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Part 4 of the Janitorial Margin Playbook Series — how budget vs actual discipline protects profitability and why fixing overages early keeps margins intact. A guest post from Jeff Carmon of Elite BSC, co-author of the Janitorial Margin Playbook.

In the janitorial industry, protecting margin is not just about getting pricing right or negotiating good supply costs. Often, the biggest leaks come from much more basic areas: jobs running over budget and accounts that never generate enough return to justify the work. Both issues are common, both are preventable, and both have a much larger impact on your profitability than most owners realize.

Budget vs. Actual: Hours and Dollars

When we talk about budget vs. actual, we are really talking about discipline. Every proposal you submit is built on assumptions about how many labor hours a job should take and what those hours will cost in dollars. If your actual results drift from those assumptions, even by a little, your margin starts to erode.

Take a simple example: you bid a job at 20 hours per week. In reality, the account takes 23 hours to meet the client’s expectations. On paper, three hours does not sound like a big deal. But three hours every week adds up to 12–13 extra hours a month, 150 hours a year, and thousands of dollars in unexpected cost. If you multiply that by ten or twenty accounts, the numbers get serious fast.

Looking only at dollars can mask the problem. That is why it is best practice to track both labor hours and labor dollars. Hours tell you how much time it is really taking to service the account. Dollars reflect the impact of wages, overtime, staffing mix, and even minimum wage changes in your market. Together, they give you a complete picture of where the account is performing against budget and where it is slipping.

Why Daily Monitoring Matters

Many companies review their budgets only at the end of the month. By then, it is too late. The overage is baked into payroll, the invoice has already gone out, and the margin is gone for good.

The best operators do not wait. They monitor hours in real time. If your system provides daily data, use it. A quick daily check of scheduled vs. actual hours can flag problems before they spiral. Maybe one cleaner is regularly clocking in 10 minutes early. Maybe supervisors are adding hours to “make sure the building looks good” without realizing the impact. Small variances caught early are much easier to correct.

At a minimum, review both hours and wage cost weekly. If you see a job running more than 2 percent over budget, take action right away. That could mean adjusting staffing levels, moving shifts around, or tightening clock-in discipline. By the end of the pay period, your goal should be to land as close to the budgeted target as possible.

The Financial Impact of Variance

The math is clear. A company with 10 million dollars in annual revenue that consistently runs 4 percent over budget on labor will lose 400,000 dollars in profit over the course of a year. That is not because of bad contracts or customer issues. It is because of small variances that no one stepped in to correct.

On the flip side, best-in-class operators consistently come in 1–3 percent under budget. That discipline creates a margin advantage worth hundreds of thousands of dollars each year.

Those funds can then be reinvested into technology, training, or better wages for frontline staff, which creates a positive cycle of stronger performance and improved retention.

Account-Specific Margin: Winning the Right Work

Budget discipline is only half the battle. The other margin leak happens much earlier, before the account even starts. Many contractors underbid to stay competitive, only to realize later that the job barely breaks even.

Low-margin accounts are dangerous for two reasons. First, they tie up supervisors and managers who spend outsized time trying to keep the customer happy. Second, they distract your team from higher-margin accounts that could actually move the business forward.

In other words, low-margin accounts do not just hurt the P&L. They also hurt your overall operational focus.

The best way to avoid this trap is to set clear margin expectations before you ever submit a proposal. Build your pricing model with benchmarks for labor costs, supply costs, supervision, and overhead. Decide in advance what margin threshold you are willing to accept. If the numbers do not work, walk away. It is better to lose the bid than to win an account that will drag your business down.

Using Gross Margin per Job

One of the most effective tools here is gross margin per job. This measures how much revenue is left after direct labor and supply costs are covered. Top operators aim for 30 percent or more on every job.

If an account consistently produces less than 30 percent, it is a signal to take a hard look. Can you staff differently by assigning lower-cost labor? Can you renegotiate scope with the client? If not, the smartest move may be to exit the account. While it is never easy to walk away from revenue, holding onto unprofitable accounts is often more damaging in the long run.

