How to Start a Cleaning Company
Starting a cleaning company can be a lucrative venture, especially if you are new to entrepreneurship and aren’t afraid of a little hard work. After all, people will always need to keep their space clean and tidy, and they are often more than willing to pay someone else to do it. From private homes to office spaces, there is no shortage of potential clients for cleaning companies. Many successful cleaning companies are also able to grow and expand their business through smart branding and marketing, increasing their profit margins and their clientele.
Ready to jump into the cleaning company industry, but not sure where or how to start? We’ve created a step by step guide to getting your company off the ground, as well as ways you can stay afloat and thrive, turning your cleaning start-up into a viable business.
Why start a cleaning company?
The cleaning service industry is considered a relatively sure bet when it comes to entrepreneurship. There is a constant demand for cleaning services, and lots of opportunities to expand your business once you get it off the ground. Starting a cleaning company is appealing to new entrepreneurs because it often requires a small upfront investment, with flexible hours and the ability to manage your own clientele.
Not only is the cleaning service industry a consistent market, it’s also not incredibly expensive to access. Though there are always fancy cleaning materials and tools you can invest in, nothing really beats basic cleaning supplies and some elbow grease when it comes to impressing clients and making a name for yourself in the industry. With low startup costs, and the ability to work part-time or full-time to start, a cleaning company is a great way to run a business with limited funds.
Another positive to the cleaning service industry is that often you can start generating revenue for your business right away, booking cleaning jobs with clients on an ongoing basis for a set fee. With little to no overhead, you can launch right in and be your own boss.
That said, starting a cleaning company requires a lot of hard work and is far from glamorous. It’s not the type of business you get into for the ease or the respect. But with some dedication and focus, you can make your cleaning company profitable, and your hard work can pay off.
Consumer vs. commercial cleaning
There are two different market groups in the cleaning industry: consumer and commercial.
The consumer market is made up of residential cleaning services for people’s homes, as well as carpet cleaners, window cleaners, and other cleaning services that are often needed on a less-frequent basis. This market is a great niche if you are looking to start small and grow, increasing your profit margins one residence at a time. Entrepreneurs often go for the consumer market if they want to do the work themselves and not have to worry about hiring employees right away.
The commercial market is more focused on janitorial services for office buildings and large spaces, but it can still include carpet and window cleaning. Your clientele is other businesses, rather than individual consumers. This is an ideal niche if you have the capacity to take on cleaning commercial spaces and are looking to grow at a larger scale to start. If you don’t mind doing administrative work and managing teams or other employees, this market might be a good fit for you.
Though you may decide to focus on either consumer or commercial cleaning to start, it’s entirely possible that your cleaning company might have a hand in both markets. In fact, it’s a good sign of growth if your business manages to have both consumer and commercial clients, especially once you’ve launched and have become a more viable business. Serving multiple markets means your company will be more sustainable and able to weather any changes or shifts in the industry with ease.
Determining your cleaning company services
There are several different types of cleaning services your business can offer, from interior cleaning in a house or space to exterior cleaning like window washing or pressure washing. You might decide to offer interior cleaning services only to start, especially if you are your only employee, and your skills are more honed for surface cleaning indoors. Or you may find exterior cleaning more appealing if you prefer working outdoors and are able to access the tools needed to do the job.
Some cleaning companies also offer remediation and disaster restoration, such as cleaning up a basement flood or damage to an office building. However, this type of service requires you to be available day or night, ready to address a client’s emergency at a moment’s notice. Residential cleaning services often have more consistent set hours, which may be more ideal for your schedule, especially if you are only able to work a certain amount of hours per day or week.
You may decide to offer more than one type of cleaning service to clients, and you can always add new services to your business as you grow. One of the ways you can determine which cleaning services to offer clients is to look at other cleaning companies already operating in your area and find your target audience.
