Squeaky Clean

This story appears in the January 1998 issue of Business Start-Ups magazine. Subscribe »

Choosing a janitorial service may sound easy, but think of this: Your cleaning service will be in your facility after hours and unsupervised. So it's important to find a service that not only does a good job but is trustworthy and reliable. The Building Owners and Managers Association (BOMA) International offers these tips:

• Develop a list of specifications. List the areas that need to be cleaned and what you expect the service to do (dusting surfaces, emptying trash cans, vacuuming floors, cleaning glass doors and so on), along with how often. Indicate the minimum qualifications you require, such as experience, references and insurance. You may want to use this list to develop a questionnaire for initial screening.

• Prepare a request for proposal (RFP) to obtain bids from contractors that pass your initial screening. Be sure the RFP includes square footage, counts of fixtures and other specifications. The contractor should examine the premises before submitting a bid.

• Prepare a request for qualifications (RFQ) to ascertain the professional qualifications, background and experience of the bidder. Ask for client references, financial references, evidence of workers' compensation and liability insurance coverage, details on the company's hiring practices, training and supervision methods, and a list of facilities you can inspect.

• Develop a scoring system to evaluate bidders' proposals. According to a recent BOMA survey, the three most important criteria in selecting a cleaning contractor are experience, price and references.

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Jacquelyn Lynn is a business writer in Winter Park, Florida.

Collect Call

You've got outstanding bills customers just aren't paying . . . how much effort should you make to get your money? It depends on the amount of the bill and the cost involved in collections. You need to recognize when you've reached the point of diminishing returns and it's time to write off the invoice as uncollectible.

Stan De Groot, national financial services manager for Wesco Distribution Inc., a Pittsburgh-based distributor of electrical and industrial supplies, suggests calculating what your in-house collection steps cost. Those steps include issuing past-due statements and making telephone calls or personal visits. Then consider your margins and what your actual losses will be if you write off the invoice.

With this information, you can set some general guidelines. For example, balances under a particular amount will get a certain number of letters and calls before they're written off. Balances at a higher level may merit stronger efforts, including outside collection activity.

A collection agency can help you determine what balances are too small to pursue vigorously. Agencies typically work on a percentage of what they collect, and they know how much collection efforts cost.

When you decide to declare an invoice uncollectible, you may be able to use that loss to reduce your taxes on other income. Check with your tax advisor first, though; the IRS and state revenue departments have guidelines that include some time limitations and require you to prove you made a good- faith effort to collect.

The Lease You Can Do

Even a one-person homebased business can enjoy the benefits of employee leasing. With employee leasing, you--and any employees you have--become employees of the leasing firm; your company then leases your services by paying a fee, which is typically the amount of your salary, taxes, benefits and administrative costs.

The number of leased employees in the United States is expected to exceed 4 million this year, which gives employee leasing companies a tremendous amount of negotiating power when it comes to insurance and other benefits, which are passed on to you. Dale Hageman, president of Accord Human Resources Inc., an employee leasing firm in Oklahoma City, says it's possible that the savings you'll realize in insurance costs alone will offset the administrative fees the leasing company charges. The leasing company also processes all your payroll-related tax requirements, giving you more time to focus on your business. "If you can more productively use your time to produce revenue and build your business, then you can benefit by outsourcing functions like payroll and tax administration to an employee leasing company," Hageman says.

Leasing companies can be found under "Employment Services--Employee Leasing" in the Yellow Pages. Hageman suggests asking other small-business owners for recommendations, then checking out leasing companies before signing up.

A Case Of The Blues

Every business experiences tough times--a big client takes its business elsewhere, you need to lay off employees, or you're in a cash crunch and can't offer raises. When hard times hit your company, you or your employees may suffer from depression. Left unattended, business-related depression can suck the enthusiasm and energy out of everyone involved--and, in turn, make matters worse for your business. So as you concentrate on pulling the business through the hard times, don't overlook your organization's emotional needs.

Open and honest communication with employees about the status of the company is essential, according to Nancy Garbett, president of Transition Management Inc., a management consulting firm in Salt Lake City. "Employees need to understand what changes are occurring and what it means for them," Garbett says. If they are feeling insecure or stressed because they don't know what's happening with the company, they won't perform at their maximum levels, and they could hinder the company's recovery and future development.

