How to Start a Commercial Cleaning Company in 2024?

Not all businesses can afford to have in-house cleaning staff or just don’t want to. That is where commercial cleaning businesses come in. They do the cleaning job for firms that cannot or do not want to have in-house cleaning. Read further to learn more about the business and how to get started.

How big is the cleaning industry in the USA?

There is a rising demand for cleaning and maintenance services in the U.S. as construction activities, investment in real estate, and the number of working women increased. The Cleaning and Maintenance industry offers commercial and residential services such as window cleaning, floor cleaning and care, carpet and upholstery cleaning, maid services, janitorial services, landscaping, vacuuming, snow plowing, and more.

The Cleaning industry supports over 3.3 million jobs, of which 2 million are supported by the Janitorial Services industry alone. The janitorial sector has over 845,000 businesses and market size of $58 billion.

How much does it cost to start a Commercial Cleaning business?

Costs to start a commercial cleaning business are small. You can start on a small budget of $1,000 with a mop, bucket, and some chemicals. If you want to expand your offerings or offer more things from the start, you can invest up to $100,000 in things like a vacuum cleaner, waxing machines, pressure washers, etc.

Your largest expenses will be payroll and payroll taxes if you hire other people – if not, they will be the ongoing cost of cleaning supplies. Vehicle maintenance, insurance, and fuel costs come in a close second. Other than that, all you need is a phone line, website support, and a regular marketing strategy.

How much profit can a Commercial Cleaning Company make?

You will probably be charging an hourly rate depending on the service you are offering. Between $50 for normal cleaning and $150 for more intensive cleaning jobs should be your ideal range, but you should look at the competition in your area before deciding. Depending on how big your crew is, it might take longer with smaller crews – as such, you might want to price and adjust the size of your crews accordingly.

The risk to the business is that a job may actually take longer than expected to complete, resulting in a partial or total loss of profit on the job.

You will want to target locations that get a lot of footfall and need constant cleaning like restaurants.

Profit margins for a cleaning company can be slim. Some companies only profit 1% to 5%. However, if yours is a smaller company working with a small cleaning crew, it’s entirely possible to price your services at a 20% to 40% profit. Local markets will dictate your pricing unless you offer value-added services that can’t easily be compared to the competition.

You can increase profit margins by specializing in types of cleaning like hospital cleaning, restaurant cleaning, etc.

What should be your target market to start a Commercial Cleaning Company?

When starting out you should really do your market research. Look for big commercial clients as homes are not going to be what you should be looking for as potential customers.

What paperwork do you need to start a Commercial Cleaning Company?

As with any business, you will need some paperwork to establish a Commercial Cleaning Business. The following is an indicative list of what are things you might need to do before you start your business. Again, check with a lawyer in your area to find out if you’re all set to start.

• Business License: Registering your business with the state, county, city, etc.
• Bond: You may need to pay a bond before you can get a license to operate a moving business in your area.
• Sales Tax Registration: Register your business with the Internal Revenue Service (IRS) for tax purposes.

It is very necessary to have insurance when you run a moving business. You do not want yourself to be liable for any damages you cause – or at least not pay for all of it. The following are some kinds of insurance you need to worry about:

• Liability insurance covers any damage you might incur while running your business.
• Workers’ compensation to cover for injuries to you or others while on the job.

We also recommend that you establish an LLC and do all of your business through it. If you do not, you can be sued for any damages caused and your property can be used to cover any damages you cannot pay. If you’re working through or for an LLC, only the LLC can be sued and only its property can be used to cover the damage.

This is not legal advice – none of it is – definitely talk to a lawyer about all of these topics before starting your own Commercial Cleaning Company.

Can I buy an existing Commercial Cleaning Company?

According to BizBuySell, Commercial Cleaning businesses usually sell for around $240,000. A better way to calculate a way closer to a fair price is 68% of the annual revenue of a franchise for every year.

Bigger businesses, as you can see, will go for higher.

Look for existing businesses in your area that might be willing to sell. There are also listings on BizBuySell you might want to look at – these listings come and go so keep your eyes out for people wanting to sell their existing moving businesses.

What are franchising options in the commercial cleaning industry?

You can also franchise a commercial cleaning business if you want. Let’s have a look at some options:

JAN-PRO

Is a cleaning and disinfecting firm franchisor that operates in the US and internationally. They operate on a master franchise model with 98 master franchisees across the U.S.A.

JAN-PRO offers people the opportunity to be a part of a business that has good returns for the master franchisees. Unit franchises also make a good profit when selling their businesses. That said, the financials of the master franchisor look a bit shaky. It saw the annual income as almost half between 2020 and 2021. That is a worrying sign for both master franchisees and subfranchisees and prospective franchisees should closely monitor the company’s financial statements.

JANPRO Franchise Costs

The initial JAN-PRO Unit Franchise Fee is between $2,520 and $60,000. You have to pay this upfront fee when opening a JAN-PRO Unit Franchise franchise.

The estimated total investment necessary to begin the operation of a JAN-PRO Unit Franchise ranges from $4,720 to $73,520.

All the franchises in the system paid a total royalty of $1,065,100 to the franchisor. Since the Royalty is at a flat 10% rate, the Gross Billings for the previous year would be $10,651,000.

Across, the 139 units in operation, this amounts to $76,625 in AUV (Average Unit Volume)

Based on the estimated Average Unit Volume for JAN-PRO’s unit franchise locations in Wisconsin, at an average of a 50% profit margin, it will take around 2.5 years to recoup your investment. This is lesser than other franchise opportunities. You may not get a 50% profit margin which would elongate getting a return on your investment.

Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Cleaning and Maintenance stores; the extent of market penetration and brand awareness that JAN-PRO stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.

When you go to sell a JAN-PRO franchise based on the median multiple of .58 and net average unit volume in 2021 of $76,625, it would sell for $44,442. This is significantly higher than the midpoint investment of $39,120.

Coverall

Coverall is a company that offers janitorial and other professional cleaning services that have been in operation for 30 years. It is headquartered in Deerfield Beach, Florida, and is led by Rick Ascolese. At the end of 2021, they had over 4,800 locations throughout the country.

Coverall Franchise Costs

The initial Coverall Franchise Fee is $15,570 to $40,320. You have to pay this upfront fee when opening a Coverall franchise.

The estimated total investment necessary to begin the operation of a Coverall Franchise ranges from $18,612 – 51,391.

Coverall does not provide sales for their franchise system but from their revenues, we estimate that their average franchise sold $31,484 worth of services in 2021.

Based on the median sales provided by Coverall’s franchise locations, at an average of a 10% profit margin it will take around 11 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 10% profit margin which would elongate getting a return on your investment.

When you go to sell a Coverall franchise based on the median multiple of .58 and net sales estimate in 2021 of $31,484, it would sell for $18,260. This is significantly lower than the midpoint investment of $35,001.

Coverall boasts a strong network of over 4800 stores but it is in decline with profit margins very slim. Their decline in locations in 2021 is a worrying sign. And we recommend speaking to existing Coverall franchise owners to learn whether this is a business you’d be interested in further.

Conclusion

We hope this article gives you basic insights into what you need to start your own commercial cleaning business. While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Cleaning and Maintenance Industry.