Starting a new business can be tricky. Multiple factors need to be considered before starting. It is important to take everything into consideration to ensure you build a profitable cleaning business. In an effort to help I have created this short guide to give you a clear look at the profitability of a cleaning business.
Is a Cleaning Business Profitable?
The profitability of a cleaning business depends on the amount of work you are willing to put into it. I can assure you, if you are willing to make some sacrifices, you will be able to run a successful cleaning business.
Cleaning services are most suited for energetic individuals, who do not mind the intensity of the workload. Cleaning businesses are relatively easy to start, as they do not need large initial investments for expensive equipment.
You are able to open a cleaning business for under $100 by purchasing minimal cleaning equipment. However, the startup cost will depend on the type of cleaning service you decide to open.
While opening a cleaning business can be effortless, keeping it afloat is that much harder. Consistency and quality work are needed to establish a positive reputation in this work field in order to create and keep a profitable client base. Still, the profit margin of cleaning businesses can be as high as 45%.
All in all, a cleaning business will be profitable as long as the correct work ethic is followed.
How Much Does a Cleaning Business Make a Year?
A profitable cleaning business is able to earn between $30,000 and $100,000 in a year. However, numerous factors contribute to these numbers. The main factors to consider are the size of the business and its overheads.
In 2020, the cleaning business industry was worth over $46 billion.
The amount a cleaning business will make in a given year is governed by: the number of jobs the business accepts and finishes, the fee that is charged for the services, the cost of the overheads of the business, including fuel, equipment and marketing costs needed to be dealt with.
With some basic math, it is easy to calculate an approximate yearly profit based on the size of the business.
Also, new business earn less in the beginning. As my business started to grow and I acquired more customers, I had to expand my team. Larger businesses and ones with a wider client base earn more yearly, because they work more hours on average than a newly-formed business. This difference can be up to 50% based on the hours worked in a given week and their clientele.
Contributing Factors in Profitability & Rentability
As with all businesses you need to take different factors into account when calculating your profitability. I had to account for the cost of my operations and my business location when setting my service fee. I also had to think about the competitors in my local area in order to be considered as an option by my clients. And, at this time I did not even think about my employees: both the cleaners and the management.
Make sure you consider all factors when looking at the possible profit margin of your business. Leaving out one small, seemingly insignificant aspect, can cause trouble down the line.
When it comes to the business location, there are two major things I had to take into account. How far is the business located from my clients and their property I was hired to clean and how much is rent for office space.
I bring the rent up as it is a huge overhead which will dip into your profit. You have to pay the business rent, there is no question about it. However, searching for a suitable location is important.
The business needs to be presentable, to leave a good impression on the customers. There is a possibility your clients will never visit your base of operations, yet it is still important to have a clean environment available if they do drop by.
In most cities, popular areas will charge higher rent. If you can scout out a location which is close to your clients, but still at a cheaper part of town, it will save you on rent quite a bit.
Secondly, my cleaners and cleaning teams need to travel to complete their work. Fuel cost can also rack up if the business location is too far removed from the main customers.
Be sure to carefully select the place you wish to rent for your business, do not just jump at the first tempting location. In some instances, a bit higher rent will still cost you less than the fuel the service vehicles will consume.
Most cleaning businesses will have specific fees for different cleaning jobs. These can have an hourly rate or be based on the square foot or the difficulty of the job. Yet, customers need to know it upfront to choose the cleaning service suiting their needs.
The pricing can be tricky, as a cleaning business needs to be appealing to their customers, while also ensuring they make a profit. My prices have to cover my business rent, the overheads (including the cost of cleaning supplies and fuel), the salary of my employees and still need to have room for profit. Yet, the prices cannot be too high or they will scare away the clients. A perfect balance needs to be found.
Starting out as a smaller business, I had to charge less since my work capacity was not able to compete with larger commercial cleaning businesses. As I have grown, I needed to increase my price as with the growth I had to hire additional cleaners. In this manner, I have managed to enlarge my cleaning business without losing profit, caused by lower service fees.
No matter which service industry you are in, you will always have competition. This is also true for cleaning businesses.
Researching businesses offering similar services in my local area gave me an idea of what competitors were charging. I have set my initial prices lower than theirs, to attract customers at the start.
A cleaning business needs to be organized. Dates, hours, appointments need to be kept track of at all times. Messing up cleaning appointments will leave a business with unsatisfied customers, the possibility of negative reviews and potentially damaged reputations. Not to mention the loss of profit.
When I started out, my bullet journal was my best friend. That notebook was enough to track my cleaning appointments, and I could make sure my team got everywhere on time to finish the job.
However, as my business has started to grow and I have hired more cleaners, I also had to change my organizing method.
Instead of getting a journal or calendar for each individual team, I have opted to use a service to help my teams stay organized.
After checking out multiple options, I have decided to take things into my own hands. Combining organization and online appointment booking, I have created Maidily, to take this burden off my shoulders.
I use Maidily to track our jobs, track customer details, send communication through automated reminders, and to manage scheduling through a detailed calendar.
Make sure you choose the app or organizational method that fits your needs perfectly, as it will make your life easier!
Residential Cleaning vs Commercial Cleaning
Most cleaning businesses will not jump into commercial cleaning from the beginning. Usually, start-up cleaning services are residential and as they expand they join the commercial market.
Residential cleaning businesses deal with cleaning private properties and real estate to earn their profile. These services specialize in cleaning things around the home. They are smaller than commercial businesses and they charge less for their services.
They tend to employ only a few cleaners to take care of the cleaning jobs offered to them. As a result, residential cleaning businesses will make less profit, but their financial input will be lower as well.
On the other hand, commercial cleaners offer their services to other retail shops, offices and buildings. As a residential business becomes larger, they typically move into the commercial cleaning market.
Usually, they employ multiple teams and charge more for the job. While their overhead costs will be higher, commercial cleaning businesses tend to have better profits.
If Managed Properly, Cleaning Business is Profitable
Taking the previously mentioned factors into account, you should be able to determine whether the cleaning business is for you or not. All things need to be considered to ensure you do not lose profit by starting an endeavour you are not prepared for.
However, once you know what to expect, things get a bit easier. By checking out the different factors governing the profitability of cleaning business and calculating it, you will know what you need to do to achieve your goal. Scouring the perfect business location, optimizing your service fees, checking out your competition and managing your organization will allow you to make the best of your circumstances and earn a profit with your cleaning business.