How to start a cleaning business

Before you begin the process of starting your cleaning business, you should determine what kind of service you want to offer. You have four general choices:

• Small scale home and office cleaning – this could be just you, providing a cleaning service to several houses or small businesses per week or month. Your set-up costs will be low, because unless you offer extras such as carpet cleaning, you won’t need a lot more equipment or supplies that you do in your own home. If your customers are spread wide and far, you will need a vehicle, but once again if you already own a car, that will probably do the job. This kind of operation could easily expand to a small team cleaning more houses and businesses without the need for an office or management team and systems. 
• Large scale home and office cleaning – as above but with more employees, vehicles and a dedicated back room staff to keep track of your workers, customers and accounts. This kind of operation is usually provided by franchised cleaning services, but it is still possible to build an independent and  successful large-scale business if you focus hard on marketing and maintain a firm grip on quality standards. 
• Franchise cleaning business – as part of a large-scale cleaning franchise, such as Merry Maids or Jan-Pro, you can get corporate support, benefit from national brand recognition and have access to a fertile target market that is softened by major advertising. However, be aware that buying into a franchise will also reduce your control over your own business and it can be expensive to join. For example, you’ll need to invest up to $78,000 to buy into a Jan-Pro franchise.
• Specialist cleaning – this means providing irregular but more costly cleaning services to businesses and for unique tasks, such as industrial cleaning, restaurant and hotel kitchen sanitizing, chemical cleaning and so on. Note that this kind of work may be hazardous and you will usually need trained staff and may need special licensing to carry out these kinds of task. However, these types of project can pay well and you may have few competitors to deal with.

The good news is, no matter which route you choose to follow, the basic steps to start your cleaning business remain the same:

Step 1: Fund your cleaning business

If you don’t have enough cash on hand to launch your new business on your own, you’ll need funds from investors or lenders. Many new business get started using financial support from friends and family, but if that’s not an option, there are networks of venture capitalists and angel investors readily available online. Bringing in external investment can give you the cash you need to get your cleaning company off the ground but be aware that investors will usually want a piece of the action in exchange for their money. This means you will need to give up a share of your ownership and you may lose overall control of the business. 

With a business loan you don’t have to surrender a share of your venture to get the funds. Although it’s never easy for new businesses to borrow money, some lenders have special products and programs for startups and entrepreneurs. These types of financing include:

• Term loan – this is a lump sum that you pay back over time. Borrow up to $5million over as long as 25 years. Collateral may be required.
• Business line of credit – a loan that functions like a high-value credit card. Withdraw cash anytime up to the maximum of your credit limit. You only pay interest on the sum you withdraw, not the whole line. This can significantly reduce your borrowing costs. Collateral may be required.
• Merchant cash advance – borrow against the value of your credit/debit card sales. As your card sales increase, your credit limit goes up. Pay the loan back with a small percentage of your weekly or daily card sales. No added collateral is required.
• Equipment loans use the asset you’re financing as security, similar to a car loan or a residential mortgage, so no added collateral is required.  Buy machinery, furniture, technology, etc. Use the equipment as you pay for it. 

To get these types of loan you can approach banks, credit unions and online lenders one by one, or you can use the services of a loan marketplace that will immediately introduce you to a choice of loans from a range of lenders. Some marketplace platforms can also give you advice and help you with the application process. This can be especially useful for borrowers who have never taken out a business loan before. 

Step 2: Choose your market

When first starting out you’ll want to  align your services and clientele with local demand, your skills, and transportation options. If you rely on walking to jobs, set a comfortable commuting radius and focus your research in that area. Those with access to a car or public transportation have more flexibility to explore a larger territory. If you’re starting off much larger you could organize your teams into city areas and provide them with vehicles to go from job to job.

Competitor research is essential in planning your business. Look for gaps in services that competitors may be missing. Residential cleaning is often easier to enter than commercial cleaning, which is usually dominated by large companies with more resources. It also typically takes longer to acquire corporate clients. To set your business apart you could further narrow your market, such as focusing on apartments or single-family homes.

Step 3: Find a specialty 

Initially, you’ll want to gain as much business as you can, but over time you will probably have more success by providing a specialised service, such as cleaning factories, schools, or hospitals.  You could also provide high-end services to larger homes, such as carpet cleaning, chandelier cleaning, wardrobe and cupboard organizing. Concentrating on a core service gives you room to establish a loyal market and limit your competitors. Best of all, because there will be fewer cleaners offering what you do, you can charge a premium labor rate.

Step 4: Plan the business budget

Cleaning services are low-margin businesses, so you need to keep a grip on your budget and monitor your expenses daily. Apart from employee wages, transportation and cleaning supplies and equipment will be your major costs – although if you’re part of a franchise chain you’ll need to factor in added costs such as renewal fees, sale commissions, credit card processing fees and so on. 

Typical costs for cleaning businesses, (small and large):

• Worker wages and benefits
• Transportation
• Cleaning supplies
• Specialist cleaning equipment (such as high pressure jets or floor polishers)
• Franchise fees and commissions
• Marketing costs – leaflets, local ads, website maintenance, etc
• Accounting and back room systems
• Insurance and permit costs

Step 5: Register the business

Once you’ve settled on a memorable business name, you must decide if you want to run the business as a sole proprietorship, an LLC or a corporation. Although it involves more paperwork, operating as a corporation can protect you if the business does not succeed, as you are not personally responsible for the company’s debts. If you choose this route, you must submit your articles of incorporation to the secretary of state’s office in the state where you register. You can do this in-person, online, or by mail. You will have to pay a registration fee at the time of filing – typically $100.

Step 6: Find and maintain clients

Business customers will usually come to you via advertising, email drops and introductions from local trade groups such as your local Chamber of Commerce. Domestic clients are more likely to find you via web searches and from leaflets and local ads you have distributed. Word of mouth can also be important in the residential market – ask clients who are pleased with your service to recommend your business to their friends. 

Keeping your clients is even more important than finding new business, as it is far easier to get more work from existing customers than new ones. Ultimately, the quality of your cleaning will determine if your customers stay with you, but pricing, loyalty programs and a willingness to go the extra mile can also play their part in maintaining good business relationships. 

Step 7: Invest in advertising and expanding

As the old saying goes, advertising pays – and you’ll need to market your new cleaning business to establish a solid customer base. Experts suggest allocating up to 20% of your operating budget to marketing activities in the first year of operation. 

Before you start any kind of marketing activity, conduct some basic research – what are your competitors selling? What kind of loyalty programs do they offer? Are there any successful promotional tactics that you can mimic? Create a plan that promotes your brand and sets your cleaning service apart from all the rest. Utilize a range of marketing actions to get your story across:

• Social media
• Flyers to local residents and commercial locations such as office blocks, hospitals, factories
• Local advertising
• Promotions for special services, discounts and loyalty deals
• Sponsorships of local school sports teams