In 2015, the cleaning services sector generated $41.7 billion, and it is expected to grow to $46.3 billion by 2020. In addition to huge profit potential, the barriers to entry and startup costs for a cleaning service business are relatively low. All you need is relatively minimal startup funding, an entrepreneurial spirit, and some basic equipment.
When starting your cleaning business, it is important to separate your business and personal finances. Chase is an excellent option to suit your banking needs. They have 5,100 branches, 16,000 ATMs, a mobile app, and an easy-to-use website. Receive a $200 welcome bonus when you open an account today.
Step 1: Create a Budget
Other cleaning services business founders estimate that you can start your own business for under $2,000. Here’s a breakdown of estimated expenses you can expect:
- Licenses and Permits – $30 to $60 if you register as a sole proprietor or $100 to $500 if you register as a limited liability company
- Insurance – $500 to $3,500 annually depending on number of employees
- Cleaning Equipment and Products – $300 to $600 depending type of tools
- Advertising – $100 to $200 for print and online marketing
- Labor – $11.63/hour per employee
With these numbers, you can launch a registered and fully operational cleaning services company for as low as $930. The low startup cost is one of the reasons why there are 898,474 cleaning services companies operating in the country.
While you can start a cleaning business under $1,000, Joanna Douglas, owner at Clean Affinity recommends that you start with more:
“When I first started, I had a lot of extra money saved up from some of my previous employment. With the help of my husband, we were able to put up our own cleaning business. Honestly, it is better to be safe than sorry, so I would recommend that you have more than $2,000 to start with.”
Step 2: Choose a Business Structure
Prior to launching your cleaning business, you need to have it registered. This means that you have to think about the legal structure along with taxes.
Many bootstrapped startups register their business as a sole proprietor. There’s not a lot of paperwork involved under this business structure and you as the owner has absolute control. One disadvantage here is that you will be held liable if your business goes under with debt.
Other cleaning businesses register as a limited liability company (LLC) which gives owners protection from personal liability. However, the entire income you and other members of an LLC company are required to make self-employment tax contributions.
If you want to know more about which business structure suits your cleaning company, you can learn more here.
Incfile takes the guesswork out of how to obtain a business license and the necessary permits. Not only do they inform you of the necessities, they offer to do the paperwork for you. Once you know which business structure is best for you, get started with Incfile today.
Your taxes will depend on the type of business you register. If you registered as a sole proprietor, you won’t have to submit a separate tax report for your company’s profit and loss. You have to file an IRS Form 1040 for individual income tax return where your personal and business incomes are considered the same. Personal tax rates are implemented under sole proprietorship.
Taxes under an LLC is much more complicated. Your company can be taxed as a sole proprietor, partnership, S Corp, or C Corp. There are certain pros and cons for each tax treatment. You can find more information in our Small Business Owner’s Guide to LLC Taxes.
Naming your business can be as difficult as naming your child. The name of your business should reflect the ideals, services, and concepts that distinguishes your company from others. You have a lot to say in a few words so you really have to make it count.
To help you out here, we created the ultimate business name generator. You just have to enter your services, area, and your name as the founder. The tool generates multiple suggestions which you can use as a starting point to come up with your own unique idea. Once you have the final list, head to the US Patent and Trademark Office to check which names are still available
Before deciding the structure of your cleaning company, CEO of Fantastic Services Rune Sovndahl suggest that you select a good franchise:
“A secret I would like to share with everyone is that it’s a great idea to pick a good franchise that will take care of the marketing for you. Otherwise, while you are testing which advertising tactic best works for your business and location (radio, tv or online) you might be missing out on making profits. How to grow the cleaning business? You should focus on building good systems and practices – the core of every business’ growth. And choosing to be a franchisee will mean having this core already established for you. Be smart and choose a franchise company that has experience working with hundreds of similar companies. A franchise company that has created and implemented systems leading to a successful cleaning business.”
Once you have sorted out your business structure, then you can sign up for a business bank account. As a small business owner, you must separate your business and personal assets. Chase is an excellent option to suit your banking needs. They have 5,100 branches, 16,000 ATMs, a mobile app, and an easy-to-use website. Receive a welcome bonus when you open an account today.
Step 3: License & Insure Your Business
Licensing requirements can vary depending on your location so check with your state, city, and county. Some cities require cleaning businesses to secure an occupational license while some only require you to file a Doing Business As (DBA) form.
