Memorandum
TO: Mr. Brett Cohn
FROM: John Doe
CC: Charles Brides, Betsy Turtz
DATE: January 25, 2012
SUBJECT: Clean Bright Cleaning Company

Industry Background The cleaning industry like other professions is extensive and diverse. The industry is segmented into commercial and residential cleaning services. The sectors are dramatically different, but demand for each has been equally affected by the recession. Price-based competition is now more prevalent after this point in time, which reduced the willingness of clients to pay full rates for contracted janitorial services. “The majority of revenue is derived from the commercial and retail sectors. These are the mainstays of the industry, although they remain very price competitive” (Moldvay, 2011). In regards to competitive analysis, the industry primarily operates in the domestic market, given that it is a service industry. The regions with the greatest concentration of janitorial service companies include: the Southeast followed by the Great Lakes, the West and the Mid-Atlantic regions. “The Great Lakes is another common destination, the region has 16.2% of the industry’s companies” (Moldvay, 2011).

In the last five years the market share concentration has been on the rise. “The majority of industry operators are small firms that specialize in specific regions or industries. According to the US Census and IBISWorld estimates, 93.3% of industry establishments have five or less employees. Less than 1.0% of industry establishments employ more than 250 people” (Moldvay, 2011).

Key success factors for this industry are:
• Being part of a franchised chain
• Ability to alter the mix of inputs in line with cost
• Use of high-volume, low margin strategy
• Ability to carry out credit checks on clients
• Access to niche markets

“In 2011, the industry’s EBIT is expected to total 7.2% of industry revenue, down from 9.0% in 2010” (Moldvay, 2011). The industry has very low barriers to entry, so firms have traditionally competed on price. However, price-based concentration is prevalent during the current recession because industry operators had to compete with each other over a smaller pool of clients. “The high component of labor input and costs, control over the cost and quantity of labor inputs is important, particularly as this industry is very price-competitive on contracts, but clients still require high-quality results” (Moldvay, 2011).

The cleaning segments in healthcare, food processing, pharmaceutical manufacturing, and electronics industries require higher guaranteed cleaning standards. In these cases, higher cleaning fees can usually be negotiated. “The franchising of domestic and commercial cleaning services markets has also increased competition in other areas, with these firms focusing more on reliability and having the ability to guarantee service and standards” (Moldvay, 2011).

Company Mission and Strategy Our goal is to be the first choice of business for providing turn-key cleaning services to industrial, commercial, and residential businesses in the Greater Northeast Ohio area. The Clean Bright Cleaning Company’s mission is to provide exceptional service and exceed our customer’s expectations by providing a quality cleaning service that is delivered on time and within a given budget. We are committed to building lasting relationships with businesses and contractors. We take great pride in doing a thorough job by striving to continuously improve our quality systems to ensure customer satisfaction for our clients and their stakeholders.

Strategies The main strategy in which we will follow will be to obtain a mix of projects to support the achievements of the organization and align that with our goals of providing exceptional services without depleting our resource (people and funding) constraints.
By focusing our efforts in a smaller metropolitan area (i.e. Cleveland/Akron) we are able to provide ourselves with the opportunity to make us the go-to company. This will satisfy our mission to be the first choice of turn-key cleaning services in the Greater Northeast Ohio Area. Taking on projects within a limited area will assure that we do not over allocate our resources, and also assures that we are able to deliver the project on time, within the budget, and with the desired work scope.

Company Organizational Structure Clean Bright Cleaning Company is located in Cleveland, Ohio servicing the greater Cleveland/Akron area for 20 years. It has approximately 35 full and part-time employees located within a 30-mile radius of the greater Cleveland/Akron area. Clean Bright Cleaning Company has been operating as a limited liability company (LLC). LLC’s are becoming the most popular way to start a business due to their ease and flexibility. The personal assets of the company and us three individuals behind the establishment of the organization will all be protected. An LLC is a type of business ownership combining several features of a corporation and a partnership. Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility. The LLC business structure is set up to require no corporate minutes or resolutions, which makes it much easier to operate. Also, all of the business’s losses, profits, and expenses flow through the company to individual members. This is an advantage to our company as it will avoid the double taxation of paying corporate tax and individual tax. As long as each business partner stays healthy and stays away from financial troubles, the LLC will be set up to be successful. The best part of operating as an LLC is that the owners are not held personally responsible for business debts and liabilities which are important because any business has the chance of failing or succeeding. LLC income is reported on the owners’ personal tax returns and any tax due is paid at the individual level, which saves a great deal of money not having to pay tax at the business level. Clean Bright Cleaning will continue to operate under this type of organizational structure with Charles Bridges, Edward Diehl, and Betsy Turek being the founders of the company.

