The 101 Guide to Starting a Lucrative Cleaning Business
In this article, we’ll present 6 quick and simple steps you can follow to start your own cleaning business.
Running your own cleaning business can be very lucrative, fulfilling, and even fun. Cleaning services are in great demand, have cheap startup costs, and have the potential for large profit margins.
The majority of the six and seven-figure cleaning businesses that are currently in operation in Australia were actually started from scratch by someone just like you!
In this article, we’ll teach you how to duplicate their success, launch swiftly, and avoid the errors most companies make.
Ready to embark on the adventure of launching your own cleaning company? Let’s dive right in.
Which Type of Cleaning Business Should You Start First?
When starting a cleaning business for the first time, the trick is to launch one or two core services at first, then incorporate additional offerings as you expand. By buying just one set of items and/or equipment, you are able to keep things simple, keep your startup costs to a minimum, and have more time to improve your systems and procedures.
Thereafter, you can quickly and simply add new, value-add services as your company grows.
Remember that experts can charge more than generalists, so resist the urge to be everything to everyone!
What to consider when beginning a cleaning business
Think about the following factors while selecting the services your company will offer:
- What are the guidelines (or suggestions) for training and licencing associated with that particular service?
- How much will it cost you to buy the cleaning goods and equipment you will need to deliver that service?
- Will you need any specific type of insurance for cleaners to deliver that service?
- What interests you the most?
- How much demand is there for a given service?
- How much is a customer worth over their lifetime?
- What can you picture yourself doing every day?
Offering a residential cleaning service is the perfect place to start for many people who are starting their cleaning business from scratch. Start-up costs are quite low, and as more people opt to “outsource” their home cleaning, demand is rising every year.
The only things you need to get started are some industrial cleaning supplies and public liability insurance.
Although there may be greater competition as a result of the low startup costs, if you implement our marketing advice, competition is something you won’t ever have to worry about!
If you’re toying with the idea of entering a specialised niche, be aware of the fact that you must be willing to spend more money on equipment purchases and more time learning the appropriate skills and gaining the relevant credentials.
A high-end portable or truck-mounted carpet cleaning machine, for instance, is required to launch a professional carpet cleaning business and can cost anywhere between $10,000 and $100,000.
We advise introducing these additional services once your firm is established (and you have existing clients to sell to!) because the greater investment expenses do mean lower levels of competition and the ability to demand higher prices.
Should You Buy a Franchise or Launch Your Own Business?
You’ll need to make the decision early on as to whether to purchase a cleaning franchise or start your own firm.
Both alternatives have benefits and drawbacks; ultimately, your particular preference and circumstances will determine which is best for you.
Ideally, you should aim to start your own business and take advantage of the freedom to build a company that satisfies your personal financial and lifestyle objectives (but make sure you have the proper guidance and assistance along the way!).
Franchises do have their advantages. They give you the ability to tap into an established brand, leverage a tested business model, access help for marketing, and access ongoing assistance and counsel. However, you will need to make an up-front investment (usually between $5,000 and $100,000), pay some of your profit to the franchisor, have limited expansion opportunities, and your success will be correlated with head office success.
Establishing a business, on the other hand, gives you full control and flexibility, has low startup expenses, allows you to keep all your revenue, is simple to run, and does not involve any recurring fees or royalties.
However, as with anything in life, there are some downsides to going it alone. You will need to manage yourself and your business without assistance (which can be quite challenging and lonely when getting started), you must learn from your own mistakes, and you will need to establish your own brand.
Business Registration, Licenses, Training, Insurance, and Taxes.
It’s crucial to set up your business properly from the beginning. This involves thinking about your business registration and structure, insurance, taxes, and any permits you might require.
Despite the fact that it could initially appear daunting, you can get started this week if you want to.
The simplest business structure allows you to complete everything fast and inexpensively.
Please note that this article is not intended to constitute legal advice; we’re simply sharing some information to assist you. We won’t be held liable for any activities you take.
Before making any choices about your company, please speak with an accountant and a lawyer to get tax and legal advice.
Business Organization and Registration
Choose whether to register as a sole proprietor, partnership, trust, or corporation before you may begin trading. Then, apply for an ABN (Australian Business Number).
The ideal choice for your company can be discussed with your accountant and lawyer. However, your options are as follows:
Sole Trader: The Fastest, Cheapest, and Easiest Option
You can simply record all of your cleaning money (after expenses have been subtracted) along with any other income on your tax return because, as a sole proprietor, your firm is not considered a separate legal organisation. Your tax rate will be the same as that of an individual taxpayer.
Partnerships are suitable when a group of two or more individuals are launching a business. A partnership is very much like a sole proprietorship but with equitable sharing of the risks, gains, and losses between all parties (as set out in a partnership contract).
A corporation is viewed as a distinct legal entity from the business owner. A corporation must maintain continuing reporting and record-keeping obligations, which come with added costs. There are many corporate tax rates.
Starting Out: The Procedure
Many people choose to start out as sole proprietors because it’s quicker, simpler, and less expensive before switching to corporations once they’ve established themselves.
