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Business planning: How to plan and set up a new cleaning agency?

There couldn’t be a much better time to get into cleaning, than ever before. Every time there has been some sort of disruption to the health of the economy, new opportunities have revealed them selves.

Due to COVID-19 the world has become extremely contious of having a clean environment. Every single organisation public, or private was provided with cleaning guidelines by the government, and there were strict penalties if they werent being abided by. In some cases closure of the organisation, to ensure the spread of the virus remained to a minimum.

Cleaning business, has become front and centre of any organisation to function. Without such measures, the organisation simply can not operate.

These sort of measures are here to stay, and therefore a growth in demand for such services has spiked 10 folds.

If you have been thinking of opening a cleaning agency, you have come to the right place. We have carefully preapred this article to have you start thinking in the right direction. This article will serve as a point of reference, to which you can continously refer back to through out your new cleaning agency journey.

There are several different cleaning business structures, such as a franchise, one man band, agency, cleaning companies, etc.

We have chosen an ‘agency’ structure as we believe this is the most lucrative and cost effective. It may require a bit more work then lets say just acquiring a franchise, but in the long run you will reap the fruits.

Furthermore, there are various different types of cleaning specialiaties, ranging from commercial, domestic, window, carpet, oven, gutter, etc. However we believe cleaning buisness especially when starting is best to start from the good old routine house work: dusting, ironing, mopping, vaccuming, scrubbing, etc.

What you will find in this post

 

 

Overview of how a cleaning agency works

 

To understand the workings of a cleaning agency we need to make sure first and foremost what is required of you as a business owner. This will help you understand if you are cut out for this sort of a business.

 

Some of the main tasks are:

 

–          Sourcing and signing up new clients

 

Sourcing – To make sure you have a consistent list of clients, you need to ensure you are targeting the right type of people. Over the years life has become fast-paced and more people are looking for external help for their domestic keep up. It is also due to society accepting helpers, as the ethos of live hard, play hard has become a norm.

 

Furthermore, senior citizens, working mums, single men, and end of tenancy are some of the avenues where cleaners are required than needed.

 

In terms of marketing, the following will be the best avenues to look into:

  • Local Newspapers
  • Mailshots
  • Website
  • Online Directories
  • Google Ads
  • Social Media
  • Press Release
  • Referrals

Signing up – If someone asked you to make a chocolate cake once a year and they will pay you £400 for it, what would you do? You will make sure that cake is top-notch. You will find out all the best recipes and get the best ingredients. Experiment a few times, and come up with a final product. Wouldn’t you?

 

Well if a client is going to pay you about £400 a year for cleaning work, you need to make sure your client understands exactly what they are getting. A neat presentation would be a nice way of showcasing this or creating some sort of sales presentation. Whatever you do make sure you put some thought into it. After all, you don’t want anyone turning away after spending all that money and effort in marketing.

 

–          Sourcing, Vetting, and training new cleaners

 

Sourcing – There is an abundance of people looking for the kind of jobs that you will be offering. However, 1 out of 10 will make it to your books, so the process of hiring cleaners will be rather repetitive and consistent. This is due to most people not fitting the criteria, or they leave as they couldn’t get along with the clients or that cleaning work was not for them.

 

There are plenty of ways you can advertise for jobs.

  • Local News Agents
  • Local Newspapers
  • Word of Mouth
  • Referrals
  • Schools and nurseries
  • Website
  • Local social groups
  • Public notice boards
 

Vetting –  To make sure the cleaners you hire are of a good standard and will be able to consistently perform well, without any complaints is crucial for your business. Moreover, you are sending people to someone’s private residence, and therefore have to be extremely cautious, of the type of person you send. There can not be even a shadow of a doubt that the cleaner will behave notoriously, ensuring there is no harm to property or its owners.

 

Here are the three main categories you must go through to ensure vetting is done correctly.

  • Telephone interview – This process will enable you to decide very early on If the candidate is suitable. You can find pre-made templates which will help you have a structured approach to interviewing clients over the telephone.
  • Cleaner interview – At this stage, you will go meet the candidate, and take all the necessary documents, such as ID, proof of reference, etc. You will also have a chance to see how the candidate has been keeping up with her house cleaning. Once happy, you can explain the onboarding procedure and get the applications filled out.
  • Reference verification – Once you have received the references make sure you call or email them to ensure the candidates hold a good reputation.

Training – Having a pre-written manual would be handy to distribute to oncoming candidates. You can ask them to go through it once, and if they have any questions they can ask you. All the main points you can go through with them ensuring everything is done according to standards.

 

–          Carefully managing a database of new cleaners and clients

 

It is essential to have all your data stored in an organised manner. You also need to make sure that your jobs are being sent to the cleaners on time, and that you know which cleaners are available and when. You would also need to know which clients have registered, and which are no longer with you.

 

All this requires a sophisticated management system. We are blessed to be living in the 21st century, where computers have made life a lot simpler for us.

 

You can find a range of CRM of softwares here. It would be wise to try some of them out before you start a subscription.

 

 

Who is your competition and how to identify them

 

In the market space that you will function in, there are three types of service providers that you will be competing against.

 

–          Private cleaners

 

These are individuals who are out offering their cleaning services to people through building their own network. They are generally paid cash in hand.

 

–          Domestic cleaning companies

 

These companies hire cleaners and put them on their own payroll. They are paid a fixed salary each month, and therefore have to bear the administrative tasks of dealing with payroll, etc.