Gross margin per job also helps you evaluate bidding success. Look at your win rate vs. the average margin on won bids. If you are winning a lot of work but margins are weak, you may be pricing too aggressively. If you are losing most bids but the ones you win are strong, you may be more selective but healthier for it.

Connecting Both Sides

Budget vs. actual and account-specific margin are not isolated issues. They are two sides of the same coin. Strong bidding discipline prevents you from taking on jobs that are doomed to underperform. Strong budget discipline ensures the jobs you do take actually deliver the margin you planned. Together, they create a system of accountability that protects profitability at both the front end and the day-to-day execution.

The Bottom Line

Margin does not slip away in one dramatic event. It leaks out slowly through unchecked hours, unnoticed dollar overages, and accounts that never had the potential to perform.

By focusing on daily and weekly budget checks, and by enforcing a clear margin threshold for new accounts, you give your company the discipline it needs to stay profitable.

Strong margins give you options. They let you reinvest in your team, provide better service to customers, and scale your business with confidence. Without them, even growth can become a burden rather than a benefit.

Action Items

• Check labor hours daily if possible – Use real-time data to catch overages before they become losses.
• Review labor dollars weekly – Factor in wage rates, staffing mix, and overtime.
• Flag jobs 2 percent or more over budget – Step in immediately to correct.
• Aim for 30 percent or higher gross margin per job – Drop or renegotiate accounts that consistently underperform.
• Balance win rate with margin discipline – Winning the wrong jobs can hurt more than losing bids.

Jeff Carmon brings over 40 years of experience across multiple industries. He spent a decade in business development and operations with Frantz Building Services before moving into his current role as Manager of Member Services at Elite BSC, where he provides training, coaching, and support to help building service contractors strengthen operations and better serve their customers.

Want the full set of benchmarks and KPIs? Download the Janitorial Margin Playbook, co-developed by BrightGo and Elite BSC, to see where your company stands and how to start closing margin gaps today.

Continue the Series

Read Part 1: Margins — The Most Important Metric
Why margins are the foundation of profitability and how to benchmark your performance.

Read Part 2: Time Theft — The Hidden Drain on Profitability
How edited punches and missing accountability silently drain payroll and margins.

Read Part 3: Overtime — Controlling the Cost Spiral
Why chronic overtime is one of the fastest ways profitability slips, and how proactive checks keep labor in line.

Part 3 of the Janitorial Margin Playbook Series — how overtime erodes profitability and what operators can do to prevent it.

Margins in janitorial are already under pressure, and overtime is one of the fastest ways for profitability to slip. While some overtime is unavoidable, chronic overages are often the result of weak scheduling, poor oversight, or underpriced contracts. Left unchecked, they can quickly snowball into hundreds of thousands in lost profit.

For many operators, this is where janitorial workforce management software or commercial cleaning software makes the difference, providing the real-time visibility needed to keep cleaning company labor costs under control and help reduce janitorial overtime before it becomes a systemic issue. If you missed the foundation in Part 1: Margins — The Most Important Metric, it explains why protecting margin is the starting point for all other KPIs, including overtime.

Overtime’s Compounding Cost

Every extra hour paid above budget adds directly to labor cost, which already represents the largest share of expenses in janitorial operations.

Even small increases in overtime hours can push labor as a percentage of revenue past healthy benchmarks, eroding janitorial business margins and making it harder to compete on price.

Overtime is defined under the Fair Labor Standards Act as time-and-a-half for any employees earning under $43,888 annually, once they exceed 40 hours in a workweek. Some occupations and pay structures have exemptions, but this standard applies for most frontline janitorial staff. That premium makes accurate janitorial time tracking software and payroll oversight critical for reducing janitorial overtime. 

Benchmarks: Overtime by Company Size

Overtime may seem inevitable, but it can be kept in check.

