T <
PAGE 8
Part II
"Busines
One of the main problems of a
building services contractor is
the high turnover rate amoiT{pus
employees. Industry sources
. indicate that most remain on the
job for a period of 2 to 6 months.
This is an annual turnover rate of~
'200 to 600-percent. This situation,
again due to the moonlighting
nature ot-the job, has caused a
premium to be; placed on
reliability by the building
services employer.
? v The-high turnover rate has-als??"""
- -?m : '^wawrrjarsrT"y
t- J-??^? .? ,-V^ -?^3?^-aij^a^5ag^^^g
.IT " proceaures" : for potential
employees of the building
services company. Many job
application forms now contain
rather pointed questions
?involving:?the?reason the
applicant desires work; whether
or not he is buying a home; how
long he has been on his present
job, etc. The whole object of such
scre^tlinff is for thp rrmtrflntnr tn
-p . MWVA ?v
acquire a "solid" employee who
will have an interest in working
and who will stay on the job.
v - Equipment required in the
building services contractor field
has been relatively basic in the
- past. A sample inventory of
equipment-is: ?
Sweeper, Buffer,' Brushes,
Floor pads, Extension cords, Mop
bucket-round-oval, Wringer,
Mop, Dust mop handle, Dustpan,
Trasn containers, Water pails,
Pushbroom, Strawbroom,
Rubber gloves, Uniforms,
Smocks, Shirts, Ammonia, Bowl
cleaner, Cleanser, Disinfectant,
Furniture polish, Liquid
detergent, Floor finish, Plastic
bags, Sanitary napkins - Toilet
seat covers - Paper towels occasional.
Recently, technological
advances and greater
sophistication have affected the
.equipment used by the building
services contra?tor. In addition
-y to the list of basic items
reproduced above, such
machines as - institutional ,
vacuums, high pressure
cleaners, and power sweepers
with centrifugal clutch are now
available. These technological
i advances have affected
profitability positively and have
somewhat fedUced labor
requirements in the industry.
One major piece of equipment
used by the building services
contractor is a truck. The new
pntronrononp mnn ?4
wnv* v|/i vnvui may cil> I1TSI
transport machines and supplies
in a car or station wagon.
Usually, however, the enterprise
will develop to the point where
one or more trucks are needed. In
a survey performed by Building
Services Contractor, the average
number of trucks in operation per
firm surveyed was 4.3.
The same survey noted that 92
percent of building services
contractors keep a warehouse of
expendable cleaning supplies,
with the average firm keeping 54
days of normal consumption on
hand/Being able to keep such
stock on hand is a problem to be
dealt w ith by any new
entrepreneur.
There are definite economies of
scale accruing to a building
services contractor. These
11 el 1 011 *7 Knrti ?-i 1 ?
uuumtj uvgm dl annual gross
revenues of $500,000 and include
savings on supplies, which can
then be purchased directly from
the manufacturer rather than
from the distributor, savings on
machines (with fewer having to
be purchased for each additional
$100,000 of income), and easing of
credit binds for the growing
business.
4. Competition
The- largest form of
competition the buildinc services
contractor has to face outside of
his own industry is in the form of i
buildings which do their own in- \
house maintenance. This
alternative is becoming more and <
more rare, however, as building
administrators realize the
advantage of contracting with a '
V
- ' c
/
*
\
ss Profile
maintenance company. The
building . administrator is
relieved of the worry of hiring
and firing of maintenance
employees, can rely on the
contractor's use of more
specialized labor, obtains the use
of more advanced and complex
equipment, and has no inventory
problems in this area. .
The growing market for the
building maintenance services
industry does not insure high
small contractors in this field
assure intensive bidding
t?>4U ?* ? ? ? - ?
luiu|;cuui;ii, wiui UlC eilipittlSlS
on shaving prices. Cost of
'maintenance is a primary
deteriiwiing tgctor in-the choice
of a building services contractor,
ana the* building owner will,
reputation for quality anii
reliability being equal, choose the
contractor who comes in with the
lowest bid for the job required. In
this type of price competition, the
large contractor has some
advantages, the small contractor
others. The large contractor may
be able to provide equipment and
supplies at a less costly rate than
pf economies of scale; the cost of
"gearing up" to do a job,
especially a large one, may be
lower for him.. On the other hand,
the small contractor may have
lower overhead, due to lower
direct expenses and less
. equipment, and may be willing to
have a smaller profit margin for
the sake of getting the job and
developing his reputation.
The' problem of estimating
must again be stressed. The
small contractor, and especially
the new entrepreneur, must be
particularly careful in his
estimating procedures. A net
deficit is likely to result .from
inaccurate decisions about costs
and personnel requirements, and
although a contractor may be
willing to reduce his profit
margin, maintaining a loss is
.hardly a sound business practice.
5. Ease of Entry
The ease of entry into building
services contracting is attested to
by the large number of firm;;
beginning operation each year.
There are no licensing
requirements in this industry,
and many contractors begin with
no more than experience in the
cleaning field, determination,
and a small amount of capital.
Because many businesses begin a
with no more than the owner and
operator (and perhaps one other
I LABC
I . w a rs
Iimnntu
The city of Winstc
employing Laborers
work at the Archie I
Transportation pro<
nirlr-nn
m i wr*
I APPLY IN
I PERSONNEL I
I C,TY
. far.
