Learning how to start a cleaning business is a well-worth-it investment in time, energy, and resources. A cleaning business startup is one of the most lucrative and rewarding businesses to launch.
Low overhead, low barrier to entry, and relatively low startup costs make learning how to start a cleaning company an attractive proposition for entrepreneurs.
Whether you intend to start your own cleaning business as a second income source or side hustle, or you’re planning a career change, this guide will give you everything you need to hit the ground running.
Why Starting a Cleaning Business is a Good Move
Starting a business is an exciting proposition, but it’s also full of potential pitfalls and unforeseen challenges that can make or break any venture. In fact, the success rate for cleaning businesses is only 34% after ten years.
This makes the process of choosing the right business and proper planning, vital steps necessary to ensure your venture is a glowing success.
But why a cleaning business startup?
Starting and running a business of any kind takes capital. The costs of keeping a business operating and the wheels of commerce chugging along are known as overhead costs.
As a startup or small business, these costs need to be minimized and carefully managed to ensure the company is cash-flow positive and viable.
Overhead is one of the largest expenses for businesses, new and old. It is also a cost that often makes the launch of a new business cost-prohibitive for many would-be entrepreneurs.
Cleaning businesses are attractive due to their notably lower startup costs than many other types of businesses.
For example, supplies can be purchased wholesale, stored in a residential garage (if needed), and requires no physical infrastructure or storefront (no lease or rent).
Examples of Overhead When Starting a Cleaning Business:
- Legal fees – contracts and business registration. For a cleaning business, contracts are largely cookie-cutter and standardized, reducing the costs of anything complex.
- Storage Fees – for a budding cleaning business, most entrepreneurs can skip expensive warehouses and opt to store their products and supplies in a residential garage (at home), or in a cost-effective storage facility, typically for less than $200/mo.
- Loans and Interest – the most basic of cleaning businesses can be bootstrapped for $500 or less at the beginning, meaning that most individuals won’t need to take out an expensive loan with high interest rates and looming monthly payments overhead.
- Supplies – most cleaning supplies are low-cost, and as your business grows, you may qualify for wholesale rates or contractor rates at stores ranging from Home Depot to specialized cleaning supply stores.
- Insurance – insurance is a necessary expense no matter which way you swing it. Various types of insurance may apply to cleaning businesses, from liability to workers’ comp, depending on the organizational structure and services offered. That said, insurance premiums for cleaning businesses can be as low as $30/month, a price well worth it for peace of mind.
- Website and Hosting – unlike large affiliate sites or media sites, cleaning websites act more as sales brochures and customer service portals than anything. Traffic is typically localized to the locations served, keeping website design and hosting costs down. Although web design costs vary widely, hosting for such a site can easily be as low as $5-$20/month.
- Payroll – Among businesses’ costs, payroll typically makes up for the biggest expense. Luckily, it is not uncommon for the cleaning industry to hire workers on a contract basis (i.e., a 1099 independent contractor). This means fewer expenses with payroll management, such as withholding tax, unemployment insurance, etc. It also may reduce tax liabilities and accounting fees.
- Marketing and Advertising – As a local business, a cleaning company or startup can more easily compete, avoiding the cost and frustration of competing against national brands and Fortune 500 companies. With in-depth knowledge of the local market, savvy entrepreneurs in the cleaning space can often find high-impact, low-cost acquisition channels that drive revenue without breaking the budget.
Residual Income from Cleaning Contracts
A major expense for most startups is customer acquisition. Worse yet, for ‘transactional’ businesses, all that time, money, and effort of acquiring a customer often result in a 1-off sale with no immediate hope for a repeat purchase.
Cleaning is a necessary aspect of home and business ownership, requiring consistent and regular upkeep to maintain a clean and healthy environment all year round.
Presuming your cleaning startup does a good job and offers value and solid customer support, chances are each customer earned will continue to provide consistent residual revenue for months or years to come.
As far as ‘lifetime’ value, cleaning customers top the list. With each passing month, as you get more cleaning contracts, your income will have a compounding effect, helping provide you with the financial ammunition to grow, thrive, and prosper.
Complexity is a major bottleneck for many entrepreneurs who want to ‘do it all’ and do it better. The problem with that model, and with some industries, is that more moving parts often lead to more headaches, complications, and mistakes.
By contrast, a cleaning business is about as simple as they come. The job is straightforward, with clearly defined parameters and processes to produce superior results.
