How to start a cleaning business

Why start a cleaning business?

The cleaning industry is a fast-growing sector with opportunities for various types of cleaning. While there is growing opportunity, it is important to understand the benefits and disadvantages of starting your own cleaning business before deciding if it is a good fit for you.

Depending on the type of cleaning business, startup costs are relatively low. Cleaning equipment and supplies are the biggest startup expenses. Benefits include flexible hours, being able to base your business from home, and relatively low variable running costs. Even in times of economic downturn, cleaners are still needed, making it a relatively stable business opportunity.

Like any business, there are downsides to owning a cleaning business. It is a competitive market to break into and hard to stand out from competitors. Cleaning jobs can be physically demanding, so good physical health is important. Running a business isn’t easy and can be stressful if not balanced and managed carefully. Pricing can be very competitive, and it can be difficult to compete and set your prices at the right level to be successful.

Types of cleaning businesses

There are many different types of cleaning services that can be offered, but they fall into three main groups:

Commercial cleaning services

Commercial cleaning businesses provide cleaning services to public spaces and offices such as hospitals, schools, and retail storefronts. Commercial cleaning companies rely on competing for contracts to get the job, usually for a set period, such as a year. These companies often require specialized equipment and a team of cleaners who all need to be certified.

Residential cleaning services

Domestic cleaning services provide cleaning of a client’s home and include tasks such as dusting, vacuuming, laundry, bathroom and kitchen cleaning. Home cleaning jobs are based in houses, apartments, and residential homes. These types of house cleaning companies don’t need a large team or specialized equipment.

Specialist cleaning services

Within the cleaning industry, many niche cleaning services offer a specialist service. These services sometimes require specialized equipment and certification. They include:

• move-in and move-out cleaning
• general home maintenance cleaning
• construction cleaning
• deep cleaning
• eco-friendly green cleaning
• janitorial services
• window cleaning
• carpet cleaning
• office cleaning
• disaster and hazardous cleaning
• construction cleanup jobs
• maid service

An important consideration when choosing which type of cleaning business to establish is whether to set up a franchise cleaning company or to be independent.

A franchise can offer benefits such as brand awareness and marketing, training and support for staff, and a business model that is proven with systems and processes that are already established. However, you will have a high startup fee to buy your franchise, and then you may not have much control over decision-making.

10 tips for starting a cleaning business

As a growing industry sector, establishing a cleaning business provides good opportunities. If you want to start one, here are 10 steps to establish a successful cleaning business.

1. Research and develop a business plan

Before you start your business, it's a good idea to do some introductory market research into cleaning services in your area. This will help you understand the needs of your community. You need to research whatever type of cleaning service you want to start and check that it will be viable. You may also need to show your plan to get financing or when applying for a business grant.

Developing a business plan is an important step, whether you do a one-page plan for a small business or a full business plan for a larger business. Your plan should consider the following aspects:

Executive summary: A brief overview of the opportunity for your business. It’s a good idea to write this section last.

Company overview: A summary of your mission, company vision and the owners.

Industry analysis: An overview of the cleaning industry, government or industry regulations, details of your services, and potential risks.

Customer analysis: Your likely target market and potential clients.

Competitive analysis: Who your key competitors are.

Marketing strategy: How and where you plan to advertise and market your business.

Operations plan: Procurement of your cleaning supplies, office location, and key asset management.

Financial team: How you will start up and finance your cleaning business. Ideally, it should be a three-year plan.

Insurance plan: What insurance you may need for your business.

2. Establish a business bank account

Opening a business bank account is essential in order to separate your personal and business finances and make your taxes easier.

Once you’ve registered your business, you’ll be able to open a business account and get a credit card. You may have to show your business licence or articles of incorporation.

3. Choose a business structure

An important part of setting up a new business is choosing a business structure. As a cleaning business, you have four choices. If you choose not to select a business structure, you’ll be assumed to be a sole proprietor. Talk to your accountant to decide which business structure is best suited to your business.

Sole proprietor: This is a business operated by a single person. It is the easiest structure, as all the profits and losses are received by the owner and reported on their personal income tax return. However, sole proprietors have no legal protection, and the owner’s personal assets may be at risk if they are sued or if anything goes wrong.

Partnership: This is a business with ownership shared by at least two people. In a partnership agreement, it’s important to define profit share and startup contributions (money, assets, time) to avoid future conflicts. Like sole proprietors, partnerships have no legal protection, and personal assets may be at risk. For tax, the partner’s share of income is reported on their personal income tax return.

Corporation: This type of entity provides legal separation from its owner, providing some protection from financial and legal issues. In most cases, incorporation is done through the province where a business is based, though larger national or international companies typically incorporate federally, which is more expensive. Corporations pay less tax, and you can raise money by selling shares. However, your operational costs will be higher than a partnership or sole proprietorship, and you will have to submit regular paperwork to the authorities.

Franchise: When you buy a franchise, you will have to form your own business. You may be able to choose your own structure, but this will depend on the franchisor. Many franchises are required to form a corporation and set up in a specific way to meet the needs of the franchise.

