How To Start a Cleaning Business

Will you clean homes or businesses? House cleaning services have different considerations than commercial cleaning businesses.

Do you plan to focus on one type of cleaning? Some new businesses focus only on one of the following cleaning jobs:

• Carpet cleaning
• Grout cleaning
• Title cleaning
• Window washing

If you plan to offer a specific service, find out if you need any special equipment or training. Your pricing structure should consider additional overhead costs like continuing education classes or increased business insurance.

Research Your Market and Potential Clients

Before you launch your own cleaning business, it's critical to know your target market. First, you should know your potential customers and what they look for when hiring a cleaner.

• Will your clients want you to use eco-friendly cleaning products?
• Do they want proof that you have business licenses and certifications?
• Are they expecting you to have liability insurance?

Research the market rates in your area. Do similar companies charge by flat rates, square footage, or hourly rates? What do they charge? Can you offer similar rates and still turn a profit?

Find a Cleaning Specialty

An easy way to set yourself apart from other residential cleaning businesses is to focus on one or two growing areas for a cleaning company.

Some examples include:

• Eco-friendly green cleaning that focuses on environmentally, pet, and child-friendly cleaning products
• Airbnb and short-term rental cleaning
• Hoarding cleaning
• Post-construction cleaning
• Post-home renovation cleaning
• Window cleaning

Pick a niche that aligns with your business plan and values. If you aren't passionate about eco-friendly green cleaning, don't make it a pillar of your business.

Determine Your Costs and Set Up a Budget

Knowing all your costs before starting your business is essential to ensure profitability. You will have upfront costs such as business formation, cleaning supplies like mops, and equipment. Will you need a company vehicle? Determine the costs of a car, including insurance.

Also, consider your ongoing expenses, such as:

• Advertising
• Credit card fees
• Insurance
• Payroll
• Transportation

Small business owners should be realistic about their costs and what they can expect to see as profits. Many local businesses don't show a profit after several months or even a year after opening.

Analyze how to fund your cleaning service with a business plan.

Even a one-person business benefits from an organized business plan. If you need a loan to fund your business, you need a business plan to show banks or potential investors.

Contents of a Cleaning Business Plan

Your business plan doesn't have to cover everything, but you should address critical areas, such as:

• What is your business?
• What are your goals?
• Who is your potential customer?
• Where will you operate?
• Who is your competition?
• How can you differentiate yourself from your competitors?
• What are your costs in setting up and continuing operations?
• How will you fund your business venture?
• Do you need to purchase or rent cleaning equipment outside of mops and brooms?
• Can you handle your business expansion?
• How will you market or advertise to attract clients?
• Do you need partners or employees?
• Will you do all the cleaning yourself or plan to hire staff?
• How many homes or businesses do you hope to clean for a successful cleaning business? What are your staffing requirements to meet that goal?

These are questions you should answer to determine the scope of your business. Once you know these answers, you will have an idea of how much money you need to fund your startup.

Fund Your Cleaning Business

Before you can start invoicing clients, you need to open your business and provide cleaning services. To do that, you need funding.

• Business loans
• Small Business Administration (SBA) loans
• Grants
• Venture capital from angel investors

Crowdfunding is only a likely option if you plan on starting nationwide. Pay attention to interest rates and repayment terms no matter which source you choose.

You will need a business name. Your business name is important—it's part of your brand.

First, research your business name to see if it's already in use. Avoid brand confusion and potential trademark infringement by using the same or a similar name as another business. Check for its use on social media and in an internet search before printing business cards.

Once you pick a name, you must register it. If you're a sole proprietor, you file a fictitious business name or a doing business as (DBA). This filing links to your legal name. Check your business name with your county clerk or secretary of state to determine their filing requirements.

If you choose a legal structure such as a corporation, partnership, or limited liability company (LLC), register the business name with the secretary of state. You don't need to file a separate name registration.