Likewise, it is a business that requires very little customer interaction after the initial sale and contract. In fact, most customers prefer not to think about their cleaning service once hired. It’s a tedious and necessary task they need to be done, but they don’t care to know the nuances of the work.
This also means that starting a cleaning business is a less stressful endeavor. Apart from offering emergency services (if you opt to), this is one business where the day’s work stays ‘at the office’ with very little stress after hours.
A cleaning startup has the potential to turn into a highly lucrative business. Low overhead, high margins, residual (recurring) revenue from contracts, and relatively low labor costs all compound in a way that is quite favorable to entrepreneurs who dare to go down this path.
Learning how much to charge for house cleaning profitably will result in continuous growth and a high owner salary.
Once established and dominating one local market, be it a city or county, a well-positioned cleaning company can use its good financial standing to expand further, growing its cleaning fleet and breaking into new markets and specializations to earn even more.
Opportunity: For the extra ambitious, franchising may become an option down the road, opening up the doors to infinite possibilities regarding cleaning business profits.
In today’s modern world, people are busier than ever before. Between work and social responsibilities, there’s often little time or room left for anything else. This makes a cleaning startup an attractive proposition.
The typical day for a cleaning startup doesn’t begin until others’ have ended. For example, businesses expect cleaning crews to work in time slots before or after closing. Similarly, residential customers generally prefer cleaning crews to work when they themselves are at their day job.
With employees and subcontractors handling the lion’s share of the work, a savvy cleaning startup owner can largely sit on the sidelines, acting in an executive capacity to direct and manage subcontractors and jobs and focus on growing the cleaning business.
Checklist for Starting a Cleaning Business
If you’ve made it this far, you likely don’t need any more convincing that a cleaning business startup has a lot of things going for it. That brings us to the next stage of this guide: our comprehensive starting a cleaning business checklist.
Below, we cover the major nuts and bolts of how to start a cleaning business from scratch. By following this guide, you’ll be well on your way to running a successful cleaning company that will be both challenging and rewarding.
1. Perform Market Research
The old adage, ‘Do your homework’ doesn’t just apply to the classroom. When starting your company, one of the most important steps is doing your research.
It sounds rudimentary, but this mission-critical step can mean the difference between glaring success and total failure. At the very least, it can save you from most headaches and expenses as you progress on this journey.
Areas to Research:
- Various Business Models (franchise, sole proprietor, acquiring an existing company, etc.)
- Competitive intelligence (other successful cleaning companies)
- Market trends
- Gap analysis (is there a lack of service providers for a specific niche or use case)
- Market demand (locally)
Remember, you can never have too much real-world data and information. The specifics of this research and data will be tailored to the individual and their aspirations, but broadly speaking, competitive and market research will go a long way for any cleaning startup.
2. Write a Business Plan
Failure to plan is akin to planning to fail. The overreaching goal of a cleaning business plan is to help you articulate the strategy surrounding the conceptualization, design, structure, and implementation of your cleaning startup.
Within this plan is a detailed breakdown and insight into the steps and resources necessary to bring your vision from idea to reality.
Benefits of a Business Plan
- Gain insight and clarity into what is necessary to achieve the desired outcome
- Establish a realistic timeframe for each milestone
- Discover internal and external strengths, weaknesses, opportunities, and threats
- Offers a tool to conduct periodic evaluations on progress
- Provides lenders or financiers with an idea of how well they might expect your company to perform
The Ten Most Important Components of a Business Plan Include:
- Executive summary: Your cleaning company’s mission statement, as well as a summary of its objectives, services offered, the market it operates in, and the target audience it serves.
- Business Description: A more comprehensive overview of the business and its goals, including everything from the proposed corporate structure, to details regarding the problem it seeks to solve, the market it operates in, the competition, and more.
- Market Analysis and Strategy: Defines the target audience, demographics, industry, and niche. Seeks to understand customer pain points, needs, desires, and budget.
- Competitive Analysis: This section details the competitors your new cleaning business will be up against. A good competitive analysis will discover areas of opportunity and costly pitfalls you’ll want to avoid.
- Management and Organizational Hierarchy: An outline of your organization’s hierarchy, including roles, qualifications, direct reports, and more.
- Services: A detailed description of the services offered, how they are fulfilled, and the necessary processes, equipment, and materials used for each.
- Operating Plan: A strategy that covers the overall day-to-day operations of the company.