Don't hide bad news or pretend things are better than they are--your employees will see through any smokescreen. "If the owner is saying that everything is okay, but in fact it's not, everybody is going to know it's not," says Garbett. Be sure your staff understands what the situation really is, what the future possibilities are, and what you expect them to do if the company's going to get through the crisis. Keep in mind, most people become emotionally attached to their workplace and colleagues, and trouble in that arena can affect them as much as a personal crisis, such as a divorce or a death in the family.

You don't need to be able to distinguish true clinical depression from the occasional bad day, but you should be alert to potential problems, says Patricia Weik, a consultant, clinical psychologist and lawyer with RHR International Co., a management consulting company in Wood Dale, Illinois.

Weik says symptoms of depression include feelings of sadness, a loss of concentration, excessive crying, changes in eating habits, loss of energy, guilty thoughts, a sense of worthlessness or hopelessness, thoughts of suicide or even, in some cases, of homicide. If you suspect an employee is suffering from one or more of these symptoms, Weik advises addressing the situation in a direct manner. Talk to the employee privately; say you've noticed some symptoms and encourage him or her to seek appropriate and qualified help. Don't try to be a counselor, but have referral options ready and know what type of coverage your insurance offers. If you're unsure about your local resources, Weik says the psychiatry department of a reputable hospital is a good place to start.

When talking with a troubled employee, avoid minimizing his or her feelings. "A lot of people will want to back away from this uncomfortable situation and say something like `It's not that bad; things are okay.' What that does for a depressed person is essentially tell them they're being ridiculous, that things are not as bad as they think; and that gets them into another negative spiral," says Weik. "You need to normalize the process for them. Say `Yes, this is really a tough situation, and most people would feel bad in your shoes.' "

While encouraging employees to seek help for their depression, don't ignore your own well-being. If you find yourself experiencing any of the symptoms associated with depression, take the time to seek help.

Breath Of Fresh Air

Indoor air pollution has become one of the main environmental health threats of our day. How can you tell if you're suffering from sick-building syndrome? Symptoms include headaches; eye, nose or throat irritation; dry cough; dry or itchy skin; dizziness and nausea; difficulty in concentrating; fatigue; and sensitivity to odors. The causes include inadequate ventilation and chemical and biological contaminants.

It's virtually impossible to remove all chemical and biological contaminants, but increasing ventilation and air cleaning is an effective way to deal with the problem. Alan Cohen of Vornado Air Circulation Systems Inc., a manufacturer of air circulators, air purifiers, humidifiers and heaters in Wichita, Kansas, says installing air cleaners is a relatively inexpensive way to reduce building-related illnesses and absenteeism, improve productivity, and demonstrate to your employees that you care about their well-being.

Cohen recommends choosing a high-efficiency unit that can change the air in a given area four to six times per hour, so be sure to know the cubic feet you're dealing with when shopping for an air cleaner. Also consider the sound the machine makes; some models are noisier than others, and workers may find it distracting. Air cleaners can be purchased at most department stores, home and building supply stores, and office supply stores. Cohen says prices per unit typically range from $150 to $250.

Release Me?

Your lease is up for renewal. Should you sign a new one, or is it time to buy your own building? Kale Gaston, southeast regional vice president of GE Capital Small Business Finance in St. Louis, offers these tips for making this important decision:

• Consider the long-term impact on your business. This calculation is easier for some businesses than others, says Gaston. For example, if you're a manufacturer or distributor, it's fairly simple to project future growth based on your past performance. The process will take more thought and research for retail or service companies. Points to consider include tax issues, your plans for future expansion, how you manage fluctuating business cycles and your plans for customizing the space.

• If you're going to buy, decide between purchasing an existing facility and building a new one. In a tight real estate market where available inventory is limited, the costs may be about equal. Certainly you'll save time by moving into an existing space, and the initial cost outlays will likely be lower. On the other hand, constructing a custom facility can enhance your long-term productivity and efficiency, especially if your business has unique needs such as loading docks, refrigeration, lab space and so on.

• Stash some space away. If you buy, be sure the facility can accommodate your needs today and into the future. You may want to "warehouse" some space for future expansion by buying more than you need now and subletting the excess space until you're ready to expand, Gaston says.

• Talk to several lenders. Consult with your banker and several other commercial lenders who are experienced with financing real estate purchases for small businesses. Gaston says this is the most important part of the decision-making process. "You need a lender who understands what you do, can provide you with a loan product that meets your needs and can grow with you as [your business grows]," he says. A good lender will sit down with you in the early stages of the process and help you with financial analysis and forecasts, then work with you to put the package together and secure the best possible loan terms. Real estate brokers are usually able to refer you to appropriate lenders; you can also check with your accountant and attorney.

