How to start a commercial cleaning service in 5 steps (2023)

Today we're going to discuss how to start a commercial cleaning service in 5 steps in 2023.

Starting a commercial cleaning service can prove to be a lucrative business venture. According to statista.com, there is an estimated 61 billion dollars in revenue up for grabs in 2019.

If you’re ready to get your cut of 61 billion dollars then let's jump right in!

💰 Step One: Who's got your money? (Pick your niche)

Business 101: Who’s got your money?

One of the most important steps to starting your commercial cleaning service is doing some market analysis to figure out your niche or who’s got your money.

When you're first getting started, it's best to start with one niche and then add on as you gain experience.

So will you chase smaller offices or only clean specific types of facilities like schools? Or will you focus on larger clients with multiple facilities right out of the gate?

Once you've decided on a niche market, you must then determine the geographic area you want to serve.

After that, it's time for you to research the demographics of the area you want to serve to be sure it contains an ample amount of potential customers.

If it does, you're ready to move ahead. If it doesn't, you'll need to reevaluate your niche market or the area you planned on serving.

Example:

Let's say the niche you want to serve is dentists' offices. From the picture below this area seems like it has a decent amount of dentists' offices in short proximity to each other. But, at the same time, it's highly unlikely that you would win all the contracts to service these.

So instead maybe you should focus on small offices in general instead of small offices that belong to dentists. That way you would 10X the number of potential customers as well as your probability to win a decent amount of contracts. This is how I would determine what type of niche I want to serve and where.

Now you know your niche, you know where you want to serve your business, and you know that area has an abundance of potential clients.

But before you can start reaching out to potential clients you have a couple more steps to complete.

🧱 Step Two: Setting Things Up

Structuring your business is the first step to getting it off the ground.

To make your cleaning service official there are a couple of things you need to do such as choosing your cleaning service's legal structure, what it will be named, and your plan for taxes.

Your Company’s Legal Structure

The legal structure of your cleaning service determines some pretty important things.

Like how the IRS will tax you and your cleaning service, and whose assets are liable for when things go wrong.

The three most common legal structures for new cleaning services are sole proprietorships, partnerships, and LLCs.

Let's take a look at each one. As well as their pros and cons.

Sole proprietorship

A sole proprietorship is the simplest and most common business structure you can choose when starting your cleaning service. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner.

As the sole owner, you are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities. Because your business and you are one and the same, the business itself is not taxed separately-the sole proprietorship income is your income.

As long as you are the sole owner, no formal action is necessary to set up a sole proprietorship. But like all businesses, you need to obtain the necessary licenses and permits. Regulations vary by industry, state, and locality.

Setting up a sole proprietorship may be easy, but it does have its disadvantages as well.

Since you and your cleaning business's assets and liabilities are not separate from one another, you can be held personally liable for all debts and obligations of the business.

Pros:

Easy setup and low cost - Because a sole proprietorship is not a formal business structure, there are no filings or paperwork for you to complete before you start your cleaning service. You simply start operating and don’t have to pay any incorporation or filing fees.
No corporate business taxes or double taxation - As a sole proprietorship, you just keep filing your personal tax returns and claim any new income from the operation of your business as pass-through taxes, meaning all income is taxed at your ordinary income tax rate.
No annual reports or filings - If you take the sole proprietorship for your cleaning service there's no need for annual reports or filings with the state in order to stay current.
Not restricted by formal business structure - Other business structures face certain limits on operations in addition to requirements they have to meet. if your cleaning service is a sole proprietorship, it's not subject to these requirements. As a sole proprietor, it’s just you – you can make whatever business decisions you want, as long as it’s legal.
Easy record keeping - Since sole proprietors have unlimited liability, there's no need to separate finances.

Cons:

Unlimited Liability - This means that there is no legal difference between you and your business. You are personally liable for all business expenses and debts. So if someone’s hurt on your property, or is harmed by a product of your business or a mistake you make you are liable.
No ongoing business life - If you structure your cleaning business as an LLC, C-corp, or other formal structure, and something happens to you (like death or a planned exit), the business survives. In fact, as long as you keep your business filings current and maintain proper licensing, your business can survive in perpetuity. If you’re a sole proprietor and something happens to you, however, that’s the end of your cleaning service.
Difficulty raising capital - If you're going to need to raise money for your cleaning service then a sole proprietorship isn't the best choice. This is because there’s no real business to sell, so it’s almost impossible to raise money unless you have tangible assets or intellectual property that investors can buy into.
Can't take on business debt - Because a sole proprietorship isn’t a formally-established company, it’s not possible to take out a business loan for your cleaning service. Instead, all debt – even funds you borrow to grow or operate your business – is personal debt.
Perceived lack of professionalism - Customers and business partners often view sole proprietors as lacking professionalism. For people who just want to run a small business out of their house or make some extra money in their spare time, this may not be a problem. Some of this unprofessionalism can be dismissed by establishing a small business checking account in the name of your business. Many providers will allow you to use an alias for your business or a “doing business as” (DBA). However, this will vary by institution.

