How To Start a Cleaning Business
Looking to clean up in a new business venture? Consider starting a cleaning service. There are many advantages to operating a cleaning business. For example, you have low overhead, minimal startup costs, flexibility in your hours, and in most cases, do not need specialized education or training.
But as with any other business, there are steps you should take to make sure you are off to a successful start.
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Determine the Scope of Your Cleaning Business
Will you clean homes or businesses? There are different considerations for house cleaning services than commercial cleaning businesses.
Do you plan to focus on one type of cleaning, for example, carpet cleaning, window washing, or tile and grout cleaning? If you plan to offer a specific service such as carpet cleaning, find out if you need any special equipment or training.
If you're handling dangerous materials such as biohazardous waste, you may need certain state permits or to follow OSHA regulations.
Will you be doing all the cleaning yourself? Do you plan to hire staff? How many homes or businesses do you hope to clean? What are your staffing requirements to meet that goal? These are questions you should answer to determine the scope of your business.
Research Your Market and Potential Clients
Before you launch your cleaning business, it is critical to know your market. First, you should know your potential customer and what they look for in hiring a cleaner.
Will your clients want you to use eco-friendly cleaning products? Do they want proof that you have business licenses and liability insurance?
Research the market rates in your area. Do similar companies charge by flat rates, by the square foot, or by hourly rates? What do they charge? Can you offer similar rates and still turn a profit?
Determine Your Costs and Set Up a Budget
It is essential to know all your costs going into your business to make sure you are profitable. You will have upfront costs such as business formation, cleaning supplies, and equipment. Will you need a company vehicle? Determine the costs of a vehicle, including insurance.
Also, consider your ongoing expenses such as transportation, payroll, insurance, and advertising. Be realistic about your costs and what you can expect to see as profits. Many businesses do not show a profit after several months or even a year or more. So plan how to fund your cleaning service until you turn a profit.
Put Together Your Business Plan
Even a one-person business benefits from an organized business plan. If you need a loan to fund your business, you will need a business plan to show banks or potential investors.
Your business plan doesn't have to cover everything, but you should address critical areas:
- What is your business? What are your goals?
- Who is your potential customer?
- Where will you operate?
- Who is your competition?
- How can you stand out among your competitors?
- What are your costs in setting up and continuing operations?
- How will you fund your business venture?
- Can you handle your business expansion?
- How will you market or advertise to attract clients?
- Do you need partners or employees?
Register Your Business Name
You will need a name for your business. Your business name is important because it is part of your brand.
First, research your business name to see if it is in use. You want to avoid brand confusion and potential trademark infringement by using the same or similar name as another business.
Once you have determined your name, you must register it. If you are a sole proprietor, you file a fictitious business name or "doing business as" (DBA), which links to your legal name. Check your business name with your county clerk or Secretary of State to determine their specific filing requirements.
If you choose a legal structure such as a corporation, partnership, or limited liability company (LLC), you register the business name with the Secretary of State. You do not need to file a separate name registration.
Choose Your Business Structure
Many small businesses choose to operate as a sole proprietorship. However, this exposes you to personal liability for your business operations. In addition to sole proprietorship, there are other corporate entities to consider.
One person can own a corporation. It provides liability protection, so your business operations are separate from your personal assets.
If you plan to have a partner, you may consider a partnership. A partnership shares the profits, losses, and liabilities of the company personally among the partners.
Limited Liability Company (LLC)
An LLC is a type of corporation that avoids double taxation. The main advantage of forming a corporation or an LLC is liability protection. A corporation or LLC separates your business assets and liabilities from your personal assets. So if a client were to sue you for negligence (i.e., if you accidentally ruined an antique rug), the client could only go after the assets in the corporate entity, not you personally.
Similarly, if an employee is injured on the job, they can only sue the corporate entity and not you for personal injuries.
Advantages of a Corporate Entity
Another advantage is that clients view a corporate entity as more professional. Therefore, if you plan to clean for businesses, they prefer paying a corporation instead of an individual.
Businesses do not want to pay individuals because they do not want the liability as a business employee. The business will need to file 1099 forms for independent contractors. Additionally, businesses do not want any liability associated with your services.
Determine Staffing Needs
How will you do the work? Will you hire employees? Will you pay them hourly or by salary? If you have employees, you want to check their background before allowing them into your client's homes or offices. You will also need to get a taxpayer or Employee Identification Number (EIN) for your business. You will use this number on all your business tax filings.
Get a Business License and Permits
Before starting your cleaning service business, you must get the appropriate business licenses and permits from your state and/or local town. Investigate if you need special permits or training to perform certain cleaning services.
Get Insurance Coverage
While a cleaning service can be lucrative, it is a business with inherent risks. When dealing with hazardous chemicals, physical labor, and personal property, there is a potential for accidents. Because there are risks of bodily injury and property damage, you should insure your cleaning business. Look into general liability and property insurance for your businesses. If you are using a car or truck for your business, you should get commercial vehicle insurance.
If you have employees, you must get a workers' compensation policy in case of an injury on the job.
Market and Advertise Your Cleaning Service
You are your best advertisement. First, let people know about your new business. Then, once you complete a job to your customer's satisfaction, ask them if you can use them as a reference for your business.
Or better yet, ask your customers if they can recommend you to their friends and family. Again, word-of-mouth advertising is the best and cheapest way to market your services.
Seek Professional Help
While you can launch your cleaning service business by yourself, it may help to use a trusted online business formation service to ensure you meet all legal requirements.
You can also consult a small business attorney about corporate structure and liability protection to start your company successfully.
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