The registration process may sound intimidating, especially to first-time entrepreneurs. However, the process is usually straightforward and takes as fast as one day.
As a cleaning business, damages or breakages to client property is inevitable. Accidents do happen in this line of work. You or your employee might unintentionally break a mirror or knock off the television. Liability insurance keeps you protected from such unfortunate incidents.
For companies catering to commercial clients, liability insurance is a must-have. It protects your business from damages or losses incurred by a client due to mishaps committed by you or your employee. For example, an employee leaves the door open while taking a break which resulted in theft. Liability insurance can help you settle the damages or losses caused by the incident.
Before you get started cleaning your first property, it’s important to find an insurance plan you can count on. AP Intego’s nationally licensed agents shop and compare your coverage needs to get you the right coverage at an affordable price, fast. Reach out for a free, no-obligation quote.
A bond is a form of insurance that acts as a financial guarantee against the terms of the bond. Obtaining a bond shields your business as well as your clients to losses due to theft. For example, if an employee gets convicted of stealing from a client. Even though your employee is at fault, your business can be held accountable by the client for the losses related to the crime.
Most clients prefer cleaning businesses that are bonded and understandably so. Invest in a bond, not only for your peace of mind but also to increase the likelihood of signing new clients.
As you grow and hire more employees, your state might require you to pay into Workers Comp. This type of insurance protects your employees from injuries and illnesses sustained on the job. It provides compensation in the form of wage and benefit replacement to your employees if they’re injured on the job and can’t continue to work in exchange for mandatory relinquishment of the employee’s right to sue their employer for the tort of negligence
Step 4: Purchase Equipment
While there are some cases when your customer will provide all the cleaning tools and products — for example, if they’re sensitive or allergic to particular products — you still have to invest in cleaning equipment such as a vacuum cleaner, broom, and mop. You can use your personal cleaning tools at the start, but take note that they are subject to wear and tear, especially if you cater to businesses. Other supplies that you’ll need are:
- Cleaning uniform or apron with multiple pockets to store essential items
- Window cleaner
- Paper towels
- Latex gloves
- Scrubbing brushes
- All-purpose cleaner
Consider investing in organic products which you can use as a selling point to clients with pets or kids. You can purchase everything at your local grocery store as you launch your business. As you grow, however, you can check with your local janitorial supplier so you can buy in bulk and reduce costs.
While purchasing equipment appears to be the only move to get the right product and tools to start your cleaning business, it’s not actually the case. Bright & Clear Floor Care President of Operations Cornell Alston recommends that you rent equipment to start:
“When we started our business in 1994 we started our business with $3,500 in the bank. Today, I would expect that the price to launch a cleaning business surprisingly could be much cheaper because of the option to rent. During the time that we launched our business we had to go out and purchase a ton of equipment but today there are several options for you to rent supplies and necessary cleaning machines on a per day usage.”
Step 5: Set Your Rates & Your Business Model
The average hourly rate cleaning service companies charge is between $25 and $40 or a flat rate of $120 to $150 for a single-family home. Factors such as your location, your competition, your clientele, the size and condition of the home, and/or any additional tasks will affect where on this scale you fall.
Regardless of your pricing model, you’ll need an easy way to bill your clients so you can get paid in a timely manner. Square Invoices makes it easy to invoice your customers and let them pay securely online or in person. Just enter their email and invoice amount and hit send. Square Invoices works for one-time billing, repeat clients, and recurring payments, and there are no monthly fees. Start your free Square account.
Consider these factors as you look at the following pricing models:
This is by far the most common method of charging customers for your cleaning services. It may sound simple, but many entrepreneurs struggle to come up with their own justifiable hourly rate.
The easiest way to establish your hourly rate is to call up your competitors and ask them how much they charge. They have most likely conducted their own research and have factored in all expenses in their current rates including labor, equipment use, gas, and products. When you do your market research, you will most likely get a range of rates as companies rarely charge the same fees. You can use the range to come up with your own hourly rate.
If you are familiar with the houses and establishments in your area, you can use that knowledge to your advantage by charging a flat rate. Estimate the number of hours it will take you to clean a particular house and offer that rate to your customer. The advantage here is that you provide a fixed price for your services. Many customers prefer this cleaning rate because they won’t have to worry about extra charges in case the job takes longer than expected.