Partnership

If you are planning to start your cleaning service with two or more people, a partnership is a simple way to do so. Two common types of partnerships available are limited partnerships(LP) and limited liability partnerships(LLP).

With a limited partnership(LP), there is one general partner with unlimited liability and all of the other partners have limited liability. The partners with limited liability usually only have limited control over the company as well. All profits are passed through to personal tax returns, and the general partner(the partner with unlimited liability) must also pay self-employment taxes.

A limited liability partnership(LLP) is similar to a limited partnership but gives limited liability to all partners. With an LLP, each partner is protected from debts against the partnership. This means other partners won’t be responsible for your actions and vice versa. Let's check out the pros ad cons.

Pros:

Extra set of hands - When you have a business partner, you have a person—or multiple people—who can help you with all the business tasks. The partners can divide up tasks, meaning tasks will get done faster and the partners might be able to tackle more than if they worked alone.
Additional Knowledge - Having a partner can bring skills and knowledge to your cleaning business that you don’t have. You might have a lot of knowledge about cleaning, but not know how to run a business. Someone skilled in this department could be very beneficial.
Less Finacial Burden - The cost of starting a commercial cleaning service may be low but once you start getting contracts and employees, costs start to add up. A partner can ease your financial burden. Instead of paying for everything yourself, your partner can split the cost. Because of the partner’s financial contributions, the business might be able to afford bigger and better opportunities sooner.
Less paperwork - Structuring your cleaning service as a partnership involves less paperwork than other business structures. You don’t have to file special paperwork with the federal government. You probably only have minimal local paperwork. All partners involved must sign a partnership agreement. This agreement will detail the duties and responsibilities of each partner, how decisions will be made, how profits and losses are divided, and more.
Fewer Tax forms - With partnerships, there are no additional business entity taxes. This means you don’t have to fill out and file business tax forms. Instead, taxes pass through to the business owners. You will include your share of profits and losses on your individual tax return. You are liable for paying any additional taxes.

Cons:

More than one decision maker - You cannot act independently when you’re in a partnership. You must work with your partner to make decisions, or at least run all decisions by your partner.
Possible disagreements - Anytime you get people together at work, there’s potential for conflict. You and your partners will have disagreements. You might even get sick of working with each other. If this happens, you can’t easily dissolve the partnership. Make sure when you create your partnership agreement you’ve drawn up a partnership exit strategy. You’ll need to redistribute profits, losses, and responsibilities among any remaining partners. And, you must change your business structure.
Split the $ - When you have a partnership, you have to share the profits. Depending on how many partners you have, your share of the profits can get fairly small.
Each partner gets taxed - A partnership is not a separate legal entity from you and the other partners. All partners are legally and financially responsible for the business. If your business isn’t able to pay back debts, debt collectors can come after your personal money.
You aren't separate from the business - While being taxed individually is a pro, it’s also a con. Business taxes usually have lower rates than individual taxes. Because the taxes are passed through to you and your partner(s), you might collectively pay more in taxes than if you paid business taxes.

Limited Liability Company(LLC)

Making your cleaning service an LLC gives you the benefits of both a corporation and a partnership.

LLCs do have higher start-up costs and a more complicated tax structure, but they protect you from personal liability under most circumstances.

If your LLC happens to face bankruptcy or lawsuits, your personal assets like your vehicle, house, and bank accounts won't be at risk.

All the profits and losses of your LLC get passed through to your personal income without facing corporate taxes. However, members of your LLC are considered self-employed and must pay self-employment tax contributions toward Medicare and Social Security. Here are the pros and cons.

Pros:

Revenue and write-offs - Members can receive revenues (and write-off forfeitures) that are larger than their individual ownership percentage.
Less to start - Less paperwork and lower filing costs than other business structures.
Flexibility with taxes - You have the flexibility of being taxed as a sole proprietor, partnership, S corporation, or C corporation.
One or more - You can form an LLC with as little as one person, but you can also have an unlimited number of members.
Liability protection - Members are protected from some (or sometimes all) liability if the company runs into legal issues or debts.

Cons:

Can't pay yourself - As an LLC member, you cannot pay yourself wages.
Renewal fees - High renewal fees or publication requirements can be pricey, depending on your state.
Capital value tax - Many states have a franchise or capital values tax on LLCs, ranging from a flat fee to an amount based on the company’s revenue.
Financial Capital - Investors may be more likely to put their money into a corporation, making it harder to raise financial capital.
Ownership - Unless you are running the LLC alone, the ownership of the business is spread across its members (this can also be a pro).

