Owning a business is something that many people dream of doing. But, usually, when you think about businesses that can make you rich, you think about tech startups, insurance companies, financial services, and real estate brokerage. Naturally, cleaning businesses are the last thing on your mind.
Contrary to popular belief, cleaning businesses are a reliable way of making more than six figures a year. In the U.S., the average cleaning business makes $36K – $100K annually — with net profits ranging from 10% – 48% depending on expenses. Moreover, in 2019, the cleaning industry mustered over $61 billion, making it one of the fastest-growing sectors in the country.
Nonetheless, like any other type of endeavor, a cleaning business will only be profitable when and if it is managed effectively. Thus, you must research your market and draft a consistent business plan that will allow you to reach your goals. Plus, it is essential to note that you also need to ponder several factors that might impact your business’s profits. These include, but are not limited to, company size, location, business structure, pricing model, initial investments, and target audience. In other words, you cannot expect all businesses to have the same profit margins. Undoubtedly, a cleaning business in New York City that employs 20 people and services 8-10 clients a day will not have the same profits as a cleaning company in Iowa with 2–3 employees that cleans one house per day.
It is important to know that what a cleaning business makes and what the business owner receives are two completely different things. So, suppose you are planning on starting your own cleaning business… In that case, you will want to know how much you will end up making and if that sum justifies all the hard work that comes into play when running this type of business.
Based on recent statistics, the median cleaning business owner makes $55,950 in a year — with salaries as low as $16,500 and as high as $137,500 annually. In other words, you can expect an average of $4,660 per month. Of course, nothing is written in stone, and many factors might affect your earnings.
Hence, when establishing your salary, consider your expenses, the company size and reputation, your business structure, the types of services, the location, and years of experience. Once you have taken all of these factors into consideration, you could be looking at a salary as low as $16,500 or as high as $137,500.
How to increase a cleaning business’s profit margin?
As we mentioned before, in the United States, the average cleaning business makes between $36,000 to $100,000 annually. Net profits, however, range from 10% – 48% depending on expenses. Thus, if you wish to be on the most lucrative side of the scale, you need to make sure your business has high-profit margins. The good news is there are many things you can do to increase your profit margins.
The most common and straightforward business strategies to boost your cleaning business’s earnings include:
Analyzing your profit margins
To start, analyze the gross profit margin of each service you provide and cross-reference it to the expenses you have when offering that service. By doing so, you can identify low margin or loss-making services and decide whether or not you should continue to provide them. Additionally, you will be able to review your business structure and make the necessary adjustments to increase your earnings.
Lowering your expenses
Make sure that you are wisely managing your capital. Some ways in which you can easily cut down on your costs is by:
- Narrowing your focus and offering only high-demand services
- Switching to only online marketing efforts
- Cutting insurance costs by selecting policies that provide your business the best deals
- Taking cash discounts from suppliers
Reviewing your prices
Increasing prices can be challenging. However, to run a lucrative cleaning business, your prices need to match market price rises and keep up with the competition. Thus, if your prices are below the market price, maybe it is time to review them.
Expanding your business
There are many ways in which you can expand your business and attract new clients, such as: seeking referrals, partnering with other companies/brands, moving into new markets, offering subscription/loyalty plans, and more. Not all of these strategies are necessarily viable for your cleaning business. Thus, choose those that seem doable, and that will ultimately help you increase profits. For instance, you might not be ready to expand to new markets. Still, when analyzing your profit margins, you may realize that switching to generic cleaning products can cut down your supply expenses. Or maybe you figure out that there is more money in custom services such as carpet cleaning or home organization and that you should revise your service offering.
Other reasons to start a cleaning business
By now, we have established that a cleaning business can be highly profitable — making it the most appealing reason for starting one. Nevertheless, there are plenty of other good reasons that could tip the scale when deciding whether or not starting your own cleaning business is a good idea:
The initial capital needed is considerably low
Depending on the scope, the initial investment required for most cleaning business goes from $2,000 to $6,000 — making it lower than many other popular industries or businesses, including tech, finance, or hospitality.
The janitorial industry is a stable market
The janitorial industry is one of the fastest-growing sectors in the country. Additionally, it is one of the few industries that does not depend heavily on trends. As a result, it is safe to say that the cleaning sector operates in a rather stable market. Plus, history has shown that even when the economy is crashing, there is still a demand for professional cleaners — primarily if you specialize in retail and office cleaning.
There is no experience or education required
Another great thing about cleaning businesses is that they do not require a college degree, specific qualifications, or years of experience to run a successful company. In other words, anyone can start a cleaning business if they have the capital, passion, and are willing to do the work.
There is a lot of growth potential
Recent data has shown that the janitorial industry has an annual growth of 1.9%. Thus, if you manage your business efficiently and effectively, the odds are you will shortly need to expand as demand will only continue to grow.
It is an uncomplicated service offering
Lastly, the cleaning business supposed a reasonably simple service offering. Hence, if you set plausible goals and manage your expenses and time wisely, you could be running a profitable business in just a few months. As you can see, a lot goes into determining whether or not a cleaning business can turn you into a millionaire. But, as a rule of thumb, opening a cleaning business is a safe bet if you wish to make money. Hence, all you need to do is plan accordingly and try to make educated decisions that will benefit your enterprising endeavors.
Frequently Asked Questions
How much money do you need to open a cleaning business?
The initial funding needed for a cleaning business fluctuates between $2,000 – $6,000. This amount includes the essential expenditures associated with opening a cleaning business such as legalities, insurance policies, necessary supplies, labor, and branding. All and all, the initial capital needed is considerably lower when compared to other businesses or industries. However, different elements impact the amount needed to open and successfully run a cleaning business, including location, types of equipment, selection of products, number of employees, marketing tactics, decor/re-models, and more.
How long does it take for a cleaning business to become profitable?
On average, it takes between 1-2 years for a cleaning business to become profitable. Nonetheless, many elements come into play when determining a business’s success and profitability. Some of the most important things to consider include:
- The amount invested in the cleaning business
- The budget established for marketing, public relations, and promotions
- The time spent in developing the brand
- The quality and efficiency of the services provided
- The company’s location
- The business’ target audience and market
- The number and experience of the employees you hire
Is purchasing a cleaning business franchise a good idea?
Cleaning franchises come in all shapes, colors, and sizes. Purchasing a cleaning franchise is a good idea as it usually entails a low buy-in investment. Plus, a good franchise usually comes with a long list of advantages, including training, continual support and assistance, the use of a trusted name, and more. Nonetheless, if your capital is limited, starting a cleaning business from scratch might be a better idea. Why? Simple. Starting your own cleaning business is much cheaper than purchasing a franchise. Based on reports, a basic cleaning franchise could cost roughly $5,000, while a well-established and renowned franchise can amount to $30,000 or more.
Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.
About the author. Entrepreneur and Cleaning Business Fan.
Hi! I am Shawn and I am a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online cleaning business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a cleaning business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Cleaning Business Boss: I want to help cleaning business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.