Mission & Strategy for SBU
Business unit description: Commercial Cleaning Industry While the market of commercial cleaning service industry demand did fall during the recession its recovery is slow, but steadily growing. Clean Bright Cleaning Company is experienced in handling quality-cleaning jobs in all types of facilities, to make them turn-key ready for their clients. The spectrum of facilities serviced includes but not limited to: public or private, small or large, corporate, industrial, commercial, educational, institutional, and retail buildings.

SBU Mission Brand new starts are significant and starting out on the right foot is crucial. Clean Bright Cleaning Company offers just that experience by providing thorough and detail oriented cleaning services to post construction and remodeled facilities. Our fully trained, licensed, insured, and bonded staff provides an exceptionally high level of services customized to fit the needs of our customers. Through our multi-step construction cleaning process our services will help to ensure the cleanliness throughout the building process. Our final detail cleaning services will ensure your new or newly remolded construction is move-in ready! It just not clean, it is Clean Bright Clean.

SBU Strategies
1. Customer Satisfaction: Our goal is to satisfy our clients so that they have no hesitation who to call for the next job. We will accomplish our goal(s) by providing a thoroughly clean, disinfected, and sanitized cleaning of a new or newly remolded construction project.
2. Trained Staff: We are committed to provide a safe environment for our staff and our clients. All employees have a full background check, are fully trained, licensed, insured, and bonded. We know that having an experienced staff makes a difference and we are committed to making a difference and adhering to our customer’s needs. Our team goes through rigorous, ongoing training to ensure that the highest quality standards are continuously perfected and that the client’s expectations are constantly exceeded. All post-construction cleanings are visited by our Director of Quality Control to ensure the white-glove standard.
3. Fair Cleaning Proposals: We provide free cleaning estimates in order to be competitive and increase our customer base. We can customize a plan to fulfill a variety of project sizes. We will provide a timeline of our services and estimated costs of our project plans. We understand the concerns of our customers and believe that communication is vital.
Portfolio Management Process Clean Bright Cleaning Company is focused on one small niche of the janitorial services market. Our focus is on contract cleaning services to post construction and remodeled facilities within the Greater Cleveland and Akron Ohio area. The Janitorial service industry “tends to be dominated by small-business oriented and fragmented organizations. The majority of industry operators are small firms that specialize in specific regions or industries” (Moldvay, 2011). The major obstacles that have been identified are:
Obstacles Level
Competition High
Reliant on Labor Medium
Over-allocating Resources High
Economy Growth High
Equipment Low
Labor Productivity High

Phase 1: Diversify Contract Cleaning Service Portfolio It is essential that Clean Bright Cleaning Company stays competitive within the industry. “The Great Lakes Region is identified as the second largest area with the greatest concentration of janitorial service companies” (Moldvay, 2011). Projects must be reviewed to see how effectively it uses the company’s resources. By containing a mix of small and large projects we will be able to maintain our organizational objectives of exceptional cleaning and customer service performance. It is essential that the mix of projects sizes do not over allocate our resources. Each project must provide for the current contributions to the company’s cash flow and must help to position the company for future success. By establishing guidelines for presenting project proposal, ranking and selection will assist in the prioritization and selection of projects to be included in the portfolio.