Gaston says a small business typically begins to consider buying real estate when it is about 5 years old. "In the start-up stage, [businesses] need to be putting their equity contribution and loan money into growing the business," he says. "After they've leased for a while, and they're growing and need more space, they'll buy a piece of real estate and build an investment for the future rather than [paying increased] rent."

Pros And Cons

Sooner or later, you'll have an applicant who answers "yes" to the question "Have you ever been convicted of a felony?" Should you reject that candidate? Not necessarily, says Paul Salvatore, an employment law attorney and partner with New York City law firm Proskauer Rose.

To develop a policy on hiring convicted criminals, Salvatore advises beginning with a clear understanding of the applicable legal requirements. Many states have laws prohibiting employers from rejecting an applicant strictly on the grounds of a past conviction. However, a criminal conviction may make an applicant ineligible for a job that requires bonding or special licensing.

"Once you understand the legal requirements that apply to your business, you can assess whether the applicant is the right person for the job," says Salvatore. This means considering the conviction in the overall context of the applicant's background, skills and abilities, and your staffing needs. For example, you'd probably view a relatively recent armed robbery conviction somewhat differently than a 20-year-old conviction for marijuana possession.

Salvatore says one of the most common convictions employers encounter on applications is driving while intoxicated. In that case, some issues you'll want to keep in mind are whether the person will be driving a company vehicle or driving his or her own car on company business, and if he or she is insurable.

Unless you have a legal reason for doing so, a blanket policy of excluding applicants with criminal records could expose you to liability. It's always a good idea to be able to demonstrate a legitimate reason for your hiring choices.

It's Better To Receive

When you don't issue your invoices in a timely manner, payments are delayed and your cash flow suffers. If this problem sounds familiar, you may want to consider outsourcing your accounts-receivable function.

A small but growing number of firms are offering services that include billing, posting payments and collections, or any part of those functions. One of those firms is The Out$ource Group, an alliance of five companies based in Columbia, Missouri, which handles receivables. When choosing an outsourcing resource, Out$ource vice president Bonnie Baker recommends going with a company that is familiar with the type of work you do and has a reputation you can verify. Discuss the various service packages the company offers. Most services bill on a contingency basis, charging you a percentage of what they collect, but some operate on a fixed-rate basis (such as a fee per month or per account). Calculate what you can save in labor, postage, telephone expenses and other administrative costs, as well as the benefits you'll gain from a more efficient system.

Finding a service to handle your accounts receivable may not be easy; it's a relatively new type of service, and providers are not always easy to identify. One place to start is with collection agencies, many of which are diversifying their services and offering accounts-receivable management. Some bookkeeping and accounting services may also offer this service. You can also find providers advertising in credit and collection trade publications.

Though outsourcing allows you to shift the workload, Baker stresses that it doesn't mean you can shed the ultimate responsibility. "Accounts receivable can make or break a company," Baker says. "We consider this a partnering relationship. We don't want our clients to distance themselves from the process once they set it up."

Eyes On The Prize

Business trendies have become preoccupied with thinking their way out of the box; homebased business owners, on the other hand, are trying to think their way in. Dun & Bradstreet's (D&B) Business Solutions in a Box is just one of the prizes luring home office owners to compete in the Homebased Entrepreneur Challenge, a new contest sponsored by D&B and Entrepreneur's HomeOffice magazine. Top awards include a cash prize of $10,000, an IBM laptop computer, Proven Edge Professional Edition Software, and Business Solutions in a Box, with personalized problem solvers ranging from insurance and financial services to marketing and risk management. George Martin, executive vice president of mass marketing for D&B, calls Business Solutions in a Box "an enabling program."

How do you qualify for the goodies? Simple. Just gripe to us. In 100 words or less, describe how you solved your biggest business challenge, headache, nightmare, roadblock or black cloud. If our panel of experts thinks your essay is the best, you could win $10,000.

Two monthly winners--from November 1997 through March 1998--will receive Business Solutions in a Box and a one-year subscription to Entrepreneur's HomeOffice magazine. All entries must be received by March 31, 1998. Official rules can be found at left; an entry form is on the opposite page. For more information or to receive an entry form, call (800) 357-7299, ext. 420.

Contact Sources

GFA Management Inc., P.O. Box 47024, Indianapolis, IN 46247, (317) 888-7156

The Mac McIntosh Co. Inc., (310) 376-1221, http://www.salesleadexperts.com

Savannah Bar & Grille, (440) 892-2266

True Connections, (800) 937-6217