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How to Start a Carpet Cleaning Business

How to Start a Carpet Cleaning Business

Unlike many businesses with a storefront, carpet cleaning businesses are mobile, which may provide a lower cost to start and greater flexibility. Rather than worrying about keeping a store staffed, you’ll be on the road meeting with clients and cleaning homes, offices, and more. If you’ve ever wanted a business that you could start with a small investment and have attention to detail, you may be able to “clean up” with a carpet cleaning business.

Business Overview

Carpet cleaning businesses offer residential services, commercial services, or both. Services include the deep-cleaning of carpets, rugs, and upholstery. Some companies offer additional specialized services such as rug dyeing, carpet restoration, and more. These businesses bring in professional-grade equipment that your typical homeowner or business owner doesn’t have access to, allowing them to do a more thorough cleaning to remove stains and dirt that common retail carpet cleaning products can’t remove.

Because carpet cleaning isn’t a service that clients need daily or even monthly, these businesses need to build up a significant client list to stay busy. A business can be as small as one person with a single cleaning van or several teams of employees.

A carpet cleaning service doesn’t need a traditional storefront, but it still requires some initial investment in equipment. Because carpet cleaning is technical and you’ll be working with chemicals, it is best if you can work as an apprentice with another carpet cleaner before going out on your own.  This way, you can be sure this is the right opportunity for you and so that you can learn how to keep yourself safe, learn how to apply the best techniques for different carpets and situations, and how to get the best results from your work. If you can’t find an apprenticeship opportunity, you will likely need to invest in some training to learn how to use the equipment and the cleaning chemicals.

Especially as many consumers have moved away from putting carpeting in their homes and moving more towards hardwoods and laminates, some carpet cleaning businesses have expanded their offerings to cleaning services such as hard surface floor cleaning, window cleaning, exterior washing, and air duct cleaning to increase sales.

You will also need to decide whether you should start a business from scratch or buy into an existing business as a franchisee. There are pros and cons to each option. When buying a franchise, you may face higher startup costs than you would when starting your own business, but you also have the advantage of operating under the name of an established business with an existing reputation.

Industry Summary

According to IBIS World, the carpet cleaning industry is predicted to bring in $5.4 billion in 2019. From 2015 through 2019, the industry saw increased demand for carpet cleaning due to the increasing number of households formed during that period and an increased disposable income rate. During that same time period, the number of vacant offices decreased, which resulted in an increased need for commercial cleaning services. In 2019, 34,852 carpet cleaning businesses were in operation, employing 69,840 staff.

Industry Trends

Demand for carpet cleaning services correlates with consumers’ disposable income and the number of occupied office buildings. For commercial cleaners, office buildings account for nearly a third of their total cleaning contracts, so an economy that negatively affects businesses can significantly impact carpet cleaning businesses. While no companies hold major shares of the market, franchise cleaning companies bring in 10 percent of the industry’s total revenue. These commercial franchises have just a 2 percent annual employee turnover rate.

Most carpet cleaning clients are return clients who will request services repeatedly, which allows carpet cleaning businesses to build up a large, loyal clientele. However, cleaning companies lose up to 55 percent of their customers, on average, because of poor service quality or poor performance on the job. Carpet cleaners who offer quality services, show up on time, and perform well should be able to establish plenty of repeat clients for a steady income.

Target Market

The target market for a carpet cleaning business can differ according to the business’ specialization. Commercial carpet cleaners specialize in commercial work with property managers, offices, stores, and other professional spaces, and a commercial carpet cleaning business may not do any residential work at all. Alternatively, some businesses specialize in only residential carpet cleaning and may not do any commercial work.

A carpet cleaning business’s target market could be homeowners, renters, landlords, commercial property owners, business owners, and more.

Checklist for Starting a Carpet Cleaning Business

If you’re thinking about starting your own carpet cleaning business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Write a Business Plan

After coming up with an idea, the next step in starting any business should be to write a business plan.  Not only will a bank require you to have one, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related: How to write a business plan

Step 2: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a carpet cleaning business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 3: Name the Business

Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips and ideas for naming a carpet cleaning business

Step 4: Select your Location

While most carpet cleaning services don’t need an expensive storefront, the business will need a place to operate from.  Many smaller operations operate out of their home, so be sure to check zoning and covenants in case you have a neighbor that doesn’t approve of your venture.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

Like any business, a carpet cleaning business owner will likely need to obtain a variety of business licenses and permits in order to operate.  Some local governments also require that carpet cleaners hold specific cleaning business licenses due to wastewater disposal; however, that is not common.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a carpet cleaning business is another.  Fortunately, the cost to start a new carpet cleaning business is relatively low; however, funding to start a business can be difficult.  Banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

