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 step guide to starting your 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 cleaning business?
A cleaning business can be started on a “shoestring” budget with basic and general cleaning supplies available at any grocery or hardware supply store. Some basic supplies you’ll need include: garbage can liners, spray bottles, trash bags, buckets, feather dusters and dusting rags, mops, toilet brushes, paper towels, squeegees, general or all-purpose cleaners, toilet-specific cleaners, floor cleaners (including supplies for cleaning wood flooring), and liability insurance.
Aim for between $500,000 to $1,000,000 in liability insurance. Larger amounts will be necessary for corporate clients.
In total, your startup costs should not exceed $1,000 for a basic cleaning business.
If you are starting a larger operation, your costs could include professional service vehicles and a cleaning crew. A fleet of vehicles could cost between $10,000 and $30,000, depending on the vehicles you use and whether you buy new or used.
Read our cleaning business purchasing guide to learn about the materials and equipment you'll need to start a cleaning business, how much to budget, and where to make purchases.
What are the ongoing expenses for a cleaning business?
Ongoing expenses include costs for cleaning supplies, insurance, and vehicle maintenance. These costs vary entirely based on the size of your business and types of contracts you secure every month.
A small company may only spend $500 to $1,000 in cleaning supplies. However, large commercial operations spend tens of thousands of dollars on equipment and supplies. Larger commercial cleaning companies also may need to spend more on maintenance of commercial cleaning equipment.
Floor polishers, for example, will need to be maintained. For a small residential cleaner, this is not a concern because it’s not typically a piece of equipment used in a home. However, in a large commercial office building, it’s a practical necessity.
Insurance is another major cost, especially for large commercial cleaning operations.
Who is the target market?
Ideal customers are long-term corporate or multi-year clients willing to sign service contracts.
How does a cleaning business make money?
Cleaning businesses make money by charging clients for various cleaning services. These charges can be on a per hour, per square foot, or per contract basis.
How much can you charge customers?
There are several ways to charge for services. Some companies charge between $25 and $35 per hour for cleaning. Others charge per square foot. Typical rates for square foot are between $100 and $120 per 1,000 square feet. Some companies, however, charge more, up to $150 per 1,000 square feet. A per contract flat fee can also be negotiated if the client has an unusual building or home or needs custom pricing for volume business.
For deep cleaning, businesses typically charge more.
For example, a company could charge $75 to deep clean a kitchen, but only $30 for a bedroom, since a kitchen tends to be dirtier than a bedroom. Windows tend to be expensive, at $5 per window and $3 per screen. Polishing and carpet cleaning ranges from an average of $0.25 to $0.50 per square foot.
How much profit can a cleaning business make?
Profit margins vary based on the scale of the operation and the contract. They can be as little as 4% or as much as 48%. Larger businesses tend to have smaller margins, but higher revenue and total profits (by dollars). Smaller cleaning companies may have a higher margin, but lower total revenue.
A small cleaning operation can make between $50,000 and $100,000 per year. A large commercial cleaning company can make between $1 million and $10 million per year or more.
How can you make your business more profitable?
Making your company more profitable is difficult. This is because cleaning services are all relatively the same. However, you can try differentiating yourself by offering services your competitors aren’t. For example, if your local market doesn’t offer pet waste removal, you might add that as a complimentary service.
Another way to stand out in your marketplace is by developing a company culture that differs from other cleaning companies. Most cleaning businesses operate what could arguably be called a “boring” business. The culture is fairly “quiet.” You could offer a sharp contrast to the industry norm by using more audacious advertising.
You could also offer educational material. For example, offer potential clients booklets and brochures about what really lurks deep inside the fibers of their carpets or in the corners along the baseboards. Highlight statistics and research on indoor air pollution and how it makes people sick. Position yourself as a leader in your industry instead of “just another cleaning company.”
What will you name your business?
Choosing the right name is very important. 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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your cleaning business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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 cleaning business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
For 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.
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.
Cleaning services may also wish to look into applying for a resale certificate, as a resale certificate allows retailers to purchase goods intended for resale without paying sales tax.
In businesses where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service. You may wish to require clients to sign a services agreement before starting. This agreement clarifies client expectations and minimizes risk of legal disputes by setting out payment terms and conditions, and service level expectations. An example of one such services agreement can be found on the ACRPWS website.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your 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
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 cleaning business
Getting new clients beyond the first year requires more advanced marketing. Business networking events are also a great way to meet potential clients. Hand out flyers to local businesses or in residential neighborhoods (check local laws first). If you’re experienced with direct mail, contact a list broker and buy a list of names of people who have already purchased cleaning services in the past. Then, mail those prospects, pitching them your services.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Your company’s services should differ from other cleaning services in the area or you should focus on a particular demographic or market. For example, specializing in cleaning certain types of buildings or offering specific services may give you a competitive edge.
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 Cleaning Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
This is an ideal business for an individual with an eye for detail and a strong work ethic. Cleaners also should be comfortable performing manual labor for many hours, since this is a job that requires you be on your feet all day. Entrepreneurs who start this kind of business also tend to work long hours and interact with a lot of different personality types.
What happens during a typical day at a cleaning business?
Day-to-day activities of a cleaning business include vacuuming, mopping, dusting and sweeping, window cleaning, and general cleaning of rooms and possibly exterior surfaces of some buildings. Business owners also have to maintain customer accounts and invoices.
Larger companies spend a significant amount of time maintaining and signing customer accounts. Smaller cleaning companies typically maintain a small client load due to the nature of running a small business. On average, a small cleaning business can maintain between 20 and 70 clients.
A large company can maintain over 100 clients.
What are some skills and experiences that will help you build a successful cleaning business?
No special skills are required, but experience in cleaning helps. Most entrepreneurs to start this type of business have a passion for cleanliness and doing manual labor. Some businesses may benefit from special commercial cleaning certifications, which allow them to prove their efficacy to larger corporate clients.
What is the growth potential for a cleaning business?
The smallest cleaning businesses are run as one-person shops. Larger operations employ staff or hire subcontractors. Some businesses franchise their model and collect franchise fees. Larger operations also tend to put more money into vehicles (fleet) and advertising, focusing on strong branding and name recognition.
TRUiC's YouTube Channel
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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.
What are some insider tips for jump starting a cleaning business?
The easiest way to get started in this business is to ask friends and family if you can clean their homes. Simple cleaning contracts will solidify your reputation in this industry and help you get referral business, which will help fuel your first year of growth.
How and when to build a team
Building a team is never necessary for this business. However, if you want to expand, start hiring independent contractors or employees to help you clean as soon as your service contracts are too much for you to handle on your own.
Read our cleaning business hiring guide to learn about the different roles a cleaning business typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.