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 Special Report

The future of independent contract cleaners

Bob Vincent, executive chairman of LCC Support Services Ltd, one of the UK’s largest independent contractors, looks at the challenges facing this particular sector of the contract cleaning market. He also discusses the pros and cons of expansion in a competitive market.

The area with the most firms in any re-

gion is businesses up to £1-£1.5 million turnover. That is relatively easy to achieve if you put in the hours and deliver the service, but the second and third millions get progressively more difficult to achieve. You are now going for small multi-site businesses, perhaps a group of 3-5 pubs or shops, or several floors of an office block. You are now entering the territory of firms a lot bigger than you. They have time saving equipment, in house HR and book keepers, and it is sometimes difficult to compete on price. This is the wake-up call for many busi-

nesses. They either remain small, well run firms and focus on profitability - or take the next leap into an unfamiliar arena. This is where heavy loans or equipment leasing starts, extra vehicles and signwrit- ten vans are needed, maybe even employ- ing a sales representative or (be very careful in selection) a telesales person. Ei- ther of these staff need a basic salary plus commission, and reps need vehicles too. You may find that neither of these people deliver the goods and are not cost effective - I have found that the large majority of reps and telesales people are unsuitable or untrained. So now you send your sales staff on training courses - more expense, only to find that they leave in 12 months and you have trained themfor someone else, or you have to part company because they don’t deliver. At this stage some firms join forces with

There will always be independent contract cleaning companies. As one drops out, goes broke or reaches the size that the bigger players find interesting to acquire and is bought out, several new ones will appear. Starting up is easy with minimal invest-

ment in equipment - but starting up within the many employment, health and safety, and taxation laws is not so easy. SME businesses and ‘start ups’ need to spend most of their working hours on building their businesses and not completing gov- ernment forms, VAT, health and safety as- sessments, etc. Many small independents have the fore-

sight to use external consultants for their site risk assessments, safety training, HR issues, tax and legal matters. Their hourly rate is considerably more than that of the small cleaning contractor’s MD, but it gets the task off his back to clear time to do what he has to do - grow the business and quality control the work.

26 l C&M l NOVEMBER 2013 l

Bob Vincent, executive chairman of LCC Support Services Ltd: “There will always room for independents at all levels - but they will have to be professionals from day one or they will fizzle out fast.”

other similar sized businesses - or an al- lied service such as carpet or window cleaners - in order to provide a larger offer and to sell to a shared customer base. This is also a good opportunity to combine HR, accounting and some other services, as well as professional association mem- bership etc. A year or two at this level with maybe a

combined turnover of £3-£5 million and you are now chasing larger clients and are fighting harder to get the business as you are not seeking any small single sites - you are hitting named local firms and often tendering against five other contrac- tors. Writing professional tenders is a skilled task and often requires a profes- sional in that field to help - more expense for a 5/1 gamble! You don’t need to lose many of these to see profits drop. Targeting your business to become a £5-

£10 million turnover operation is another huge leap forward and many choose to ei- ther dig in and work on maintaining busi- ness rather than growing it - or sell to one of the larger players such as LCC and a few others that remain in the £20-£100 million area. Many buyers, especially those backed by

venture capitalists, are on an asset strip- ping and account sifting exercise. They are often buying a business for a few key ac- counts, maybe in areas where they have little experience so they can enter a new market. The other less attractive accounts usually suffer increased costs or reduced standards and at renewal time the client filters back to one of the smaller, more at- tentive operators. So you can see, work does return to the

small cleaning businesses and there is a constant development of SME new busi- nesses - but unfortunately there is a high failure rate and the majority don’t last. You have to ensure regular prompt payment or let their failure aid your failure. In the sector for mid-sized contractors -

those with £20-£100 million turnover - there are surprisingly few players because the bigger you get, the harder you can get hit. I would not have liked to have had the Jessops, Woolworths, Dixons or some of the other large failed retail stores in my portfolio. These are always very price competitive contracts and to lose only one month’s fees when the business crashes could mean the loss of a whole year’s profit for the contractor. Contract cleaning is regarded as an easy

job that anyone can do and in theory it is - but in reality, when you look behind the scenes at the cost of equipment, public li- ability insurance, training, accounting etc, it is hard to make a 10% margin - and how many retailers or office-based service in- dustries work on such low profit margins? I firmly believe that as new employment

and workplace health and safety laws de- velop, the number of people employed in the cleaning profession will increase year on year. As we become more cleaning con- scious, cleaning will progressively become more of a ‘profession’ and less of ‘man with van and vacuum’ as I started, so set- up costs will become higher. The days of Mrs Mop are long gone and very soon even the smallest operator will become branded and become a mini version of the mid-sized firms. All these issues will ensure that our

world is a better cleaned place for work, education, healthcare, and leisure and there will always room for independents at all levels - but they will have to be profes- sionals from day one or they will fizzle out fast.

About the author

Bob Vincent started his first cleaning com- pany in 1978 as a man with an estate car, vacuum and broom. Today he is passion- ately independent with a turnover in ex- cess of £20 million. Vincent is a Liveryman and Freeman of the City of London, and a Court Assistant at the Worshipful Com- pany of Environmental Cleaners. He is also deputy chairman of the CSSA, he sits on the board of BICSc, and is on the board of the British Cleaning Council.

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