Identifying your target audience
To determine the target audience for your company, analyze the potential competitors in your area, such as existing cleaning companies or businesses that may offer similar services as your business. Check out the Canadian Industry Statistics database on janitorial services to find out the number of cleaning businesses in your area. Look at what services your competitors offer and think about how you can make your business more appealing to consumers, so they are motivated to choose your company.
You should also think about the demographics of the area you plan to serve. Are there a lot of young professionals in condo buildings in your area that might find your service appealing? Maybe there are a high number of seniors homes or multi-level family homes that could be a good demographic for your business. Check out demographic data through your government’s online database to learn more about the age, income, and education level of people living in your area, or the area where you plan to operate your business. This will give you a better sense of how you should position and market your cleaning company.
Another good way to get a sense of your business’ demographics is to join a cleaning services association, made up of members of the residential cleaning industry, such as the Association of Residential Cleaning Services International. These associations can give you access to networking opportunities with other business owners as well as business advice and information to help you get started.
Launching your cleaning company
Once you’ve done some preliminary research about the cleaning industry, and thought about your ideal market, it’s time to dive into getting your cleaning company off the ground. There are several ways you can launch your cleaning company, including:
Starting a cleaning company from scratch
This option might be ideal if you are ready to jump right into entrepreneurship on your own terms, building your business from the ground up. Starting a company from scratch means you can dictate the business’ identity and approach, creating something that is all yours. To start a cleaning company from scratch, you will need to be willing to wear many different hats and put in the hours needed to make your business a success. As the owner of a cleaning company, you will likely be responsible for doing all the cleaning, marketing, and branding on your own. You will also need to be comfortable doing administrative tasks and bookkeeping to ensure your business stays healthy and financially viable.
Having start-up funds for your company is often a must, especially if you are launching your business on your own. You may need to access small business grants or other funding to get the start-up capital needed to launch your company. Putting in long hours and lots of hard work, combined with start-up funds, will help your business grow and thrive. To get started, you’ll need to register your business to ensure you are all good legally to jump in.
Buying an existing cleaning company
Another way you can launch your business is by purchasing an existing cleaning company and making it your own. This option might be a good fit if you have the funds to buy an existing business and do not want to assume all the risks associated with starting a venture from scratch. Maybe there is an existing company that could do much better with a few tweaks or adjustments. Or perhaps you get approached by the owner of an existing company looking to sell.
Before you buy an existing cleaning company, make sure you do your due diligence and look at the company’s finances, market value, and client list. Determine the value of the business and its potential for growth in the market. Use the value of the business to figure out how much the business is worth and what you should pay for the business to avoid overpaying or investing in a business that will not be viable.
Investing in a franchise
A third option is investing in a cleaning company franchise in your area that is doing well. When you invest in a franchise, you agree to a contract with other entrepreneurs to replicate their business for a franchising fee. Franchising can be a great way to own a business without the risks of a start-up. Most franchisees are also proven performers in the market and do not require as much business management as a new business, or an existing independent business.
If franchising a cleaning company seems like a good fit for you, take a look at the franchise’s financial performance and business model to confirm you’re making a solid investment. Keep in mind that when you invest in a franchise, you do not have as much autonomy as a business owner as you would if you started your own company or bought out an existing independent company. Franchises are often successful because they follow a winning formula, and you will need to be able to replicate the formula properly as a franchise owner.
Setting up your company’s location and transportation
Whether you decide to launch as a start-up or invest in an existing business or franchise, your next step is to establish your business operations. Start by deciding where your operations will be based. Will you operate your business out of a home office or rent a commercial office space? For a small business model that focuses mostly on cleaning people’s homes, you may be fine with just a home office. But a larger operation that cleans office buildings may require a commercial office space.
You should also factor in storage for your business. Think about how you will manage your inventory of cleaning supplies and tools, and how they will be stored, so they are easy to access. If your cleaning business requires a lot of equipment, such as pressure washers or window cleaning tools, you may need to rent a storage space.
