Matters to Consider in Your Cleaning Business
A necessary skill for running a business is the proper organization and
management of financial matters. Without preparation and planning, you might
watch your business fail due to lack of funds or confusion with expenses. Don't
let this happen to your new business, but instead take the time to learn what
it takes to handle financial matters properly.
One of the first financial decisions you will have to make
is how much you will charge your customers for the service you offer. There are
many factors that contribute to determining an appropriate cost for each different
type of service, and some of these factors include cost of equipment, hours of
labor, employee salaries, and size of the job.
Picking the right price can get tricky, because you want it
high enough to make a profit, yet low enough to attract customers and keep
them. How can you find the realistic middle ground, then?
the Competition - Step one: Know who you're playing against. Research
businesses in your local area that are offering similar services, and inquire
about their rates. What are the rates of the most popular business in the local
market? The current going rate will place a large role in where your prices are
set, as you want to stay in the competition. As you are just setting off, you
might want to lower your rates to have an edge on the other businesses, but be
careful not to let this hurt your financial situation even worse. Knowing what
your competitor's charge can help you when speaking to customers, because you
can compare and contrast your services and prices to other brands they may have
heard of. This helps you seem like you know what you're talking about, and that
you have really put thought into offering the best prices.
Set the Cost per Job - As you are just starting off, you may not know yet
the best way to provide a quote for a customer. You can either charge by the
square foot of the room you are cleaning, which works well for businesses such
as floor cleaning and carpet cleaning. Perhaps you may choose to charge by the
hour, which generally works for domestic and commercial cleaning jobs. If you
do choose to charge by the hour, keep in mind that your clients will expect you
to work efficiently and get the most out of each hour that passes. The longer
you are there, the more they have to pay, and they may not be pleased if you
take a long time to get the job done. As you get more experience and take on
larger jobs, you will learn the best ways to estimate costs based on the
workload you are taking on.
Your Business Plan - In your business plan, you should have a section
addressing the profit and loss projection. What are your profit goals? If your
current rate is not high enough to help you meet those goals and stay afloat in
your business, then cheap prices may be hurting you more than helping you. There's
no point in lowering your prices to win customers if you can't stay open long
enough to keep them.
Determine the cost for each individual job,
from traveling expenses to supply usage. The numbers will vary from client to
client, as each job is a different distance to travel and larger rooms may
require more supplies. Setting a basic idea of how much it costs, though, can
help you determine how much profit you are looking to make on each job. Combine
the costs and the profit you wish to make, and you have an estimate price.
Depending on the competition's pricing, you may have to adjust this a bit.
Rates - Keep in mind that not every client you take on will pay per job,
but you instead may have monthly or yearly contracts with commercial customers.
It is up to you whether you will offer such contracts, or just keep it at a
shorter-term payment method. If you do choose to work with long contracts, you
might consider offering a cut on prices to entice customers to choose your
business. Offering a cut on prices for long-term contracts shouldn't hurt your
business financially, as you are getting a steady and consistent income from
this client's business. If that's what it takes to get their business, then
this could be a wise decision.
for Negotiating Clients - Many clients know that you have the ability to
shift your price, and are willing to negotiate. If you want their business,
sometimes you will have to take them up on their offer or meet them in the
middle. If you are determined ahead of time not to negotiate, however, you can
let them know that the price is set and you can't change it. Just have an
answer prepared and also prep your employees on how to answer if a customer
tries to negotiate the price. Set a standard for what the lowest possible price
is, and instruct your employees not to negotiate below that price. Sometimes
you just have to say no to a client if they are asking for a price that harms
your finances more than it helps.
of Keeping Records:
It is necessary that you learn to organize and keep up with
customer records, from preferences to payments. Without this skill, you will
quickly find the disorganization reflected in your customer relations and
day-to-day business operations. Your customers will be able to tell that you
don't have a good system when you lose their information and have to request it
repeatedly, and this can turn them away from using your business. Maintain a
good reputation and keep your customers for the long run by developing strong
organizational skills and putting them to use with your new cleaning business.
The first step to keeping up with everything is knowing what to keep? With all the paperwork and
documents a small business goes through in a single workweek, how can you know
what needs to be saved and filed away?
Documents - Don't lose track of your license and insurance papers, or any
government-issued documents you have that establishes your right to continue
with your business.
You should keep anything that is a supporting document displaying your
income from the business. Credit card statements, invoices, check deposit
receipts, and any other document that is related to your income should be saved.
of Purchases - With a new cleaning business, you will be spending a lot of
money on supplies and equipment. Keep records of all your purchases from
manufacturers and suppliers, along with proof of transaction showing that your
payment went through. You never know when this information might resurface and
be beneficial to you. It is also important to hold on to this information as
you write up your yearly budget, so you can see how much you annually spend on
supplies and resources.
on Loans or Investments - However you managed to get your start-up funds
for your business, you need to hold on to documents and transactions for future
reference. If you received an SBA loan, you will need to keep up with paying it
off. You also need to keep up with your investor's information in order to keep
them updated on business changes about how their money is being used.
