Business franchise: commercial cleaning proving recession-proof


Business franchise: commercial cleaning proving recession-proof
Providing an essential service, the contract cleaning industry is coping with the recession well.

As companies increasingly look to cut costs related to non-core areas, commercial cleaning companies are enjoying growth at the top end, blue-chip segment of the market.

Clients are benefiting from reducing in-house head count and costs by outsourcing cleaning services to a supplier which can perform them more efficiently because it’s their core business.

Procurement/buying departments of large companies are increasingly recognising the financial benefits of outsourcing.

The selection of cleaning contractors is taken out of the remit of operations- or field-based management and centralised behind a disciplined tendering process.

Along with new legislation, this trend has accelerated growth in the contract cleaning market.

According to a Keynote marketing report, this market is growing at 10.7% annually and is forecast to hit £6bn by 2010.

The market has also seen considerable consolidation, with 91% of the market controlled by only about 125 cleaning companies.

The market is growing at 10.7% annually and 91% of that market is concentrated in the hands of just 1.25% of companies

There are over 10,000 VAT-registered cleaning companies in the UK, so 91% of the industry is concentrated in the hands of just 1.25% of companies.

Many small independent cleaning operators advertising in the Yellow Pages are going out of business, unable to compete with the marketing clout and economy savings offered by larger national or regional operators.

There’s evidence that many large clients are recognising that they can pay cleaning contractors generously and still make savings compared to doing the services in house.

And it’s simply bad practice for them to force a price so low that the contract becomes commercially unviable for the cleaning company.

This ultimately drives them out of business or forces them to start operating illegally (by paying staff below statutory minimum wage levels).

Making customers aware of this is critical and many major-brand customers serviced by Jani-King such as Next, Premier Inn and Ten-Pin Bowling Alleys have proved sensitive to the importance of achieving a ‘workable contract’.

The examples of Next, Odeon and Premier Inn are particularly relevant.

All three are extremely well run companies and recognise that a specialist external/outsourced cleaning contractor offers quality and cost benefits compared to in-house models.

Consolidating a greater volume into the hands of fewer external cleaning suppliers maximises the benefits, as it gives suppliers more scale, which in turn can be passed on to the customer in the form of cost efficiencies.

 

About The Author

Adam Bannister Writer
Adam Bannister writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.