How to Start a Commercial Cleaning Business
While a cleaning business may make you think of housecleaning, the commercial cleaning industry also offers you the chance to build a profitable business. If you’re hard-working and meticulous about your work, starting a commercial cleaning business might be a rewarding opportunity. Best of all, you can start a small business with a smaller financial investment, then gradually grow your business into a multi-vehicle, large operation.
Cleaning Industry Overview
Commercial cleaning businesses help to keep commercial buildings and vehicles clean and, therefore, safe for use. A cleaning business may hold a contract with one large operation, providing all of their daily cleanings. The business may hold smaller contracts with multiple businesses, providing cleaning services only on certain days. Because many businesses require cleaning during non-business hours, it’s common for cleaning businesses to operate after 5:00 pm and into the night. Many businesses hire commercial cleaners from offices to apartment complexes to train stations and airports.
While a cleaning business can take a general approach to cleaning, it’s common for these businesses to specialize in certain areas. A business may specialize in certain aspects of cleaning, like floor care or window cleaning, while others may focus on residential cleaning, medical cleaning, or industrial cleaning. A business may offer maid services, sanitation services, or damage restoration cleaning, and these specialties often allow businesses to charge more for their services.
According to IBIS World, the commercial cleaning and janitorial services industry experienced a 2.0% growth from 2014 to 2019. That growth was due to multiple factors. As corporate profits increased, businesses spent more on cleaning, leading to an increased demand for commercial cleaning services. Office vacancy rates also fell during that time, and with more offices and retail spaces in use, increased cleaning was needed. By 2019, the industry brought in $61 billion in revenue. A total of 870,916 businesses were in operation, and they employed 1,890,016 staff. Industry revenue is predicted to continue to increase from 2019 through 2024, thanks to a healthy economy.
Many trends are shaping the commercial cleaning industry. According to K. Payne Contracting, as the demand for cleaning has increased, many companies have branched out and started to offer specialty services. Specialty services like upholstery cleaning, post-construction cleaning, and even property preservation allow companies to expand their offerings and make it easier for clients to access a variety of services.
Companies are also increasingly using smart equipment and technology, like robot vacuums, automated cleaners, artificial intelligence-powered window cleaners, and smart air systems. These devices require an initial investment, but they can make cleaning easier for staff and potentially increase productivity.
Like many industries, the cleaning industry is under pressure to offer eco-friendly and green options. Companies that embrace sustainable and eco-friendly cleaning methods can appeal to eco-conscious clients. This requires a shift away from harsh cleaning chemicals and an increased focus on more sustainable options. Employees will also need specialized training on how to use these new cleaning systems and products.
With more consumers relying on internet searches and online reviews when finding local service providers, cleaning businesses need to embrace this online culture, too. Websites, digital marketing, and social media are increasingly important and can help commercial cleaners secure additional clients.
On a broad level, commercial cleaning businesses market to owners or managers of commercial spaces. Individual cleaning businesses may develop specialties, like focusing on hospital cleaning or transportation cleaning, to refine that target market.
Skills, experience, and education useful in running a commercial cleaning service
Starting a commercial cleaning business doesn’t require a business degree, but certain skills and experiences are valuable in starting and running this type of business.
Cleaning experience. A business owner who has firsthand experience working in the cleaning industry will be well-prepared for what to expect when working within this industry.
Knowledge of chemical safety and handling. Cleaning chemicals are harsh and harmful if misused, so previous knowledge of general chemical safety and handling procedures is valuable in this industry. Training and certification courses are available and are required for certain types of chemicals.
Attention to detail. Little details matter in cleaning and a business owner with attention to detail can ensure that jobs are done right.
Physical fitness. Cleaning is hard work, so physical fitness and strength will be an advantage and will make your daily cleaning work easier, too.
Management experience. Most commercial cleaners employ multiple staff. Experience in hiring, training, and managing staff is an important skill to have.
Customer service skills. A cleaning business owner will need to stay in contact with the property managers or owners and may need to troubleshoot issues and ensure that the business delivers quality service. Customer service skills are valuable.
Checklist for Starting a Commercial Cleaning Business
If you’re thinking about starting your own commercial 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 your Business Plan
After coming up with the idea, the next step in starting your business should be to write a clothing line business plan. Not only will a bank require you to have a business plan, 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: Name the Business
Finding the perfect business name 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 cleaning business
Step 3: Form a Business Entity
A business entity (also called a business structure) refers to how a business is legally organized to operate. There are four primary business entities 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 commercial 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 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 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 4: Select your Location
It’s possible to run a single-vehicle business right out of your home, but once you invest in multiple vehicles, it may be time to rent a garage or a storage building with a parking lot. Cleaning chemicals often need to be kept within certain temperatures, so you may need to look for an air-conditioned building or storage facility. Rental costs will depend on the type of property, its size, and location.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
A commercial cleaning business will need to obtain certain business licenses and permits, including permits and certifications for the cleaning chemicals used. These permits and licenses can vary based on the state and town where the business is located.
