Sweeping Divided by Thirds

Whether you believe you can work successfully with third party providers or not is your opinion. There are however, some basic business realities sweeping contractors need to think about when making the decision to participate or not participate in third-party business.

The first economic reality is the profit margin is not controlled by the two entities who have assumed the risk. The sweeping contractor and the property owner have the liability exposure, but the guy in the middle, the third-party provider, controls the transaction.

Recently, a big box retailer called for bids for a new sweeping contract. The third-party provider involved did not reach out to the sweeping industry to ask for pricing or ideas on how to improve service or lower cost. The third-party provider submitted a price assuming if they were awarded the work, then they would look for contractors. In this process, they did not vet sweeping contractors. If you are willing to do the work for the price, you have it.

However, it doesn’t end there. The contracts the third-party provider want to impose on the contractor are one-sided. Some third-party providers go so far as to say that they do not allow for the contracts to be amended. In spite of the “no cross out” rule, if there is a term you cannot agree to, cross it out. Down the road, you may regret not trying.

In most of the one-sided contracts we have seen, if the third-party provider doesn’t get paid, the contractor doesn’t get paid. Contractors are left to the mercy of the third-party provider invoicing the property owner correctly. There could be an issue unrelated to the sweeping company’s job which could cause a dispute. Yet the contract the sweeper has is with the third-party provider and not the final customer, leaving the sweeping contractor unprotected.

Third-party providers recently began requiring contractors to provethey were on site. Some of these extra steps include taking photos of their work in progress with the store sign in the back, calling in at each location, putting sticky notes on the door or calling in the next day and getting tracking numbers which then have to be submitted with invoices. All of these steps add time. Adding 5 to 40 minutes to a job is a 12.5 percent increase in work and all of this is done without additional revenue. To add to the chaos, each of the third-party providers have their own way of being invoiced. There are numerous web portals and invoicing options, meaning your office spends more time than before on generating invoices. All of this is done on the onus of the sweeping contractor to make the life of the third-party provider easier.

The key to any service industry is meeting the expectation of the customer, but the third-party provider doesn’t want the sweeping company talking to the customer. These two people need to talk regularly to ensure optimum performance and service, but the business model of the third-party provider restricts the relationship. To further solidify the impossible, they often include a non-compete clause stating the contractor cannot work for the end customer for a specified number of years should the third-party provider lose the business, even if the customer goes with another third-party provider. Sweepers need to ask themselves if they are willing to walk away from potential business for a specific number of years due to a non-complete clause.

No sweeping company should ever rely on third-party providers for the success of their business. The sweeping company can supplement their overall business with third-party provider work, but in the end, this business can leave a sweeping company holding the short straw.

Remember, having too much of your business with any one customer is an unstable business practice. To closely tie your business to any single third-party provider can be a business fatality as well, so protect yourself and your business from becoming one of the industry horror stories where the phone rings one day and you hear “You need to lower your price or we are going somewhere else.” It can and does happen.

Be smart and good sweeping.

The North American Power Sweeping Association (NAPSA) is a nonprofit association made up of 200+ contract sweepers, service providers and sweeping equipment dealers, manufacturers and suppliers. NAPSA is dedicated to providing beneficial support to the membership and enhancing services to the sweeping industry.

NAPSA is committed to promoting and educating the power sweeping community while enhancing the environment. For more information on NAPSA membership, please visit www.powersweeping.org or call (888) 757-0130.

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