Our pool business as a road to retirement

[Arif]

The most profitable part of the business also brings along the biggest headaches. I've found more challenges dealing with customers that just call us up for repairs. Some want to haggle on the price after the repair and others just can't seem to make up their mind on what they want. I also need to do a better job writing out contracts which I usually don't do.
I've decided to concentrate on growing the weekly cleaning service. It's stable and year round versus the repairs which are primarily in the spring and summer. One area which has huge profit margins is drain and cleans. I usually charge $300 to drain a pool which can take 3 hours max. Another is replacing drain covers (new law) which I charge $200 plus the cover for 10 minutes of work. I can get away with the price because I'm SCUBA qualified and the owner doesn't have to drain the pool. When I get some free time I plan to visit the hotels and condos to offer my services.

Out of the 90 pools, we have 4 commercial pools and I just bid on a new one today. I got that referral from a property manager we did some work for. Commercial pools can be demanding giving the volume of people using the pool on a daily basis however we charge accordingly.

I haven't tried craigslist but will look into it. The last time I looked there was a guy offering his pool services for about half what I charge. Not looking to compete with him at those prices.

I need to work on the realtor angle. Probably should have done that in early spring when it was quieter. Now we are as busy as I want to be. I'm not looking to sqeeze the last bit of profit out of the business just a large and consistent income from the weekly cleanings. For the most part employees take care of the weekly cleanings which will leave me with more family time. The repairs are more challenging because I do most of the repairs myself.

[Arif]

Good news! We got the contract for the HOA pool! From a numbers standpoint we grew 6% in gross income and average account value from last month. I'm really happy with our growth because we had several accounts that cancelled due to customers selling their homes, job losses or other reasons this month. The source of our growth has changed as well. Last year most of our growth came from online referral services but this year it's been word of mouth. Our goal for June will be a 20% increase in gross income and a 10% increase in average account value. By the end of the year we are shooting for 175 pools that we'll maintain on a weekly basis.

Still haven't been out to visit HOAs and hotels to inform them about the drain cover law changes. However, we have notified the property managers we currently work with and offered our services.

As I've mentioned before this business is not "our baby" and we don't have an emotional attachment to it. It is a vehicle to increase our income that will alow us to retire within 10 years. Our goal is to grow at a reasonable rate that is sustainable and doesn't increase the number of hours worked. When we chose to discontinue the warranty work, this was a direct result of this philosophy. By concentrating on weekly cleanings we can train a new employee within two weeks and he's on his own versus repairs which can take months to train for. I'm still learning on the repair side even after a year of owning the business.

Next week we'll expand our referral program to other pool supply stores in other parts of the city. I ordered 1000 business cards so I'll put them to good use.

[CCdaCE]

Thanks for continuing to share your business story/experience!

I see we share similar taste in avatars.

-CC

[Arif]

I'm glad someone is enjoying it.
I started this thread because I wanted to share the nuts and bolts of owning a business. I've lost numerous accounts from lack of knowledge in the pool industry but we've learned and continue to grow. Owning a business is really not that risky. If I lose a customer it's not the end of the world however if I lose my job that has much more of an impact.
One thing I realized was this thread allowed me to think through different strategies for my business as well as what is really important in the whole balancing act.

Yeah, I'm a big fan of the Matrix as there are a lot of similarities to real life and how people think.

[Buckeye]

Does your company have a website? Do your employees have any stake in the profitability of the company or do they receive only an hourly wage?

[Arif]

The website is on the todo list. DW was suppose to be working on it but got sidelined when we started doing the warranty work. It will be nothing fancy just some pictures of "before and after" shots, customer pools, contact info and our services.

Our employees are hourly workers however they think like owners. I've been thinking about when we sell the business whether to take a few accounts and give them to one of the employees. That's a few years off and a lot could change but I think that would be a great bonus for him.

[utrecht]

Im surprised at the fact that people are willing to pay good money to have someone maintain their pool (I shouldnt I guess be...people are dumb and lazy for the most part).

I have 2 drain covers and changed them myself by just holding my breath, diving down, unscrewing the olds ones and screwing in the new ones. As you said, it took 10 minutes.

I brush the pool twice a week or so in the swimming season and and never in the fall / winter. I do have a Polaris sweeper thingy and no trees in the backyard.

I have an automatic clorinator attatched to the pool equipment and I supplement it with a gallon of plain old generic liquid bleach about once every 4 days in the summer (needs no bleach at all in the winter) and my pool has been sparkling crystal clear since day 1. Im on my 7th year of owning the pool now. Ive never had a speck of algae, let alone an entire green pool.

The money wasted on unecessary chemicals (pH up..pH down..yellow out...ect) amazes me. Good for you that its all working out for you though.

