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Business Plan to Set Up a Cleaning Company

The outsourcing of companies and the new way of building open a wide range of possibilities for entrepreneurs.

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Cleaning is a basic human need. It is demanded on a daily basis by homes and communities of neighbors as well as by companies, facilities and organizations of all kinds: the range of clients is wide. If we plan to dedicate ourselves to this activity, it will be necessary to define previously what we want and we can clean up. Here you can read the keys to set up a cleaning services company. To download the complete business plan, click here.

In this sector, it is necessary to differentiate between three types of cleaning services. The first are the general cleanings are punctual or sporadic, and are aimed at both private homes and companies, commercial premises and other facilities. Also included here are the end-of-site cleanings, in depth or the cleaning of claims.

The second modality is the specific sectoral cleanings. There are demand sectors that require specific cleaning plans, with adequate materials, techniques, machinery and personnel. These peculiarities mean that in maintenance cleaning there are also several specializations, in some cases quite complex: that of industrial buildings requires cleaning of heights; in health centers hygiene procedures are very strict; in the agri-food and pharmaceutical sector the personnel must be adequately qualified; while industrial technical cleaning and that of nuclear power plants is located at the top of the pyramid of specialization.

The third type are specialized technical cleanings. The maintenance cleaning service does not cover certain elements that require specific periodic treatments, such as ceilings, upholstery, blinds or air conditioning ducts, among others. In the same way, there are special circumstances that require specific interventions, such as the elimination of chewing gum, graffiti and graffiti, the dressing and polishing of soils, the services of deratization, disinsection, environmental deodorization, pottery, etc.

KEYS TO SHINE IN THE SECTOR

The experts of this market highlight the following aspects as especially relevant to succeed in it:

  • Management of people. They are the “soul” of the business and it is a particularly critical point in a sector characterized by a high rate of absenteeism, high turnover and little attachment to the profession. Training, motivation and the remuneration system are the tools to achieve employee satisfaction and ensure their productivity. In addition to the staff of cleaners, commercial, as well as organizational, profiles can not be lacking in order to achieve the proper planning of the work.
  • Professionalism and service vocation. This aspect is vital, since cleaning services are provided on a regular basis. Sandra Moreno, Manager of Limpiezas Castilla, puts it this way: “Would you leave the keys of your house to anyone?”. The commitment to quality service and the generation of trust are the driving force of his company, which has been providing services since Azuqueca de Henares (Guadalajara) since 1992. Its policy of managing people has been key in its longevity. “Many ladies (most of their staff is female) have been with us since the beginning. Feeling valued and achieving balance in your personal life have been decisive “explains Sandra Moreno.
  • Machinery, techniques, treatments and modern products. Being at the forefront in this area and even innovating, as well as a good purchasing management, in quantity and quality, can represent a considerable costs’ saving and productivity increases.
  • Attention to the regulations. It is necessary to know and strictly comply with the current environmental, storage and handling standards for chemical products, as well as the personnel subrogation regulations, in the event that a contract changes ownership.
  • Communication. Gaining notoriety is essential for any business, especially in the early stages. This implies time and resources, so you have to have an adequate initial budget. It will be necessary to fine-tune a good mix of activities, both online – web, social networks, SEO, SEM – and offline, such as announcements in the media, signage and signage, commercial visits, public relations (press releases, sponsorships, networking), etc.

THE INITIAL BALANCE

Our entrepreneur decides to create a limited maintenance cleaning services company for neighborhood and business communities, also offering a technical service for cleaning blinds by a specialized worker, who will pick them up and clean them at the company’s facilities with specific machinery . A 75 m2 premises is rented outside of Alicante, preparing it for administrative and management tasks, with a small warehouse for cleaning products and tools and a workshop to install the machinery for cleaning shutters. A van, acquired by renting, will also be necessary. The following investments in tangible fixed assets are foreseen: machinery (€ 6,000), refurbishment and refurbishment of the premises (€ 4,000), tools and supplies (€ 5,000), furniture and decoration (€ 2,000), resources and computer equipment (€ 3,000). In intangible assets, computer programs worth € 700 are included. First establishment costs for corporate image and material and launch advertising amount to 1,200 €, while the costs of incorporation total a total of 2,200 €. In the Current Assets, the heading of Public Finance debtor for VAT of initial investments totals € 5,061 and has 15,000 of initial treasury. The total amount to be financed (Asset from the initial balance) amounts to € 44,161. Our businesswoman contributes a social capital of € 20,000 and gets a grant of € 2,000. The rest (€ 22,161) is financed by a long-term bank loan (five years), at 5% annual nominal interest, which will be refunded through 60 constant monthly installments of € 418 (formed by interest and return of capital).

BALANCE OF RESULTS

The income statement records all the income and expenses made throughout the year (without VAT). The main expenses incurred by a cleaning services company are:

  • Personnel expenses: the sum of gross wages and social security paid by the company. It is the highest expense in this labor-intensive activity and also needs to be covered punctually every month, so control of the treasury is especially important. The salary range stands at an average of 15,380 gross euros per year. In our case we collect in this section the remunerations of a team of 4 cleaners, a specialized worker and the entrepreneur.
  • General expenses: supplies (electricity, water, telephone, gas, Internet connection, fuel), external services (leasing – local and renting of the van), services of professionals – in our case, the agency -, maintenance costs and repairs, insurance, advertising).
  • Amortizations: they represent an unavoidable expense that includes the loss of value of the elements of the fixed assets. In our example they amount to a total of 4,591 euros per year.
  • Financial expenses: interest on loans or bank loans.

Subtracting from sales the cost of sales (or variable cost) – which does not include labor and is associated with the consumption of goods needed to perform each service (basically cleaning products) -, you get a gross margin on sales 95.5%. A value close to 100% makes it necessary to sell the equivalent of the expenses that are available, in order to reach the breakeven point. As in the first year only sales of 108,500 euros are achieved, losses of € 43,392 are generated. To start giving positive results maintaining the same margins and expenses, sales should increase 43%, although this will also increase operating costs. Likewise, it will be very important to guarantee the stable income derived from the maintenance cleanings, since the general and specialized ones report more irregular income. The prices of the services vary depending on the type, the expected costs, the types of clients, the prices of the competitors and any possible aspects of differentiation. In this sense, specialized technical cleanings allow higher prices and margins.

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