A wide variety of cleaning services are offered by cleaning businesses, such as vacuuming, dusting and floor mopping. Cleaning businesses have been focusing on the CDC-recommended procedures to eradicate the COVID-19 virus. This guide will discuss low-cost ways to get your cleaning business started on a tight budget. In seven easy steps, we will show you how to start your cleaning business.
1. Select the type of cleaning business you want
First, you must decide if you want to start a commercial or residential cleaning company. This decision will impact everything else, from financing to equipment to marketing.
Many cleaning companies do not offer services to commercial and residential customers. Each cleaning company offers different services and requires unique equipment. This is why specialization is important. It is also important to decide whether you are starting your business from scratch or buying a franchise that specializes in cleaning.
Commercial vs. Residential Cleaning Businesses
A residential cleaning service is one that specializes in cleaning homes, while a commercial cleaning service is one that specializes in cleaning businesses. It gets more complicated. The residential cleaning business is typically more affordable to start. However, adding on services like window washing and floor waxing can make it very profitable.
You also want to consider that residential is done during the day, and commercial is during the night. Also, residential cleaning is more detail oriented because the homeowner is more likely to inspect your work, and be particular about how you do certain tasks such as arranging pillows and blankets. Commercial covers more square feet, so you’ll have to work faster and less detail oriented than residential.
You’ll have more customers in residential areas, which means less competition for your business. Your budget and your lifestyle will determine which option you choose between residential or commercial.
Do You Need to Buy a Cleaning Franchise?
Franchises in cleaning are very popular. You can choose from more than 15 brands. Cleaning franchises are attractive because they are generally affordable to start. Many franchises offer the option of starting from home or part time. As low as $3500 for a Stratus Building Solutions franchise
It’s important to keep in mind that not all cleaning franchises will be affordable. Some franchises require a $200,000 investment. These franchises require vehicles, advanced equipment, and a physical location.
A franchise offers industry and business training, which is why many new business owners opt to purchase it. The Maids, for example, offers seven-weeks of business training. It also provides two days of culture and admin training at headquarters. You can also get four days on-site training at your place. This is a boot camp for cleaning businesses!
Research top cleaning franchises
|Stratus Construction Solutions
||$4,000 to $73,000
||$4,000 – $54,700
|Vanguard Cleaning Systems
||$6,000 – $37,000
|Anago Cleaning Systems
||$11,000 to $68,000
||$58,000 to $222,000
||$63,000 to $141,000
||$125,000 – $90,000.
||$112,000 to $156,000
Next, you need to create a business plan. Get your ideas down on paper. Also, research startup costs and project how much the cleaning business will make over the next two-years (referred to as financial projections).
A traditional business planning is required if you are looking for large amounts of funding from a bank, investor or other financial institution. To help with financial projections, most people will use a business plan software. Software is required to help you understand what an income statement or balance sheet are.
A one-page business plan is possible
The one-page business plan should take you less than fifteen minutes to complete. It’s easy: Simply write one to two sentences for each of the questions provided in the template.
Download template: PDF
Create a budget
You will need to calculate the financials of your cleaning company along with the business plan. Three figures are required: estimated startup costs, estimated monthly expenses, monthly income and estimated startup costs.
These are the most common expenses associated with a low-cost cleaning company:
- Permits and Licenses: $50 to $500 to Register as a Limited Liability Company
- Insurance: $500 – $3,500 per year, depending on how many employees. You can expect to pay only a few hundred dollars a month.
- Cleaning products and equipment: $300-$600 depending on the model of tools. Vacuums of high quality can be purchased for $200 to $300. There are $10 off for several all-purpose cleaning products, $10 off for a broom and $20 on a mop. You also get $20 off for dusting supplies.
- Advertising:$100 – $200 for print or online marketing
- Labor: About $12 per hour.
Once you have estimated your expenses, it is time to calculate your rates and the monthly income you will make.
Get your Cleaning Rates Set
Rates will be determined by factors such as location, competition, clientele and interior condition. Upgrades such as wall washings, appliance cleanings and window cleaning can help you earn more revenue.
These options are important when setting your rates
- Hourly rate: $30-$90 per hour. The most popular billing method is the hourly rate. Call your competitors to get an estimate of your hourly rate and inquire about the cost of service.
- Flat rate: $120-$150 for a single family home. This rate can be determined by estimating the time it will take to clean a house. This rate may be preferred by customers because they know exactly how much to pay each month.
- Square Foot Feet Rate: Commercial cleaning companies charge per square foot. An office building will typically be charged between $.05 and $.20 per square feet.
