With the advent of COVID-19 and the hygiene regulations that come along with it to minimize its spread, a cleaning business has become one of the most lucrative money-making opportunities around. Aside from being a high-demand service, cleaning businesses come with added advantages like minimum startup investment, low overhead and operating cost in comparison with other businesses.
All you need is a solid business plan, the right trading licenses and insurance, a few basic cleaning supplies, an effective marketing strategy and dedication. If you’re planning to make the most of this current situation and start your own cleaning business, this blog should be helpful.
Below, we’ll tell you how to launch this business from scratch and get it rolling. But before that, there’s something you must know. In fact, this is one of the first steps towards starting a cleaning business.
An overview of the cleaning Industry
There are two primary market groups in the cleaning industry: consumer and commercial. The former one typically consists of housing maid services, together with window cleaners, carpet cleaners, and a range of other cleaning services needed from time to time. The commercial field, on the other hand, typically focuses on janitorial services that cover a wider range of services other than regular maid services, for example window washing, floor waxing, and deep disinfecting.
While most cleaning companies have their own niche and concentrate on services for their target consumers, it’s absolutely fine if you’re planning to serve multiple markets simultaneously. However, it’s important to remember that both residential and commercial customers have individual requirements, which means you’ll need unique equipment to serve them.
While the residential cleaning business has a low startup budget, the commercial can be more lucrative considering the bigger projects with add-on services like machine cleaning, electrostatic cleaning and more.
You may also want to consider that residential services are usually provided during the day and commercial at night. Additionally, residential work is more detailed because the homeowner inspects your work and is typically specific about how you do certain tasks like cleaning kitchens and arranging blankets on the bed.
Commercial projects usually cover more area and have a strict deadline, which means you’ll have to work faster with more staff and equipment. From a business perspective, the residential market is typically less competitive than the commercial one because there are more household customers seeking such services.
Here’s another point to note. Many cleaning businesses have amped up their services, particularly with the high rise in demand due to the novel coronavirus pandemic. Innovative tools and procedures are constantly altering the way the owners are conducting their cleaning business. Staying aware of new trends and using innovative tools means further investment, which will help you stay ahead of the competition.
If you’re planning how to start a cleaning business and make it really big, budget is an important factor. The good news is, with proper planning, hard work, and dedication, you can build a lucrative business that’ll generate revenue quickly. Most cleaning businesses can be operated on a part- or full-time basis, either from your residence or a commercial location. This flexibility makes the cleaning business an appealing prospect for many aspiring entrepreneurs.
Another positive side of this cleaning industry is that each category has its own market niches and working styles that vary immensely. This basically means that you can build your cleaning business around your individual style, preferences and talents. If you have a small budget and prefer doing the work yourself, you can certainly choose to go solo and do so. On the contrary, if your skills are more detailed and extensive in nature, you can build and handle teams to do the work.
If you prefer taking risks and working outside, choose services like window cleaning and pressure washing. Housing maid services have somewhat predictable working hours; disaster cleanup and restoration services can mean emergency calls at odd hours of the night. Only a few industries offer this kind of flexibility and opportunities, and the demand for general and special cleaning services is only expected to rise in the future.
Note: Before starting a cleaning business, always take a look at the competition. Consider the number of active cleaning services in your area? Also find out the number of residential and commercial properties in and around your locality. Do you have the time and resources to cater to far-off clients? Research and decide in advance the market you intend to work for.
While you can have a combination of both residential and commercial clients, targeting a particular group can give you an edge over the competition. Commercial cleaning services will require you to use specific equipment, training and supplies, but this added upfront cost will allow you to charge a higher price for your professional services.
Do you have the necessary qualifications?
There is no legal obligation of having a specific qualification when starting a cleaning business. You will pick up the skills over time while working on various projects. However, as with any type of business, you need a strong determination to make things work and the dedication and willingness to please customers by giving the highest level of service.
Another crucial requirement for the owner and the workers of any cleaning company is honesty. Whether you’re vacuuming and disinfecting an office or cleaning a residential bathroom, your clients must be able to trust you. A housing maid service is perhaps the simplest kind of cleaning business, in terms of necessary skills. Janitorial cleaning services, pressure washing services and other niche cleaning jobs require the use of special tools, cleaning solutions and skills, for which you and your employees must be trained.
Aside from delivering the services diligently and honestly, a cleaning business owner needs to have some basic business skills. They must understand the organizational challenges of running a business, should be able to meet work deadlines, and build long-lasting relationships with their employees and clients.
Once you get your cleaning business rolling, you can take steps toward taking it further. It’s a good idea to get industry certifications that validate your abilities. These certification courses are offered by The American House Cleaners Association. While most of us are familiar with the basics of cleaning like dusting, sweeping, and moping, as professionals, you and your staff will be expected to know the technicalities of cleaning a variety of stains and surfaces in the most efficient way. Getting certified is a trusted way to improve your cleaning skills and win your clients’ confidence.