The process of starting a sole proprietorship goes like this:
- Apply for an ABN (it’s free,and you can do it online)
- Register your business name (unless you are going to trade under your own name). At the moment, the price is $34 for a year.
- Open a bank account for your company (you can use your own bank account if you trade under your own name)
If you anticipate making at least $75,000 in sales in your first year, you should register for GST. If not, you can do so whenever your anticipated revenue reaches $75,000 later.
Do you need to register for GST right away?
The 10% GST cost on many of the items and services you buy can be refunded if you register for GST at the beginning of your firm. However, this also implies that you must charge an additional 10% for the services you give.
A quarterly or monthly business activity statement must be completed by GST-registered enterprises (BAS).
State Permits & Local Council Requirements
There are no minimal qualification requirements because the majority of cleaning types are not regulated in Australia. To find out if there are any particular requirements you need to be aware of, it is vital to contact your local council and your state licencing organisation.
Although there may not be any minimal entrance standards or educational prerequisites, it may be a good idea to take a training course before visiting a client’s home or place of business to provide your cleaning services, especially if you lack prior expertise.
You may execute cleaning tasks correctly and effectively if you have the necessary skills, knowledge, and expertise, which are all provided by a recognised qualification. A course will educate you on how to become a professional cleaner, as well as introducing you to the proper tools and materials to employ. Additionally, you can utilise your credentials as a marketing tool to differentiate yourself from your competitors.
To protect yourself against accidents or property damage when working on a client’s premises, you are advised to have public liability insurance in place ($5 million minimum; some commercial clients may require up to $15 million).
If you hire staff, you’ll also need workers’ compensation insurance to protect them.
You might want to think about additional insurance options, such as business interruption insurance, income protection insurance, and insurance for commercial vehicles.
Confirm the precise insurance needs of your company by speaking with your lawyer.
Maintain Financial and Tax Records
Hire a CPA from the beginning. They will aid in the formation of your company and the implementation of sound accounting procedures.
In the long run, hiring a competent accountant will save you money since they can explain all of the potential deductions you are entitled to in order to lower your taxable income.
Keep all receipts and invoices for your business (you are required to keep records for a minimum of five years).
Record keeping and tax preparation don’t have to be arduous processes once you have a system in place as long as you stay on top of it.
If the proper system is not put up from the beginning, you will end up chasing your tail to get it back in line.
Select the Appropriate Tools and Cleaning Supplies
As noted earlier in this article, the equipment you require will be greatly influenced by the kind of cleaning service you intend to start.
Starting a house cleaning business only requires a few simple items, and you don’t need to make any purchases until you have your first customer.
Although a good vacuum cleaner will likely be the most expensive piece of gear, you don’t need one with a lot of extra features to get started.
The list of additional things also includes a mop (and bucket), rags, cloths, toilet brushes, dusters, brooms, dustpans, and brushes.
Additionally, you’ll require cleaning supplies like an all-purpose spray, furniture polish, and window cleaner. We advise selecting commercial-grade cleaning chemicals that are favourable to the environment (rather than the regular products you can buy in a supermarket).
Avoid the temptation to use cheap tools or materials only to save money; you’ll wind up needing more time to complete each task before you reach the desired result, and you risk ruining your client’s home or office furnishings or carpets in the process.
Get Ahead of Your Rivals
When you look around your neighbourhood, it could feel like there are already a lot of competitors — and chances are, there are. However, you should make a concerted effort to stand out from the crowd.
Very few businesses excel in customer service, but those that do almost never need to promote their cleaning services because their customers do it for them.
If you take the effort to go above and beyond for your customers, you will quickly distinguish yourself from the competition.
Making sure you always sound friendly when you pick up the phone and that you show up when you say you will could be all that is needed to achieve this.
It’s the little things that count, like sending a handwritten message, giving returning clients a discount, or sending a card on a client’s birthday (actions that cost very little to do).
Develop Your Expertise
Where a specialist is available, clients will typically pick them over generalists. An office manager, for instance, is likely to select a seasoned office cleaning company over a ‘general’ cleaning company to clean their large office because they know they’ll have the knowledge and experience needed to finish the job quickly and are accustomed to working odd hours to clean the office when it’s empty.
Developing a strong reputation for being an expert at a particular service is one approach to standing out from the crowd. Additionally, keep in mind exterior cleaning choices, including gutter, pressure washing, and window cleaning.
Get Your Pricing Right
Avoid attempting to compete on price. We see the allure, especially when you see your rivals providing outrageous discounts, but you’ll wind up with low profit margins and feel like you are labouring in vain. The worst clients and customers, in our opinion, are those that haggle over prices.
Give your service a price, and be glad to tell them how much you and your services are worth. You’ll discover that consumers are willing to pay more for high-quality services, and by establishing your cleaning company as a “premium quality” enterprise, you’ll be able to increase your costs and draw in the most desirable clients and customers.
This doesn’t imply that you shouldn’t provide special offers or package packages to draw in new clients and boost how much money they spend with you.
For instance, you may build a value-add bundle that includes more services or provide an introductory discount.