Copy and pasted from a post below...
What will you do in this economy?
October 17 2008 at 5:08 PM
Rick Gelinas
The stock market is down. The housing sector is down. There’s talk of a global recession. The word panic is inexorably linked to stories about the economy. So what is a wise entrepreneur to do?
Firstly, scrutinize your expenditures. Keep a close eye on your bottom line! Know your numbers. How does each sale correlate with your total cost of doing business? Do you understand these numbers? Your business’ future is directly hinged to these numbers.
Next, spend some time thinking. Where do you want to end up? How will you weather this storm? Are you content to let external forces such as the economy control your course? Will you allow your future or your family’s security be gobbled up by this ugly situation? I guess it comes down to this, ask yourself “am I a loser that sits on the couch and takes whatever is coming to me?” Or are you determined to look for ways to propel your companies growth?
With these thoughts in mind, where are you planning to take your business? Are you content? For me personally, I kind of groove on a little adversity. No, I don’t like trouble. But when I’m pushed up against a wall I go into fight mode. And it’s at times like this that I tend to become most resourceful.
For example, when I started cleaning commercial carpets in the early 80’s, the national average for commercial carpet cleaning was .10 per square foot. Twenty five years later, the national average for commercial carpet cleaning is till .10 per square foot. Yikes! What in the world is that? Everything else in the universe has gone up a hundredfold, and we are still expected to clean for peanuts. This is what I mean when I’m talking about a “little adversity”.
Well it was those exact conditions that pushed me to look for alternatives. I was out cleaning commercial carpets at pathetic 20 year old rates. Not because I liked it, but because it was all the market would bear. Feeling like a victim, I searched long and hard for a way to make it work. That’s when I discovered encapsulation. I was the first person to put the Cimex together with encapsulation as we know it today. I like to say that I didn’t discover peanut butter or chocolate, I just put it together and got the Reese’s peanut butter cup (aka Cimex/Encap).
In the early years, I got my tail kicked. I shared what was working for me on the industry message boards. And the hot water extraction guys ripped me apart. I took my licks and kept right on extolling the benefits of this new system. Before long a few of the naysayers began taking a look at this crazy new idea. Low and behold, one by one they started to come on board and in a short time the encap revolution was underway.
Today we see a lot of players jumping into the arena. It seems that everyone has their version of an encapsulation product. This is a two edged sword. All the interest in encapsulation is a good thing for the industry as a whole. But on the flip side, a lot of the products that are being introduced do not contain a good crystallizing polymer. Some manufacturers even try to get around their products’ lack of crystallizing polymer by calling their product a “film former”. In the end, these products that do not encapsulate well give encapsulation cleaning as a whole a black eye.
Well by now you are probably saying... Okay Rick, now get off your soapbox and give me something I can work with! Give me the scoop! Tell me something that will help me feed my family! Well buried in the paragraphs above I think I may have done just that.
Encapsulation has empowered countless cleaners to open up a new source of revenue. Back when I began broadcasting the fantastic results I was getting with encapsulation, guys would laugh and say they preferred to stay away from commercial carpet cleaning. Well fortunately those days are behind us now. For the first time the ball is back in the professional cleaner’s court. Now cleaners can finally make good money cleaning commercial carpet. Yes!
As the economy continues to head south, it makes sense to diversify. It makes sense to form a game plan that includes revenues from higher yielding sources. More and more, we are seeing that the average residential carpet cleaner is needing to tap into additional revenue sources.
Oh, and one more thing. What about market share? Consider DuPont. A few years ago DuPont sold ALL of their fiber production to one of their competitors - Koch Industries. To me that was alarming. I know that DuPont is a brilliant company with more collective brain power and money than I’ll ever posses. And with all that wisdom - they went and sold off their fiber. So I asked myself, what do they know that I don’t? Well it’s obvious; they saw their fiber production diminishing. People are opting for alternatives to carpet (like wood, tile, marble, etc). And while that may be true in the residential setting, in the commercial setting carpet is still king!
Now let’s consider the cost of performing residential carpet cleaning. A decent complete truck-mount rig can set you back $50 grand. If you amortize that for 5 years at 7% interest, your monthly payment is $990.06 Oh my goodness, you will have to pay out a grand a month before you make your first dollar. And we’re not even factoring in fuel costs, maintenance, or anything else. That means before you earn your first dollar, you’ll have to throw away a thousand dollars a month for fixed operating expenses. A thousand dollars a month up in smoke, gone, vamoose! Sheesh. And what if you were to buy a big-box testosterone rig for a $100 grand? Let’s not even try to justify those numbers!
So the bottom line is this. The economy may be in the toilet. But now we have a way to generate great money, cleaning commercial carpet at 2,000-3,000 square feet per hour. We can fix people’s problems with their commercial carpets so they can enjoy cleaner carpets. The building owners can now afford to get their carpets cleaned more often (even on their tightening budgets). And at the same time, we can turn a tidy profit. Talk about win win. In these tough economic times, this makes a lot of sense!
Look at the numbers... A Cimex cleaning with Releasit at a rate of 2500 sq ft per hour, even at a low rate of .08 per sq ft, will generate $200 per hour! Did you hear that??? $200 per hour! With a machine that sells for less than $3000. If you were to take 3 months of the truck-mount payments listed above, you’d have a Cimex completely paid for. Talk about a money maker!
Now if your company cleaned just 3 hours a night (at .08 per sq ft), for 4 nights a week - you would generate $124,800 a year. Are you following this math? A single Cimex could easily generate in excess of $124 grand a year. What if you had 2 Cimex machines running? What if you had 3 or 4 running? My point is this - this approach to business makes good economic sense. And in the ensuing economic quagmire, this amounts to an economic windfall!
Well I know this was a loooong message. But hopefully it provided some food for thought. It’s times like these that excite me. I think there is a lot of opportunity for the resourceful ones who seize the opportunity to diversify and grow their business. Some will say the sky is falling. But I believe there’s still plenty of blue sky to go around
Rick Gelinas
rick@excellent-supply.com
