How to Start a Parking Lot Cleaning Business
Did you know that for every car, there are an estimated eight parking spaces in the US (FastCompany, 2021)?
Although urban planners are starting to reign in the number of car parking spaces being newly built, as a society, we’ve become used to being able to park at or very near our destination. And let’s face it if you are out shopping or are exploring parking options at a new apartment complex, first impressions count. You’re far more likely to opt for a garage or parking spot that looks well-maintained and tidy.
So if you are looking for an opportunity to become your own boss, these factors make starting a parking lot cleaning business a viable option.
Parking lot cleaning businesses mainly operate locally, keeping parking areas for apartment complexes, malls, shopping centers, garages, government and public buildings, industrial facilities, and even motor home parks tidy and safe.
Their services provide regular sweeping services to maintain curb appeal, safety and cleanliness. They also manage emergency cleaning, ensuring that spills don’t pollute the stormwater. This means they often operate at night when public car parks are empty and are often on-call 24/7 for emergency call-outs.
Parking lot cleaning services are grouped within the street cleaning services industry. The industry encompasses private companies that provide driveway, street, parking lot, and other asphalt cleaning and maintenance services. Their customer base can broadly be divided into government/ municipalities and private businesses.
According to IBISWorld, the industry’s market size with $2 billion in the US in 2021, with the parking lot cleaning segment commanding a 51.2% share of that revenue. It also notes that although concentration levels across the US are considered low, competition is high.
Trash Removal Service
IBISWorld also forecasts annual growth of 1.6% for this industry by 2026. This relatively moderate growth is due to the government increasingly funding their own services, an expected reduction of new parking spaces, and a struggle to expand car lot sweeping services beyond a local area. On the other hand, the industry continues to see growth in business and industrial customers outsourcing the maintenance and cleaning of their car parking facilities.
Your target market should include any commercial property management company, property owners of office buildings, retail stores, grocery stores, car dealerships, fast food parking lots, government agencies, and municipal and public services with dedicated parking spaces. We also recommend maintaining good relations with developers to support your bids for new contracts.
One of the main factors determining your target market is the equipment you need and will invest in. According to research published by Report Linker, most sweeping services in the US are nonemployers or sole proprietorships, servicing their contracts with a low-cost sweeper rather than an expensive, large cleaning truck.
Checklist for Starting a Parking Lot Cleaning Business
Starting a parking lot cleaning business can be an incredibly rewarding experience, but it’s important to make sure you’re prepared for the challenges ahead. Use this checklist to help get your business off on the right foot.
If you’re thinking about starting your own parking lot cleaning business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
If you’re thinking about starting a parking lot cleaning business, it’s important to do your research first. Here is a checklist to help you get started.
Checklist for Starting a Parking Lot Cleaning Business
If you are looking to start your own parking lot cleaning business, there are a few things that you will need to do in order to get started. While the steps will be different for everyone, here is a list of common tasks.
Step 1: Write a Business Plan
Starting a new business can be an overwhelming task, and one way to help organize all of those thoughts is by creating a solid business plan.
A business plan lays out the goals and objectives of your company and how you plan to achieve them, including your target market, services that will be offered, competition, marketing strategies, and financial projections.
A comprehensive business plan can not only give you direction as a new business owner, but also make you more attractive to potential investors or partners.
Related: How to write a business plan
Step 2: 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 on naming a business
Step 3: 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 parking lot 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 4: Apply for Business Licenses and Permits
Like any business, a parking lot cleaning business owner will need various business licenses and permits to operate.
Requirements vary based on location, but generally speaking, a business license and sales tax permit will be necessary. Additionally, if you will be using regulated chemicals and cleaners, licensing may be needed before starting your business to avoid any potential legal issues.
Related: Common business licenses, permits, and registrations by state
Step 5: 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 parking lot cleaning business is another. Fortunately, the cost to start a new parking lot cleaning business is relatively low; however, if funding is needed, obtaining it 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.
Step 6: 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 7: Get your Marketing Plan in Place
If you want to attract clients for your parking lot cleaning business, it’s important to have a clear and compelling message.
First, determine what sets your business apart from the competition. Maybe you offer eco-friendly or chemical-free cleaning options or quick turnaround times for busy parking lots. Once you have your unique selling proposition, incorporate it into all of your marketing materials, including your website, social media pages, business cards, and flyers.
Consider offering specials or discounts for new clients as an incentive to try out your services. Also, networking with property management companies and building owners in your target market can also help generate leads and land contracts. And remember to always provide excellent customer service to ensure repeat business and positive word-of-mouth recommendations.