The Snowball Effect: A Cost Example

Here’s how quickly savings add up when overtime is brought under control:

Some overtime is unavoidable. Chronic overtime isn’t. Here are simple but effective steps to take:

• Review scheduled vs. actual hours daily: Do a quick scan by site as a pulse check, making sure accounts aren’t drifting too far off budget.
• Run a 30-hour report midweek: Establish a cadence of checking employees approaching overtime so supervisors can reassign shifts to under-utilized staff before payroll closes.
• Cross-train staff: Reduce reliance on single employees by training multiple staff to cover key sites.

Overtime often compounds other margin leaks like time theft. Part 2: Time Theft — The Hidden Drain on Profitability explains how high edited punch rates and weak attendance controls open the door to time theft, which further erodes profit.

‍Beyond Payroll: Overtime’s Operational Impact

Beyond payroll savings, reducing overtime strengthens operations across the board:

• Better scheduling discipline creates more predictable workloads.
• Balanced hours give supervisors more scheduling flexibility and reduce the fire drills that lead to burnout.
• Margin protection builds confidence in bidding, since you know actual results will match planned budgets.
• Stronger compliance ensures wage laws are followed and payroll errors are minimized.

In short, keeping overtime in check delivers more than cost savings. It helps stabilize operations, supports retention, and positions your business for sustainable growth.

Want the full set of benchmarks and KPIs? Download the Janitorial Margin Playbook to see where your company stands and how to start closing margin gaps today.

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Continue the Series

Read Part 1: Margins — The Most Important Metric
Learn why margins are the foundation of profitability and how to benchmark your performance.

Read Part 2: Time Theft — The Hidden Drain on Profitability
See how edited punches and missing accountability silently drain payroll and margins.

Part 2 of the Janitorial Margin Playbook Series — how time theft erodes margins and what operators can do to prevent it.

Margins in janitorial are already razor-thin, with labor consuming up to 70% of revenue. That leaves little room for error. As we noted in Part 1: The Most Important Metric, understanding your overall margin is the starting point, but time theft is one of the hidden factors that can quietly erode it.

Imagine running payroll and noticing a site is consistently logging 20% more hours than budgeted. At first it looks like a data glitch, until you dig in and discover a pattern of missed punches, early departures, and edits made after the fact. What feels like small slips can snowball into hundreds of thousands lost each year.

The good news: while some amount of time theft is inevitable, it can still be tracked, measured, and reduced — but only if owners know what to look for.

A Triple Threat to Profitability

Unchecked, time theft creates more than a payroll problem:

• Margin Loss: You pay for hours that weren’t worked, shrinking net profit.
• Competitive Pressure: Higher labor costs make it harder to price competitively without undercutting your margin.
• Customer Risk: Short-staffed shifts mean poorer service quality. Clients notice, trust erodes, and retention suffers.

Because janitorial work often happens after hours or across multiple, dispersed sites, direct supervision is harder — making time theft both more likely and harder to detect.

Time Theft on the Job

Time theft doesn’t always mean malicious intent. Sometimes it’s an innocent mistake; other times it’s a recurring issue that signals deeper problems. Common examples include:

• Missed punches or “buddy punching” (one employee clocking in for another).
• Leaving early or arriving late while recording a full shift.
• Taking unapproved, extended breaks.

Whether accidental or intentional, every discrepancy carries a cost. Clients also feel the impact: property managers paying a fixed monthly fee may receive less service than expected, while those paying hourly may be overcharged for inefficient work.

The Benchmark That Matters: Edited Punch Rate

Your edited punch rate is the percentage of shifts with manual edits to time entries. Some edits are a normal part of the payroll process, but consistently high rates signal deeper issues.

A company running at 20% edited punches isn’t just losing margin, it’s also wasting supervisor time on payroll corrections, and fueling frustration among employees who follow the rules. Over time, this imbalance hurts morale and retention.

How Much Does Time Theft Really Cost?

Here’s a sample formula to estimate the amount a high edited punch rate may be costing you.

That’s $350,000 disappearing from profit, largely because punches aren’t consistently tracked and enforced. For a mid-sized BSC, that can mean the difference between investing in growth and barely breaking even.