I An Equal Oppor
# /
1NSTON-SALEM CHRONICLE
V
:: Mainte
part-time employee), qualified
employees do not present an
immediate problem (or the
prospective entrepreneur. At this
stage, no office or storage space
is required, and a new enterprise
can be operated from" the
entrepreneur's home. Between
41 >200 -and -11,500 -monthly
contracts may be sufficient to
begin an operation if accurate
cost estimation and time
allocations have been made. The
ittliurt: rate OI ulIIluillK ScrVltcS
--TT7 ' IHTfci . ^ ^ .
industry sources, higher than uie
combined rate for all businesses.
Some of the reasons for failure
cited by trade .authorities
inrlllHp? nvprPTtpnstnn rociiHincr
- ? ???V
in inability to complete jobs
properly and to the satisfaction of
the client; poor estimating
procedures, resulting in cost
overruns and unprofitable
contracts; lack of managerial
experience, resulting in higher
than usual labor turnover;
competitive weakness because of
lack of established reputation;
and general administrative
auiicumes.
In addition, industry souses
indicate thot experience in the
building maintenance field is
almost essential to the success df*
an enterprise. The majority of
contractors interviewed ^stated
that they had worked for 6
>jnonths to 2 years in the field
before attempting to branch out
into independent operation, and
many noted that it was this early
experience that helped to insure
their success.
6. Financing
It is difficult to estimate the
capital requirements of a new or
prospective building services
contractor. Industry sources
indicate that a rough rule of
thumb is: have available capital
in the amount of three times the
expected first month's gross
income. For example, ' an
entrepreneur who has secured a
contract that will produce
monthly gross receipts of $1,500
will hp ahlo tn Kaain Ann??ofiA?r
. fx** ww m wav ?v wgui vpvi auvno
with $4,500. This amount will
cover the cost of supplies, salary
for the entrepreneur and any
employees he might require, and
working capital requirements
needed to carry him through the
timelag in payment for past
services.
There are no special programs
or sources .,:of ? capital for
establishing building services
contractor. The Small Business
Administration, however, has
>RERS I
ITED I
JATELY I
n-Salem is now I
to perform outside I
fHedge Sewer Plant. 1
vided from central I
PERSON: * I
DEPARTMENT I
HAIL - 1
iunity Employer. 1
? /+*
m
nance Pr<
been quite active in providing
regular business and economic
opportunity loans in this field, a
large portion of which have ban
to minority entrepreneurs.
Another fuini of organisationand
source of capitalization that
is becoming increasingly popular
in this field is the franchise
arrangement. One of the largest
franchise operations provides
such assistance as training
programs, managerial
?i
supplies, aaverusing and
promotions for a nominal fixed
fee.
7. Profitability
As noted above, the reasonably
successful - building service
contractor can expect an average
of about 5 percent profit on net
receipts. TTie industry can be
^expected to grow at about 15
.percent per annum.
Factors tending to decrease
profitability are: inaccurate cost
Patronize^qual Opp
I following locations:
-Roseboro's Communil
843 N. Liberty St.
-Our Shop ?
_ 3045 N. Patterson Ave
- Anderson's Beam S
604-A N. Trade Srf
- Parrie Beauty Salon
2234 N. Patterson Ave
- Andrews Place
120 Northwest Blvd.
Bantam Food Marke
835 Northwest Blvd.
Kampus Kitchen
344 S. Clairmont St.
- Model Pharmacy
1225 E. Fifth Si.
H - ? o
- Student Government
I Student Union
- Lil General
2312 N. Patterson Ave.
[MCCRI
| 432 N. Liberty St. F<
!|J FREE <
j?l
im With This Cbupon
|IM! TV*? /v#
|1-, riucuiise UI
,c, Offer Ends
|| | MeCrory Store 42
il
|i FREE IV
I I
!=. With This Coupon And Any 1
I or More
MeCrory Store 42
| I
| j _McCRORY_j. COUPON_SA
I McCRORY'S
THURSDAY, OCTOBER 3, 1974
oblems ' !
4
i
estimation; the high labor
turnover, with resultant costs;
frequent theft of equipment and
supplies; and overextension of
operation..
^ Dependence en Outside
Factors
~~ " x ;
The field of business
maintenance contracting is less
subject to the effects of economic
conditions than are - many
ftifflffi pa ? mfc' *
maintenance needs exist
irrespective of business cycles,
and purchasers of these services
usually think of them as fixed
pnfitc Ono offopt f\( fKft Kiia<ha??
?ww?w? vtiv yitVW b Vt MIC UHOIIICiW
cycle, however, is the decrease in
construction during times of 9
recession, in turn causing a
decrease (or, more accurately, a
less ^pid increase) in the
contractor's potential business.
The availablity of credit would $
most likely affect the building
services contractor less than
other areas of the economy. "
oriunity Advertisers
t
je purchased at the 7?I
ty FislkJIarket
lalon
I
I 9
* 2:
t
Association, WSSU
Spence Place
72 L N. Patterson I
DRY'S]
ormerly H. L. Green !
"ai/C ! !
-WIXE i.ij
And
A "Big Mac" MS
: 10-15-74 jgj!
(2 N. Liberty St. j ||
Ttor-mcmcr \i I
. 1 || #
_ MS
IBP A 1^ Hi
1RCMU jjjl
Material Purchase of $3.00 jaJ|
12 N. Liberty | 11
?|
Downtown
9,*30 To 5:30 Daily