Add up the income and expenses
Once you know your startup costs and monthly expenses and your potential income, the next step will be to calculate your net income (income after expenses) and the time it will take to make your initial investment back. This is also known as breakeven.
Let’s take, for example, startup costs of $4,000. You calculate that your monthly expenses will be $1,000, which includes your quarterly tax withdrawal, or about 20% of your income.
If you clean 20 houses per month, earning $120 per house, that’s $2,400 in income. You will have $1,400 in net income each month after you subtract the $1,000 monthly expenses.
This scenario will require you to breakeven in four months and earn your $4,000 investment back. It’s unlikely that you will have 20 homes within your first month of business. This client base and your return on investment may take more than four months.
3. 3. Get the necessary funds
You did it! Now you know the amount of money it will take to open the cleaning business and keep it running for at least six more months. Now, you have to raise the money. How do you go about it?
In order to begin your business, it is a good idea to use personal money. Avoid debt whenever possible. If you have vehicles or a physical address, this may not be possible. No matter what type of business you are opening, you will still need to repay the debt if it fails.
To start your cleaning business (bullets), you might consider the following funding options:
- Personal money: Before you use any personal funds to launch your business, make sure that the money is transferred into a bank account for the business (described below).
- Crowdfunding – This funding option is often overlooked by new cleaning business owners. Crowdfunding is a way to raise funds from family and friends before you open your business. The funds can be used to buy equipment, and then for prepaid services.
- Credit Cards: We don’t recommend that you take on large amounts of debt in order to start your business. A credit card can be an option if you are willing to take on debt. You can get a 0% APR for 12-18 months if you have excellent credit.
- Personal loan – We recommend that you do not take out a personal loan in order to start a cleaning company. Because the loan isn’t secured by collateral, the interest rate is high (12%)
- Home equity loans: You can get a loan to fund your startup if you have equity in your house. The interest rate on this loan will be very low because it is secured by your home.
- Rollover to business startups (ROBS).: This is only for franchise openings. ROBS refers to when you use your 401(k), money to open a new business.
You can’t apply for traditional bank loans or SBA loans until you have a minimum of three years worth of income and expenses or paid off any equipment. Banks don’t usually lend to startups.
A bank loan or franchise financing may be available if you are franchising. A bank may be able to arrange funding through the franchise. If the franchise’s overall failure rate is low, a bank might be willing to finance it.
Now that you have enough money to start your cleaning company, it is time to organize your legal documents. To open a bank account for your business, you will need an employment ID number.
Register for an Employment Identification Number
To identify small businesses, the federal government provides the employment identification number (EIN). This number is used to file taxes, open a bank account or get a loan. The IRS offers a free EIN. It takes approximately 15 minutes to complete the entire process.
Register the Legal Entity
All owners of cleaning businesses need to register their business as an entity. If a lawsuit is ever filed against your business, you can protect your personal assets by registering as a legal entity. The cost of registering a business depends on the state. It can range from $40 to $500.
Tip Do not try to save money and skip this step. Cleaning business comes with a risk because you use chemicals in the homes and homes of your customers. You could be sued by customers if you cause damage to their homes, or if you accidentally destroy something. Your personal assets could be used to pay damages if you don’t have a legal entity.
- Sole proprietorship – This is the default structure for your business if you do not register it as a legal entity. A sole proprietorship does not provide legal protections.
- Limited Liability Company : This is the legal entity that you will most likely choose to run your cleaning business. It is easy to set up and requires little maintenance each year.
- C corp – The C-corp is another legal entity. It’s easier to set up than the LLC. Many business owners hire an attorney for assistance in setting up the LLC. C-corps are typically used for larger businesses that have many investors.
- S corporation – Technically the S-corp (small company corp) is not an entity legal. It’s a tax designation. The S-corp was created by Congress to give small businesses similar tax benefits as large corporations. To determine if your LLC can be designated as an S-corp, you can use the custom calculator.
Visit your state’s official website for business registration. You can use an online legal service if you find the site difficult to navigate. IncFile can register your company for free (plus any applicable state fees).
Register for a Business Bank Account
Get a bank account before you incur any expenses or take on any new clients. You want to make sure your personal and business finances are separate as a business owner.
Separate bank accounts are useful for keeping track of income and expenses in order to file taxes. This separation of finances makes it easier to handle any IRS audits.
You can open a business check if you already have a banking relationship. Novo is a great option if you are looking for a bank. Novo is an online bank that caters to small businesses. Novo does not require a minimum balance to open a checking account. Big banks may require $1,500.
