We’re living in a post Covid-19 world, people…
Which means that the demand for commercial cleaning services has become more relevant than ever.
So if you’ve ever thought about rolling up your sleeves and starting a commercial cleaning business…
Then 2021 might just be the year to take the plunge.
I'm Ippei, you friendly neighborhood passive income and local lead generation specialist...
And fortunately for you, I’ve taken care of the initial research phase for you.
In this 7 step guide to starting a commercial cleaning business, I’ll walk you through everything you need to know to get started…
Plus I’ve added a section on startup costs to get you up to speed on the financial investment (and potential profit) of this business model.
So let’s get started!
How to Start a Commercial Cleaning Business in 2021
Thinking about starting a commercial cleaning biz? Here's what you should know:
If you’re planning to start a commercial cleaning business, then there’s never been a better time to do so! But to get started with a commercial cleaning business, you will need to create contracts, master your pricing structure, and market your business. As well as hiring a team of cleaners!
Start Up Costs
While this list is not a comprehensive compilation of every you need to start a commercial cleaning business, it provides a snapshot of what you need to add into your business plan.
Average Total Startup Costs: $1,630 - $5,180
Annual Revenue of Established Commercial Cleaning Business
According to [name your source here], the average annual revenue of this kind of business is:
Average Cleaning Business Profit Margin: 19%
7 Step Quick Start Checklist:
1. Write a Business Plan
Before you set sail into the wide open seas of starting you own commercial cleaning business…
It’s time to lay the groundwork for your business success.
Ultimately, failing to plan is essentially just planning for failure.
Which is why creating a business plan for a commercial cleaning business is so important.
In your head it might sound as simple as calling up some local office buildings and showing up with your gloves and Clorox wipes…
But just as with most new businesses…
The initial stages can make or break the long term profitability of your company.
In light of this, your business plan is actually about to be your new best friend!
It will cover your strengths, weaknesses, and business opportunities…
And act as your ever evolving roadmap to setting short term and long term goals.
A simple but effective outline for a commercial cleaning business contains these key sections:
Basic Things to Include in a Business Plan:
As your business continues to shift and grow over time, you are always free to come back to your original business plan and update it.
After all, your business plan is primarily there to serve you: the business owner!
Yes, it might come in handy if you choose to seek outside funding or investors in the future…
But the most important thing is that it is an effective and applicable tool that assists you in planning for your success as a new business owner.
2. Insurance and Legalities
The best thing you can do for yourself before you take on a single client for your cleaning business is to get your business legal!
It’s easy to get sidetracked with writing the perfect business plan and learning how to market commercial cleaning services…
But you aren’t going to get far without being established as a legal business.
Which means that you need to take care of getting your business registered…
As well as determining which business entity structure fits your needs the most.
You have three main options for your business entity structure:
The Sole Proprietorship is how the government will automatically categorize you as if you fail to form a different business structure.
Which might be fine for crafters selling a couple prints on Etsy…
But for a legitimate commercial cleaning business with employees and multiple clients, a Sole P. isn’t going to offer you the legal protection you probably need.
An LLC is the most practical choice for most small business owners as it protects you from personal liability and is much easier to obtain than an S Corp.
In addition to registering for your business license and establishing your LLC…
You will also need to apply for your EIN number.
This is your tax identification number, and it’s like a social security number for your business.
Fortunately, this step is completely free and can be done online through the IRS’s website.
Once you’ve gotten the legal side of your business set up, it’s time to cover your business’s ass with some solid insurance.
Primarily, you’ll want to invest in these two types of insurance for a commercial cleaning business:
Liability insurance is a must-have if one of your employees or a subcontractor damages property or something breaks.
Better to pay $200 towards a claim than $20,000!
And Worker’s Compensation is for your protection as the business owner if an employee is injured on the job.
3. Pricing Your Services
Before you print out or publish any marketing materials that include cost or the starting price of your cleaning services....
Make sure that you’re 100% confident in your pricing!
Setting and publishing your prices is a big step, and one that shouldn’t be rushed.
If you price based on emotion or what “feels” right…
Or if you price solely based on industry standards…
You might end up losing money if you haven’t properly accounted for your personal costs and expenses.
Your competition isn’t the sole factor in pricing your services, but it will affect your decisions.
So if you want to size up the local market, you can call other commercial cleaning businesses in your area as if you were a local office building looking to book their services.
For example: “Hey, I’m an office looking for some cleaning, we’re about 1,000 square feet. How much do you charge? Do you charge per square foot or per room or per hour?”
Get some info from them and write down some notes, and then compare it to what you have set for your pricing.
Ultimately, the most important factor in pricing your cleaning services will be your cost of goods sold (COGS).
COGS Examples:
Payroll is usually the highest number you will need to account for when pricing out cleaning jobs.