As a business owner, you have to be careful when choosing this cleaning rate. You have to be specific about what your flat rate covers because if not, you might end up losing money. To mitigate that risk, you can create a package that includes basic services like dusting, wiping, vacuuming, and mopping. You can then charge extra for additional services like chimney cleaning, carpet cleaning, or roof and gutter cleaning.
Additional services have different fees as they vary on products and equipment to be used. Click here to find more information on house cleaning costs.
Square Foot Rate
This cleaning rate suits businesses that target large homes such as villas or vacation homes. These types of properties often have rooms and spaces that are rarely used and may require more manpower for an ultra-deep clean. Therefore, many companies set higher hourly rates for properties that are bigger than 1,000 square feet. For example, if you charge $25 per hour for a single family home, consider charging $30/hr for homes bigger than 1,000 square feet and $40/hr for properties larger than 2,000 square feet.
Step 6: Market Your Cleaning Business
Now that your pricing model is all set, it’s time to get the word about your new company. As a startup, you are probably working with limited capital and you’d want to make the most of your budget. Therefore, your marketing efforts should be highly-targeted. You want your materials to reach the right types of people. There are a few ways to do that.
Chinese billionaire Jack Ma said, “When selling to close friends and family, no matter how much you’re selling to them, they will always feel you’re earning their money, no matter how cheap you sell to them, they still wouldn’t appreciate it.” Rookie entrepreneurs often make the mistake of relying on their inner circle to be their regulars. However, that’s rarely the case. Instead, ask your close friends and family to put a good word about your new business to their friends or family who fit your customer persona. Word of mouth marketing is particularly effective since 9 out 10 consumers more likely trust and buy from a brand recommended by a friend.
In addition, word of mouth costs absolutely nothing. Set an appointment with people who are interested to acquire your services. Don’t show up empty-handed. Consider printing brochures that feature a menu of your services with respective fees.
Also, offer coupons and loyalty accounts. Your coupons serve as your sweetener where you reduce a certain percentage like 10 percent off on your first 10 hours to give prospects an incentive to avail your services. Loyalty accounts is the value you add to existing customers. For example, customers earn free window cleaning after they avail your services a specified number of times.
This marketing strategy helps you earn new customers and keep them at the same time. More importantly, the strategy costs your business next to nothing other than hard work. If you have a high-quality printer, you’ll need to shell out around $35 to cover the costs of ink and 250 pages of quality paper.
Mike Kawula agrees that a strong referral program is one of the best ways to get a business off the ground:
“Have a referral program that is strong. The best ways to drive new business is via word-of-mouth marketing. I spent over $2,000 a week using direct mail, but word-of-mouth drove the highest closing ratio by far. Also on marketing, try to build relationships with realtors in the area. They know everyone moving out that needs a clean and everyone moving into the neighborhood who needs a new service. Have a solid referral program in place for realtors and go out and sell them on it. You’ll have an army of salespeople this way.”
The bulk of your marketing strategy should be passive. As a startup, you will most likely do most of the cleaning yourself which leaves very little time for you to do marketing activities. Given that situation, one of the best ways to expand your market is to get inbound leads from the internet.
75 percent of today’s consumers use the internet to find a local business. In other words, most of the customers who need your services are looking for you online. They usually do local searches where a set of keywords plus location are typed on a search engine such as:
- Home cleaning Baltimore
- Carpet cleaning Akron
- Chimney cleaning Chicago
You need to establish online presence or risk losing potential customers to your competitors. We recommend investing a huge percentage of your marketing budget to building a website and creating marketing content.
Create Your Own Website
Creating your own website from scratch is not as complicated as it sounds. With Weebly, you can build a unique and professional business website using pre-made themes you can customize with a drag-and-drop editor. And because Weebly is owned by Square, your customers can make payments, leave reviews, and book appointments right on your website. Click here for a free trial.
Use a Scheduling Software to Manage Appointments
Even with minimal marketing, you could end up with more clients than you can keep track of with a simple calendar. Avoid double-booking yourself by using an online scheduling tool. Square Appointments syncs with your personal calendars and lets clients book appointments and make payments right from their phone. Best of all, Square Appointments is free for a single user. Click here to get started.
The Bottom Line
Many people strongly consider starting their own cleaning business as the barriers to entry and required startup capital are significantly lower compared to other types of businesses. Before you launch, however, your primary considerations are the costs, your business model, and how to market your new business. With the help of this guide, you can easily take care of these aspects fundamental to any type of business, so you can start working on making your cleaning business a success.