Naming Your Business

The name of your cleaning service is very important. You want it to reflect your brand’s identity and what services you provide.

When you are naming your business there are three different ways to register it.

Each way of registering your name serves a different purpose. Some of them may be legally required depending on your business structure and location.

Let’s touch base on each way.

Entity Name - Protects your business name at a state level.
Trademark - Protects your business name at a national level.
Doing Business As (DBA) - doesn’t give legal protection, but might be legally required.

Check with your state for rules about how to register your business name, and which one is required to get your cleaning service started.

Business Bank Account

No matter which legal entity you decide to go with for your new cleaning business, you’ll need to create a bank account for your business to keep its costs and profits separate from your personal finances.

Even if you decide to go with the sole proprietorship business structure, having separate accounts will keep everything clean and organized.

On top of that, the professionalism and legitimacy of your cleaning service are evident when your clients can pay directly online or make checks payable to your business.

While asking clients to pay you personally does the exact opposite.

Next, let’s talk about protection for when things go wrong.

💎 Step Three: Covering your ass...sets

The last thing you want to put you out of business is not having the proper licensing and insurance coverage.

Many of your commercial cleaning clients will actually have it written out in the contract as to how much coverage is required to clean for them.

Licensing, registration, and insurance might all sound a little intimidating for new cleaning companies but they are all must-haves for this industry and are pretty easy to obtain.

Licensing

In some cities cleaning companies are required to have an occupational license while other cities only require you to file a DBA (Doing Business As).

It’s best to double-check with your state, city and county governments when setting up your cleaning service.

Insurance

Let’s say you're mopping and accidentally hit a mirror and shatter it, or your stripping and waxing and tip your bucket of wax over onto the carpet.

Geez. There goes all your profits soaking into the carpet. Now what?

Accidents happen. With that said, if you plan on starting a commercial cleaning service then liability insurance is a must-have.

Do a quick google search for insurance companies in your area that can assist with obtaining the right insurance.

Bonded

A bond protects your clients from harmful, unethical, or otherwise poor business practices.

And since your cleaning company performs its services on the premises of other businesses, you should strongly consider getting bonded to protect your customers and your business's financial health.

Being bonded is primarily protection for your client, but it can also provide your cleaning service with financial stability in the case of a dissatisfied customer.

In the unfortunate event of a client making a claim against your business, the compensation needed to settle this claim would come from the bond and won't impact your immediate operations.

Worker’s Compensation

With growing your business comes hiring employees. And with hiring people to work for you comes the potential of one of them getting hurt on the job.

That’s where worker’s compensation comes into play. Not only does it cover your cleaning service from being sued, but it is also more than likely required in your state.

Worker’s compensation protects your employees from injuries and illnesses they receive on the job.

It provides compensation in the form of wage and benefit replacement to your employees if they’re injured on the job and can’t continue to work. In exchange, employees relinquish their right to sue their employer for negligence.

So now you have:

✅ Your niche

✅ Your business is legit

✅ You are protected in case of accidents

Now it's finally time for the fun part.

Finding potential clients!

📝 Step Four: Finding cleaning contracts

The lifeline of your cleaning service-the illustrious cleaning contract. Without one of these, you’re out of business, and we don't want that do we?

Nope.

So let's go over a few of the many different ways to get in front of potential clients.

Referrals / Word of Mouth

Referrals also known as word of mouth, is one of the oldest and best forms of advertising and the best thing about it is it can go both ways.

Your cleaning service might knock the socks off of a client that then passes your contact information on to a friend who is in need of office cleaning or this same client might make you aware of others they know who are in need of office cleaning.

Either way, it's a win-win for you. So always do a good job and keep your clients happy because it might just turn into another cleaning contract.

One way to get the ball rolling for this method when you are first starting out is to make an announcement on your social media that you are starting a cleaning service.

Networking

I've seen many times in the CleanWork Facebook Group, people mention networking at their local chambers of commerce or local events. The people that attend these types of events have ties to your city in one way or another. The more relationships you can build the better off your business will be.

The GRRRR Method

An easy way to find potential clients is to use the GRRRR Method:

💻(G) Google your target demographic and make a list of potential clients.

📞(R) Reach out to each one (cold call/email).

🤓(R) Research each one.

🧠(R) Remember to keep the results to each cold call/email so they can either be kept on your list of potential clients or removed.

🔄(R) Repeat this for each potential client until you go through your whole list.

You can check out the detailed version of the GRRRR Method 👉 here.

Cold calling

Cold calling is an old-school method that a lot of people don't like to do for one reason or another. But from my experience, this method has landed me a lot of contracts.

Not only does this give you instant results when you speak to the right person, but you are able to get information from them that may result in a contract down the road.