The Broader Impact on Margin

Time theft doesn’t exist in isolation. It compounds with other margin leaks: overtime, underpriced bids, and bloated G&A. By tightening time tracking, operators not only stop payroll leakage but also:

• Strengthen client trust with consistent service.
• Improve competitiveness in bidding.
• Free up supervisor time.
• Reduce turnover by creating a fairer environment where reliable employees aren’t stuck covering for others.

Reducing Time Theft: From Policy to Practice

Time theft can be reduced to manageable levels. The key is combining policy, visibility, and enforcement.

• Enforce clear clock-in rules. Employees should know expectations, and supervisors must follow through, supported by janitorial employee attendance tracking systems.
• Use mobile timekeeping tools. Easy-to-use apps reduce “I forgot” excuses and capture GPS/location data.
• Audit high-edit staff and sites. Outliers often reveal systemic problems.
• Flag repeat offenders. A small subset of employees can cause a disproportionate share of issues.

Case Study: Cleantech Service Group

Here’s how one company put these practices into action.

• The Challenge: Cleantech struggled with limited visibility and preventable account loss, often learning about issues only after a client complaint.
• The Solution: BrightGo provided real-time oversight with geofenced clock-ins, mobile inspections, and building health dashboards, giving managers the tools to verify attendance and catch problems early.
• The Results: Cleantech saved over $1M by eliminating time theft, reduced payroll leakage, and saw fewer missed and late shifts thanks to verified clock-ins.

“We didn’t have our finger on the pulse. We had no way to see what was happening on site without calling the client. Now, with a few clicks, we can see what’s happening and where each building stands. That visibility helps us catch problems early and retain more accounts.”
— Riley McNamara, Vice President

Read the full case study to see how Cleantech took on time theft.

Tech-Driven Transparency

Paper timesheets and manual reviews can’t keep up. Modern janitorial time tracking software gives operators the visibility they need:

• Mobile clock-ins with geofencing to verify location.
• Real-time dashboards that highlight edited punches.
• Alerts when staff approach thresholds for edits or overtime.
• Easy reporting for supervisors and payroll reconciliation.

Beyond the financial savings, these tools also boost client confidence and employee morale. When hours are tracked transparently, service delivery becomes more consistent, employees feel accountability is fair, and managers spend less time chasing errors.

The Takeaway

Time theft may feel like an inevitable cost of doing business, but it can be reduced with careful tracking. Left unchecked however, it can drain hundreds of thousands from your bottom line.

The operators who win aren’t the ones ignoring it or overburdening supervisors with paperwork. They’re the ones using benchmarks, enforcing clear policies, and adopting technology that makes accountability seamless.

If you missed Part 1 of the series, take a look for the profitability benchmarks that show where cleaning companies stand, and why thin margins make issues like time theft so costly.

Want the full set of benchmarks and KPIs? Download the Janitorial Margin Playbook to see where your company stands and how to start closing margin gaps today.

In the janitorial industry, growth often came with complexity. More sites meant more staff, more variables, and more chances for things to go sideways. For Vancouver-based Cleantech Service Group, that complexity was starting to slow them down. They needed to rethink how their field operations were structured.

In 2023, the Cleantech team adopted BrightGo's janitorial workforce management software to bring their workforce management into a single, integrated system. The platform combined real-time janitorial time tracking, mobile inspections, and site-level cleaning company KPIs. The results? A 50% reduction in account loss, $1M+ saved by reducing time theft, and 60% revenue growth over two years.

The Visibility Shift: Moving from Gut Feel to Data

Cleantech had the scale of a mature operator, but like many growing cleaning companies, their systems hadn’t kept pace. Leaders couldn’t reliably confirm who was on site. Supervisors were still managing inspections by hand. And by the time issues surfaced, a client was already frustrated, or gone.

“We didn’t have our finger on the pulse. We had no way to see what was happening on site without calling the manager or the client.”
— Riley McNamara, Vice President

The company began reworking its janitorial operations with BrightGo as its central platform, focusing on three foundational improvements:

• Real-time janitorial time tracking software: Verified, GPS-based clock-ins give Cleantech live visibility into who’s on site, when they arrive, and how long they work—eliminating backfilled hours and guesswork. Supervisors receive real-time alerts for missed or late shifts, allowing them to intervene quickly. This continues to prevent time theft in the janitorial industry, saving millions in lost wages.
  
