Congratulations on your decision to start your own business. You are probably excited and apprehensive at the same time. You have passed the first hurdle: Choosing the type of business you want to start and the industry you want to join.
The commercial cleaning industry covers janitorial services, pest control, and building maintenance and is worth $117 billion in the United States. Some cleaning business owners catering to customers like restaurants, retail spaces, and office buildings saw a decline due to the coronavirus pandemic. However, a 7.4% gain and recovery is forecasted this year, with 5.4% annual gains until 2025.
A commercial cleaning business can be a profitable opportunity with high growth potential. Depending on the services you'd want to offer, it can also be inexpensive to start. Read on for an overview of the steps you can take to start and grow a commercial cleaning business.
Establishing Your Commercial Cleaning Business
One of the many decisions you need to make at the beginning of starting your business is to choose what services you'll offer. There are several commercial cleaning services to choose from, such as:
- General cleaning: This includes mopping and vacuuming, waxing floors, removing trash, dusting, and sanitizing bathrooms. Your typical clients for this service would be restaurants, offices, schools, and retail establishments.
- Construction site cleanup: This involves removal of construction materials and final cleaning of the space for occupancy. Your potential clients for this service are construction companies and property management firms.
- Hazardous waste cleanup: You'll need specialized training and permits from the U.S. Environmental Protection Agency (EPA) and Occupational Safety and Health Administration (OSHA) to offer this service. Your target market for hazardous waste cleanup includes federal agencies, oil and gas companies, construction companies, and hospitals and other medical facilities.
- Window cleaning and carpet cleaning: You may choose to offer separate cleaning contracts for windows or carpet cleaning for sites with significant square footage (such as 50-story buildings).
To help you decide which services to offer, consider your experience, the market, and the start-up costs. Generally, it's better to provide services you can do yourself. If you have previous experience cleaning hazardous waste, for instance, it's easier for you to offer the service because you already have the training and are familiar with the cleaning solutions needed.
Your startup cost may vary depending on the services you'd want to offer. A specialized service, such as hazardous waste cleanup, may require additional permits and equipment. This is why you also need to know how much your initial costs will be and how you're going to fund them. List what you'll need to get started, such as:
- A vehicle
- Cleaning equipment (e.g., vacuum cleaners, mops, brooms, buckets)
- Cleaning supplies (e.g., cleaning products, disinfectant, gloves)
- Administrative costs (e.g., permits, licenses, registration fees, attorney fees)
- Working capital to cover the first three to six months of operating expenses (e.g., payroll, workers' compensation, business insurance, general liability insurance)
Make sure to do market research before you lock in a specific niche. Market research doesn't have to be complicated. You can do it by canvassing the area and learning about your target market and competitors. Your goal is to determine if there's a need for the services you're offering in the market.
For example, to determine if there's a need for hazardous waste cleanup, research the number of hospitals, medical facilities, and other sites that deal with hazardous materials in your area. Learn about your competitors, as well. You may find out that there are only a few facilities that need service providers but that there's also only one cleaning company providing the service, which means there's a market for your services.
From the information you gathered on your market research, you could test the profitability of your business idea. Find out the average price of commercial cleaning services in your area. On average, commercial cleaning prices typically range from $135 to $300 depending on the type of service and square footage of the site. Estimate your startup costs and monthly expenses to develop pricing for your services and calculate your profit projections.
After doing market research and calculating your potential income, you have the information to create a business plan. A business plan is your company's blueprint - you can add and delete details as you gather more information. For the most part, it should include what services you plan to offer, the legal structure of your company, startup costs, profit projections, and how you plan to market your services.
Building Your Company
You've done your market research, determined your startup budget, and even wrote a business plan - you are ready to get started!
