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Start a commercial 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 step guide to starting your commercial 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 commercial cleaning business?
Costs to start a cleaning business are minimal. It can be started on a shoestring budget for less than $500. A larger company may budget up to $100,000 and start with professional cleaning equipment like floor waxing machines, floor washers, commercial mops and cleaning buckets, and cleaning and service vans.
What are the ongoing expenses for a commercial cleaning business?
Ongoing expenses for a cleaning company include cleaning supplies, utilities, insurance, and maintenance for transport vehicles. These costs may range from a few hundred dollars for smaller operations to many thousands of dollars (or millions of dollars) for larger companies.
Who is the target market?
Preferred client types are large commercial clients. Most cleaning businesses work with big chain restaurants. Undesirable clients are companies that have no need for ongoing cleaning services.
How does a commercial cleaning business make money?
These businesses make money by charging clients a fee for cleaning services.
How much can you charge customers?
Businesses can charge clients an hourly rate between $50 to $150 per hour, with a small crew of 2 cleaners typically charging $50 per hour. Smaller crews tend to take longer to complete jobs, however, so the total cost may be higher for the client. Cleaners can also charge a flat-rate for services. This makes sense when you know you can complete a job on time or under an equivalent hourly billing time.
For example, let's say you know a job normally takes 10 hours to complete. If you charge the customer $50 per hour, you will end up with $500 in billable cleaning hours. However, you may decide to charge a flat fee for services of $600 to $750. The higher fee guarantees that you'll finish on time and protects the customer from unexpected expenses due to longer-than-expected cleaning requirements.
The risk to the business is that a job may actually take longer than expected to complete, resulting in a partial or total loss of profit on the job.
How much profit can a commercial cleaning business make?
Profit margins for a cleaning company can be thin. Some companies only profit 1% to 5%. However, if you’re a smaller company working with a small cleaning crew, it’s entirely possible to price your services at a 20% to 40% profit. Local markets will dictate your pricing unless you offer value-added services that can’t easily be compared to the competition.
How can you make your business more profitable?
Making your business more profitable usually means specializing in one type of industry or offering value-added services. For example, you might specialize in cleaning hospital kitchens, which may require certain specialized knowledge of hospital cleaning procedures and processes (including sanitation requirements).
You might also choose to offer value-added services, like complimentary cleaning of blinds and doing laundry service for clients. You could also increase the value of your services by offering cleaning services for special equipment, like ice cream machines.
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.
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 commercial 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, and it's easy enough to form by yourself, or check out the top business formation services.
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 commercial kitchen 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.
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.
Commercial kitchen 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 commercial kitchen 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.
Occupational Safety and Health Administration (OSHA) Regulations
Commercial kitchen cleaning business owners may interact with harmful chemicals and it is important to reference to OSHA’s (Occupational Safety and Health Administration) rules and general standards for chemicals:
- Standard 1910.1200 states that employees be adequately informed of all potential hazards when working with chemicals
- Standard 1910.132 states that the necessary personal protection equipment be provided to the employee working with chemicals, such as safety glasses, a face mask and suitable gloves
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 commercial cleaning business
Commercial cleaning businesses are usually started organically.
Simple ways to start a cleaning business are to go door-to-door and find prospects who need your services. Contact local business owners you know and ask if you can clean their kitchens at a discounted rate. Get referrals from those business owners and expand. You can also hire a mailing list broker and mail all the restaurants, hospitals, and other businesses with kitchens in your local area.
Follow up with a phone call and offer for services. If you have a business's email, try using email marketing.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Differentiate yourself through specialization. Some companies specialize in schools, for example, and may offer value-added services unique to that type of organization, such as decoration services and removal before and after holidays or during special events.
Another way to attract customers is to offer discounts on cleaning services or special packages for first-time customers. Run promotions and contests so customers have the opportunity to win free or discounted cleaning services. Offer a referral or loyalty program to your existing customers.
Permanently discount rates for long-time customers in exchange for referral business.
Finally, consider offering discounts for services that exceed a specific dollar amount or for long-term cleaning contracts.
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 Commercial 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?
This business is perfect for individuals who are passionate about cleaning and have good attention to detail. Business owners should also be passionate about working with other business owners and maintaining high standards for cleanliness.
What happens during a typical day at a commercial cleaning business?
Day-to-day activities of a kitchen cleaning service include cleaning and maintenance of kitchens and related areas. Daily cleaning regimens include:
- Changing foil linings for grills, ranges, and flattops
- Disinfecting prep areas
- Wiping and cleaning grills, ranges, fryers, and underneath all equipment
- Washing can openers and meat slicers
- Wiping down walls and back splashes
- Mopping floors
- Cleaning machines
- Disinfecting waste disposal areas
- Running hood filters through the company’s dishwasher
- Washing and sanitizing walk-in coolers
- Deliming sinks and faucets
- Cleaning floor drains
- Changing pest traps
What are some skills and experiences that will help you build a successful commercial cleaning business?
Being a successful cleaning business means that you have staff that are well-versed in various cleaning methodologies, have good attention to detail, and are knowledgeable about how to mix and use cleaning products and equipment. This is a very labor-intensive job and, while not heavily skill-dependent, it does require stamina.
What is the growth potential for a commercial cleaning business?
Growth potential for this business is significant.
Small cleaning operations can be run by a staff of one person, but at least 2 to 3 is preferable. Larger operations can employ 10 to 50 employees, or even hundreds of cleaners. HOODZ and Janiking are examples of large cleaning companies that operate as a franchise.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
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.
What are some insider tips for jump starting a commercial cleaning business?
Focus on small business owners instead of large chain restaurants because large corporations may already have long term partnerships with professional (and established) cleaning services. Smaller companies may also have a greater need for services but can't afford to hire a full-time employee. These may be smaller jobs but will form your "core clients."
How and when to build a team
Building a team is necessary usually from the start. Unless you are working with very small businesses, it’s easy to get overwhelmed. Start by hiring a small cleaning crew and expand as revenue and profit allows. A small business can be started with just one or two cleaners. You can expand the business to accommodate anywhere between 10 and 100 employees. This would be considered a mid-sized company. Large commercial cleaners employ thousands of people or franchise the business.