Starting a commercial cleaning business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful commercial cleaning business.
Importantly, a critical step in starting a commercial cleaning business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Commercial Cleaning Business:
- Choose the Name for Your Commercial Cleaning Business
- Develop Your Commercial Cleaning Business Plan
- Choose the Legal Structure for Your Commercial Cleaning Business
- Secure Startup Funding for Your Commercial Cleaning Business (If Needed)
- Secure a Location for Your Business
- Register Your Commercial Cleaning Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Commercial Cleaning Business
- Buy or Lease the Right Commercial Cleaning Business Equipment
- Develop Your Commercial Cleaning Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Commercial Cleaning Business
- Open for Business
1. Choose the Name for Your Commercial Cleaning Business
The first step to starting a commercial cleaning business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your new business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your own cleaning business.
2. Develop Your Commercial Cleaning Business Plan
One of the most important steps in starting a cleaning business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your commercial cleaning business.
- Company Overview – this section tells the reader about the history of your commercial cleaning business and what type of commercial cleaning company you operate. For example, are you a janitorial service, window cleaning service, carpet cleaning service, or a residential cleaning business?
- Industry Analysis – here you will document key information about the commercial cleaning industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your own business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your commercial cleaning business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Commercial Cleaning Business
Next you need to choose a legal structure for your commercial cleaning business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the business owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small business owners. It is an agreement between two or more people who want to start a cleaning business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a commercial cleaning business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a commercial cleaning business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your commercial cleaning business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Commercial Cleaning Business (If Needed)
In developing your commercial cleaning business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a successful cleaning business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a commercial cleaning business that they believe has high potential for growth.
5. Secure a Location for Your Business
When looking for a location for your cleaning company, it’s important to find a place that is central and easily accessible. You also want to make sure that the space is big enough to accommodate all of your equipment and supplies.
Another important factor to consider is the cost of rent. You’ll want to find a property that is within your budget, but also offers enough space to grow your business.
6. Register Your Commercial Cleaning Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your commercial cleaning business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your cleaning company to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
You will need a business license, permit to operate as a commercial cleaning business, a trade name registration, and a federal tax identification number. You may also need a zoning permit, depending on your location.
10. Get Business Insurance for Your Commercial Cleaning Business
The type of insurance you need to operate a commercial cleaning business will depend on the type of business you are operating.
Some commercial cleaning business insurance policies you should consider for your business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Commercial Cleaning Business Equipment
When starting a commercial cleaning business, the first thing you need is some cleaning equipment. This might include a vacuum cleaner, mop, broom, and dustpan. You might also want to invest in some specialized equipment, such as a floor buffer or carpet cleaner.
12. Develop Your Commercial Cleaning Business Marketing Materials
Marketing materials will be required to attract and retain customers to your commercial cleaning business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your commercial cleaning business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional commercial cleaning business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your commercial cleaning business.
13. Purchase and Setup the Software Needed to Run Your Commercial Cleaning Business
The most important software for a commercial cleaning business is a customer relationship management (CRM) system. This system will help you keep track of your customers’ contact information, schedule appointments, and invoices. Other software that may be useful includes accounting software and marketing software.
14. Open for Business
You are now ready to open your commercial cleaning business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Commercial Cleaning Business FAQs
Is it hard to start a commercial cleaning business?
No, it is easy to start a cleaning business. The startup cost is low and the demand for commercial cleaning services is high. However, it is important to do your research and plan your business carefully to ensure its success.
How can I start a commercial cleaning business with no experience?
One option for starting a cleaning business with no experience is to research the industry and learn about the different types of cleaning services. You can also attend industry events or join relevant online communities to learn from others who have started their own cleaning companies. Additionally, you can create a business plan and financial model to help you understand the costs and potential profits of your business.
What type of commercial cleaning business is most profitable?
The most profitable type of commercial cleaning business is a janitorial service. There is a lot of demand for janitorial services, and the competition is not as fierce as it is for other types of cleaning jobs. In addition, janitorial services are typically labor-intensive, which means that there is more opportunity to make money.
How much does it cost to start a commercial cleaning business?
The cost to start a cleaning business can vary depending on the size of the business and the amount of equipment and supplies needed. However, on average, startup costs can range from $2,000 to $10,000.
What are the ongoing expenses for a commercial cleaning business?
One of the main ongoing expenses for a commercial cleaning business is the cost of the cleaning supplies and materials. Other expenses can include labor costs, marketing and advertising costs, and insurance costs.
How does a commercial cleaning business make money?
Commercial cleaning companies make money by charging for their services. Services may include general cleaning, window washing, and carpet cleaning. Local business owners may also offer specialty services, such as graffiti removal or power washing.
Is owning a commercial cleaning business profitable?
Yes, owning a commercial cleaning business can be profitable. There is a lot of demand for commercial cleaning services because businesses and organizations of all sizes need to have their offices, meeting spaces, and other facilities cleaned on a regular basis. This creates a large market for commercial cleaning business owners.
Why do commercial cleaning businesses fail?
One of the main reasons commercial cleaning businesses fail is because the owners do not have a clear business plan and do not set realistic goals for their company. Other businesses also fail because of inadequate marketing, hiring the wrong employees, and charging too little for their cleaning services.