How to Run a Small Commercial Cleaning Company
Table of Contents
Commercial cleaning companies are the reason everything is clean and tidy at your doctor’s office, apartment building, office building or store. Whereas residential cleaning companies serve individual families and homes, commercial cleaning companies provide cleaning services to shared, more public spaces.
As long as these buildings exist, there will be a need for cleaning services, so it’s no wonder that some people choose to start cleaning companies. Starting any small businesses can be scary, but as long as you go about it strategically, you can enjoy a stable and profitable business when you start a small commercial cleaning company.
How to Start a Commercial Cleaning Company
Starting a new business of any kind can feel overwhelming. The great idea for a business is just the start. Then you have to take care of all the necessary logistics. Fortunately, when starting a cleaning company, there aren’t too many things you need to do or money you need to spend to get started. This is one of the major advantages of this business. Let’s look at what you do need to do to make things official and get your new business off the ground.
1. Consider Buying Into a Franchise
The first decision you need to make is whether you want to operate independently or as a part of a franchise. Buying into a franchise has a cost associated with it. Typically, you have to pay an initial down payment, and then pay ongoing fees, which may be a percentage of the revenue you make. These fees aren’t for nothing. You get the advantage of being a part of a brand that has already been established and has some recognition.
There are some other drawbacks to being a part of a franchise you should also consider, though. In some cases, you may be required to operate out of a retail location, which adds significantly to your company’s overhead. You also give up control when you buy into a franchise since you must run your business a certain way. It also means you can’t sell your business someday once it has become highly profitable.
If you choose to buy into a franchise, many of the following items will be predetermined for you. So, as we continue to discuss the steps to starting your business, we’ll assume you’ve chosen to function independently rather than as a part of a franchise.
2. Select a Legal Entity
The next step is to decide what legal entity your business will fall into. There are three main options to consider for how to legally classify your business. These are:
- Sole proprietorship or partnership: This option gives you independence and saves you from having to register with or report to your state government. However, with that higher level of freedom comes a higher level of risk. You, or you and your partner, will be personally responsible for any debts or issues your business experiences.
- Limited liability company (LLC): An LLC is a hybrid option that falls somewhere between a sole proprietorship or partnership and a corporation. It offers some protection to your personal liability, though not to the same degree as a corporation would, but it also requires members to pay self-employment taxes. Filing for an LLC could cost you anywhere from $40 to $500, depending on which state you live in.
- Corporation: This option turns your business into a completely separate entity of its own. Your personal assets are safeguarded, but it also means both you and your company can be taxed. This option also forces you to comply with more regulations and devote more attention to careful record-keeping. Incorporating is generally not a popular option for small businesses.
3. Come up With a Name
Your business’s name is important, but don’t overthink it too much. Just make sure the name accurately communicates to clients what you do. A simple name like Carla’s Commercial Cleaning Services will do the trick. Check that there are no other companies with the name you want or a similar name. Even Kara’s Commercial Cleaning Co. could cause some confusion when clients try to look you up online. There are a few different ways to officially register your business’s name. The way you go about it will depend on the legal entity of your business.
4. Set up a Business Bank Account
No matter which legal entity you choose for your new business, you’ll need to create a bank account for your business to keep costs and profits separate from your personal finances. Letting clients know that they can pay directly online or make checks payable to your business lends legitimacy to your business operations while asking clients to pay you personally does just the opposite.
Before you go to open a bank account for your business, know the requirements. Corporate bank accounts have the most rigid requirements, but these won’t apply to you if your business is an LLC, sole proprietorship or partnership. For an LLC, you will need to show the bank your state registration paperwork. For a sole proprietorship or partnership, you will have to share the Employer Identification Number assignment letter, which you will have received from the Internal Revenue Service (IRS).
5. Consider Purchasing Insurance
Insurance protects you from unfortunate circumstances or accidents that could occur. For example, if one of your employees accidentally breaks something valuable in a client’s building, liability insurance would cover the expense to fix or replace the item. Without insurance, those expenses would come out of your profits. Liability insurance also applies to third-party claims over bodily injuries. General liability insurance is the most basic type of insurance you can get for your business and typically has an annual premium between $375 and $700, but it is worth the investment.
If you want other types or higher levels of protection, consider the following options, as well:
- Commercial property insurance: Insures your business’s assets, including your office building, if you have one, along with your equipment or supplies. Annual premiums tend to fall between $500 to $750.
- Business owners’ policy (BOP): If you want general liability insurance and commercial property insurance, you should get a business owners’ policy, which combines the two. With an annual premium between $725 and $1,000, you will save money bundling this way.
- Commercial vehicle insurance: If your business has vans or any other type of vehicle you and your employees use to get from job to job, you can cover these vehicles through commercial vehicle insurance. Premiums range from $1,500 to $3,000, depending on the policy.
- Workers’ compensation: This insurance policy covers injuries employees may experience on the job and wage replacement. Annual premiums are in the $1,500 to $3,000 range.
