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Start a carpet and upholstery cleaning business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your carpet and upholstery cleaning business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a carpet and upholstery cleaning business?
You could either buy a franchise from an existing operation or start an independent service. According to the trade association Institute of Inspection Cleaning and Restoration Certification (IICRC), franchising fees can run from about $20,000 to $50,000. That doesn’t cover equipment, cleaning solutions or transport vehicles, but does include include training and the support of a known brand. For example, if you represent yourself as a Stanley Steemer company, customers will be familiar with your brand and perhaps have used Stanley Steemer services in the past. If they were satisfied then, you’ll get the credit even if you had no association with that previous company.
Whether you buy into an existing franchise or go on your own, your startup costs will include the following:
- Carpet cleaning equipment, which includes a commercial rug cleaner with attachments and holding tank for wastewater, and long hoses to water supply
- Cleaning solvents, for which a startup supply can cost several hundred dollars
- A van for transport of equipment and possibly for operation
- Business licenses and insurance (consult your attorney and independent insurance broker to see what you’ll need in these areas)
- Website development and/or other means of promoting your business, including van signage and logo (Consider contacting the graphic design department of your nearby university or community college for talented students who can design logos or create websites at a much lower cost than through an ad agency or even freelance experienced designers.)
The equipment and supplies can run from several thousand dollars to $30,000 for a new truck-mounted system. All of the supplies and equipment can be bought used online much less expensively at sites such as this. A used van can cost as little as $5,000.
What are the ongoing expenses for a carpet and upholstery cleaning business?
Once you’ve initially bought your major equipment and transport vehicle, your ongoing expenses will mostly be cleaning supplies which you’ll find through janitorial service vendors. Shop to find the lowest prices on these commodity products. Your other ongoing expense will be payroll costs for your workforce, which will be determined at least in part on prevailing wages within your region, and gasoline for your vehicles. This cost is difficult to quantify since it involves a number of variable factors: the size and mileage and condition of the vehicle, distances within your market, numbers of jobs per day, etc.
As your business grows, you might add teams to meet growing scheduling demands. If that’s the case, you’ll eventually have to invest in additional equipment and transport vans.
Who is the target market?
Anyone who owns carpeting, rugs or upholstered furniture and wants to keep them clean is a potential customer. That’s virtually every household in America—or, more realistically, in your marketing area.
While residential cleaning is where the customer volume is, commercial customers are likelier to use your services more frequently. That’s because they have more foot traffic, so their carpets and upholstery get dirtier faster. And since their facilities are in the public eye, the decision makers are more motivated to maintain appearances. They’re also likelier to have more square footage of need, so one stop can generate more income than an average-size private home. These public spaces include office buildings, apartment buildings, shopping centers, auto showrooms, churches and other places of worship.
How does a carpet and upholstery cleaning business make money?
The business charges home residents, business owners, property managers and other customer types for cleaning services. The going rate is about 30 cents a square foot and business owners in this category try to average at least $100 an hour per visit. (The actual rate tends to range from about $75-$150 an hour.)
How much can you charge customers?
The going rate for carpet cleaning services is about 30 cents per square foot. But many customer relationships are developed from couponing or by offering contract discounts. The goal, from the business owner’s viewpoint, is to gross $75 to $150 per hour in the field.
How much profit can a carpet and upholstery cleaning business make?
Carpet cleaning businesses bill at least 30 cents per square foot and try to gross at least $100 an hour per job. Top-scale hourly is about $150. With that figure, if a single truck can stay in operation seven hours a workday, it will gross about $700 per day for 240 workdays. However, the work is seasonal in some areas of the country, so it’s not always possible to bill for 240 days. Experts expect to net anywhere from 10 percent to 50 percent pre-tax profit.
How can you make your business more profitable?
There are many additional sources of related business you can undertake. The same equipment and cleaning supplies can be used to deep-clean cars, boats and recreational vehicles. Similar supplies can be used to clean tile and grout, natural stone and even hardwood floors. And since you’re already in homes and businesses, consider expanding your service offering to include duct cleaning. Minor carpet repair and restoration and drapery cleaning services might also be extended.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your carpet and upholstery cleaning business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a carpet and upholstery cleaning business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Carpet cleaning businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your carpet cleaning business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a carpet and upholstery cleaning business
Your best means of promotion is to start with your current network of friends, neighbors, social media contacts, church or charity contacts and business associates. If you don’t already belong to your local chamber of commerce, join up. That’s a good way of establishing customer relationships with business owners and decision-makers for public spaces.
Your website should be easy to navigate and encourage responses. Consider couponing as a means of introduction to a new customer base.
How to keep customers coming back
The best way to attract and retain customers in this business is to ask for referrals from every satisfied customer. When people consider getting their carpets cleaned, they often look for referrals since they want to be able to trust strangers they invite into their homes.
Try to get your commercial customers on long-term contracts by offering discounts for repeat business.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Carpet and Upholstery Cleaning Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Organization, sales ability and customer dedication are key. You must be able to promote your business and sell your services, supervise your people in the field and handle complaints. You should also have patience, since employee turnover can be high. That means you’ll need to regularly train new workers and supervise them in the field to make sure the job gets done right every time.
What happens during a typical day at a carpet and upholstery cleaning business?
Your typical business day might include the following activities:
- Networking on the phone, online or in person to find customers and encourage additional business from them
- Training and supervising your work crew, which often means accompanying them on-site to inspect their work and help them overcome obstacles
- Handling the cleaning operation yourself if you have few or no employees, you overbook or workers fail to show up as scheduled
- Ordering cleaning supplies
- Handling the day-to-day business of operating your own company: paying bills, invoicing customers and staying current on taxes, insurance and other issues
What are some skills and experiences that will help you build a successful carpet and upholstery cleaning business?
Your planning skills are critical. Start by writing a business plan as a strategic blueprint. It should answer the following questions: What services will you offer? Who is your market, both geographically and by customer type? Who are your competitors and how is your company different? Where will you get your equipment and supplies, and at what cost? What must you charge to be profitable on every job?
You must also be adept at making sales, maintaining work schedules and managing a workforce if you have one. And finally, you must be able to maintain your poise under pressure and to be committed to keeping your customers happy. A satisfied customer will continue to call for your services until they’re no longer satisfied.
What is the growth potential for a carpet and upholstery cleaning business?
According to business research firm IBIS World, the industry’s annual growth rate was projected at 1.9 percent between 2011 and 2016. The firm also pointed out that rising per-capita income is likely to increase business and that customers use such services every year or two, on average. (Many commercial users are much more frequent customers.)
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
When your bookings exceed your ability to service the business by yourself or with one or two employees, that’s when it’s time to consider investing in growth. First make sure that the sales growth is real and long-term so you don’t put several thousand dollars into your business for another van and more cleaning equipment unless you can generate steady income to cover the expense.