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Without a SOW you’re leaving money on the table


Trying to find a little room in the budget for some staff incentives?

Thinking about a new office with ocean views?

A revised Scope of Works document could be the answer.

With August already nipping at our heels, the new financial year is in full swing.

Did you manage to turn your EOFY from stressful to successful?

Whether you are a procuring a service, or you own a service business, a detailed Scope of Works (SOW) can be the difference between a profitable financial year, and an unsuccessful one.

Analysing results, service costs, supply chain compliance and confidentiality agreements can all highlight hidden opportunities for growth. It can also help determine which service providers or clients, if any, are holding your business back.

A detailed SOW is key in helping you capitalise on business relationships, so you can increase profits and reduce cost of risk.

Here’s 4 reasons why, without a SOW, you’re leaving money on the table:

#1 SOW Prevents Payment Disputes

Writing a SOW is all about setting expectations.

It’s about creating a document that gives clear directions as to what the goals, milestones and conditions of the service agreement are, before the work begins.

As the director of Clean Feeling, a commercial cleaning business in Mackay, we receive many calls from potential new clients looking for a new provider, as they’re unhappy with the standard of their current cleaning service.

However, what is interesting is that whilst poor performance is to blame, we often find that these clients either:

  1. Have no cleaning SOW with their current provider or
  2. Their current SOW is inadequately worded/explained

For example, a recent client showed us their existing SOW which stated ‘clean bathroom, clean kitchen, change bins.’ Now, these tasks could take 3 hours or 30 hours depending on what aesthetic the client is after, the size of the building and even how many employees are using the amenities.

In the SOW documents we create with our clients (as seen in the example below), we ensure we use specific instructions. Instead of simply clean bathroom” we write “wipe over and disinfect visible surfaces, detailed clean of piping, tops of partitions, backs of doors, fittings & fixtures.”

Although both instructions dictate to the cleaner that the bathroom must be clean, our more thorough explanation ensures they receive the quality they are after.

#2 SOW Helps Prioritise to Cut Costs

A detailed SOW provides flexibility in your service agreement, with the opportunity to prioritise certain tasks throughout the year to cut costs.

If created correctly, a SOW gives your business the ability to increase or decrease the services agreed to, depending upon your financial circumstances.

Say for instance your business is performing with current clients, but you’re struggling with profits as you have yet to secure any new clients. You decide that in order to grow your business, you need to find money in your budget to afford a lead generation campaign.

When you have a detailed SOW document with your service providers you can clearly see what tasks are of the lowest priority and place them on hold whilst you generate new business. This ensures you cut costs in the areas of least importance when you need, and then restart when you can afford to. As you can see below, in our Scope of Works document, we create a document that can be tweaked as needed.

This is also important when you have new team members coming on board or you’re looking to expand your workspace. With a detailed SOW you can simply revisit the document, reassess the needs of your business, and add new areas or priorities to your scope.

This removes the need to revisit the entire services agreement, which would be costly, especially when your service providers are in the consulting space.

Certain service providers can quite charge a high hourly rate and as we all know in business, time itself is crucial. In creating a clear SOW you can reduce unexpected costs and the time needed to handle these changes.

#3 SOW Increases Customer Lifetime Value

Perhaps the most obvious benefit of a detailed SOW is that it works to monitor the quality and performance of your service provider. Yet as Director’s, we must look beyond the obvious.

Here I believe that it is not simply quality and performance that are important, but the fact that quality and performance will influence the lifetime value of your clients.

A detailed SOW can help increase your profitability as you clearly outline, manage, track and record the quality and performance of either:

  1. Your employees – if you are the Director of a service business or
  2. Your service provider – if you are a contracting a service business

It is in the review of quality and performance that you can start to analyse the cost effectiveness of certain tasks, quality of delivery and therefore opportunity for price increases. You can even determine the profitability of each employee/ service provider.

At Clean Feeling, we digitise our SOW document, and provide each employee with a job management system that includes the client’s SOW. This provides peace of mind, both to Clean Feeling and to our clients, as after the clean is complete, our clients have a digital checklist to assess the work themselves. This helps them to determine whether we meet, exceed or fall below the SOW standards.

In order to keep our employees motivated, as we know they are the key to our high customer lifetime value, messages are sent in real-time with notes of Congratulations or Helpful Reminders to let them know the areas to focus on as priority.

Without a clearly defined outcome, and a SOW to use as the foundation of our service agreements, these site inspections would not be nearly as effective, and could lead to unhappy clients, and no loyal clients.

If you don’t know what you’re looking for, it’s hard to see the benefits or the downfalls of your service providers.

#4 SOW Increases Brand Reputation

Without a plan and detailed SOW, you simply cannot measure success, resolve disputes or handle any unexpected turns that the financial year may bring.

A common error when hiring contractors, or procuring services (especially without a SOW) is the tendency to overlook a safety assessment. This takes into account the environmental conditions for employees and contractors, to provide quality assurance and increase brand reputation.

In the service industry, brand reputation is a key component in establishing credibility, which can validate an increase in prices and overall brand trust.

With a solid brand reputation, it is easier to hire qualified employees, attract your ideal clients, and increase retention, which all lead to an increase in profitability.

As Directors, we must recognise that our brand reputation is of key importance to the success of our business. A safety assessment within your SOW will solidify your position as a reputable partner, rather than a contractor that can be replaced when your contract is due for renewal.

It is also worth noting that each SOW should be developed around the environment in which your business operates. At Clean Feeling, we create custom SOW documents for a range of different client environments including medical centres, schools, professional offices, pubs and clubs, then personalise within for client specific tasks.

Think about it this way, how can you:

  • Meet client standards
  • Determine what equipment and materials you require or
  • Provide a budget

Without having a clear picture of your priorities and expectations?

This applies to all types of service businesses from consulting, to employment, to cleaning or electrical. If you require a certain outcome, you must include the specifics.

If you want a FREE custom SOW document for your business, email director@cleanfeeling.com.au and mention this article.
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