Marketing expenses for carpet cleaning businesses can vary depending on the method and whether the marketing is kept in-house or hiring a professional marketer. A quality website with before and after photos of a business’ work can be a powerful marketing tool and doesn’t require too much money to establish. Word-of-mouth marketing is key to getting new clients but takes a while to show the quality of your work to customers.  Other marketing methods include social media, online sites like Yelp and Google Reviews, targeted direct mail, and print advertising.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a carpet cleaning business. A few of these include:
– General liability insurance covers expenses if a client is ever injured or if the business ever damages a client’s property.
– Worker’s compensation insurance is required if a business hires employees. It helps cover expenses like lost wages or medical bills if an employee is injured while working.
– Automobile insurance is needed to cover the van and its drivers.  If you plan to use a personal vehicle, be sure to review your current policy to ensure it allows for commercial activity.

The cost to insure a carpet cleaning business will differ according to factors like a business’ location, the value of the equipment to be insured, and the number of employees on staff. To get a more accurate idea of potential insurance costs, request quotes from multiple insurance companies. Compare the policies and consider factors like deductibles and coverage limits to find the policy that’s best for a business.

Step 10: Hire Employees

Depending on the size of a carpet cleaning business, multiple employees may be needed.

According to PayScale, carpet cleaners make an average of $13.20 per hour or $35,370 per year. In addition to budgeting for employee salaries, don’t forget other employee-related expenses like health insurance contributions, unemployment contributions, paid time off, and worker’s compensation expenses.

There are a number of steps that are required before hiring an employee.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your carpet cleaning business is critical to your business’s long-term success.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a carpet cleaning business?

While a carpet cleaning business doesn’t require a traditional storefront, the business has to be mobile, which can add on costs in other ways.

The startup costs will vary according to the type and amount of equipment needed and whether or not you can find a deal on a used van that’s already outfitted. Purchasing used or refurbished equipment can also help to keep costs down.  The cost to start a carpet cleaning business can range from $500 to $85,000.

Some common startup costs for a carpet cleaning business include:
– A van to transport equipment
– Carpet cleaning equipment such as a truck-mounted or portable hot water extractor for steam cleaning, dry foam or cleaning system, carpet rake, and vacuum
– Cleaning products and solvents

How much can a carpet cleaning business owner make?

A carpet cleaning business’s income varies depending on the type of work being done, location, clientele, and the number of employees. It is possible to make $50,000 to $75,000 with a carpet cleaning business, though some businesses make much higher amounts each year. Some carpet cleaning franchises, such as Chem-Dry, report that their franchisees earn as much as $94,000 each year.

What skills are needed to run a carpet cleaning business?

Starting a carpet cleaning business doesn’t require a business degree, but business owners can benefit from having certain skills and experiences.

Mechanical knowledge. Carpet cleaning equipment sees heavy use and requires regular maintenance. The more that a business owner can do when it comes to servicing and repairing equipment, the less downtime a business will see. Being able to diagnose and repair a mechanical problem on your own can also save on expensive repair costs.

Physical strength. Transporting and using carpet cleaning equipment is physically demanding and requires someone strong enough to transport equipment several times a day.

Experience in the cleaning industry. Understanding the different chemicals and techniques used in the carpet cleaning industry will ensure that any business owner understands how to address different stains on different materials for the best results.

If you don’t have industry experience or would like training and certification to be ahead of the competition, check out the Institute of Inspection, Cleaning and Restoration Certification (IICRC), a non-profit certifying body for the cleaning and restoration industry.

Attention to detail. Cleaning carpets is all about details. To do a good job, a business owner needs to pay attention to details in the clients’ rooms to ensure that the job is done fully and well.

Management skills. When carpet cleaning businesses grow large enough to hire employees, management skills, and experience are valuable when training and overseeing employees.  A key skill as the team grows and the owner isn’t directly overseeing jobs ensures employees use their time efficiently to stay profitable.

Customer service experience. From answering calls to addressing customer questions and concerns, previous customer service experience will put a carpet cleaning company owner ahead of the game. Because many carpet cleaning clients are returning clients, providing a positive experience to customers with every cleaning is important to their profits.

It may take time to build your reputation, but with a dedication to great customer service, you can build a base of returning customers and enjoy a profitable business.

Marketing skills. Marketing a carpet cleaning business requires some talent, and a business owner can save money on marketing if they can do some or all of the marketing themselves.

Are there grants to start a carpet cleaning business?

It’s extremely rare to find a grant to start a carpet cleaning business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a carpet cleaning business?

The NAICS code for a carpet cleaning business is 561740.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?

Resources
Low Moisture Carpet Cleaners Association
International Cleaning and Restoration Association
National Carpet Cleaners Association

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