor-theory-of-value.asp

Save Money, Write Better for Your Business.

HandPrint Inc.

The cleaning industry…

is rife with change in the recent decade.  More eyes on our businesses means more scrutiny too.  But are we wasting money with our own words?  Are we leaving money on the table of our clients because we can’t explain our services at a top-notch level?  Are the proposals a cut and paste situation for each new deal, and is that causing problems and confusion with your staff’s delivery?  The change in our industry will require these 3 main focuses to establish clear communication and deliverables.

Before we get to the 3 focuses, I wanted to share a couple of interesting studies (Verbal Identity):

1.      The National Commission on Writing (surveyed 120 major American corporations) –

“Two-thirds of employees working in large companies write as part of their job. For service companies that goes up to 80%. Yet almost a third of the companies in the report said that 33% of their employees’ writing skills weren’t up to scratch.”

This is serious when discussing turnover, when a 3rd of your staff is not effective in writing the wrong messages could be sent out with the wrong meaning or intention.  This also affects the business continuity of leadership positions. Imagine if a second generation of leaders is coming up with the same 33% bad writing.  Now your business in heading in a downhill trajectory with communication.

2.      Within the same article another killer statistic took me by surprise –

“37% of people think that their company’s process for collecting and combining feedback works well.”

This one hurts the most!  To grow our company’s, we need to identify key performance indicators (KPI’s) to visualize beneficial and dangerous trends.  The cool thing is that there is a plethora of data available hidden in the processes used by each of us.

So, what are the 3 main focuses to establish clear communication and deliverables?

1.      Are your manuals readable to the average employee?  If not, start there.  For example,

“General Electric rewrote one of their software manuals. As a result, calls and letters to their customer care team dropped by 125 calls a month. This translated to a saving of $375,000 per year for every single customer.”

This is real savings, but what about the cleaning industry?  The same applies to us, from what to do for HR calls and how to clean the floors for beginners.  If the writing is not clear the message will be lost. 

Suggestion:

looking at two items first: language barriers, and focus group work.  Both inclusions can, however long it takes, will win over every employee in the long run.

2.      Next, focus on the proposals.  I’ve been a fan of the cut & paste method of proposals for ever.  I mean it saves time, right?  I sure do, but if the proposal is filled with fluff, then you risk looking like all the other contractors promising the same thing.  Which puts you in a commodity market based on price.  That is not the space to be in.  If you say something in the proposal, be ready to back it up.  Plus, and here is a warning, if you have an item in there that you forgot to take out the client might be expecting it.  That could cost you.

Suggestion:

here is to have a couple of versions of proposals ready for different industries and have a one-sheet on top for you to see the deliverables in that contract (which may need to resemble the clients Request For Proposal).  Just be sure to keep the Fluff on the peanut butter sandwich and not in the proposal.

3.      Finally, email is the choice mode of communication in this fast-paced world.  Face to face is always the best method of communication but email is the strongest current method of communication as the number of clients increases per manager.  The cleaning industry’s average clients per manager is tough to nail down as processes and procedures vary wildly company to company.  Back to the email concern, with emails being used primarily the two statistics from Oberlo are shocking –

“In 2022 alone,333.2 billion emails were expected to have been sent and received each day (Statista, 2021).”

AND

“Emails with personalized subject lines generate 50% higher open rates (Yes Lifecycle Marketing, 2019).”

Suggestion:

take the time to run role play games with your managers about email use.  Share with them that each email is a possibility to gain trust, increase revenue, upsell, share experience, and more. Role play with written email curriculum to support our managers.

With these three tips to strengthen you cleaning company a content writer or ghost writer can help build these resources in a fraction of the time an employee can.  Saving time and money to increase your bottom line.

Bibliography

Mohsin, M. (n.d.). 10 Email Marketing Stats You Need To Know In 2023 . Retrieved from Oberlo: https://www.oberlo.com/blog/email-marketing-statistics#:~:text=81%25%20of%20small%20businesses%20rely,50%20percent%20higher%20open%20rates.

Verbal Identity. (n.d.). Hard proof that better writing makes a better business. Retrieved from Verbal Identity: https://www.verbalidentity.com/hard-proof-that-better-writing-makes-a-better-business/