Another important aspect of a cleaning company is transportation, as you will need to be able to drive to your clients to clean their locations. Do you have access to a car that can fit all your required supplies? Do you need to purchase a vehicle for your business that has enough space for all your equipment?
The cost of operating your business, including business location and transportation needs, can be factored into the start-up capital required to set up your company.
Complying with cleaning rules and regulations
As the owner of a cleaning company, you will be working directly with cleaning solutions and chemicals on a daily basis. To ensure your safety and the safety of your clients, make sure you read up on the Workplace Hazardous Materials Information System (WHMIS) for these items so you can create a safe work environment. If you plan to hire employees, walk them through WHMIS for all cleaning supplies used for your business.
Some cleaning companies opt for natural cleaning supplies or a more organic approach to their cleaning. This may be an option to consider for your company if you notice your target demographic values natural cleaning supplies, and you’d prefer a less chemical-heavy approach.
Pricing your cleaning services
When it comes to determining your prices, you will need to consider three factors:
1. The cost of your labour and materials
Estimate the cost of your time and the time of your employees, if any. Use an hourly wage to tally up the total cost of your time per client. Then, factor in how much your materials cost, including cleaning supplies, cleaning clothing, and any other items you use for your business.
2. The cost of your overhead
Identify any required expenses that are non-labour related, such as your transportation costs or your rent if you are renting a business space. Total these expenses for one year, and divide this number by the total cost of your labour and materials to get your total overhead costs for a year.
3. Your net profit
Your net profit is the amount you will earn after you have been paid by your client and covered your overhead costs. To determine your ideal net profit, think about how much net profit in percent that you’d like to earn. Most new businesses try to earn a 38 – 40 percent net profit, before taxes, in the first year of operation. So if you are aiming for a 38 percent net profit, you will need to apply a 61.3 percent profit factor to your labour and materials plus overhead costs to hit your target.
Calculate these numbers and compare your numbers to the prices your competitors are charging in your area. Try to match their prices or come just under, without undercharging for your services. For your first year of operation, you will want to try to cover your overhead costs and turn a profit that you can invest back into your business.
When it comes to billing your clients, see if you can set up a consistent payment schedule. If your company is focused on residential clients, arrange a weekly or monthly payment system where they pay you on the same days of the month to ensure you have regular cash flow. For commercial clients, you will likely need to set up an invoicing system to ensure you are paid on time, and at regular intervals.
Branding and marketing your cleaning company
As a new small business, you’ll want to keep your branding simple and easy to maintain so you can focus on growing your clientele. Go for a simple uniform that is consistent and identifiable, such as an apron in a unique colour. Pick a company name that is short and easy to remember. You might include a word that distinguishes you from your competitors, such as “green” or “organic,” or you might get creative to come up with a memorable name. Keeping all of the aspects of your company consistent (from your uniform to your company vehicle to your invoices) will give your brand a sense of professionalism and trustworthiness.
Hire a graphic designer to design a simple logo for your company and create business cards you can hand out to potential clients and current clients for referrals. Word of mouth marketing is free and effective, so encourage existing clients to recommend you to other people in the area. Online reviews of your business on a reviews-based site like Yelp or Google Business can also help to boost your company’s profile.
When you market your business, keep your target audience top of mind. Think about where they live and work, and leave brochures or fliers for your cleaning services in spots they frequent. If your target audience is social media users, consider getting a social media account for your business to market your services to potential clients.
Depending on the scale of your business, you may start out with several employees or only add employees a few years into your business once your company has grown. Hiring employees can be a great way to expand your company, allowing you to serve more clients and increase your profit margins. Only hire employees if your business is doing well, and you have enough profit to pay employees a consistent wage.
Hopefully our comprehensive guide has helped you better understand how to start a cleaning company and thrive as an entrepreneur. With hard work, planning, and smart marketing, you can launch your own company and be your own boss.