4. Register your business

Registering your business is an official obligation and an important part of setting up your business. How you register depends on which legal structure you’ve chosen for your type of business:

Sole proprietors and partnerships: If you plan to operate your business with a trade name, you’ll need to register it in the province or territory where you plan to do business. Sole proprietors using their personal name don’t need to register their business. You may also have to apply for a federal business number. Check the registration requirements for sole proprietors in your province.

Corporations: When you incorporate your business, the process includes registering your business name. Unless you incorporate federally, you’ll only have exclusive use of your business name in the province where you’re registered. Learn more about registration requirements (federal and provincial) for corporations.

Tax: To pay tax, you’ll need to register with the Canada Revenue Agency (CRA). You may also have to pay provincial and federal sales tax. Some provinces automatically send you a business number and tax account when registering. Others do not.

Permits and licences: You may be required to apply for some permits or licences in your province. You can find out which permits and licences you need through BizPal. Some common permits are outlined here:

• Vendor licences are required in some provinces, especially if you are a vendor for a government contract.
• Commercial surety bonds are required in some provinces to protect entities from financial risk, eg, government.
• Business licences are required by most businesses. Check with your local province if you require one.
• Service contractor’s licences are required in some areas.
• Hazardous waste: If you are involved in handling or cleaning chemical cleaning supplies, you may have to complete the Workplace Hazardous Materials Information System (WHMIS).

5. Choose your specialization

Check the services in your area and identify gaps in the market. This will help you choose your niche. Consider your cleaning experience and what will best suit your previous experience. You can choose from commercial cleaning, residential cleaning, or a specialized cleaning service. When you’re doing your business plan, complete a SWOT (strengths, weaknesses, opportunities, threats) analysis to help you determine which type of service will provide the best opportunity for you.

6. Get cleaning insurance

Having business insurance is essential to protect you from the unexpected costs of running your business. Events such as natural disasters, accidents, and lawsuits could wipe you out without the right insurance.

Some common types of insurance that may be needed include:

• General liability insurance: This is key insurance to have and covers financial loss for a variety of reasons, including property damage, bodily injury, and defending lawsuits.
• Commercial vehicle insurance: Provides protection for your work vehicles.
• Business interruption insurance: Provides protection if there is an unexpected interruption to your business, such as a natural disaster.

7. Get cleaning equipment and supplies

Once you have chosen your specialization, you can plan what equipment and cleaning supplies you need. Purchasing cleaning equipment will be one of your biggest initial investments. Choose quality brands that are reliable and easily repaired if necessary.

You’ll also need to buy basic cleaning products and disinfectants. Find vendors to purchase your supplies from. This can save money and ensure that you have a system in place for buying necessary cleaning materials. Consider wholesale and bulk purchasing from local business providers for cheaper prices.

8. Setting your prices

Decide how you will price your cleaning services. Research your local market to understand how competitors price their cleaning services. Choosing the right pricing structure is essential. Cleaning companies use several methods to charge clients including:

• hourly rate
• flat rate by job type
• long-term contracts
• room rate
• square foot rate (common for commercial cleaning)

Consider your business goals and factor in your expenses and operating costs. Once you know this, you can establish your rates.

Establish a system for invoicing and for clients to pay you. Talk to your accountant and bookkeeper for advice.

9. Startup finances

Startup finances are a significant part of starting a business. It is essential for small business owners to have a clear plan and for you to understand how you’ll finance the early stages of your business. Plan your budget early, so you know clearly what your expenses are.

Some early startup expenses are likely to include:

• business registration
• registering with the CRA
• getting a business number
• registering for GST/HST
• registering for provincial sales tax for provinces without HST
• setting up business accounting and software, eg, Xero
• tools and cleaning supplies
• transportation
• branding and marketing

It may be worth investing in time to look at federal grants for small businesses as well as provincial grants. A range of grants are available.

Consider different options for raising your startup funding. Some common methods include:

• savings
• business loans
• applying for a grant

The Canadian Small Business Financing Program provides advice and support to make it easier for small businesses to get loans.

10. Build your brand and your business

Building a brand can help you establish an identity and stand out from your competitors. It can also help you build a strong relationship with new customers.

Common ways to build your brand include:

• choosing a niche and creating a unique selling proposition (USP) to establish your point of difference.
• choosing a business name that is simple and memorable (check if it is available in your province).
• developing a logo – keep it simple and uncomplicated.
• building a website – include your values and mission statement to show what you stand for. Keep your website simple and uncluttered.

As a new business, you’ll need to invest in some marketing. Here are some of the common ways to market your business:

• Use word-of-mouth – collect testimonials from satisfied customers.
• Ask for referrals.
• Get on social media – choose one or two platforms. Create a Facebook business page.
• Establish a Google Business Profile.
• Advertise in local publications.
• Print some business cards.

Referrals, reviews and ratings from customers are some of the best ways to build up a loyal clientele of customers. Good luck with your new cleaning business!