5. Get Proper Licenses & Insurance
A license is required for a cleaning business to operate in the locality. All cleaning companies will require insurance. This insurance covers any damage to a customer’s house. Workers’ compensation insurance is required if you hire employees.
Your state may not require you to obtain a license to operate a cleaning business. Check your state’s website for information about licensing requirements.
A General Business License is required for your city. A record of the businesses that are in operation is all that’s required by most cities. Visit the official website of your city to obtain a General Business License.
Atlanta, for example, requires that all businesses obtain a General Business License. This applies to both online and home-based businesses. The license costs $75. A $500 fine can be imposed if you fail to get a license.
General Liability Insurance
You should at least purchase general insurance (GL). This insurance will protect you from property and bodily injury. A small cleaning business will need GL insurance. It costs around $300 per annum.
Customers may ask for proof that your company is covered by general liability insurance before they hire you as a cleaning service. Customers want to be able to collect for any damage your cleaning might cause in their house or business.
Although you will do your best to find the best people for your cleaning company, there is no guarantee that they won’t steal on the job. In the event of theft, a janitorial bond ( certainty bond ) protects the homeowner.
Here’s how it works. If an employee takes an item from a customer’s house, the bond company will pay for replacement. The bond company places your business on a payment schedule so that you can repay them over time. This is better than a lawsuit or large payment to the client.
A bond is required for new cleaning companies to ensure that thefts don’t cause financial ruin. An annual janitorial bond costs around $200
Workers’ Compensation Insurance is required if you have employees. Workers’ compensation insurance covers employees who are injured while on the job and pays for their medical bills, rehabilitation costs, as well as lost wages. Workers’ compensation will cost approximately $450 per employee annually.
6. Buy Cleaning Equipment
Your first customer is almost accepted! First, you will need to buy the equipment necessary to do the job. Below is a list of affordable items that will help you get your cleaning business off to a good start.
These are the basics you’ll need:
- Clean uniform or apron
- Use paper towels
- Microfiber cloths
- Latex gloves
- Use scrubbers
- Toilet brush
- Grout brush
- All-purpose cleaner
- Window cleaner
- Wood cleaner
- Grout and tile cleaner
- Extendable duster
Don’t be overwhelmed by the sheer number of cleaning products and brands available if you are starting from a tight budget. When you first start out, make sure to only purchase the items that are necessary. Do not spend more or get into more debt than you need.
Write down your cleaning wish list items. It’s tempting to want a premium vacuum right now. But resist the urge.
In your business plan, list your wishlist items. Indicate the net income level at which you will make each purchase. There will be milestones in your business that you can look forward to!
7. 7.Market Your Cleaning Business
Let’s discuss low-cost, free ways to get your cleaning company noticed. All online marketing, including Google My Business and social media, is free. Although physical marketing materials may have a price, you can make an impact on customers with creativity.
Material for Physical Marketing
There are many options available for physical marketing materials such as flyers, business cards and postcards. We’re talking about marketing on a budget so I will only discuss one low-cost strategy to market a cleaning company.
Leave a note on a card after each cleaning. Thank the homeowner for their service and ask them to forward your card to anyone who is interested in having their home cleaned.
If you are promoting your business using marketing materials, leave a small gift like chocolates or something that the homeowner would appreciate, such as a hand sanitizer. This is called reciprocity. This personal marketing creates an emotional connection between the homeowner and their customer, which makes them more likely than others to reciprocate.
These are free online marketing strategies that will help you get your cleaning business noticed online.
- Google My Business: All local businesses can use the GMB, a free listing provided by Google. Your GMB will be displayed first to potential customers who search for residential cleaning businesses.
- Google My Business: After you have created your GMB listing, Google will also provide a one-page website for free. Although this is not a permanent website, it is a great option for cleaning businesses on a tight budget.
- Social media profiles – The best advice for social media success? Choose one platform and use it well. You can choose the social platform that you like best (for cleaning, either Instagram) and build your following there.
- Local business directory: A cleaning company should be listed at least on Yelp or Yellow Pages. You can find other directories that you should be listed on by doing a Google search for your service and seeing what results are returned.
Network in Your Community
Networking in person is an effective and memorable way to promote your business to potential customers. Try attending small business groups in your area such as the Chamber of Commerce and Rotary clubs. Volunteer to serve as a leader in order to make a lasting impression on the organization.
We have discussed the steps required and low-cost ways to get your cleaning business started. A franchise is a great option for a new business owner who needs the support and training they need. After you have your first customers, it is important to put in great work. A clean house or office is the best way to market your business.