Choosing the Legal Structure of Your Business
You are on your way to becoming a proud owner of a commercial cleaning business. It's time to get the necessary documents to make it official. First, you need to decide on the legal structure of your business. The four primary business entities are:
- Sole proprietorship
- Limited liability company (LLC)
Each type of entity has its advantages and disadvantages, such as liability protection, costs, and requirements. Consult with professionals if you're not sure what's best for your business and industry.
To operate your business legally, you also need a combination of licenses and permits from federal and state governments. The requirements vary depending on your business structure, state, or county. To make sure you apply for the correct business permits and licenses, call or visit your county or city's business licensing department. The Internal Revenue Service (IRS) and the U.S. Small Business Administration (SBA) also offer additional information and resources.
Before you start booking clients, you may also want to open a business checking account for your company. Companies formally structured as an LLC or a corporation are required by the IRS to have accounts specific to the business. This is because LLCs and corporations are recognized as entities separate from their owners or founders.
If you registered your business as a sole proprietorship, you may use your personal bank account for your business (though the practice is generally discouraged because it doesn't separate your personal finances from your business transactions).
With a business bank account, you can accept payments and pay your suppliers under your company's name. It also helps you build your company's credit and may save you a few hours at tax time.
You'll need the following to open a business bank account:
- Social Security number (SSN) or employer identification number (EIN)
- Personal identification
- Business license
- DBA (doing business as) or business name registration
- Partnership agreement papers (partnerships)
- Organizing documents (LLCs and corporations)
Lastly, establish a pricing structure for cleaning jobs. Develop pricing based on the location, frequency, and area size. Unlike residential cleaning, commercial cleaning jobs are generally priced per contract. Anticipate negotiations and calculate how many discounts you can afford to offer. You may also want to provide hourly rates for customers who prefer those.
Finding and Booking Your First Customers
To build and grow your business, you need customers. As a business owner, you'll find that marketing is constant - how else will potential customers find you? Think about brands like Coca-Cola, Amazon, and Nike - everybody knows them, but they still pay to advertise.
When you start looking at ways to promote your business, you'll probably encounter a hundred different methods and mediums. To avoid confusion, think about your ideal clients. Who are they? What are their problems or priorities? How can you help? And what's the best way to reach them?
You will most likely need a website to create an online presence. Having a Yelp page and Google My Business may also help establish your brand. You don't need to sign up and advertise on all social media platforms. Instead, identify the best ways, places, or events to meet your ideal customers and show up there. For instance, if you offer construction cleanup services, be on the lookout for community events where you can hand your business cards to contractors (e.g., home and garden shows).
The important thing is that you take on an active role in your company's marketing. Getting out in the community to introduce yourself to local business owners, following up with potential clients, and making sure you're providing professional cleaning services at all times are excellent marketing strategies.
Setting Up Your Day-to-Day Operations
Before you officially open the proverbial doors to your business, you should have the following systems set up:
- Quotes and bids: At times, you may need to send quotes and bids to customers - use Skynova's free quote or bid template. The small efforts you put into professionally presenting your business can help secure customers.
- Billing: Don't wait until you have your first customer before you set up your invoicing system. For professional-looking invoices, Skynova's invoice template can help.
- Payment options: It would be nice if all of your customers paid in cash or directly to your bank account, but that's probably not going to happen. You may also need other payment methods like Paypal or Square to be able to accept credit cards.
- Accounting: An effective accounting system will help you track your expenses and income. To save time during tax season, use Skynova's accounting software to keep all necessary documents and receipts in one place.
Build and Grow Your Commercial Cleaning Business With Skynova
Starting a new business requires passion, determination, and a lot of research. Skynova is here to help you build and grow your commercial cleaning business. Feel free to explore the platform for valuable resources and templates for all of your business needs.
Do you want a system that allows you to send invoices and track your income and expenses at the same time? Use Skynova's all-in-one invoicing and accounting software. It keeps your receipts organized in one place and records sales taxes collected and paid to your local taxing authority. To help you compare your company's profit margins, you can also generate financial reports.