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Start-up Costs for Running a Cleaning Business

August 04, 2021

Starting your own business can be overwhelming. We walk you through everything you need to know to get started; including choosing the types of services to offer, determining budget, rates, and insurance needed.

Thinking of starting your own cleaning business?

Cleaning is an essential task. Whether it is cleaning homes, vacation rental properties, office spaces, schools, hospitals, and more – cleaning will always be necessary. Therefore, starting your own cleaning business can be a successful way to make a living. Learn more about cleaning business start-up costs and other important things to consider to help you get started.

How to Start a Cleaning Business

At first, starting your own business can be pretty overwhelming since there are so many factors to consider. Where would someone begin? Factors such as equipment costs, hiring employees, insurance, and more must all be well-thought-out before diving in.

Choose a Type of Cleaning Service

It is important to first differentiate which type (or types) of cleaning your business will provide. Will it focus more on residential or commercial business? For most cleaning businesses, it’s either one or the other. Therefore, it is best to first determine your focus early on in the business-building stage.

1) Residential vs. Commercial
To put it simply, residential cleaning focuses more on single-family homes and personal areas, whereas commercial cleaning specializes in business or office spaces. It is also important to consider that residential cleaning is typically done during the daytime and commercial cleaning is done after business hours, usually at night. There is also the option to have a niche focus, such as floor waxing or cleaning and sanitizing hospitals.

Choosing which to specialize in will greatly affect cleaning business start-up costs because of the difference in equipment and competition. Consider making a list of the pros and cons for each category to help you decide.

2) Franchises
Another option to consider is opting to purchase a cleaning franchise. Cleaning franchises are low-cost and popular for beginners, with over 15 brands to choose from. Costs for cleaning franchises can range from around $3,000 and can go up to over $225,000.

The least expensive franchise available for purchase right now is with Buildingstars Franchise (commercial cleaning) starting at around $995-$1295 in liquid capital. On the other hand, a pricier and very popular cleaning franchise is Merry Maids, available which can be within reach with about $37,500 in liquid capital.

Before starting your cleaning business, it will be beneficial to do more research on the differences in price between looking into franchises and starting a business from scratch.

Determine Budget

How much are you planning on investing in your cleaning business? Carefully looking at your financials is vital to the success of your company. Initial costs to consider while determining the budget include equipment costs and licensing or any necessary permits.

Equipment/Tools
This cost would include everything from the vacuums, mops, sponges, cleaning products, and more. The cost of equipment will vary depending on the specialization but typically requires at least $400, depending on the quality and quantity of the items.

There are many different cleaning items necessary to purchase, and it can be quite overwhelming to think of them all. This is where choosing the right tools for your cleaning business will be key.

Licensing/Permits
Registering your cleaning company with a license is not required, but it varies from state to state. Make sure to check online to confirm if you need a license on your state’s business regulation website.

Most cities require a general business license (around $75) and you will also have the option to register your business, with the cost being dependent on which type of business you choose. The most inexpensive option is registering as a Sole Proprietorship, which can be as low as just $30.

Another option is a Limited Liability Company (LLC) which can range from $100-500. Both options have their benefits, so do research on which suits your cleaning company the best.

Insurance

Photo by NORTHFOLK on Unsplash

Generally, there are three different types of insurance that are recommended for cleaning businesses:

General Liability Insurance
This insurance covers legal fees, medical expenses for employees, slander, libel, and any property damage by a cleaner.

Workers’ Compensation Insurance
This covers bills associated with medical treatments, such as work-related injuries. It also covers the wage of the person being treated while outside of work.

Tools and Equipment Insurance
Tools and equipment insurance covers your cleaning tools if it gets stolen or damaged in certain situations.

Typically, liability and property insurance can range from $500-$1000 every year. Of course, each company and policy is different, and not always within this range. Learn more about insurance and guidelines for your cleaning business if you need more guidance about how to get insured.

Determine Cleaning Rates

In order to fully grasp your cleaning business start-up costs, you must determine your rates for cleaning. Different factors such as competition, clients, and location will help determine how much to charge for your service.

For residential cleaning services, choose from either hourly rates or flat rates.

  • Hourly rates: This is the most common method of charging rates. Depending on your location, size of the residential property, competition, cleaners may charge from $25-$100 per hour. Remember to look up other cleaner’s rates in the area to see what they’re charging, to keep your rate competitive.
  • Flat Rate: Charging a flat rate is very popular. Your price will be dependent on a lot of different factors, including location, size of the property, specific tasks, and more. Customers tend to prefer being charged a flat rate so they can plan ahead and know the rate each time.

For commercial cleaning services, it is common to charge per square foot. Many commercial cleaning services charge between $.05 to $.20 per square foot depending on the type of commercial space and the specific cleaning services being provided.

Advertising

After you establish your business model, next up is advertising. Getting the word out and attracting new clients is essential to growing your business. Opting for social media and in-person networking is a cost-effective way to spread the word. Other means of advertising, such as print and digital advertising, can cost anywhere between $100-$1,000.

Consider printing out business cards for around $50 to pass out to potential clients and showcase your professionalism. There are also free marketing strategies online to apply while advertising for your own business.

Now, Add It All Up

Finally, the last step is to add together every expense in order to find your cleaning business start-up costs. Hopefully, these tips help you on the journey of starting your business. Since there are many factors to input and add together, make sure you write every expense down. The bottom line is, starting a new cleaning business may seem overwhelming at first but once you take the time to break down each of your costs you will be well on your way to running a successful business.

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By Lei Kimura