Well this was a fun thread to read....but I'll try to chime in, but since I've never owned a business I probably have no clue what I'm talking about; and of course Ken if I'm totally wrong tell me to just shut up, or correct me if you'd like. :mrgreen:
Through the last few years I've always seen Ken mention CREDIT.
As an owner operator you work your ass off paying mostly in CASH with maybe a credit card or two, unless you've done things right and have amazing credit. There is a common trend of why people get into this industry and its already been mentioned by Harper - relatively low start up costs. A lot of the owner operators had absolute crap credit, but needed money at the time. They took what they had and invested what they could and off they went. Some have made it, some haven't, some are still around but still can't get by mainly because they are horrible at managing money.
I bet a lot to Ken's and Hagopian's success is because Ken is brilliant at managing money. I also bet the company has a great standing with their credit, even with a lot of debt. When you have credit you can simply do much more than you can with cash and little credit. This gives him the ability to stretch out his debt for as long as he wants, and pay off what he want when he wants. Debt can be a good thing or a bad thing, but in order to have great credit, you have to have debt, and usually a good amount of it.
I also know Hagopian makes a lot of the cleaning agents they use, and I'm sure they buy in bulk which saves them even more money in the long run. Buying in bulk allows you to budget and have more control on your cost of goods. Even more so if you're smart about it, even if they're a variable expense you can ALMOST make them a fixed expense. Versus buying things on the fly like many owner operators do, because they have to, they simply don't have the buying power.
I could go on but I won't. But take all that I've said into consideration. Ken's labor costs may be higher than others but he is able to do that by how manages money elsewhere. He is able to pay a good living wage, with benefits, and that keeps his employees happy. If you're going to pay high labor costs you better make sure its a good investment for the company, and its obvious Ken "gets it" because his labor is his most important expense, consider the volume they do.
And believe me, I shopped Ken... he doesn't know it but when a company I worked for was going to expand I did. I called just about every single carpet retailer in and around the ann arbor/detroit area. I can say that about 80% of the places I called(30-40, can't remember exact number) recommended Hagopian for carpet cleaning... now that is market share!