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With the janitorial services industry currently valued at $98 billion, starting a cleaning business may be a profitable venture, whether you’re looking into residential or commercial cleaning services. In this guide, we go through the steps and talk about low-cost strategies to get your cleaning business up and running on a budget.
How To Start A Cleaning Business In Maryland: A Comprehensive Guide
The first step you need to take is to determine if you’d like to create a residential or commercial cleaning business. Your decision here will affect everything else you do, from the financing to the equipment to the marketing.
Most cleaning companies don’t provide services to both residential and commercial customers because each includes different services and requires unique equipment. You also need to decide if you’re starting your biz from scratch or purchasing a cleaning-based franchise.
A residential cleaning service specializes in homes while a commercial cleaning business specializes in businesses. But it gets more complicated. Typically, the residential cleaning business is a lower cost to start (primarily because of simpler equipment needs); however, commercial can be very lucrative because of the add-on services such as floor waxing, window washing, and deep disinfecting.
How To Start A Cleaning Business In Maryland? [updated For 2022]
Generally, residential cleaners earn a slightly lower hourly wage than cleaners who provide services to businesses, government buildings, schools and universities, and other commercial clients. However, there are more residential cleaners than commercial ones, suggesting higher demand for those services.
You also want to consider that residential is done during the day, and commercial is done during the night. Also, residential cleaning is more detail-oriented because the homeowner is more likely to inspect your work and be particular about how you do certain tasks, such as arranging pillows and blankets. Commercial covers more square feet, so you’ll have to work faster and be less detail-oriented than residential.
From a business perspective, the residential space has more customers available. Overall, your choice between residential and commercial depends on your budget for equipment and lifestyle.
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Cleaning franchises are popular—you can choose from many brands. One aspect that makes cleaning franchises appealing is they’re generally low-cost to start. Many also provide an option to start from home or part-time. For example, the Stratus Building Solutions franchise costs as little as $1, 000 down.
Now, it’s important to remember that not all cleaning franchises are low-cost. Some require up to a $150, 000 investment. These types of franchises often require vehicles, a location, and advanced equipment.
Many new business owners choose to buy into a franchise because it provides business and industry training. For example, The Maids offers seven weeks of business training, plus two days of culture training at headquarters, six days of admin training, and four days of on-site training at your location. It’s a cleaning business boot camp!
Starting A Cleaning Business
You might also consider ISSA (one of the top five janitorial companies)—it’s actually an association that can recommend franchising options for you.
The next step to starting a cleaning business is to create a one-page business plan. You should also research the startup costs and make financial projections by forecasting how much money the cleaning business will earn and spend over the next two years.
If you’re seeking a large amount of financing from a bank or investor, you will need a traditional business plan. Most people use business plan software to assist with planning financial projections. If you find yourself wondering what an income statement, balance sheet, or breakeven point is, you will likely need software.
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You should be able to complete the one-page business plan in less than 15 minutes (assuming you’ve done your research). It’s simple: Write down one to two sentences to the questions in the free template below:
Along with the business plan, you need to estimate the financials of your cleaning business. You need to determine three figures: startup costs, estimated monthly expenses, and estimated monthly income.
Factors such as your location, competition, clientele, and interior condition will determine your exact rates. You can also earn additional revenue with upgrades such as window cleanings, appliance cleanings, or wall washings.
Steps To Get Your Cleaning Business Bonded And Insured
Now that you have your startup costs, monthly expenses, and potential income, the next step is to determine your net income (income after expenses), and how long it will take to earn your initial investment back—also called breakeven.
For example, let’s say your startup costs are $4, 000. Regarding monthly expenses, you determine that you’ll spend $1, 000 every month, including your quarterly tax withdrawal (about 20% of income).
For income, if you clean 20 homes per month at $120 per home, that is $2, 400 in revenue. Taking out the $1, 000 in monthly expenses leaves you with $1, 400 net income every month.
Ishpat Favour Cleaning Business
In this scenario, it will take you at least four months to break even and make your initial $4, 000 back. Keep in mind that it’s likely you won’t have 20 homes in your first month of business. It may take longer than four months to build up this clientele and make your money back.
Ideally, you’ll want to use personal funds to start the business so you can avoid debt. That may not be possible if you’re starting a cleaning business with vehicles or a physical location. Whatever type of business you’re opening, remember you’ll still have to pay back the debt if the company fails.
Until you have at least a three-year history of income and expenses, or paid off equipment such as vehicles, don’t apply for a traditional bank loan or Small Business Administration (SBA) loan. Typically, banks don’t lend to startups.
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If you’re franchising, a bank loan or franchise financing could be an option. The franchise may have a relationship with a bank and can organize funding for you. A bank may be open to financing a franchise if the overall failure rate is low.
Once you have the funds to start your cleaning business, it’s time to get your legal paperwork in order. You’ll need to get an employer identification number, register the business as a legal entity, and open a business bank account.
The employer identification number (EIN) is provided by the federal government to identify small businesses. You’ll use this number when filing taxes, opening a bank account, or getting a loan. You can get an EIN for free through the IRS. The entire process takes about 15 minutes.
Free Cleaning Service Contract Template
All cleaning business owners need to register their business as a legal entity. Registering as a legal entity protects personal assets if a lawsuit were to ever occur against the business. Depending on your state, the cost to register a business is anywhere from $40 to $500.
Tip: Don’t try to save money by skipping this step! A cleaning business carries a risk—you’re using chemicals in the homes of your customers. If, for example, you ruined or broke something in a customer’s home, they could sue you for damages. Without a legal entity, your personal assets are at risk to cover damages.
To register your business, visit your state’s official business registration website. If you find the site cumbersome and challenging to navigate, consider using an online legal service to handle it for you.
How To Start A Cleaning Business From Scratch ($5,000+/mo)
Before incurring any expenses or taking on any new clients, get yourself a business bank account. As a business owner, you want to ensure you keep personal and business finances separate. Separate bank accounts help with keeping track of business income and expenses for tax purposes. Plus, this separation of finances helps the process of IRS audits go more smoothly.
If you have a current banking relationship, you can go to that bank to open a business checking account. However, if you’re still looking for a bank, consider Bluevine. It’s an online bank designed for small businesses. Bluevine charges no transaction or monthly fees and offers qualified accounts a high-interest rate of 1.5% annual percentage yield (APY) on balances up to $100, 000.
A cleaning business is likely to need a license in the city where it’s operating. Regarding insurance, all cleaning businesses will need at least general liability insurance to cover any damages in a customer’s home. If you’re hiring employees, you’ll also need workers’ compensation insurance.
How To Get A Cleaning Business License: 50 State Guide
It’s likely your state won’t require a license for a cleaning business. To confirm there’s a license requirement, search on your state’s business regulation website.
Your city will likely require a General Business License. Most cities simply want a record of what businesses are operating. To obtain the General Business License, visit your city’s official government website.
For example, Atlanta requires all businesses to obtain a General Business License—even at-home and online businesses. The cost to acquire the license is $75. Failure to obtain a license can result in a $500 fine.
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At a minimum, you’ll want to purchase general liability (GL) insurance. This insurance covers bodily damage and property damage. GL insurance for a small cleaning company will cost around $300 per year.
You may find that customers
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