Three Steps for Success in a UK Recession
This article appeared in the 2023 March issue of Cleaning Matters.
Reducing costs, gaining efficiencies and improving proof of service is top of mind in a year of forecasted economic difficulties.
Recent economist predictions are estimating a recession twice as bad as what was expected at the end of 2022. Even though the same economists are expecting stabilisation during the second half of the year, many industries are preparing for short-term impacts to customer retention and related profit margins.
In times of recession, it’s natural for companies to look for opportunities to reduce costs and increase efficiencies in order to stay competitive. In the cleaning industry, the drawback is that clients are looking to conserve expenditures, too.
Though the past few years have brought some cleaning companies increased income through pandemic-driven services – like high sanitisation work or jobs with high-risk layers requiring personal protective equipment – those requests are declining alongside a rise in endemic mentality.
As those diversified revenue streams wane, it’s time to refocus on the core of your business: providing the services you do best while maximising the resources you have available.
An argument can be made that achieving this mission is twofold.
- First, cleaning companies must do what they can to save as much money and build cash reserves.
- Second, cleaning companies must become as efficient as possible to retain profit margins, even as expenses rise.
- Third, cleaning companies must ensure that the methods being used to report on proof of work, service delivery quality, issue resolutions, client queries, and invoicing and billing are as strong and irrefutable as possible.
Reducing costs in an age of inflation
There are several instinctive reactions to reducing costs on a corporate level: lowering or stagnating wages, reducing supply expenditures, involuntary workforce separations, and consolidation, to name a few.
Each of these tactics is easier said and done, especially when examined through the lens of the cleaning industry.
Although the UK reported an increase in total pay at the end of November, actual wage growth declined after adjusting for inflation.
There is a theoretical opportunity for cleaning companies to change suppliers or adjust procurement strategies in the new year, in reality, the industry is still struggling to recover from supply chain issues of recent years.
The labor market within the cleaning industry remains skewed against employers in favor of applicants, with data from TEAM Software by WorkWave reporting the need for cleaning companies to hire 133 applicants a year in order to maintain an average annual headcount of 100 employees. As such, layoffs as a cost savings measure – a tactic which has dominated headlines across other industries over the past year – are unlikely.
That leaves us with the fourth option: consolidation.
Consolidation as a cost savings measure
Now is the time to take a hard, critical look at the solutions, vendors and partners you use to operate your business.
Many times after implementing a new software solution, companies don’t fully understand or implement everything that is available to them based on their product agreement. This is a mistake, not only because it is leaving value on the table, but also because companies tend to have redundant software solutions executing on those purposes.
For example, let’s say a cleaning company implemented an integrated software solution solely for the time and attendance and scheduling features it offered, not realising the solution also offers modules for payroll preparation. That company could consolidate their current payroll preparation from a separate payroll solution (or, possibly, a third-party vendor) into their new solution. The benefits of this action? Not only does the company save money and administrative resources spent managing another vendor relationship, their time and attendance and payroll data are now operating in tandem, reducing error and risk when it comes time to process payroll.
In some instances, the consolidation of processes and systems – especially in technology – may require investing in a new solution. Still, an all-in-one solution has long-term benefits to profitability.
The importance of efficiency
Efficiency is sometimes viewed as a buzzword. Still, there are real, measurable results efficiency gains have on a cleaning company’s bottom line. For example:
- Automated scheduling and rostering ensures the right number of employees are scheduled based on a contract’s scheduled work, which minimises the risk of gaps in coverage.
- Technology-driven time and attendance tracking ensures employees are paid only for the hours they’ve worked. Combined with location tracking technologies, employers can also minimise time theft fraud.
- Real-time monitoring reduces the amount of time it takes to resolve costly issues, like those leading to slip, trip and fall accident claims. It also helps identify work requirements based on things like volume of use, traffic, leading to better allocation of supplies and employee efforts.
Proving service delivery
As cleaning company clients look to reduce costs, many are aiming to scale back on scope of work, if not terminate contracts altogether.
To counteract this, your proof of service strategy must be sound. Provide reporting documentation of work completed to your clients upon request. Or – arguably, even better – automate this kind of reporting to be directly sent from your workforce management solution to your client’s inbox.
Reporting should focus on what is of most value to your customer – and help leverage your business’ position for any upcoming contract negotiations or tenders.
For example, reports that measure proof of service, inspections and task completions all support changes needed to scope of work, which can impact bill rate or support ad hoc service add-ons and help maximise revenues.
Operationally, reporting can help tighten workflows and improve processes to greater support customer satisfaction. Exception reports, for example, highlight areas where corrective action is needed before it becomes an issue, like if work was missed from a cleaners’ route, or task completion falls below satisfaction.
The reporting capabilities of a software are often one of the biggest differentiators among other solutions. TEAM Software by WorkWave incorporates many of these reports as out-of-the-box tools in our best-in-class solutions, meaning users can access the features without any additional customisation. If you are in the market for a new platform, ask about reporting questions as you explore different options and come prepared with your top reporting requests to determine which software solution can deliver the most value in this area.
When refocusing your core business strategy remember, these efforts aim to support success due to short-term economic strife. But, the real value will come back in year over year success brought by consolidation, efficiency gains and strong client relationships supported by provable service delivery.
For more information on the latest trends in the cleaning industry, forecasts for the year and applications for both findings, access TEAM Software by WorkWave’s latest – and free – industry-specific data report.