Did you know that revenue in the household cleaners business is estimated to cross $7 billion in 2023? The industry has great potential as it’s expected to grow by 3.02% annually. These stats should provide you with confidence that starting a house cleaning business can be a very lucrative endeavor.
Starting a new business isn’t easy but as long as there’s potential in the market, it’s possible to achieve success with consistency and hard work. Don’t just start a house cleaning business and hope for the best. Take a methodical approach to it so that you’re setting yourself up for success.
Why Start a House Cleaning Business
One of the biggest advantages of a house cleaning business is that there’s always going to be demand for your services. People like coming back to a clean and tidy home. If they don’t have the time to do it themselves, they’re more than willing to pay someone to do it for them. If they’re satisfied with a cleaning service, they tend to stick with it, thus providing you with recurring revenue.
It’s relatively easier to start a cleaning business since the startup costs are low and you don’t need to hire employees, you can simply start by doing the initial cleaning jobs yourself. It’s only after the business picks up steam and you have more clients than you can handle do you then think about hiring more people.
The obvious disadvantage is that this is a very labor-intensive business. If you’re doing the cleaning jobs yourself, you may have to get comfortable with the idea of cleaning up after other people and getting your hands dirty. As long as you’re good with that, you can slowly but surely expand your house cleaning business.
11 Steps to Starting a House Cleaning Business
Every new business opportunity needs to be approached with diligence. It helps immensely if you take time to research the industry, understand where the opportunities exist, and how you can best take advantage of them.
The following is a simple framework that you can utilize as you begin setting up your house-cleaning business. It walks you through the various steps that you must go through to give your business the best chance of succeeding.
Research the House Cleaning Industry
If this is to be your first small business, you’re likely thinking more local than national. In either case, you must research the industry first to see whether there’s enough demand for your services, particularly if you intend to offer specialized services such as pressure washing, gutter cleaning, etc.
It’s also imperative to study the laws and regulations about house cleaning in the area where you intend to operate. There may be specific regulations that cleaning businesses have to comply with. In some areas, you may also be required to secure permits and licenses. Find out what requirements apply to your business and ensure compliance so that the business doesn’t run into any problems down the road.
Develop a Business Plan
A great idea alone doesn’t make a solid business. There needs to be a clear roadmap that highlights the path from formation to expansion. Consider the business plan as the guiding light for your endeavor. It will highlight the opportunities in the market and detail how your business plans to take advantage of them.
A good business plan will include market and competitor research, pricing and marketing strategy as well as an expansion plan. Do keep in mind that business plans aren’t set in stone. Market dynamics can change and the plan should be adapted when the circumstances arise to ensure that the business can successfully navigate any challenges.
Your target market will be defined by the demand for services in the area, your skills, and your access to transportation. For example, a house cleaner with a car will be able to service clients in a broader radius compared to one relying on public transportation.
If you’re providing general residential cleaning services and will be doing the jobs yourself initially, it would be better to focus on condos or single-family homes instead of tackling very large properties that would require multiple cleaners. As your business expands and hires more cleaners, you can expand the target market to include larger properties as well.
It’s not that capital-intensive to start a house cleaning service, one can typically be launched with just a couple of thousand dollars. This would include the costs related to setting up a business entity, securing any licenses and permits as well as acquiring the appropriate cleaning supplies. The supplies for general house cleaning are relatively affordable and any machinery that’s required, such as vacuums, is often provided by clients.
The primary assumption here is that you’ll be doing the initial cleaning jobs on your own. If you were to start by hiring cleaners to do the jobs, the startup costs will certainly be higher as you’ll need to account for their wages.
You can choose to offer your services either at an hourly or a flat rate. Make sure you’re considering the cost of supplies, your labor hours, and other expenses when setting your pricing. Do consider what other cleaning businesses are charging their clients to understand the market rate.
While it can be quite tempting to undercut competitors, offering significantly lower prices may lead potential customers to feel that it’s too good to be true, and they may then become concerned about the quality of the service. Try to find a good balance where you can remain competitive in the market while also earning a decent wage for yourself.
Name of Business
You may feel that this is perhaps the most trivial part of the process but nothing could be further from the truth. It’s very important to choose a unique name for the business. That’s going to be the identity of your business and that’s what people will remember it by. You need to make sure that the name makes your business stand out and makes it instantly recognizable.