If you're not sure what to say you can find a cold calling script here 👉 Cold calling script

Cold Emailing

Cold emailing is another one of my favorite methods for finding new business. Take the time to create a decent template that is short and sweet then use it to reach out to potential clients in bulk. Like with any of the other methods always keep track of the decision maker and what your results are.

Direct marketing

Direct mail makes it possible to spread the word about your business fast and at a decent cost. With direct mail, your company’s advertisement reaches targeted businesses in a specific area. It's not a bad idea to offer a coupon or discount within your direct mail either. Coupons for new customers are always a great strategy for getting people to try out your service. Believe it or not, a lot of companies save these types of documents for when they are in need of a cleaning service.

Online presence

An online presence is crucial these days if you want to reach as many potential clients as possible.

When you're looking for information what's the first thing you do? Google it! So having your company’s information online only makes sense.

Company Website - Making a website for your commercial cleaning service that is search engine optimized(SEO) is a must. A website for your cleaning service is your opportunity to go all out and show potential clients what you are all about.
Google My Business - Making a Google My Business (GMB) is another simple and very important step in creating an online presence. With a GMB, you set up a free business profile that lets you easily connect with customers across Google Search and Maps.
Business Directories - Filling out or fixing your business profiles on online business directories like Manta, Yellow Pages, and The Chamber of Commerce can broaden your presence as well. Also when making these profiles make sure you’re linking them back to your business’s website. Doing so is an easy way to create backlinks to your company’s website which helps with its ranking on Google.
Social Media Business Pages - Using Facebook and other social media platforms to extend your cleaning service's reach is another great option. For example, when you create a business page for your cleaning service on Facebook, you can then invite your friends to view this page. If they follow and like it, their friends will see it and if they do the same then their friends will see it, and so on. Reaching potential clients becomes more of a possibility if you frequently post on your business page and your followers like them.

CleanWork

CleanWork is a web app that makes it easier to find cleaning opportunities by bringing them all to one place. Opportunities like Airbnb cleaning, construction clean-ups, and standard office cleaning can be found here. Personally, I prefer finding my own opportunities and CleanWork makes that easy. With its Decision-Maker Search, you can search CleanWork's evergreen decision-maker database for decision-makers near you and then reach out to them on autopilot through CleanWork.

If you're looking for more ways to reach potential customers check out this post 👉 Ways to promote your cleaning service

Once you land your first commercial cleaning contract you’re ready for the next step.

Hiring!

Sure doing the work yourself at first is fine, but if your plan is to get more contracts and expand your cleaning business, then hiring great employees is one of your few options.

🤝 Step Five: Hiring cleaning employees

According to an article on Swept’s blog the average cleaner turnover rate is between 75% and 375% annually!

Crazy!

The best way to offset this is by hiring the best possible employee you can.

Writing a good job listing

With employee turnover being a big issue in the janitorial industry, having a well-written job listing can land you a long-lasting employee. So what makes a good job listing?

A good description - A good description can go a long way, but if not written well It could deter good potential employees from applying. When writing the job description you want to give the potential employee as much information as possible, so that when they apply they already know what to expect. Like what their position is. Where their work will take place. How many hours they will be working each day. How much they will be paid. Etc, etc.
Clear responsibilities/requirements - This is probably the most important part of your job listing. Here is where you want to be crystal clear on what will be expected from them as an employee, as well as any and all requirements they must meet to work for you.
Company Culture - Make sure your job listing also includes a sprinkle of company culture. You want to give the applicant an idea of who you are, and your company’s mission, values, ethics, and goals. Doing so will help you stand out from the rest of the dull job listings that are looking for a new cleaner.

If you're looking for more help on writing a commercial cleaning job listing, this should help. There's also proof that writing good listings not only helps you find more qualified candidates but saves you money.

Referrals/Word of Mouth

Family, friends, and current employees are another great resource for hiring new employees.

The more people you have advertising your job opening, the bigger the pool of potential employees, the more likely you will find the perfect one for your business.

Perfect fit for the Position

The first person who applies might not be the perfect fit for the position you have available. But if you keep looking you will eventually find someone that is almost perfect that you can then train and mold to be perfect for the position.

Whatever you do, don't hire someone you know isn't a good fit. It ends up being a waste of time.

Trust me.

The more you hire, the better at it you will get. You will learn how to read people and get a better understanding of how they are and if they will make a good employee for your company.

💪 Bonus step: Hardwork and Dedication

That's right, you’re going to have to work hard in this business, and have some dedication to get things going. Yes, eventually you will have people to do the work for you, but your business will always need your love for it to thrive and keep growing. After all, no one is going to love your business as much as you do.

And that's it!

Follow these steps and you will be on your way to starting a great cleaning service.

Good luck!

Jerome