With estimated revenue of over $40 billion in 2015, the cleaning services industry represents a huge profit potential for entrepreneurs. Low startup costs and minimal entry requirements for the cleaning industry are two reasons that business-minded people are getting involved in this thriving market.
Business experts suggest that for as low as $2000, one can start their own business in the cleaning services industry. Furthermore, because the operating costs of a cleaning business can be very low if one is prepared to invest their time to perform the cleaning work initially, this industry can potentially bring in a lot of revenue.
As with any business, when starting a cleaning service business, you will first need to name your business and determine which business structure will work best for your new company. Selecting the right business entity for your purposes can avoid trouble later on with the Internal Revenue Service, or IRS, in paying your taxes.
How to Start a Cleaning Business in 7 Steps
Once you’re ready to start, here are the first steps to take when starting a new cleaning business:
1. Determine cleaning needs and develop a niche.
What are the cleaning needs of your local market, including both homes and office buildings? Do some brainstorming and ask friends and relatives. Scope out competing cleaning services in your area. If there are several existing housecleaning businesses, you may want to offer a more specific type of service with features not available in your community.
Residential cleaning service is an easier market than commercial cleaning, which is typically dominated by large janitorial businesses. Cleaning on a very large scale requires a large staff and a large startup cost. Residential clients are also easier to recruit via social media, word of mouth, and other forms of advertising.
You may also want to consider purchasing a cleaning franchise rather than starting an entirely new cleaning venture. This could be a good idea for entrepreneurs who want to gain some footing in the industry before starting their own company.
2. Set a budget for your new business.
As a business owner, you will need to set a budget for your new cleaning company. Take into account the business license and permit fees, business registration fees, insurance, cleaning products, and any equipment required, marketing and advertising costs, and labor costs, e.g., employee wages. In some cases, experts estimate, you can start a cleaning business for as low as $2000 initial cost. It may be a good idea to start small with minimal staff and only the essential service offerings, such as a standard house cleaning service, and then work on offering additional services as you gain clientele and bring in more revenue that you can use to invest in expanding your company.
3. Obtain the required licenses and insurance for your new business.
Because licensing requirements for small businesses can vary by location, it’s best to consult with your local or state authorities to determine what licenses are required for launching your own cleaning business. You may need to obtain an occupational license and/or register as a DBA. You can check out our reference guide on how to register a business in each state for more details.
As a commercial cleaning company, you will need to purchase a business insurance policy because it’s inevitable that in the course of the cleaning process, your client’s property could be broken or damaged. Accidents happen, so be prepared for such situations by purchasing liability insurance. Liability insurance protects your business against accidental mishaps that may occur and can help settle any damages or losses caused. You will need to obtain insurance before you clean your first home.
You will also need to invest in a bond, which is a type of insurance that protects your small business from losses that may occur due to theft. If a member of your cleaning staff is convicted of theft from a client, you could potentially be held accountable for any losses resulting from the crime, even though your employee is found to be at fault. Investing in a bond is a good choice because most clients prefer house cleaning services which are both bonded and insured, and this will ensure the maximum peace of mind for both you and your clients.
Workers’ Compensation may also be required for your business, depending on your state’s rules and regulations. Worker’s Comp ensures that employees are protected in the event of an injury or illness occurring when they are on the job. Workers are compensated in the event that they are hurt on the job and cannot work, in exchange for the loss of their right to sue their employer (i.e., you) for negligence.
4. Purchase the necessary equipment and supplies.
Some basic supplies you will need include cleaning uniforms or aprons for your cleaning staff; household cleaning supplies such as disinfectants, house cleaning chemicals such as window cleaner, paper towels, sponges and/or cloths, and scrubbing brushes; latex or nitrile gloves; equipment such as dusters and a vacuum cleaner (or several, depending on your initial business strategy).
Some consumers are opposed to the use of harsh chemicals in their home, so you may opt for more eco-friendly choices in your selection of cleaning agents. Organic and green products can be a good choice that is less harsh on the human body – especially for people with asthma and allergies — and more environmentally friendly to boot. You may want to start out purchasing your cleaning products at retailers, such as grocery stores or Walmarts, in the initial stages of your business, but then transition to obtaining your cleaning supplies from a janitorial supply center once you are more established and require larger bulk orders. As for equipment, renting might be a good choice for nascent cleaning startups, unless you can obtain used or secondhand equipment with good functionality very cheaply.