It’s recommended that you take some time to think about what you’re going to name your house cleaning business. Don’t feel that it needs to be a super fancy name but it should encapsulate your vision for the business and makes it easy for potential clients to understand the services that you offer.
There’s likely going to be no shortage of cleaning services in the market you’re operating in. So it’s going to be a challenge to try and stand out from the crowd. A unique name is the first step in helping your business cut through the clutter and maintains its own identity.
Choose Your Business Structure
Another important decision when setting up a new venture is deciding what the business structure will be. There are different types of business entities each with its advantages and disadvantages. The type of entity that you choose will dictate how your business is taxed and what its legal obligations are.
Ensure that you understand what the different entities are, how they differ from each other, and which would serve your needs best. It’s always possible to switch to another type of entity later on but it’s best to get started with one that’s most suitable for you initially.
An unincorporated business, the sole proprietorship is owned and run by a person who is not separate from the business. It’s the simplest business entity that’s easy and relatively affordable to set up. The profits flow to the owner who must pay taxes on them through their tax returns. Since there’s no separation between the two, the owner remains personally liable for all of the business obligations.
General partnerships operate much in the same way as sole proprietorships only that they have two or more partners who are actively involved in the management of the company. There’s less paperwork and they’re easier to set up. All profits and losses pass through to the individual partners. However, all partners face unlimited liability and are also liable for each other’s actions.
Limited partnerships have two or more partners who choose a general partner to run the business. The other partners don’t have management control and are effectively silent partners. There are little to no reporting requirements as all profits and losses pass through to the partners. The general partner takes on unlimited liability for the debt and obligations of the business whereas the other partners have liability limited up to the amount they’ve invested.
Limited Liability Company
The preferred entity for small business owners, a Limited Liability Company (LLC) provides a degree of separation between the owner of the business, thus their personal assets remain protected from the debts and obligations of the business. It’s a flexible business entity as LLCs can choose how they are to be taxed. There are some paperwork and annual filing requirements that LLCs have to comply with annually. It’s more expensive to start an LLC compared to a sole proprietorship or partnership.
A corporation is owned by its shareholders who enjoy maximum liability protection. Corporations exist as separate legal entities so they can enter into contracts, acquire assets, sue, or be sued in their own capacity. Corporations can also raise money by issuing stock. However, it’s a complex and expensive process to set up a corporation. There are also stringent paperwork and regulatory filing requirements to be met.
Register Your Business
Once you’ve chosen the business entity that you feel is the most appropriate, it’s now time to register the business. For example, LLCs need to be registered with the secretary of state where they’re based. This will typically require filing a few forms and paying the fees which are usually not more than a couple of hundred dollars.
Businesses are also required to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN will be required for federal tax purposes and banks will also require the EIN when you approach them to open a business bank account.
Obtain Necessary Licenses and Permits
You’ll likely need a business license before you can start the house cleaning business. It’s important to get all of the appropriate licenses and permits before you start taking clients as there could potentially be major fines to pay if you start without the proper license.
If you’ve set it up as a sole proprietorship, perhaps you may consider a DBA or Doing Business As license, so that the business can have a more professional-sounding name instead of your given name. This license enables your business to operate under a different name than the registered entity.
It’s best to search for the licensing and permit requirements in your area to be sure that you’re complying with them before you begin taking on clients. This will save you from a lot of headaches and potential fines down the line.
Open a Business Bank Account
It’s very important to open a business bank account to keep personal and business finances separate. This enables you to practice prudent financial management and helps remove stress during tax season.
You can open a business bank account at any bank. They’ll typically want to see the formation documents of your business, the EIN, and your personal identification documents. Once everything checks out, they can usually open a bank account the same day and get you sorted. Banks may also offer additional services such as credit lines and loans.
Get Business Insurance
As a home cleaning service, you’ll be working in clients’ homes and there’s always going to be an element of risk there. If your business gets sued for damage to property or any other incident, there must be adequate insurance coverage.
General liability insurance is a must as it will cover a wide array of eventualities, including slips and falls. Workers’ compensation insurance will be useful as well even if you’re a sole proprietor as it will provide you with a financial lifeline if you get injured on the job and are unable to work.