Many small businesses operate as sole proprietorships. But this exposes you to personal liability for your janitorial services-based business operations. In addition to sole proprietorship, there are other legal entities to consider.

Corporation

Corporations provide liability protection. This means your business operations are separate from your personal assets. If you opt for a corporation and want to avoid double taxation, consider filing Form 2553 with the Internal Revenue Service (IRS) for a subchapter S corporation.

Partnership

If you plan to have a partner, you may consider a partnership. In a partnership, the partners share the company's profits, losses, and liabilities personally. There's no personal asset protection.

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, suppose an employee is injured on the job. In that case, they can only sue the corporate entity, not you, for personal injuries.

Advantages of an LLC or Corporate Entity

Another advantage is that clients view an LLC or corporate entity as more professional. So, if you plan to clean for businesses, they prefer paying a corporation instead of an individual.

Businesses don't want to pay individuals because they don't want the liability as a business employee. The business will need to file 1099 forms for independent contractors. Businesses also don't want any liability associated with your services.

If you hire employees, conduct background checks before allowing them into your client's homes or offices. Suppose they attack someone or damage property, and you could have anticipated it from their background check. In that case, your business may be liable for damages.

You must get an employer identification number (EIN) when hiring employees, even as a sole proprietor. You'll use this number on all your business tax filings.

Before starting your cleaning service business, you must get your state or local town's appropriate business licenses and permits. Investigate whether you need special permits or training to perform certain cleaning services.

Follow State and Federal Regulations

Suppose you're handling dangerous materials such as biohazardous waste. In that case, you may need certain state permits or to follow Occupational Health and Safety regulations (OSHA regulations).

You must follow environmental law regulations and laws. This includes waste disposal regulations. An easy real-world scenario is where your commercial cleaning business has a business contract with an art facility. The facility uses oil-based paints for its work. The water they use to clean supplies or create work is now contaminated. You must dispose of that water in line with federal environmental regulations, even if you're just cleaning.

The Environmental Protection Agency (EPA), Department of Energy (DOE), and U.S. Department of Agriculture (USDA) enforce environmental regulations. Failure to follow federal and state laws can result in fines, criminal charges, and a shutdown of your business. If you don't dispose of waste properly, toxic tort class action lawsuits can be filed against you.

The EPA has the Office of Small and Disadvantaged Business Utilization (OSDBU) to help small businesses understand these regulations and be in compliance.

While a cleaning service can be lucrative, it is a business with inherent risks. There is a potential for accidents when dealing with hazardous chemicals, physical labor, and personal property. You should insure your cleaning business because there are risks of bodily injury and property damage.

Look into the different types of business insurance policies.

• Business operations policy (BOP)
• Commercial vehicle
• General liability
• Property insurance for your businesses

If you have employees, you must get a workers' compensation policy in case of an injury at work.

You are your best advertisement. First, let people know about your new residential cleaning services business. Then, once you complete a job to your customers' satisfaction, ask them if you can use them as references for your business. The easiest way is for them to leave a review on social media or Google.

Ask your customers if they can give referrals of your work to their friends and family. Again, word-of-mouth advertising is the best and cheapest way to market your services.

Make sure your company drafts a contract for each customer. This helps set expectations and responsibilities for you and your client. Include the following in your document:

• What is the term length of the contract? Is it month to month or for a 6-month period?
• What is the pricing for your services, including how much is owed, when it's owed, and how you want payment?
• Does your client provide disinfectant, or do you bill them for using your products?
• On what schedule will you provide your services and for how long (for example, every first Tuesday of the month for 3 hours or every Tuesday for 1 hour)?
• How much notice do the parties need to give to end the contract?
• What are the reasons for ending the contract?
• If someone has pets, do you want them put in a crate when you clean or off the premises completely?
• If someone sues for breach of contract, can they get reasonable attorney's fees and costs?

Don't be in such a rush to land a client that you skip this process. Even with a signed contract, make sure you know the refund policy of your state. Some states follow the cooling-off period, which allows a refund within a set number of days after purchase.