Solo or franchise operation?
One of the first and most important things to consider when starting any business is, how small or big you want it to be. Most cleaning business owners prefer starting out solo with a few clients and gradually grow their business over the course of time. You may choose to start a larger cleaning business right away, although the upfront cost will be much higher.
From equipment purchase and rentals to employee wages to branding costs and taxes, there are a lot of factors that need consideration. While running a solo cleaning business is definitely convenient in the beginning, it may get difficult to scale as your business grows.
Franchises will typically work closely with you from the beginning and take it to the point where you start earning handsome revenues. This sounds like a lucrative option, but once your business takes off and you’re financially secure, a franchise agreement might be a nuisance.
For those who want to start their own cleaning business but would rather play safe than risk failure, a franchise is a good option. It’s important to note that most franchises offer a kind of marketing support – especially in the popular areas of national advertising – that’s almost impossible for individual owners to match.
On the other hand, you’ll likely have to invest far less working as an independent cleaning service than as a franchise. Additionally, when you work as an independent owner, you’re not obliged to any pre-established rules for name, concept, list of services, etc. That’s both a boon and a curse. The boon is that you can run your business the way you want. The curse is that you have nobody to guide you.
Every step you take, from deciding your start-up budget to planning your marketing strategy, is a trial and error approach. As a solo owner, you need to research every little aspect about your business (before and during the course of your business) so you can start right and stay alert about the latest market trends.
- Plan your business budget
Equipment and transportation are the two main expenditures of basic cleaning business. Depending on the type of services you provide, your expenses will vary from low and very low for a solo cleaner, to high and exorbitant for a business with several employees. Once you have a proper transportation and backup plan in hand, you can start estimating the other expenditures of starting your cleaning business.
One of the basic and most important aspects of any mobile business is transportation because before starting your job, you need to reach there first. Most cleaning businesses charge their clients for getting to and from the job site, so the transportation arrangements and errands will certainly fall on you.
The amount and cost of your supplies will depend entirely on the services you provide and the number of clients you’re expected to have. If you’re working for private residences alone, you can purchase supplies in bulk at retail stores. Some clients might even ask you to use their supplies instead of yours.
If you’re launching a big business with several employees and serving both residential and commercial clients, it might make sense to buy supplies from wholesale vendors. In that case, you’ll likely need to give proof of your business’s legitimacy. Once you register your cleaning business, getting supplies at discounted rates shouldn’t be a problem.
While transportation and supplies are the major expenses for cleaning services, equipment and rentals are also key contributors. Unless you own or have connections that give free access to cleaning equipment, hiring special tools and machines for cleaning carpets, windows, and exteriors can be quite costly. Even if you’re trained in using certain types of equipment, it’s good to hold off buying until your business is more established and has consistently high revenue.
Labor is possibly the biggest single expense you’ll have in your cleaning business, and you must pay attention to it. If you don’t watch your daily labor cost, you’ll make a huge mistake. Prepare a daily log, which makes it easier to spot loopholes before they become major problems. If labor charges are constantly on the rise, figure out the root problem.
Are the clients asking for special services that you aren’t charging them for? Are your laborers working overtime to meet their targets? If your clients are paying the right labor costs, make sure that your workers are providing the quality of services assured.
How much should you charge your clients when starting a cleaning business?
One important factor to consider when launching any service business is how to charge your clients. One common mistake made by solo proprietors is that they think hourly rate to be the only important calculation. Nevertheless, there are many other associated expenses other than just the wages. The additional taxes and overhead expenses like rent and utilities can affect your overall profit margin.
Going by the hourly rate, the standard fee charged by most cleaners is $25-$90 per hour (According to Freshbooks), depending on your skills and service area. Consider checking out the cleaning services in your area to see what they are charging. Make sure that your rates are competitive in the market.
However, if you want to charge a little higher, provide some value added services to make it worth the extra pennies. Including some standard chores like changing beds, washing windows, and cleaning outdoor areas can give you an advantage over other cleaning companies that charge additional fees for those jobs.
Next, calculate your tax liability. Other than the regular income taxes, you may have to pay an additional federal self-employment tax of 15.3 percent, which is double the employee taxes rate. This means an independent cleaner who earns $25 per hour pays an additional $1.90 per hour in taxes, when compared to an employee earning the same hourly wages.
Going by the rule of thumb, small cleaning business owners should set aside 30 percent of their earnings for tax payments. This obviously increases your hourly service rates from $25 to $32.50. Paying taxes out of your hourly wages reduces your profit margin to $17.50/hour.
The overhead expenses in a cleaning business typically includes the bookkeeping and accounting costs, transportation costs, promotions, and the cost of buying cleaning supplies and machineries. While the cleaning professionals rarely work for full eight hours a day on a single project, you need to factor in that extra time to earn enough money for your business’ sustenance. For instance, you charge $25/hour for your services.