[Arif]

Well, I guess pool care is like everything else we pay for in life. While not rocket science, most of my customers either can't maintain their pools because of a physical limitation or they are so busy career wise they'd rather spend time with their family rather than cleaning their pool.
For those in the latter category they probably rationalize it like this: at work they make $100/hr so working on their pool they lose $100/hr. Some might say they don't make that much but most of my clients are self employed or professionals. I have some customers who I have never met before. They signed up through the internet lead service and send their check each month.
We don't target the diy types as we couldn't make any money off of them. However, there are plenty of people that are so focused on their work (or afraid of losing it) that they spend an insane amount of hours working and spend what little free time they have with their family.
It pays to know who your customers are and not every customer is a good customer.

[Arif]

Well, it's been almost two weeks since I last posted here and we've been as busy as we want to be. We've been in business exactly one year and so far it's been a great year.
We bid on a new commercial pool two weeks ago and found out we won the contract today. So far this month we've grown 15% in gross revenue (month over month)thanks largely to this new contract. While I was talking to the maintenance guy he mentioned that we were the only pool company that he found with worker's comp. and general liability. I did another bid for a commercial pool and the guy there told me the same thing. Most pool companies hire indepedent contractors to avoid the requirement for worker's comp and employment taxes. I think we'll keep our employees and it turns out to be a competitive advantage.
To meet our goal of 155 accounts (currently we have 97 accounts)by the end of summer we've increased our marketing budget by 45% and will be reiterating our compensation program at the local pool stores since they have new employees that aren't aware of it. Speaking of marketing, we signed up for the yellow pages last February and I think we've gotten two calls. Unless we start getting more calls from them we won't be renewing next year.
As far as retiring early, our goal is to continue growing the business for another 8 years and then cash out. The good thing about owning a business is your networth goes up as the business grows. So we'll also continue to save a large portion (atleast 50%) of our income and purchase foreclosures which is what we were doing before the pool business. For me there is not a better way to make money than real estate and owner your own business.

[Arif]

Forgot to post this lesson learned:
I got a call from a guy who I was planning on buying his pool route. He tells me that he is no longer taking new customers so he will them my number. I've never met him in person but was glad he was willing to forward any leads my way.
So often we hear about competition in business and never sharing with your competition. This is the second time I've had offers like this and the business owner has never asked for a referral fee. Just goes to show you that your competition is not always your enemy.
Also got a 50% raise from one of our customers. Guess we're doing something right.

[CCdaCE]

Nice!

-CC

[Arif]

June was our best month ever! Our revenue grew 22% over May numbers as we picked up a total of 2 large apartment complex contracts. Unless I hire another tech we are maxed out on our ability to service commercial pools since they have to be done in the morning before the bathers get there.

One thing that I have not been able to successfully deal with are complaints. Just today I got a call from one of our new customers complaining that our tech hasn't shown up in two weeks. We leave door hangs but they say they haven't received them. I highly doubt my tech is skipping their pool because with 100+ degree weather the pool would have turned green by now. We get atleast one or two customers that claim this each month. It normally ends with the customer seeking another pool company. If anyone has advise on how to handle this better let me know. I am open to suggestions.

BTW-I've had customers that I service personally tell me that no one came to clean their pool. We finally figured out their dogs were literally eating the door hangs we were leaving for them!

[CCdaCE]

Is it always the same tech.?

Sometimes it's best to let those problem customers be someone else's problem, if you are at full capacity.

Maybe if the customer doesn't see them, they assume they never cleaned the pool.

-CC

[Arif]

It is the same tech but he has 45-50 accounts he services each week. No other complaints from long time customers.

Yeah, that's what we've been doing but I wanted to see if there was a better way of dealing with it.

I've even had a customer tell me his 80 year old mother is at home and she didn't see him come by. I'm thinking to myself: is she posted at the pool 24/7? She doesn't take naps during the day?

[Nords]

Quote:

Originally Posted by Arif One thing that I have not been able to successfully deal with are complaints. Just today I got a call from one of our new customers complaining that our tech hasn't shown up in two weeks. We leave door hangs but they say they haven't received them. I highly doubt my tech is skipping their pool because with 100+ degree weather the pool would have turned green by now. We get atleast one or two customers that claim this each month. It normally ends with the customer seeking another pool company. If anyone has advise on how to handle this better let me know. I am open to suggestions.

How's your churn rate? Are these customers the 10% that you want to "fire" anyway?

Maybe they're complaining as a pretext to firing you, no matter what you do. So when you lose them would you be replacing them with happy (or at least non-complaining) customers?

This would be a great excuse to build a database of problem customers to be shared among pool-service companies. But that's probably all sorts of illegal/unethical.