  
• Mobile janitorial inspection software: Managers use BrightGo’s mobile app to log site conditions, assign follow-ups, and verify resolution with notes and photos. Cleaners know exactly what’s expected, and supervisors can close the loop without chasing updates. As Elizabeth Pannell shared, “Our inspections are logged in real time, tasks are clearly assigned, and staff can fix issues with full visibility.”
  
  
• Building health metrics: BrightGo scores each site based on employee attendance tracking, inspection results, and unresolved issues—giving managers a real-time snapshot of performance, risk, and support needs. Rather than reacting to complaints, supervisors focus their time where it matters most.
  

Measurable Outcomes

Since adopting BrightGo, Cleantech:

• Saved over $1 million by reducing time theft
• Cut client churn in half, with retention at an all-time high
• Increased revenue by 60% over two years
• Reduced operational friction, including fewer repeat site visits and faster follow-through
  
  

“This has been our best year ever at Cleantech. These changes gave our teams the tools to catch issues early, work more efficiently, and keep clients happy.”
— Michael Anastasi, Chief Operating Officer

Rethinking Field Operations: Lessons from Cleantech

Cleantech didn’t make these gains by adding headcount or overhauling their business model. They focused on structural improvements to how daily work gets done—especially how it gets tracked.

Key takeaways:

• If you can't verify it, you can't manage it. Real-time clock-ins reduce payroll bloat and give supervisors a clear view of attendance.
• Inspections are only useful if they lead to action. A mobile workflow helps supervisors assign follow-ups and confirm resolution.
• Not every site needs the same attention. Health scores help managers prioritize which buildings need hands-on support.
  
  

For janitorial teams looking to grow without sacrificing quality or margin, Cleantech’s shift offers a clear blueprint: build systems that surface risk early, support accountability, and let your team focus where it matters most.

Read the full Cleantech case study →

See the Janitorial Software Behind Cleantech’s Growth

BrightGo is janitorial software built for cleaning companies navigating growth, client churn, labor inefficiencies, and rising customer expectations. It combines janitorial time tracking, janitorial inspection software, and field-level performance data to help operators make faster, more informed decisions.

‍Get a demo or email us at hello@brightgo.com See how data-backed tools can strengthen your operations and support long-term growth.

Part 1 of the Janitorial Margin Playbook Series, co-developed with Elite BSC to provide operators with industry benchmarks and profitability strategies.

Margins in janitorial are notoriously thin. Labor consumes the majority of revenue, clients demand more for less, and even small inefficiencies can erase profitability. Despite their importance however, margins aren’t always thoroughly understood. Many owners know top-line revenue and payroll costs, but lack clarity on how their performance compares to peers, or where hidden leaks are cutting into profit.

Margins are notoriously thin in janitorial — even small inefficiencies can erase profitability.

Common Pitfalls in Margin Management

Owners often fall into one of two traps when it comes to how closely they track their margins:

Flying Blind

Margins are reviewed sporadically, if at all. Without clear tracking however, there’s no chance to catch problems before payroll is finalized.

Over-Correcting

Others chase margin too aggressively and service slips. Hours are cut, clients notice shortcuts, and retention suffers. Short-term savings are wiped out by lost contracts.

The right balance requires protecting margin while delivering reliable service.

Benchmarking Profitability in Janitorial

Margins in janitorial aren’t like those in other industries where double-digit net profit is common. 

These janitorial profitability benchmarks serve as a baseline for evaluating your cleaning company’s KPIs and long-term business margins. While these numbers provide a valuable reference point, one size doesn’t fit all. Margins are influenced by a variety of factors: competition, market size, and ownership structure all shape performance. Benchmarks should be viewed as guideposts, not absolutes.