How much time will each cleaning task take? You need to visit your client’s property in order to make that estimation. Usually, it takes around 1.5 hours to thoroughly clean a 1000 square feet area. Nevertheless, it’s much easier and faster to clean a low-key apartment than a messy home with toddlers who leave a lot of stuff around them.
Plan and estimate a rough baseline for how fast you can clean a property based on the floor area, and then make adjustments for variables like pets, kids, furniture, showpieces, and other delicate items that need extra care and time. Also consider additional tasks like vent or window cleaning that you might offer. Multiply your hourly rate by the number of estimated hours for the cleaning job. This will be your labor charge and the basis of your overall estimation.
If it’s assumed that it takes an average of 4 hours to clean a double-story house at a $25/hr labor cost, your standard rate will be $100. Now add on your tax liabilities. While independent business owners will have to give 15.3 percent tax, the employers need to pay only half of this rate, i.e. 7.65 percent. Also consider the additional state and federal taxes.
Independent owners should set aside 30 percent of their income for tax payments. Big, established businesses sometimes share some of the tax liabilities with their staff, and might only need to pay 20 percent of their earnings in taxes.
If you add 30 percent as your tax liabilities to the $100 labor cost, the net rate will be $130. While this will include labor and tax cost, there are still other expenditures to consider. If you are using your own cleaning supplies, equipment, or personal protective gears (gloves, eye shields, boots, etc.), these expenses need to be added to your estimation. For regular household clean up, an estimated 5 percent overhead is generally sufficient to cover all costs, bringing the sum amount to $136.50.
If you’re working in a niche market using specialized machineries or solutions, calculate the exact cost of each cleaning chore. For example, if you’re using a cleaning solution worth $50 for each client and not including it in your cost estimation, it will significantly eat into your hourly rate and reduce your overall profit.
Overheads are the daily expenses of operating your business. This typically includes office rent, business licenses, advertising fees, administrative employees, website design and hosting, conveyance time and more. Any other cost incurred by your company that is not directly related to cleaning jobs also needs to be covered under your overhead billing.
If you’re starting off small and working from a home office for only a few hours a week, your administrative costs will be quite low. On the contrary, if you’re running a large-scale cleaning business with several employees, the administrative cost can rise as high as 50 percent or even more. For instance, an administrative cost of 25 percent will result in a $170.63 service charge for a 4-hour cleaning job.
Finally, include your markup. This will be your business profit and a safety buffer in case of emergency costs. The recommendable rate is 33 percent, which typically comes to one third of your fee. The final rate for providing 4-hours cleaning service comes to $226.94 — a much bigger figure than the $100 hourly rate that we had started with.
Get your business registered
The legal formalities concerning domestic services like babysitting and house cleaning aren’t always clear, particularly when the service is provided by an individual and consumers are paying in cash. The registration process and income reporting usually depends on the type of services you offer and the size of your business (precisely, your revenue).
Serving only a couple of clients per week doesn’t really make a business, so it’s probably safe and advisable to postpone your business registration until you’ve reached a certain level. Say, if you’re earning more than 500 dollars a month, you’d better report your income to the IRS and pay your tax.
You can choose to operate your cleaning business as a sole proprietor or in collaboration with another individual. You can also run a limited liability corporation if you intend to separate your business and finances. As already mentioned, you can also choose to run a franchisee of a large cleaning services chain. Proper business registration and tax documentation are crucial for cleaning services with industrial or corporate clients.
Consider getting a management software
Running any business takes a lot of hard work, time and dedication. Doing the cleaning chores, filing permits and paperwork, and stocking on cleaning supplies can take a lot of your precious time. Additionally, you also need to cater to your clients’ needs, oversee employee appointments, track your budget, process client invoices, calculate tax liabilities, and plan other business growth strategies. Having a management app for your cleaning business will make things easier for you, as well as aid in your company’s growth. When you have all the functionalities you need in a single app, you can streamline your day-to-day managerial tasks, simplify communication with your clients and employees, and reduce the load of back office work.
Just imagine trying to maintain your employee or client schedules, account notes, and payment details using a pen and paper. Aside from being cumbersome, it’ll also cause a lot of confusion. Using an all-in-one software does away with all that confusion and makes your business more organized.
How to start a cleaning business, final thoughts
The cleaning business may be apparently simple, but when you consider all the hard work, planning and resources that go into its establishment, it’ll appear quite challenging. So, before you make cleaning your full-time profession, consider doing a lot of research and talking with others who are into this business. The best thing about a cleaning service is that you can start small and gradually take on more work as you get familiar with the job. As you figure out your business strategy and accumulate more clients, you can optimize your earnings and grow faster.
Business Development Manager with a demonstrated history of working in the Media and Digital marketing sector, Passionate about innovation and bringing the future into new business solutions.