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 8: Get Business Insurance
When it comes to running a parking lot cleaning business, it’s important to have the right insurance in place to protect yourself and your clients. One type of coverage that’s typically necessary is general liability insurance, which can cover claims of property damage.
A business owner’s policy may also be useful, as it combines general liability insurance with additional protections, such as for lost income due to business interruptions. If you will have employees, most states require workers’ compensation insurance to cover injuries on the job.
Step 9: Set up an Accounting System
When it comes to running a successful parking lot cleaning business, having the right accounting system in place is crucial.
First, it’s important to have a system for tracking expenses, such as the cost of equipment and cleaning materials. This will allow you to budget accurately for future expenses, as well as analyze where your money is going and potentially find ways to reduce costs.
Secondly, having a system for invoicing clients and keeping track of payments ensures that you are properly compensated for the work you do.
Finally, keeping track of payroll and employee hours is essential for ensuring that your team is fairly compensated and staying within legal guidelines. By implementing these various accounting systems, your parking lot cleaning business can stay organized and profitable.
Related: Setting up the accounting for your business
How much does it cost to start a parking lot cleaning business?
Your startup costs can be low depending on your target market and location. The capital investment can be as low as just a broom all the way through a specialized parking lot cleaning machine.
Here are some budget items to consider:
Equipment/vehicles: This will likely be your most significant expense. Most businesses will only need a walk-behind rotary sweeper or a ride-on sweeper, but for larger areas, you may need to invest in a sweeper truck.
Costs range from $4,000 to $100,000. Checking auction sites for reconditioned, second-hand equipment may be a cost-effective way to start your new business.
If you opt for a hand-held or ride-on sweeper, you will need transport and a trailer to travel to your clients.
Business licenses and insurance: Licencing requirements will vary from State to State. It also pays to shop around for insurance coverage.
Tools and inventory: Consider investing in a range of cleaning equipment, uniforms, and protective gear. You may also need to stock a small number of chemicals and general cleaning products. We also recommend you invest in a set of tools to do minor maintenance work on your sweeping equipment yourself.
Will you likely have to deal with ice and snow? What equipment and inventory will you need to meet your contractual obligations in these conditions?
Affiliations and memberships: Don’t underestimate the power of a good professional network and connecting with your industry and its current trends and opportunities.
Communications and marketing: An online presence is a non-negotiable regardless of your target market. But also consider doing a print campaign in your area.
Accounting and booking system: We recommend you invest in an accounting system specializing in small business support and a booking platform that suits your requirements. It will make the administration side so much easier!
How profitable is a parking lot cleaning business?
Even though this industry is considered to have a low entry into the market, research your competition, potential customer base, local requirements, start-up, and operating costs, and develop a detailed business plan.
It will help you to develop a price structure that allows a viable profit margin whilst remaining competitive.
Although an average income for this market segment has not been published, IBISWorld states that wages made up almost 50% of the revenue in 2021. Gross profit margins are generally very high, up to 45%.
Are there grants to start a parking lot cleaning business?
It’s extremely rare to find a grant to start a parking lot 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 skills are needed to run a parking lot cleaning business?
You will save yourself a lot of costs and headaches if you can undertake minor machinery maintenance and keep your tools and all equipment in top shape and within regulations.
You will also need a good understanding of dealing with chemical or oil spills. Organizations such as NAPSA or the National Parking Association offer their members a range of educational resources and certifications.
Supporting your bid for a contract with relevant certifications will always be a bonus. It will indicate to potential customers that they will be in good hands and can count on your professional expertise and know-how.
Excellent organizational skills
Regardless of your customer base, be prepared to work early mornings and nights when most car lots are empty and, therefore, easier to clean. That said, if you have a contract for an apartment complex or warehouse sites, standard business hours or weekends might be the best times to work. Of course, you are your own boss, so you can decide how much and when you want to work and what contracts you’d like to take on. But there will sometimes be an urgent need for this kind of work, and you may be called in to clean parking lots after hours.
Regardless of your workload, organize your time well and plan each work project to meet your contracts’ requirements and your client’s expectations. Good time management is part of good customer service, which, in turn, will help expand your brand through word of mouth.
Good time management also means you assign time to look after your business administration, meet with potential clients, develop your marketing, and keep up with quotes and invoicing.
The relatively low initial costs make developing your own car park cleaning services an excellent starter business that can grow from a side hustle into a full-time opportunity.
So, building a car park cleaning business is an attractive option if you are ready to take the plunge from employment to being the boss and deciding how and when you want to work.