5. Establish your brand identity.
In establishing your brand, make sure to pay attention to the details. A professional-looking and consistent uniform, client profiles, and a mission statement can go a long way in communicating to your clients what they can expect from your company. You will need to commit your values to paper and be able to explain to potential customers what sets you apart from the competition. You may, for example, offer cleaning services 24 hours a day, 7 days a week, or you may offer environmentally sustainable and eco-friendly cleaning or offer an on-time guarantee.
Knowing your company values can help you set your brand identity and come up with a business logo. You will want to add your company logo to your invoices, receipts, and other documents to make everything look as professional as possible from the get-go.
6. Develop a business model and set cleaning rates.
Once you have taken the time to develop a brand and obtain the necessary supplies to turn your business idea into a reality, it’s time to develop a business model and set your hourly rate or flat fee. You will need to consult your budget to determine how much revenue you must raise in order to stay profitable and use those calculations as a guide. In general, you may want to start with a lower price point, and expand your business to add extra services over time; alternatively, you may want to offer a unique, more comprehensive service not previously available in your local market at a slightly higher price point
Whatever you choose for your pricing strategy, make sure you have done some research into what the average housecleaning hourly rate or flat fee is, so that you can ensure that your pricing is competitive.
Another aspect of your company’s finances that you must tackle in this step is to determine how your clients will pay you. Many cleaning services keep a credit card on file for their clients in order to perform home cleaning on a regular basis (e.g., every week or month). You can use a variety of smartphone apps, websites, and other tools to invoice and bill your clients.
7. Market your business effectively.
Once you have determined your business plan and budget and come up with a pricing plan, you should devise a marketing campaign to ensure that you can bring in new clients and build your customer base. You may want to print out business cards with your business name and contact information and leave them on bulletin boards, or you may opt for local newspaper advertisements. Flyering around town and purchasing ads in local newspapers can help a small start-up gain a small, loyal clientele. In the early stages of your business, you likely will not have a large budget to advertise, so be resourceful and reach out to friends and family to help get the word out about your new business.
You should also claim your brand’s social media handles and establish a social media presence on popular platforms such as Facebook or Twitter, in addition to an online presence such as a website. In today’s internet age, creating a Facebook page is essential and can be an inexpensive way to establish an online presence. On social media, you can both advertise your services and any sales or specials, and also offer customer service for new or existing clients who may have questions about or need assistance with your services.
Word of mouth is an incredibly effective way for any new customers you recruit to send new clients your way, especially for a local business such as a cleaning company. You may want to consider setting up a referral program in which clients are offered a discount or credit for referring their friends and family members.
Branding your vehicle is also a creative way to spark brand awareness among those driving beside you on highways and city streets.
Starting a business is hard work, but with the correct strategy, your efforts can lead to a successful cleaning services business. All you need to start a cleaning company and tap into this $40 billion industry is minimal startup funding, some basic equipment, and a spirit of entrepreneurship and willingness to work hard. Online tools can help entrepreneurs seeking to succeed in the cleaning service industry to coordinate scheduling and payment. You may want to charge by the hour or a flat fee or opt for a scaled strategy such as a flat rate which increases by square foot.
Determine whether you will be operating a residential or commercial cleaning service. Cleaning homes can be more lucrative for a small business than large-scale cleaning operations due to lower startup cost. Cleaning businesses driven by ethical and environmental conscious standards are also very popular right now and could be a lucrative market, depending on your local market’s needs.
Business owners seeking to launch a cleaning business with little initial funding should be prepared to do most of the work themselves, even working part-time in a cleaning capacity until they have more money to offer full-time cleaning jobs and hire a staff. Carpet, window, and other forms of cleaning require little training and no expertise, but business owners should make sure to invest in insurance, worker’s compensation, and bonds to protect themselves, their employees, as well as the real estate that they are cleaning.
Regardless of your exact business plan, keep in mind that most startups – in any industry — fail because they seek to do too much, too soon. Therefore, in developing and implementing a business plan for a new cleaning startup, small business owners must remember to start small and expand slowly over time. Businesses which operate this way are more likely to succeed.