- Umbrella insurance: If you want to be insured beyond the limits of your liability insurance, you can purchase an umbrella insurance policy. The annual premium for umbrella insurance is $400.
- Bond: A bond is a type of insurance that financially guarantees certain terms. One of the most important functions of a bond for a cleaning company is that it safeguards your business and clients if an employee ever commits theft. Some clients prefer to work with bonded cleaning businesses for this reason.
6. Determine Services and Rates
Next, you need to determine what services your company will offer and how much you will charge. By identifying as a commercial cleaning company, you already narrow in on cleaning services for commercial, rather than residential, buildings, but if there are certain services you are and are not equipped to offer, make sure you are prepared to let potential clients know.
As for your rates, there are several different ways you can set rates. Here are the main options to consider:
- Hourly: The most common way of setting rates is by the hour. To home in on an appropriate hourly rate, first pay attention to what your competitors are charging.
- Flat: A flat, or fixed, rate is one you come up with for a particular job and does not change regardless of the time the job actually takes. You may have to get some information from the client to determine an appropriate rate.
- Square Foot: Especially in the commercial cleaning business, the buildings your company services can vary a lot in size. You can set a dollar amount per square foot or can charge a higher hourly rate if a building exceeds a certain square footage that you have determined.
- Monthly: If a client contracts your services long-term and requires roughly the same routine services each month, you may opt to set a monthly rate. You may also want to include a discount as an incentive for these long-term contracts.
7. Stock up on Supplies
Don’t forget to stock up on all the necessary supplies for commercial cleaning. These items include:
- Apron or cleaning uniform
- Rubber or latex gloves
- Commercial grade vacuum cleaner
- Floor buffer
- Extension cord
- Scrubbing brushes
- Paper towels
- Wet floor signs
- Toilet brush
- Garbage bags
- All-purpose cleaner
- Furniture polish
- Window cleaner
How to Market Your Small Commercial Cleaning Company
Starting a commercial cleaning company isn’t the end of the story. You have to get clients, and you do this mainly through marketing. When it comes to marketing your business, you can choose between handing off this responsibility to a professional marketer or doing the work yourself. Especially in the beginning, you may want to save money by doing your own marketing. There are two main types of marketing we’ll look at here — traditional and online.
1. Market Your Business the Traditional Way
Traditional marketing includes print, TV and radio ads. These are the types of ads that have been around for a long time and are still useful means of gaining exposure. Here are a few ideas for traditional advertising:
- Place door hangers or flyers on the doors of establishments near a building your company cleans.
- Place magnetic signs on your vehicle to advertise your services wherever you go.
- Send postcards to businesses through the mail that offer a discount.
- Send fridge magnets in the mail with your company’s name and contact information.
- Buy a short ad spot on a local radio station, and be sure to repeat your contact information.
- Take advantage of word-of-mouth leads by calling a business you think may be interested in your services and offering a free consultation.
- Keep business cards and brochures on hand in case someone wants your contact information or information about your services.
- Offer an incentive to clients for referrals.
2. Market Your Business Online
Online marketing is more important than ever since more than 85 percent of searches for products and services take place online. Online marketing is not just about advertising but also about creating a presence so potential clients can find you easily. Here are some ways to market your business online:
- Purchase a domain that fits your business and create a website that includes information about what you do along with a form to contact you.
- Create a blog on your website where you write and share articles on topics related to cleaning.
- Create a page for your business on major social media networks and share pictures and promotions. Ask clients to “like” your page.
- Set up your business listing on Google My Business. This service is free and helps people find your business when they search for local cleaning companies.
- Pay for ads online. These could include pay-per-click, banner or social media ads.
- On your website, offer an incentive for visitors to sign up for an email list. Then, send out newsletter emails and possibly discounts regularly.
- Ask clients to post reviews of your business online. Considering that many people read online reviews before visiting a company or making a purchase, it’s crucial that your business is well-represented online.
Maintaining a Great Business
Once you’ve established a solid client base, you may feel like you’re all set. This is a great accomplishment, but your work is hardly done. Owning a cleaning company isn’t enough — you have to remain focused on making your business successful. Here are three tips for success to keep in mind, no matter how long your company has been around:
- Don’t overextend yourself: Before taking on jobs, make sure they would be profitable for your business and that they won’t overload your schedule. You never want to sacrifice the standard of quality your current clients have come to appreciate and expect to take on more jobs.
- Network with other pros: Networking is important for any small business owner. Meeting small business owners in and outside of your industry is a great way to learn new tips for best practices on the job, equipment to try or effective marketing strategies. You can also gain referrals and even potential partnerships.
- Don’t lose sight of the big picture: It’s important that you periodically take stock of your business to see how far you’ve come and to determine how effectively you’re moving toward your goals. When you meet a goal, set a new one. This doesn’t mean your business needs to keep growing. Goals can focus on things like customer satisfaction or improved efficiency.
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