Purchase Cleaning Equipment
You may not require a lot of capital to launch a home cleaning business, but there’s still a considerable amount of supplies and equipment needed to do a good job. Supplies typically needed are the following:
- Latex or rubber gloves
- Face mask
- Paper towels
- Cleaning towels
- Microfiber towels
- Mop and bucket
- Broom and dustpan
- All purpose cleaners
- Toilet cleaner
- Glass cleaner
- Spray bottle
If you’re acquiring a service van, it can also be used to advertise the business. A vinyl wrap will not cost more than a few hundred dollars. You can have one created with the details and contact information of your cleaning business. So when you’re driving around or the van is parked somewhere, anyone who looks at it will instantly know about the cleaning service and will potentially reach out if they need it.
Hire and Train Your Team
Once you’ve grown the business and it’s no longer possible to do all of the jobs yourself, there will come a time when you’ll need to expand the team and hire more people. Finding the right people to support their expansion is one of the biggest challenges that businesses face so it’s important to approach this part of the process with patience.
Hire people who have the skills and capability to provide the service levels that your clients have become accustomed to. As you expand, you’ll want to ensure that there’s no degradation in service quality, particularly on jobs where you’re not present to monitor everything yourself.
This will require setting protocols and procedures in place that the new employees must follow to ensure that consistent service is provided every time. Train the employees so that they’re able to maintain those standards and that clients remain satisfied with the service quality.
Market Your Business
Getting the word out about your business is going to be a major challenge. How do you find clients that are willing to give your service a shot, particularly if it’s new and doesn’t have any reviews from existing clients?
A great way to go about this is to start by creating social media accounts. A solid online presence is a good indicator and clients will view it favorably. Keep sharing relevant content and highlighting your services to show potential clients the quality of work that you do.
Consider investing in Search Engine Optimization (SEO) and Pay-Per-Click (PPC) advertising. Most people will simply search for cleaning services in their area on Google or Facebook as it’s the easiest way for them to find one. Make sure that your targeting is set appropriately and the landing pages are optimized so that the people who reach the website are converted into leads and subsequently into clients.
Build Your Relationship With Existing and Potential Clients
It’s very important to build a good relationship with existing and potential clients. Remember, they’re going to be letting you into their home, and for many people, this requires them to have a relationship of trust with the service provider. Value their trust and develop that relationship further by providing good service so that they’re not inclined to go with another service provider.
Word of mouth is a powerful way to get new clients. If you’re doing a great job for your existing clients, there’s a great chance that they will recommend your service to people in their circle. If they’re comfortable with recommending you to others, there’s a higher chance that those people will reach out and hire you as well, based on the solid reviews that you’re receiving from existing customers.
Effectively building relationships with customers will make sure that you have a steady stream of new customers coming in. This will snowball and provide your business with the perfect expansion opportunity.
Why Cleaning Up Your Books Should Also Be a Priority
A house cleaning business can be started with relatively low capital and it can be quite profitable, particularly if you have low overhead costs and are doing the initial jobs yourself. As you get more clients, you can hire and train more people to expand the business and potentially even cover more areas.
Even as you understand, properly cleaning clients’ homes is of the utmost importance, so is cleaning up the books for your business. There should be a complete separation between business and personal finances while income and expenses should be tracked diligently so that you always have a clear view of the financial standing of the business.
With doola Bookkeeping, you can take the stress out of keeping perfectly balanced books. It securely and accurately tracks all of the money coming in and going out, empowering you to make informed business decisions at a moment’s notice.
How profitable is a house cleaning business?
A house cleaning business can be very profitable, making between $25,000 to $50,000 per year on average, if it’s operated by one individual. The profitability largely depends on the area and the types of services offered.
What is the fastest way to start a house cleaning business?
The fastest way to start a house cleaning business is to set up a sole proprietorship and do the initial cleaning jobs yourself. This will save time as you don’t have to train employees but can do that once the business is ready to expand.
Is the house cleaning business in demand?
There’s a growing demand for house cleaning businesses as people continue to value the flexibility and convenience that it provides them. They can go about their life while a service provider ensures that they always have a tidy home to come back to.
What equipment is needed to start a house cleaning business?
To start a house cleaning business, the equipment that you’ll typically need will include brooms, mops, cleaning rags, microfiber towels, all-purpose cleaners, disinfectants, toilet cleaners, glass cleaners, etc.
Is it a good idea to start a house cleaning business?
It is indeed a good idea to start a house cleaning business as the industry is estimated to grow at a CAGR of 3% over the coming years, thus there will be plenty of opportunity for cleaning businesses to thrive in the market.