Establishing a baseline

Nothing works without details. They are everything, the baseline of quality – Dieter Rams

Before I started my cleaning business I was a nurse. When assessing a patient, one of the first things we do is establish their baseline. This gives us a starting point for comparisons and tells us whether a patient’s condition is improving or deteriorating. I’ll use the same theory for my cleaning company by establishing a baseline to track the financial health of the business.

Expenses

During the first year there were a lot of establishment costs such as purchasing cleaning equipment, uniform etc. We’ll use the average from the first year of business as our baseline for the expenses category. The total cost for all expenses including petrol, insurances, consumables, equipment, uniform and subscription fees averaged out to $516.30 per month. I work 121 hours per month, therefore my cost of sales equates to a $4.27 / hour.

Week 1 Income

The data from the week 1 time hacking experiment showed that I made $1541 from regular ongoing work or $3082 per month. This gives us a definitive figure that we can try to surpass as we continue to grow the business.

Week 2 Income

As above, the data from the week 2 time hacking experiment indicates I earn $1240 in regularly reoccurring work or $2480 per month. Again this gives us a target with obvious room for improvement.

Odds and ends

I have a few jobs that are not so regular. These include once monthly jobs, as well as window cleans that occur biannually or four times per year. These odd jobs equate to a total of $378 per month.

Establishing a baseline

Now that we’ve collected all the data we can create a baseline which we will use to compare income and expenses. We’ll implement strategies to increase revenue while decreasing costs and publish the results in a monthly update.

Baseline Monthly totals
Week 1 $3082
Week 2 $2480
Odds and ends $378
Expenses $516.30
Total monthly income $5423.70

As you can see, it takes lot of effort to track, record and establish a baseline for your business, however I feel that it’s essential in order to get a good idea of how well you’re doing and where you can improve.

In next week’s post we’ll explore strategies to increase the cost of service in order to improve revenue.

Have you established a baseline for your business? Share your thoughts in the comments!

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