[Arif]

I haven't tracked our churn rate but from my month to month comparison I'd say we lose on average 1-3 customers per month out of 100. We gain on average 7-10 new accounts per month so it's not a huge problem however I see it as money walking out the door. WE've been fortunate enough to actually increase our average account bill so while we lose 1-3 accounts per month the replacement accounts are paying more money on average. So I guess it might be a neccessary evil in that our margins improve with little to no additional effort. Current customers aren't willing to pay more for the same service so I guess this is a by product of that.

I used to keep a small database of the accounts we've lost and used it to both improve our customer service and avoid problem customers. The pool business is really small here so we share information on problem customers that don't pay or complain a lot.

[Nords]

Quote:

Originally Posted by Arif I haven't tracked our churn rate but from my month to month comparison I'd say we lose on average 1-3 customers per month out of 100. We gain on average 7-10 new accounts per month so it's not a huge problem however I see it as money walking out the door.

I think AOL and Facebook would be jealous of that turnover ratio.

If you have to spend more time & effort on retaining your current customers than you would on getting new ones, then your only concern would be running out of new customers...

[utrecht]

Maybe instead of putting out a door hanger each visit, you could give the customers some sort of punch card that attatches to the pool equipment with a zip tie. Then your tech punches the card each time hes there. The card cant "fall off" and the punch proves that he was there.

[Nords]

Quote:

Originally Posted by utrecht Maybe instead of putting out a door hanger each visit, you could give the customers some sort of punch card that attatches to the pool equipment with a zip tie. Then your tech punches the card each time hes there. The card cant "fall off" and the punch proves that he was there.

This door hanger/card punch issue reminds me of a nuclear story.

Years ago there was a research/training facility operating a Navy nuclear reactor, so the Naval Reactors inspectors would occasionally check safety & cleanliness. Comments made by the inspectors would be recorded and the company would have to write a letter to NR telling them what they were doing to fix the problem(s).

On one visit an inspector noted that the floor was dirty. Next letter to NR said that the company had cleaned the floor and added a floor-cleaning log to make sure that the floor was kept clean. Next visit the inspector noted that the log had hourly slots but that it had been more than an hour since the last log entry. Next letter said that the log was modified to emphasize hourly checks. Next visit the inspector noted that the hourly checks were occurring exactly every 60 minutes, which seemed unusually precise (e.g., falsified). The log policy was changed to require random visits every hour at intervals not to exceed 60 minutes. Next visit the inspector noted that log entries were still being missed. The log policy was changed to include supervisor initials next to each log entry. Next visit the inspector noted that some supervisor initials were missing.

It's easy to form the impression that the inspectors were a bunch of martinetic jerks, and unfortunately that reputation is not undeserved. However in this case the inspectors were only checking whether the company was doing what it said it was going to do-- they were only inspecting compliance, not the rules themselves. The more rules the company made for themselves, the more things the inspectors could check for compliance... and the more things they could find "wrong".

Which shows how far off track the company had gone from the original question: Was the floor clean?!?

As you've pointed out, Arif, if the pool is clean then it's pointless to argue whether or not the pool guy was there…

[Arif]

Quote:

Originally Posted by Nords This door hanger/card punch issue reminds me of a nuclear story. Years ago there was a research/training facility operating a Navy nuclear reactor, so the Naval Reactors inspectors would occasionally check safety & cleanliness. Comments made by the inspectors would be recorded and the company would have to write a letter to NR telling them what they were doing to fix the problem(s). On one visit an inspector noted that the floor was dirty. Next letter to NR said that the company had cleaned the floor and added a floor-cleaning log to make sure that the floor was kept clean. Next visit the inspector noted that the log had hourly slots but that it had been more than an hour since the last log entry. Next letter said that the log was modified to emphasize hourly checks. Next visit the inspector noted that the hourly checks were occurring exactly every 60 minutes, which seemed unusually precise (e.g., falsified). The log policy was changed to require random visits every hour at intervals not to exceed 60 minutes. Next visit the inspector noted that log entries were still being missed. The log policy was changed to include supervisor initials next to each log entry. Next visit the inspector noted that some supervisor initials were missing. It's easy to form the impression that the inspectors were a bunch of martinetic jerks, and unfortunately that reputation is not undeserved. However in this case the inspectors were only checking whether the company was doing what it said it was going to do-- they were only inspecting compliance, not the rules themselves. The more rules the company made for themselves, the more things the inspectors could check for compliance... and the more things they could find "wrong". Which shows how far off track the company had gone from the original question: Was the floor clean?!? As you've pointed out, Arif, if the pool is clean then it's pointless to argue whether or not the pool guy was there…

It is a slippery slope once you go down that road. We went from small slips that we would put on the door jam but those would fall off so we went with the door hangs. That's about as far as I'm willing to go. It's called diminishing returns and if it works for 95% of our customers then that's good enough for me. I guess the answer is finding customers that are like us.