Ron Holt got into residential cleaning in the early 2000s, when he saw a surge in demand that the mom-and-pop shops dominating the industry couldn't meet. The result was Two Maids & a Mop, his Birmingham, Alabama, startup. By making some decisions that were expensive at first--but which bore long-term fruit--this three-time Inc. 5000 honoree brought in $4.7 million in revenue in 2014. Holt explains how his company has thrived.
1. Doing the right thing is smart business.
When Holt created Two Maids & a Mop, he was inexperienced in business building. He visited five noncompeting cleaning businesses to learn their secrets. He found that the majority of home-cleaning companies employed independent contractors. It would have been cheaper for him to hire cleaners this way too. But since owners can't require independent contractors to perform tasks in a specific manner, "I just couldn't envision any scenario that would allow me to control an employee's action by using that model," Holt says. So, he decided to make all staffers W-2 employees. He also learned that cleaning companies often make their workers pay for damage they cause--and many of them hide it as a result. Holt chose instead to let customers and staff know that the company, not the cleaner, will pick up the tab for damage. "I never wanted my employees to break something and not tell me," he says. He believes these policies have boosted his brand's value and enabled the decisions he subsequently made that helped grow revenue.
Takeaway--Competing on integrity can be as important as competing on price.
2. It pays to give employees a reason to be great.
Holt started Two Maids & a Mop in April 2003. One year later, he had almost burned through his initial capital and was worried about making payroll. The morale of his cleaners was low and turnover was high. Holt had been paying them hourly rates, with most starting at minimum wage. His attempts to motivate his 12-person staff using a corporate style of management weren't working. "I wanted a way to get our employees to care without being a police sergeant," he says. In May 2004, he came up with a pay-for-performance plan--cleaners would be compensated on the basis of how customers rated them on a scale from one to 10. A 10 gets an employee a better wage--above the industry average, says Holt. "A one is pretty close to minimum wage." He had to raise prices, but rewarding employees for doing the best job possible led to higher customer satisfaction and buoyed the business. "We were never really that much different from anyone else," Holt says. "Now, when we talk about the pay-for-performance plan, we're different. A lot of people hire us because of our plan."
Takeaway--Customers will pay more for higher quality. Give employees an incentive to provide it.
3. Keep it consistent at scale.
While customer satisfaction increased with the pay-for-performance plan, there were still discrepancies from one cleaning to the next. "There would be individuals who would go above and beyond with good intention, and someone else would come in and clean the normal way, and all of a sudden, the previous cleaning had become the standard," Holt says. Cleaning quality also declined in the afternoon, likely because of tired staffers. In 2008, Holt enlisted the help of Debbie Sardone, a Texas-based cleaning consultant. She spent a month observing the company's cleaners. With her, Two Maids & a Mop developed a 100-page, room-by-room guide on cleaning a home. Staffers are required to follow the formula (something that couldn't be required if they were independent contractors), which has resulted in a more consistent quality of service. "We're not perfect," Holt says, "but now it doesn't matter if you clean at 3 p.m. or 8 a.m., because the recipe tells you what to do."
Takeaway--Successful scaling requires giving your employees the tools and knowledge they need to excel.