 

–          Domestic cleaning agency

 

These types of organisations are where cleaners are introduced to people who require their services, in exchange for a regular management fee. The cleaners are paid directly by the service users.

 

As we have recommended the domestic cleaning agency model, it would be wise to start by searching them on google. Understand the type of services they provide and their fees structures.

 

You can also call them to find out what they have to offer and to have a feel of their sales process.

 

An in-depth analysis of a few service providers will put you in a much better position, to identify their weak points, and to build your USP.

 

Scope of domestic cleaning post-pandemic

 

With the onset of the pandemic, the cleaning industry has seen a rise year-on-year. The figures keep changing, however, data from some industry experts shows the industry may be around £3 billion in the UK alone. There are 25 million households across the UK, if you can even catch the crumbs of this massive market, you will be set for life.

 

 

Guidelines to set up your new cleaning agency

 

–          Market Research

 

Market research is crucial to the success of your business. This will not only provide vital information on how to attract clients but also what salaries to pay your cleaners to keep a high retention level.

 

As mentioned earlier your first place to start with is on google. Research their websites and make a list of all the relevant things. A few of them could be:

  • Name of the company
  • Telephone number
  • Website address
  • Cleaner hourly rate
  • Agency hourly rate
  • Overall hourly rate
  • Minimum weekly hours
  • Types of services offered

This exercise will help create a good understanding of your competition and will ensure you step into the market with the right tools.

 

 

–          Income and Expenditure budget

 

Without a good understanding of how much money is coming in and going out, you will struggle to make a profit.

 

Make a list of all your expenses and ensure you have a monthly budget to cover them. Keep updating it as your business evolves.

 

Some of the expenses you would need are:

  • Stationery and business forms
  • Office equipment
  • Public liability insurance
  • Marketing online and offline
  • Vehicle fuel

 

In terms of income, you need to make sure you have an understanding from the get-go of the amount you are targeting to achieve. If your target is £100,000 for the first year. Then do the following calculations:

  • Work out average weekly income per client. If your agency fee is £3 and the cleaner has worked for 3 hours, this will equal to £9.
  • Now calculate the average yearly income. Multiply the weekly amount by 52 weeks. This will amount to £468.
  • At this point, you would need to divide the total yearly income by your targeted earnings of £100,000. This would equate to 213. You would need 213 clients a year to hit your £100k revenue for the year.

If you need 213 clients for the year this would equate to about 17 clients per month. Based on this you will be able to strategically create a marketing and sales strategy. You will also understand how much you can spend and accordingly reduce or increase your target.

 

Make sure you have these projections saved, as this will help you steer throughout your business journey.

 

–          Business Name

Coming up with a catchy business name will help you stand out. You would also need a logo to match it. You can use a software by the name of Bust a name. This software will help you churn out a few names.

 

After you have narrowed down your business names, make sure you check if the name is available. Check on companies house, IP, and godaddy to check for the availability of the domain.

 

Once satisfied, create a logo for yourself. Smashing logo is brilliant. After inserting a few keywords, it will give you a long list of possible logos which you can then use for a low fee.

 

 

–          Bank Account

There was a time when there were only a few high street banks available, and you would pick the closest to you by going into the branch. However today everything has moved online. Tide is the best of them all. It is app-based and in a matter of few hours, you can have a fully functioning business account.

Claim your £50 when you first open your account with Tide, by using the code “EVOTAX”.

 

–          Business legal entity

Due to the nature of the business, our recommendation would be to register as a ltd company. You will protect yourself from any claims of theft, or any type of malpractice. As you will have company insurance you will always be protected.

 

Check out our article ‘Top 5 perks of running a limited company’ to learn all about why an ltd can be the best choice for you.

 

–          Insurances

There are three types of insurances that you must have before you start your business. They are as following:

Public liability insurance –  Any personal injury or damage caused due to the negligence of the cleaners can be claimed here. Usually, insurances can cover up to £1m  per claim.

 

Employers Liability Insurance – This is to cover an injury to the employees. As in an agency, the employers are your clients, it is worth mentioning to them to have appropriate cover.  

 

Fidelity Insurance – This type of insurance is another that needs to be covered by the employer. It relates to any theft or fraud done by the employee. Again worth mentioning to your client.

 

–          Appointing an accountant

 

Unless you have studied accounting or have got some sort of experience with double-entry bookkeeping or tax, it would be wise to hire an accountant.

 

They will be able to advise you on the best accounting software to use, and ensure your income and expenditure are recorded correctly. They will also advise you on tax and keep you updated on any new changes that might affect the national insurance and income tax thresholds.

 

It’s important to note that if you have chosen to go for a ltd company, it is a requirement for a qualified accountant to prepare and file your accounts and corporation tax.

 

If you find yourself struggling in creating a business plan, this is another way an accountant would be able help you out. For inspiration, you can also browse some of our related free resources.

 

A good accountant shouldn’t cost you a lot and will help you save money rather than act as an expense for your business.

 

If you find the above useful and are intrigued by starting your own cleaning agency, make sure to claim your free consultation today.

 

About the Author

Bilal Khalid

CEO, Accountant

Bilal Khalid EvoTax accountant

Successfully running my own small business for years has taught me a great deal about the complexities of taxation and I understand all the pain points that every entrepreneur has to go through. I often found myself paralysed with fear of making a mistake and getting fined and eventually decided to take up accounting and finances myself. Today, I help other small businesses suffering through similar mistakes and I am happy to share my knowledge, jargon free!

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