Additionally, there are some general local, state, and federal business registrations like a state sales tax permit, Employer Identification Number (EIN) with the IRS, and local Occupancy Permit.
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 cleaning business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your 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
Now that you are getting close to opening, it’s time to get marketing materials planned and created. It’s important to understand your market and what media they consume so you can effectively reach out to them and let them know you’re open.
Set up your business listing on Google My Business, Angie’s List, and social media platforms like Facebook, LinkedIn, and Instagram, in addition to handing out business cards and flyers.
Also, don’t forget the marketing basics like picking up the phone and following up with potential clients, and getting out in the community to introduce yourself to business owners. You’ll also need to be ready to back up your marketing with client testimonials and a professional bid package.
The more effort you put into professionally presenting your business, the more likely you’ll be to secure additional clients.
Step 9: Get Business Insurance
A commercial cleaning service will need to consider several types of insurance to protect the business. A few of these include:
–General liability insurance protects the business if a client is ever injured due to the business’ work or equipment. This type of policy usually helps to cover expenses like medical bills and legal fees.
– Commercial property insurance protects the business if its equipment or property is ever damaged or destroyed in an event, like a fire.
– Commercial auto insurance offers protection if a business vehicle is ever involved in an accident.
– Workers’ compensation insurance protects the business if an employee is injured while on the job, and it can cover expenses like lost wages and medical bills.
– Janitorial Bonds protect the customer if an employee commits theft or damages their property.
Many factors affect insurance policy costs, including the value of the business’ equipment and the value of its vehicles. To get the most accurate idea of insurance costs, it’s best to request quotes from multiple insurance companies. Then, compare the quotes, but don’t just look at the premiums. Instead, consider all of the factors, like differences in coverage limits, exclusions, and deductibles.
Step 10: Hire Employees
Many cleaning businesses start with the owner being the only employee, but at some point, additional help is probably going to be needed. Not only will the owner need to consider the risk to their income should they become sick, but the physical labor demands can be hard to keep up for a long period of time.
According to Indeed, janitors earn an average of $19.24 per hour, while those salaries can range from as little as $7.45 to as much as $35.45 per hour.
In addition to budgeting for employee salary costs, a business’ budget also needs to include other expenses like paid time off, health insurance contributions, and worker’s comp insurance.
Hiring dependable staff can be a challenge as a majority of the work is done at nights and on the weekends, and the pay is often low.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your cleaning business is critical to the long-term success of your business.
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.
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 commercial cleaning service?
Costs to start a commercial cleaning business can be quite affordable and can be scaled up as most of the expenses are for equipment that could even be rented. A small, one-person business can cost $10,000 or more to start, while larger businesses may require an initial investment of $40,000 or more. Most of these costs center around cleaning equipment and vehicles, though buying a used vehicle can save money over the cost of a brand-new vehicle.
Common startup costs for a commercial cleaning business:
– Cleaning equipment like vacuum cleaners, floor scrubber, carpet extractor, mops, brooms, buckets, brushes, sponges, etc.
– Cleaning supplies like disinfectant, rags, towels, latex gloves, etc.
– Working capital to cover the first 3 – 6 months of labor costs, insurance, rent, utilities, etc.
Buying all of the equipment needed to do comprehensive commercial cleaning can be expensive, but it’s possible – and even advisable – to start a business on a smaller scale, then expand. Consider purchasing, or even renting, just what you need to do office cleaning, then later invest in additional more specialized equipment that allows you to expand your service offerings. By taking on smaller cleaning jobs initially, you’ll learn valuable lessons about your productivity and how to quote for projects before taking on larger, more demanding projects.
How profitable is a commercial cleaning business?
Many factors will affect the profits of a commercial cleaning business. Cleaning Business Boss reports that cleaning businesses can expect to make between $30,000 and $50,000 per year, though commercial cleaning businesses can potentially charge more for their services. Other factors include the years that a business has been in operation, the number of employees, any specialties that allow for increased sales, and the business’ profit margin.
Are there grants to start a commercial cleaning business?
It’s extremely rare to find a grant to start a commercial 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 commercial cleaning business?
The NAICS code for a commercial cleaning business is 561720.
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.