Use this example template to setting the pricing for your own cleaning services and tweak the numbers as necessary:
Pricing Template:
Formula
These numbers will leave you with approximately:
It’s typical to offer a discounted rate when charging for a monthly service, but for smaller bids or one time service accounts, add on the following percentages:
Many people price cleaning jobs by square footage…
But there are a lot of variables to consider when offering prices based on square footage alone.
Unless you are offering extremely specialized services (such as carpet shampoos) you really shouldn’t price per square foot alone.
The method laid out about accounts for your most important factor pricing jobs: your cost of goods sold.
If you don’t accurately cover that, then you can’t turn a profit!
4. Creating Your Contracts
One big sign of a trustworthy and legitimate business is a contract!
And a big red flag for most potential clients will be the lack of a contract…
So before you open for business, take the time to sit down and flesh out a professional and thorough contract for your commercial cleaning clients!
If you want to go the extra mile, hire an attorney to look over what you’ve created and offer advice and tweaks to it.
Although you might think you’ve covered all your bases legally within a contract, a professional attorney will be able to spot things that you’ve missed!
What to Include in a Commercial Cleaning Contract:
Commercial Cleaning Business Contract Checklist:
Another thing to remember when creating your business contracts is that a contract exists to protect both you as the business owner…
AND your clients!
Ensure that there are appropriate provisions for both parties written into your contract.
Otherwise your clients will think that they’re signing something just so that you can cover your butt if you screw things up!
Rather than recognizing that you have their best interests in mind as well.
5. Investing in Equipment
So obviously you can’t expect to run a commercial cleaning business without your supplies, can you?
Investing in equipment is really the biggest initial investment that you will have to make for your business.
The downside to opening a commercial cleaning business versus a residential cleaning business is that you will definitely need commercial grade equipment…
Which is definitely pricier.
But the beauty of it is that the most expensive pieces of equipment will be the ones that last you the longest or will be one time investments!
Most of the other items that you will need to purchase before you can start scrubbing will be smaller, reusable or even disposable cleaning items.
Here is a basic equipment lis to get you started:
Hands down, the most important investment you will make is in your vacuum!
Backpack vacuums are the way to go: they are great for cleaning stairs, cleaning high or hard to reach locations, or even cleaning ceilings.
Whereas standard handheld vacuums are not as multi purpose or as functional for your employees to use as the backpack vacuums will be.
Here are two great options for backpack vacuums:
As far as your cleaning solutions, Dawn detergent can’t be beat!
It’s really cheap, but great for cleaning bathrooms and pretty much anything else…
Plus it leaves everything looking nice and shiny!
Pro Tip:
Get yourself some extra long extension cords! Having extension cords will be a lifesaver when you are cleaning large commercial spaces because you won’t have to plug and unplug your vacuum constantly as you move through the space.
6. Marketing Strategies
You won’t get far as a commercial cleaning business with a solid marketing strategy in place!
If you were paying attention, then you might have noticed that I included something called a Unique Selling Proposition, or USP for short, in the business plan outline.
A USP is the way your business stands out against all the competition…
It’s what makes you different, sets you apart, and ultimately motivates your clients to work with you rather than anyone else.
For Example: Domino’s USP is “Fresh, hot pizza delivered in 30 minutes or less, guaranteed.”
(Although if I’m being honest it’s Domino’s buttery garlic crust that sells me every time…)
When you are developing your marketing strategy, work on creating a clear USP first.
From there, you can build out everything else around that unique selling proposition.
Start by creating a website.
If the idea of paying a graphic designer to custom build a website for you is making your head and budget start to spin…
Don’t freak out!
There are some excellent template based website builders out there nowadays that almost anyone can use to create a simple but beautiful website for their business!
Some of my favorites are:
After your website is finished, sign up for a Google My Business page immediately!j
This is one of the most overlooked marketing opportunities out there.
But creating a GMB page will help you rank higher in Google’s search results (boosting your SEO)...
And help people to find you faster (more clients for you) through Google Maps.
Plus, it’s completely free to sign up!
If you want to take your online marketing strategy a step further...
Take a look at our course online local lead generation, here.
Once you’ve built out your website, don’t forget to print out brochures and business cards to pass around your community!
If you’re wondering who you’re actually going to be handing these business cards to…
Then you’ve helped me segway nicely into my next point!
Because it’s time for you to join your local chamber of commerce!
The chamber of commerce is a great way to meet other small business owners within your local community…
And guess what?
Many of them are going to have office buildings or commercial use spaces that need to be cleaned.
Plus, joining the chamber can actually be a great support system: having a group of like minded business owners to talk with and bounce ideas off of can be extremely refreshing!
AndI hate to say it…
But you’re going to have to start making cold calls.