Filings - At this point, you may realize that pretty much any document
related to finances should be saved. File away any documents that have to do
with business taxes, your employee's taxes, and taxes on purchases you made.
and Safety Documents - Hold on to any documentation regarding health and
safety regulations, so that you can use them for future reference.
- If you choose to make long-term cleaning contracts with clients, you need
an organized way to hold on to these valuable documents. You can't hold the
client responsible for keeping up with their copy, but you can be responsible
for your own copy. Should anything arise that requires the contract to be
pulled out of the files and possibly renewed, you should know where it is and
how to access it.
Decisions - This is especially important if you are not the sole owner of
the business, as you will need to record agreements and decisions about changes
to the business. File any changes you make to the business plan or customer
If there are any of these documents that you are not legally
required to keep but just choose to do so just in case you might need them, figure
out the appropriate length of time to hold on to them. If you keep everything
from the moment you start your business and on, you may have too many documents
to keep up with. Hold on to documents you aren't sure about until you are
certain you can operate your business efficiently without calling upon them,
and then clean out your files of the unnecessary documents.2 If you
are unsure about how long to keep up with important business documents, search
online for information about your specific question or contact a professional
just to be sure you have valid information! This is something you don't want to
get wrong, as it plays such a critical role to the success of your business.
Keeping up with the required business documents will help
you stay out of trouble regarding taxes, promote efficient customer service and
customer relations, protect your business against potential lawsuits, and
assess your business's profitability.
How can you make sure that you are organizing and keeping up
with all these documents efficiently? Here are just a few tips:
Keep it separate from your personal life. Don't
make payments for the business on your personal credit card, and don't use the
business credit card for personal expenses. At the beginning, it may seem easy
to pay yourself back with either, but in the long run it just gets confusing,
especially when you're trying to keep up with expenses and records. Save
yourself the trouble and keep the two entirely separate. This will help with
professionalism as well, by keeping customer relations separate from your
personal life. If necessary, look into getting a business phone rather than
using your personal phone to make customer calls. You can get a cheap deal on a
phone plan that suits your needs for the business.
Give yourself time to work on records. Don't
just expect yourself to find the time if you don't purposefully set aside the
time in your schedule. It doesn't take much time out of your schedule if you
make it a weekly routine to sort and organize records and documents. Keeping up
with a weekly scheduling will also help you stay in tune with the ins and outs
of your business and how things are looking financially. You can see firsthand
any progress or decline that your business's finances have taken, and keep up
to date with current customers or contracts. You will be able to spot potential
trouble areas before they have the opportunity to present an issue for your
Check for financial holes and inconsistencies. A
sloppy job of following through on invoices and payments can lead to you not being
paid, and you may not even realize it if you don't follow through. If you take
the time each week to look over customer payments and make sure that all is in
order, then you should be able to catch any instances where a customer didn't
turn in their invoice or something along those lines. Checking up on your
financial situation on a weekly basis can keep you from overspending during
times of financial stress, and help you to put money to good use when your
business is doing well.
Call in a professional as needed. If you're new
to the business world and aren't quite sure where to begin on your own, it
would be more beneficial to pay a little extra for an expert than to hurt your
business with poor record-keeping skills. Lack of expertise in this area can
lead to loss of income, tax issues, and even lawsuit issues that could have
been prevented. Over time, you should get a hang of the system and may no
longer need to call in a professional, or you may still choose to do so for
peace of mind and confirmation.
Talk with your customers about their preferred method of
billing, as it could vary from client to client. If you prefer to set a
standard billing process, then you can let them know up front with your
policies. Some residential cleaning services, for instance, have their
customers pay with a check at the time of the cleaning. Others might send a
bill in the mail or over email after the cleaning is finished. With residential
clients, you are best served by letting them pay in the manner that they are
accustomed to, should that be credit card, cash, or check. Just make sure that
their payment is legitimate and consistent, especially since the billing
process is typically done after your
services have already been provided.
For residential customers, you will have some clients who
have a routine cleaning schedule, and others who only hire you on an occasional
basis. You need to develop a system for each, which includes setting up a
routine billing schedule for the client with a routine billing. You will find
the same situation with commercial clients, in which they hire you to clean on
a routine basis. You can set up an email invoice to go out on the occasion of
each cleaning, just make sure to remember to cancel the invoice if they cancel
Once you begin a routine contract with a client, you may get
into the habit of relying on your billing system to send out the invoice, and
you won't even have to do it manually. Just be careful of getting too
comfortable with automated billing systems, because you may not be as
perceptive if the customer misses a payment. This makes record keeping critical
in order to ensure that you are paid!