Tips for Exponential Growth
At PCT’s annual M&A Virtual Conference, consultant and former pest control operator Greg Clendenin shared his best tips for getting your pest control business on the path to efficient and immediate growth. This is a best Tips for Exponential Growth and you can implement in your business.
Greg Clendenin has spent 39 years leading a number of successful pest control companies. He recently transitioned into the consulting side of the business, launching The Clendenin Consulting Group in 2018, where he helps owners prepare to sell their company to the right buyer.
At this year’s PCT M&A Virtual Conference, Clendenin shared some practical tips he has learned and developed over the years that are immediately applicable for driving growth to position a company for sale.
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Clendenin’s first tip for business leaders is to visualize the end result you want to achieve with growth in your mind’s eye. “If you can’t see it in your mind, you’ll never have it in your hand,” he said. “So growth is a mindset,” Clendenin added that PCOs should largely focus on organic, or internal, growth, which does not include acquisitional growth.
This type of growth comes in two forms: incremental, or any small rate of growth above zero, and exponential, which refers to growth at an increasingly rapid rate. However, be careful of only relying on incremental growth. If your company’s growth is less than the overall cost of business, not only will your company lose money, but other negative factors like employees not seeing career growth or advancement opportunities could affect growth.
BUST BUSINESS MYTHS
For Clendenin, there are always ways of improving a company’s operations and growth. That’s why his next tip for PCOs is to think outside some of the common myths that surround the business world.
For example, there’s no such thing as the status quo when it comes to growing your business, according to Clendenin. “Nothing remains the same over any period of time,” he said. “Business is either going forward or backward; it’s either growing or dying.”
This constant ebb and flow of business mean there are always new ideas or potential revenue sources to be considered. This leads into another everyday mindset that Clendenin believes harms rather than helps a business grow: If it isn’t broken, don’t fix it.
“A leader really has to see around corners, and when you see around corners you’ll see things that aren’t broken that needs to be fixed,” Clendenin said. And it is OK to want to improve upon something that technically works as it should. Looking to the future like this allows PCOs to offer new services or change strategies ahead of trends in the marketplace.
OFFER AN ‘X FACTOR.’
Exponential growth can only happen on a sustained basis, and in order to be sustained, Clendenin said a company’s foundation should always be quality service.
“There’s a direct correlation between the quality of the service and the quantity of the customers. Revenue is driven by customers, and quality service drives the growth of the customer base,” Clendenin said. “So quality service is the center of your customer base growing.”
This quality service could be a part of your company’s unique selling points, or what Clendenin called the X-Factor. “These are defined as what you really do well and what the customer wants. It differentiates you from your competitor and puts the client first,” he said.
Offering quality services and delivering an X-Factor to increase the number of customers is only the first step, however. After the money starts coming in, it is imperative to make sure you know your cash flow and what you’re spending your money on.
MANAGE CASH WITH BENCHMARKS
Clendenin, who has worked with many businesses that struggled with cash management, saw how it impacted them in the long term. “It really hindered their growth,” Clendenin said. He went on to explain that one of the best ways to avoid bad cash management is to benchmark.
Benchmarking begins by asking what goal your company is trying to reach for various facets of your pest control business and then working towards those goals — or benchmarks. Ask questions like what percentage should customer retention be in different service areas? What should closing rates be? What should your management to employee ratio be?
Once these benchmarks are determined, meeting them is the next step in building your business. “Benchmarking is really important to do to figure out a way to have everything in place that you operate,” Clendenin said. Benchmarking also sets up the company for success and challenges everyone, from CEO to technician, to participate in meeting those goals.
BUILD UP PEOPLE
In addition to meeting your set benchmarks, Clendenin went on to say that the most important aspect of growth for PCOs to remember is that you “build a business by building people.”
Building up your business through people can come in many different forms. For example, Clendenin suggested when hiring a potential employee, hire for character and attitude first. That way, their strengths and confidence in the job can be easily cultivated as their work progresses.
Clendenin also said that “everything rises and falls on leadership,” and a major part of company leadership comes from middle management. That’s why it is important to develop strong leaders in management positions.
“Your branch managers can make or break you,” he said, because they are responsible for everything from facility management, to customer service, to foster a positive corporate image. “Your middle management roles need to be occupied by eagles, not ducks. Eagles soar, ducks quack.”
Another significant component of growth is creating a sales team that is driven and gets results. Clendenin warned that even if your company exhibits good customer retention, a weak sales performance could keep your incremental growth in single digits.
“You need a large enough sales force, and the number of new sales should crush the number of customer cancellations each month,” Clendenin said.
To have a strong sales approach, sales material should be both illustrative, so the customer knows exactly what they are spending their money on, and competitive enough to make it easy for customers to want to spend their money on your services.
Salespeople also need to be well-versed in lead generation, knowing what products or services would interest the most customers and focusing more money, time and energy on those areas.
Every customer is important. However, when deciding the price of service, PMPs should target their most profitable customer. Find out which service, which type of house and which locations are associated with most customers.
“Are we charging enough?” Clendenin asked. “Or is that an unprofitable customer? We need to tag the unprofitable customer and then do what’s necessary to make that a more profitable situation.”
PCOs should promote and tailor pricing for services that have recurring revenue more heavily than one-time services. And after you get your pricing strategy established, make sure you enforce that pricing.
Other components of growth are things like scalable, documented systems and procedures. Systems and procedures are the scar tissue of past failures. If PMPs are to achieve sustained exponential growth, they need to avoid making the same mistakes over and over.
Another component of growth is what Clendenin calls “footprint management.” How far do you drive to get to a stop before you start losing money to get there? Route density is an “eighth wonder of the world.” Reducing windshield time may be more important than a manager might realize.
Finally, one of the most impactful components of exponential growth is organizational alignment. This means everyone in the firm is going in the same direction and reaching for the same results and goals. “We get more done and we get there faster if we are working together in a cohesive and cross-departmental manner,” he says.