- Financial Projections: Part of budgeting, financial analysis, and projections forecast future revenue and costs to help you optimize cash flow and plan for growth and expansion as well as costs.
- Exhibits and Appendices: A catchall section that is often used to include extraneous or supplemental information such as marketing research, permits, licenses, graphs, legal documentation, pictures of the product or services, financial documents, and more.
3. Get funding
You’ve heard it before: it takes money to make money. Luckily, a cleaning startup generally requires less startup capital than other ventures.
Even so, you will want to put together a detailed breakdown of startup costs, with enough of a financial runway to give you time for revenue to catch up with expenses.
Options for funding your cleaning business:
- Borrow from Friends and Family: This is often the best and least stressful option. Getting friends and family to help isn’t just an easier proposition (they generally want to see you be successful); it also nearly always comes with better terms (i.e., low or interest-free).
- Small Business Loans: The Small Business Administration (SBA) and other organizations and banks often have special programs for helping small businesses get financed. This route can be a bit frustrating as far as red tape and paperwork go, but if you qualify, you may be able to acquire funding with more favorable terms than a standard bank loan.
- Short-Term Loans and Credit Cards: Arguably the riskiest of financing options, both short-term loans and credit cards carry high-interest rates. Although the scope of this guide can’t offer personalized investment or financing advice (every entrepreneur’s situation is unique), we can confidently say that these options should be carefully weighed against the risks involved and typically used as a last resort.
- Bootstrapping: One of the best ways to finance and fund a new cleaning startup business is by ‘bootstrapping’ it yourself. Bootstrapping is a phrase that describes utilizing existing resources and ‘making do’ with what you have to get your cleaning venture off the ground. This can include using old or donated equipment, hitting up garage sales for supplies on the cheap, converting your mini van into a work van, and more.
4. Select a Market
This is where some of that market research from Step 1 will come into play. Choose correctly, and you’ll make your life 100x easier. Choose wrong, and you’ll be facing stiff competition from existing cleaning businesses that have gained a strong foothold in the local market.
The right market to launch in should also be one in which you have identified a need. In other words, is there a gap between the availability of cleaners and the demand for cleaning services in that area?
Competitor research will be necessary when honing in on where to set up shop. This research may also reveal hidden opportunities to differentiate your cleaning startup from the competition or to ‘niche down’ (more on this below).
5. Select a Niche and Specialize
Especially when competing against established or large corporations, ‘niching down’ and specializing is one of the easiest ways to differentiate from the sea of competition right out of the gate.
Niching down refers to targeting a sub-section of the broader target demographic. For example, a cleaning startup may want to specialize in getting commercial contracts such as cleaning office spaces, warehouses, or food production facilities.
Each industry or niche typically has unique needs, desires, budgets, and expectations. Some industries may require specialized equipment or approaches that differ widely from standard cleaning services.
This presents an opportunity for a startup to specialize in being the best for those particular businesses. Learning how to price commercial cleaning jobs is a valuable skill when you want to grow.
For many cleaning startups, bidding on cleaning jobs in the residential market is the path of least resistance. Commercial businesses are typically the harder niche, usually dominated by large franchise cleaning companies.
But even within the residential sector, there is an opportunity to ‘niche down’. Consider focusing on getting apartment complexes, single-family homes, rental units, and more.
Specializing refers to offering at least one specialized cleaning service. For example, outdoor cleaning, ‘green’ cleaning solutions, a unique approach to cleaning, UV disinfecting, and more.
Key-Takeaway: Rather than being a jack of all trades and ‘master of none’, a business can focus on outperforming the competition in one specific area, gaining a foothold and customer loyalty that can translate into cross-sales later on down the road as your service line expands.
6. Plan Your Budget
When starting a business, most entrepreneurs have visions of fat checks and living a lifestyle they have always dreamed about. But before attaining those goals, one must first be realistic about the costs involved with getting there.
The budget for a cleaning startup needs to be detailed and well-planned, accounting for both one-off and recurring costs, balanced against projected cash flow to ensure sustainability over the long run.
For a cleaning business, there are a few main expenses that most new companies expect: Supplies, Labor, and Equipment.
The type, amount, and cost of supplies will vary widely depending on the types of services you offer and the type and number of clients you expect to service.
When starting out, Costco, Sam’s Club, and other bulk discount retailers can add up in savings. Consider looking into loyalty cards or rewards programs with various store credit cards to stack up even more savings.
At some point, transitioning to purchasing wholesaling is an ideal next step. However, this avenue isn’t usually an option for startups due to required order minimums that are typically quite high.