That’s right, I know you were holding your breath and hoping I wouldn’t mention it, but cold calling and even cold emails are just a part of playing the game.
If you don’t want to deal with compiling a list of cold call businesses, you can hire a freelancer to do this for you.
They can compile a directory of local commercial contacts in your area that you can reach out to as you have the time.
Personally, I recommend making time for at least 5-10 cold calls every day!
They don’t take as long as you think, I promise.
Lastly, one of the best ways to market a commercial cleaning business is through referrals.
I can almost guarantee that referrals will be the number one way that you get most of your business.
So how do you ensure that you have referrals coming in?
Standing out against your competition and serving your clients with excellence.
You can work towards accomplishing this through:
How to Stand Out From the Competition:
If you do all four of these things well, the good reviews will start to stream in, and the referrals will be sure to follow!
7. Hiring Subcontractors VS Employees
Chances are, when you first start your commercial cleaning business…
You’ll be down on your hands and knees scrubbing toilets yourself!
And this is perfectly normal.
Doing the cleaning yourself is a great way to gain necessary experience, as well as keeping labor costs at a minimum.
But sooner or later, you’re not going to be able to run your business effectively if you are your business’s only employee!
Which means that you are going to have to decide whether to hire employees, or hire subcontractors.
If you go the contractor route, then you won’t need to purchase your own equipment…
But if you have employees, then you’ll need to do your research and make this investment wisely.
Contractors are independent workers.
They manage their own schedules, work as they please, don’t take specific instructions, bring their own equipment, and pay their own taxes
Employees work directly for your company.
They are your staff.
They follow a strict schedule, you give them directions and they report back to you, you can have them wear a uniform, and you are responsible for their payroll taxes.
Going the contractor route is definitely the easier and cheaper route when starting out.
Make sure you do your research on this point.
Many cleaning companies confuse the differences between the two classifications…
But if you incorrectly label your employees as contractors, you may be responsible for paying back taxes if the government finds out!
There is a high turnover rate in the cleaning business, so you will need to be able to hire people quickly.
But don’t be afraid to fire people just as quickly if they are constantly late to appointments or do a poor job
Your hesitation to fire a cleaner who is performing poorly might cost you a client if they choose to terminate your account because of bad service!
Pros and Cons
of starting a commercial cleaning business
Pros
For many aspiring entrepreneurs, one of the greatest draws to launching a business is the freedom to set your own schedule. There’s no boss to dictate your day, or look over your shoulder… You are in control of your time. This can be both freeing, and stressful. But for most small business owners, it is one of the most gratifying aspects of being self employed.
The good news for you here is that it really doesn’t take a whole lot to get started as a commercial cleaning business. Cleaning supplies themselves aren’t that expensive, and the minimal amount of commercial equipment you will need to invest in is still very reasonable. In comparison to many other business models… This initial investment is on the low end of things.
Even if you start out as a one man operation, your commercial cleaning business has the potential to scale and grow. You might want to work yourself up to managing several cleaning crews in your area, and eventually branch out from there and consider a franchise model. The potential here is limitless if you’re willing to hustle and work hard.
Cons
After you’ve paid your cleaning crew and calculated your overhead costs, the profit margins for a commercial cleaning business are pretty slim. Plus, there is only so much that an office space will be willing to pay to have their facilities maintained, so there will be a cap on how much you can realistically charge for your services.
The nature of the commercial cleaning industry is that there are notoriously high staff turnover rates. Employees will come and go frequently. And finding new employees regularly will be a large part of your job, which can be very frustrating. Not only is the hiring process time consuming in and of itself, but you will consistently be training new employees. All of this takes valuable time away from running your business.
If you have any visions of earning steady passive income from your commercial cleaning business… I encourage you to lay those aside. Your income as a cleaning company will be directly linked to your hours. While owning your own commercial cleaning business can eventually lead to consistent passive income, that is a long way down the road.
Starting a Commercial Cleaning Business Can Be Profitable...If You Know This First:
Let’s be honest…
Your cleaning business isn’t worth much without your clients.
But what do you do when you’ve exhausted yourself with cold calling and traditional marketing techniques and you’re still coming up empty handed?
You need a reliable source of new leads outside of these methods and waiting on referrals to start coming in.
But I have good news for you.
It’s called local lead generation.
When I first decided to launch into the world of entrepreneurship I was hardly making 2K per month at my traditional job.
I now bring in well over 50K a month helping small businesses thanks to the lead generation business model.
And lead generation can work for your business too!
The best part is that once you’ve done your due diligence and established your online lead generation properties…
You get to sit back and relax.
The leads will come in passively while you get to focus your attention on the rest of your business!
So if you'r ready to start your lead generation journey today...
Click here to learn more about how we can help you get started on the right track.
