Cleaning House Nationwide
Using basic business disciplines and Internet marketing not unlike Uber, Ron Holt transformed house cleaning into a $4.7 million-revenue brand he’ll soon take national.
The residential segment of the cleaning industry “looks the same as it did 12 years ago,” says Two Maids CEO Ron Holt. “That’s a good thing for us.”
Ron Holt hit big in one of the oldest, least sexy professions there is. At age 41, he is the CEO of Two Maids & a Mop, a Birmingham-based house cleaning company that he started in 2003 and that has landed, three years in a row, on the Inc. magazine list of the 5,000 fastest growing companies in the U.S., with 2014 revenues of $4.7 million. Add revenue that went to franchise owners, says Holt, and the total came close to $7 million. The company started franchising in 2013, with its first franchise at its 13th location, in Tampa, Florida. There are now 19 locations in seven states, with plans to open franchises in eight more locations in the next six months.
I graduated from the University of Georgia with a biology degree, but I educated myself in business. For the first seven years of my career after college I worked in a lab in Atlanta and eventually managed the lab, and I fell in love with the business side of what we were doing. My family had always been entrepreneurial, and I had a burning desire to become a business owner.
I focused on the South and looked at many different ideas, from franchises to buying a small mom and pop that had a recurring revenue stream and strong demand and was resistant to market penetration. I wanted a business that was almost invisible. I found a small cleaning company in Pensacola, Florida that I could buy for nominal money. I started growing that.
Our industry is comprised of fragmented mom-and-pop cleaning companies. What we do is house cleaning, and it is perceived as a sideline or menial job, not thought of as a profession, and that’s how it was being operated in Pensacola. The demand was there, but it was not approached as a business. Most important: There was no type of culture.
We built a culture that was an office-based opportunity. A lot of our competitors operate out of their home. But we work out of an office. There is a schedule of events every day. Every morning in a 15- to 20-minute meeting we talk about yesterday and about what we’re doing today. Then we go out and clean homes. And as they come in, we have a regular meeting, one-on-one, in the afternoon. We are a cleaning company and we clean toilets, but we can also be a real business.
It’s always two cleaners who clean. An average office has about 15 employees. The customers provide direct feedback, and that score, on a 1 to 10 scale, determines their wage. It’s pay for performance, and the manager and most who work in a location are compensated on a very similar model. If an office is doing well, a manager can start out at $30,000 a year and rise to $50,000 with the success of the office.
I’ve always had a vision of scale, to build a brand — first regional and then national. When I started, our preferred method was ownership of the office locations, but when we expanded across five states in the Southeast about two and half years ago, we redirected our plans to franchising. It’s easier to scale with franchising. And instead of hiring someone, you’re partnering with them.
We’ve designated about 300 cities across the country that are perfect. I’m from a small town in Georgia, and a franchise there would not work. But it will work with cities the size of Birmingham or Montgomery or Mobile. In Birmingham, we have $1 million in annual revenue but still think there’s another $2 million to $3 million in revenue potential. One home is about $3,100 a year in annual revenue, so all we need is about 300 homes to get to a million dollars.
We are 99 percent residential, and that segment of the cleaning industry looks the same as it did 12 years ago. That’s a good thing for us. We can capitalize on the same weaknesses of our competitors. There has been some recent movement of people starting to understand the demand side of what we do. Some big companies, such as Google, have tried to dip into house cleaning and have exited. There are some big money guys out there trying to figure out how to capture that demand.
How to clean a house is the same as it’s ever been. Technology does not affect the trade side. But we do use technology for the marketing and administrative side. Uber became famous as a fast method for finding a taxi because Uber allowed people to get a quote in one click, about 50 seconds of your time, which was pretty innovative. With us, the customer can decide in 60 seconds if he wants to hire a maid and know how much it will cost and schedule a cleaning.
When I started 12 years ago, the average age of a customer was 40 to 50, and the average house size was 3,000 to 4,000 square feet. Today the age is 30 to 40, and the house size has been reduced to 2,000 to 3,000 square feet. The middle-income segment is more open to the idea of hiring a maid service.
We have totally shifted our marketing approach to using the Internet solely for lead generation. There is a lot of old-school advertising in our industry, yellow pages and direct mail, and we used to do some of that ourselves. But now we are focused on online marketing and per click advertising. And in our message, we are definitely focused on pay for performance and talk about that out loud. Our tag line is “A Maid Service Worth Talking About.” We get our customers to talk about us on the Internet in all sorts of outlets, especially Facebook, where they talk to all their friends. Word of mouth has always been crucial for us, but today the Internet allows that voice to be much louder.
In the next 12 to 15 months, we will be trying to focus on a triangle that extends from Texas to D.C. to Florida. We operate out of 19 locations in that triangle, and we can manage those. We’re inside of those offices every 90 days. That is our barometer: If we can’t be inside your office overnight, then we’re not ready to open there. At some point, we’re going to build a network in the Northeast and the West Coast, and then we’re going to start growing there. We’re not quite ready for that, but in 2017 we want to be aggressive in that area.
Chris McFadyen is the editorial director of Business Alabama.