When starting out, you may find that you need to complete much of the work yourself. This is a good idea regardless because it gives you a ground-up view of what is expected of each role in your company and what is required to achieve the results and quality you will expect of employees or contractors.
Speaking of employees, hiring 1099 contractors (when possible) is a great way to reduce operating expenses and the headache of paperwork, withholding taxes, health insurance, and unemployment insurance.
That said, always speak with an attorney or tax advisor to gain clarity on what you are and are not allowed to do in your particular jurisdiction.
A cleaning company doesn’t have much in the way of heavy machinery, but it may still be necessary to budget for commercial-grade vacuums, wet/dry vacs, a service vehicle, and more.
7. Register Your Business
When starting a business, there are a few items on the legal side that need taking care of. First up, is choosing a legal business entity under which to operate.
This guide is not meant to offer any type of legal advice in this matter. However, we can briefly cover the potential avenues most applicable to a cleaning startup.
- Sole Proprietor: The most basic of business structures, this type of company is operated in the owner’s name and offers no liability protection. It is also the easiest to set up, with virtually no paperwork, business registration fees, or processes to contend with. The only caveat is that if you intend to market your business under a name other than your personal name, you’ll need to file a DBA (doing business as).
- LLC: Also known as a Limited Liability Company, this corporate structure will require paperwork to be filed with the state and a business registration fee. The LLC will have its own tax ID, but profits and losses are called ‘pass through’. This means that any net profit or loss from the company will ‘pass through’ to the owners’ personal tax returns.
- S-Corp: Not actually a legal structure; an ‘S-Corp’ is a tax designation that can be filed for and granted to an LLC or a C-corp. The primary benefit of an S-corp is that a certain percentage of the profit can be distributed to its owners as a ‘dividend’, thus bypassing the self-employment tax for that portion of the income received.
Starting a Cleaning Business Checklist PDF
You can save a condensed version of the above checklist as a PDF file by clicking the download button below:
The days of ‘If you build it, they will come’ are long gone. Today’s markets are more competitive than ever before, with new businesses facing a sea of competitors, some of which are well-established and with bigger bankrolls.
Digital Marketing and SEO
Savvy new cleaning companies would be wise to lean into digital advertising, ideally partnering with an SEO or digital marketing agency specializing in SEO for cleaning services.
Despite the steep competition, the digital landscape still offers a means for even startups to gain traction and get cleaning clients.
User acquisition channels such as organic SEO, paid ads, and Facebook ads for cleaning companies offer small companies, and budding startups access to the same high-impact, low-cost channels used by major corporations.
With the right tactics, these digital advertising channels enable brands to get in front of the RIGHT customer, at the right time, with the right message, increasing conversion rates, and driving ROI.
For those still on the fence, consider that more than 80% of all in-person and online sales are influenced by a search engine query. And regarding search engines, Google is the biggest elephant in the room.
Networking is a powerful tool at any business’s disposal. Leveraging time and connections, networking is often the foundation of many new cleaning startups’ marketing plans.
Tap into social networks, friends, colleagues, family, and more to expand reach, gain visibility and earn new customers.
Other Opportunities for Networking Include:
- Trade shows
- Industry-specific communities
- Industry-specific forums or groups
- Social media groups and communities
- Local chamber of commerce
Referrals are a valued and cost-effective lead generation tactic that also speaks to the value and quality of services offered by your company.
This method relies heavily on impressing your customers so much that they are willing to proactively (or when asked) send business or prospects your way.
Common Questions About Starting a Cleaning Business
Is starting a cleaning business a good idea?
Starting a cleaning business is a good idea because of minimal overhead, residual income, and higher-than-average profit margins.
What are the overhead costs of a cleaning business?
A cleaning business’s overhead costs include payroll, supplies, insurance, advertising, legal fees, and storage fees.
The Bottom Line On Starting a Cleaning Business
Anything worth doing is worth doing well, and when it comes to starting a cleaning business, those that do it right will reap incredible rewards both monetary and professional.
If you’ve been on the hunt for a new business opportunity with low overhead, high margins, minimal oversight, and manageable startup costs, launching a new cleaning business might be just what the doctor ordered.
This ‘evergreen’ service is always in high demand, with customers often sticking with the same company for years or even decades. By following the steps in this guide, you’ll be well on your way to starting a thriving cleaning business that’ll keep the competition on its toes.