Phase 2: Value Project Offering as Related to the Portfolio To remain aggressive while bidding for contracts in the Great Lakes market, it is essential that Clean Bright Cleaning Company remains price-competitive. The janitorial industry operates in “an environment of high volume and low net margins as fierce competition in the market keeps service prices low” (Moldvay, 2011). In order to perform the ranking of projects in regards to financial segmenting, it will be necessary to establish budget buckets for the portfolio while integrating an appraisal of risks that might alter the benefits of a project. It is necessary to routinely “monitor performance of active projects against both the project goals and the selection criteria and adjust the portfolio to maximize return” (Hiegel, James & Cesairo, 2006). By establishing these mechanisms within the project portfolio, it will help to set a baseline in which all projects can be measured against. Applying these types of tracking performance strategies helps to align business priorities and strategies.

Selection Criteria Process It may take organizations a while to develop the necessary criteria for selecting a project or projects within their specific industry or niche. However, the goal is to make that process as expedited as possible, but at the same time it must be carried out without flaws or mistakes. The portfolio projects for any organization are based upon the correct tactics to deliver the strategies that will accomplish the organization’s goals. Our company, Clean Bright Cleaning Co. will operate and do business on the commercial cleaning level. Therefore, we will have to use our strategies to the best of our abilities to develop the correct selection criteria for our projects. These projects will include business of all sizes, small and large. It is our objective to establish a relationship with a company doing renovations or even establishing residency in a new building. They will in turn hire our services to precisely clean their building and get it ready for move-in. When selecting the companies we wish to do business with we must keep in mind and establish a rate as well as a deadline as to when the project must be completed by. Also, once multiple projects are selected, it is important to asses which projects will be viewed as the highest priorities and will receive the commitment to be completed. Our organization features state of the art cleaning equipment that will completely revamp and improve any building it comes in contact with. It is our objective to work specifically with companies that operate in commercial buildings and our prices will be based off the size of the building as well as the man hours logged to complete the task. Our selection criteria will therefore be based upon what the customer exactly wants done, and we will associated that with whether or not we have the resources and manpower to complete their requirements and deadline. When going through the selection process it must be clear that we can get the maximum value and benefits of the projects we wish to accept and complete. This will include looking at the key financial aspects, such as our expected return on investment, expected revenue increase, and expected costs of each project. In order to continue operating as a successful business, the correct projects should be selected in hopes to increase the value and reputation of the company as a whole (Reference for Business, 2009). We must select projects in which there will be a high probability that they can be delivered by the requested completion date, within the given budget, and within the work scope. These projects in the Greater Cleveland area could include quality commercial cleanings of a local university, a new office building, and a new public administration building.

Selected Projects
Project A: Tri-C University – The city of Beachwood is currently doing renovations on their Tri-C campus on Richmond Road. This could be a good opportunity for Clean Bright Cleaning to perform their services on a large scale project. Our specific objective here would be to do a thorough cleaning in order to get building ready for their Spring class semester.
Project B: Office Max – The city of Akron, specifically in the Valley Centre Plaza, will be opening up a new Office Max location late this year. This location will be close to 16,000 square feet in size and would be a nice sized project for our company to take on. This could be a good opportunity as the owners and management team behind this location would certainly like for it to be completely cleaned and ready for operations as a brand new establishment.
Project C: Carl B. Stokes Federal Courthouse Building – This skyscraper was built in 2002 and has since served as the new courthouse for the city of Cleveland. The tenants within this building include judges and magistrates, U.S. Marshall’s employees, Federal government workers, and the U.S. Attorney’s Office, just to name a few. Research was done on the building operations and it is clear that a detailed cleaning organization could be needed in the near future when certain offices need to be renovated.

Works Cited

Hiegel, J., James, R., & Cesairo, F. (2006). Projects, programs, and project teams, advanced program management. (p. 5). Hoboken, NJ: John Wiley & Sons, Inc.

Moldvay, C. (2011). Coming clean: Demand from construction and households will return, strengthening revenue. IBISWorld Industry Report 56172, Janitorial Services in the US

Reference for Business. (2009, August 8). Retrieved January 11, 2012, from 2nd Edition: http://www.referenceforbusiness.com/small/Bo-Co/Budgets-and-Budgeting.html