Net Margin by Company Size

‍Factors That Influence Margin

Market Size

Margins are heavily influenced by labor cost, which varies significantly by geography. Direct labor as a percentage of revenue correlates with market size, rising in larger, higher-cost metros:

Direct Labor as % of Revenue

Competition

Benchmarks also shift according to the intensity of the competitive environment:

Impact of Competition on Net Margin

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Companies operating in niche markets, like luxury apartment cleaning or more isolated regions like Puerto Rico, often enjoy stronger margins due to limited competition or high switching costs.

Ownership Type

While not the biggest driver, ownership structure influences profit margins as well:

Impact of Ownership Status on Net Margin

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Multi-generation firms often benefit from stability and institutional knowledge, while acquired companies may struggle with integration challenges that weigh on profitability.

Profit Strategies by Company Stage

The priorities of a new company look very different from those of an established operator. Each stage brings new risks, tradeoffs, and focus areas for owners.

The Early-Stage Mindset: Growth at Any Cost

At this stage, survival means landing accounts. Margins often appear higher because founders are multitasking—handling sales, supervision, and admin.

The Expansion Stage: Margin Matters

Once a company reaches $5M or more in revenue, retention becomes critical. At that point, there is significant revenue at risk if accounts are lost.

It’s Time for Your Check-Up

Understanding your margin is like checking your weight during a doctor’s visit. It’s an important number, but getting a full picture of your health requires a more thorough review of the underlying factors. That’s why we recommend taking a closer look at these metrics:

• Measure Net Margin Monthly. Compare against benchmarks by size and market.
• Break Down Labor. Cleaner wages, supervisors, overtime, and PTO should be separate line items.
• Audit Overtime. Flag employees approaching 30 hours midweek.
• Watch Edited Punches. This is one of the best ways to detect time theft in the janitorial industry.
• Review Budget vs Actual consistently. Regular janitorial budget vs actual tracking helps you spot labor cost overages before they erode profit.
• Carefully Monitor G&A. General & Administrative costs tend to grow as a company expands, but larger firms should have more—not less—control over these expenses.

Many operators now use janitorial profitability software to gain this real-time visibility into labor costs and margins, making it easier to track these metrics consistently and take action when issues appear.

The Takeaway

Margins in janitorial are thin, but they don't have to be fragile.

The companies that win aren’t those chasing every RFP or cutting corners for short-term gains. They’re the ones using data and benchmarks to make informed tradeoffs, protect profitability, and build sustainable growth.

Want the full set of benchmarks and KPIs? Download the Janitorial Margin Playbook to see where your company stands and what to do next.

We so often overlook the vital role of the janitorial industry in our daily lives when cleanliness is not just a preference but a necessity - it’s an essential part of all spaces we frequent, be it supermarkets, offices, malls, banks, or hotels. And the cleaning industry is a large one, with the janitorial profession ranking as the 5th largest in the world and employing more than 3 million in the US and Canada alone.

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Growing up, I spent a lot of time listening to my mom tell stories at the dinner table about properties she managed and the challenges of maintaining these places to keep them liveable. It got me asking, “How can I help building service contractors (BSCs) be more effective and improve their ability to provide such a key service worldwide?”

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"How can I help building service contractors (BSCs) be more effective and improve their ability to provide such a key service worldwide?"

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When Saagar and I attended ISSA in Chicago last year, we noticed a disconnect between what BSC business owners were experiencing with their software versus what that software was promising to do for them. We quickly realized that the existing software is just not powerful enough to provide for the modern BSC.

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After interviewing over 300 business owners of BSCs to understand their experiences, we set a vision to change the industry standard. Janitorial companies deserve world class software built by world class technical talent, and there has not been a company to date daring to do that until now.

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Today, we are announcing our partnership with venture firms Costanoa and Index Ventures, who appreciate the significance of seemingly unglamorous industries. While others are chasing the hottest trends in Silicon Valley, we are choosing to run in a different direction and help the people and businesses that need it the most.

By Gerald

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If you’re a BSC interested in reaching out, please reach out to me at gerald@brightgo.com. We are actively hiring, so please reach out to careers@brightgo.com if you’d like to learn more.