By Bill Prosch, CR
If you perform in-home services, such as carpet and upholstery cleaning, and frequently struggle to collect your money, read on. If you don’t struggle with collections, read on anyway; you might still learn something helpful about getting paid.
In a nutshell, here’s what successful entrepreneurs do: they find out what people want, they go get it, then they turn around and sell it to the masses for a handsome profit. Simple, right? In theory, yes. After all, we see evidence of this on every episode of Shark Tank. However, in reality, here’s what we frequently do instead: we find a service people need, we learn how to perform that service better than anyone else, we drive to the customer’s house and do our job, and then we tremble and cower when it comes time to collect our money. The customer says, “Sorry, my wife has the checkbook. Can you just bill me?” and we go on our merry way. At the end of the month we’ve billed $20,000 in services and can’t pay the electric bill.
As you’re sitting at your computer, staring at the accounting software that’s telling you your bank balance is negative, you say to yourself, “I’ve got to get better at collections.” With newfound resolve, you diligently call everyone who owes you money. Except they don’t answer your call, nor do they respond to the voice mail you leave, even though your message politely asks them to. And now you can’t pay the rent. However, you are still the epitome of awesomeness when it comes to cleaning carpet.
Next month, as you’re watching Cletus and Cooter from Repo World tow away your nearly new, state of the art carpet cleaning van with a four billion horsepower direct drive rug sucker and chrome wheels, you decide this is all a result of corrupt politicians, global warming, and a general decline of moral values in the western hemisphere. After all, this couldn’t be your fault.
Two months later, as you’re moving into the homeless shelter, you ask yourself, “What could I have done better?” After all, you found a service people need. You provided it to them better than anyone else in the world. And yet Jimmy at Crooked Carpet Cleaning is living in a brand-new house with cable TV and everything. What does Jimmy know that you don’t? Jimmy knows that collections start before the work ever begins. (Either that, or Jimmy has a cousin Vito who’s pretty good at convincing people that it’s in their best interest to pay their bill, but for the sake of this article, we’re going to assume the former.)
In the early 1990s, I worked with a consultant named Mack Clark. One of the cornerstones of Mack’s philosophy was that everything in business works better with clearly stated expectations. Everything. Here’s how that advice applies: When you purchase a house, a car, or an appliance, what do you have to do before they let you have that item? You have to pay for it, or at least arrange to borrow the money to pay for it. You don’t drive the new car off the lot and tell the salesman to send you the bill. You can’t leave the appliance store with a new toaster by saying, “I’ll catch you next week.” And yet, you’re afraid to ask your customer for the money you just worked so hard to earn. The real estate agent, car salesman, and appliance vendor make it very clear that the item you want is not yours until you pay for it. They have clearly stated expectations.
How about adding one quick, easy phrase right after a customer agrees to the price for your services? Add, “And how will you be paying today, by credit card or check?” Even better would be to ask the customer the same question when you book the appointment and, yet again, right after the customer agrees to the price on the day of your service delivery. Do you see what’s happened here? You’ve set the expectation with the customer that you are to be paid before you leave the premises. Today. Not next week. Not next month or next year. Today. Ah, the miracle of clearly stated expectations!
If you’re having trouble getting paid, try this approach. I promise it’s substantially easier to clearly state the expectation of being paid today than it is to repeatedly call the customer and beg them for the money you earned two months ago. You’re not a lending institution, so don’t act like one.
Now, go be the epitome of awesomeness in the home services world AND collect your money.
Bill Prosch, CR, is a Business Development Adviser for Violand Management Associates (VMA), a highly-respected consulting company in the restoration and cleaning industries. Prosch is a leading expert in operations and a Certified Restorer. He has a deep understanding of entrepreneurial challenges having owned and operated a successful restoration company for more than 30 years. Through Violand, he works with companies to develop their people and their profits. To reach him, visit violand.com or call (800)360-3513.