8 Mistakes to avoid if want to sell your Cleaning Business:
1. The Owner as the “Primary” Cleaner
Remember you are starting a business not starting to become a full time cleaner. The key point here is the future owner of your business most likely doesn’t want to be cleaning 40 hours a week. Also, remember you don’t have time to run your business if you’re doing all the work. Hire reliable cleaners to assist you in the cleaning process and eventually trust them enough to do all the work, while you grow and maintain the relationships your business needs to succeed. Then move on to finding a General Manager so you continue to sell and build your business.
2. Thinking all Cleaning is the Same
Home Cleaning and Commercial Cleaning are very different businesses. In both you make a clean space out of a dirty space but the real similarities end there. Homes all have the same basic areas including a living room, kitchen, bedrooms, and bathrooms. In Commercial Cleaning there are different types of spaces with cubicles and larger central bathrooms or hair salons with hard floors, mirrors, and chairs drilled in the center of the room. Understanding your rate and potential profit in different scenarios and spaces is critical to the success of your business.
3. Not having Signed Contracts
If you plan to sell your business in the future or you want to be confident in your customer relationships you should make every effort to get signed agreements with all of your customers. We have seen many operators who run their cleaning business without contracts and when it’s time to sell, the valuation is drastically lower. Bottom line is, get signed contracts. If you need assistance on what makes a good contract please let us know.
4. Billing Clients Per Cleaning
One of the most important parts of how you operate your cleaning business is the process of billing your clients. Generally speaking, you would think I go do work and I bill them on an hourly basis or at an agreed upon project basis (each time you clean the whole house). However, when selling your business the best type of revenue to have is an on-going monthly revenue stream where you know exactly what you make every month for an agreed upon amount of cleaning. This way the revenue is seen as more of a recurring revenue and has a higher valuation than project-based work.
Having a lot of windshield time (in your vehicle) is all time you’re not collecting revenue. Make sure you don’t spread your customers too far from your home base or each other. Choose a territory wisely and do your best to stick with it. The further away your locations are, the more your time and service costs go up. The less driving you and your teams are doing the more money they are making or services are being provided. A tightly knit area to service is also far more appealing to buyers as well.
6. Growth through a Very Big Customer
One of the biggest weaknesses of any business is overly relying on one customer for your company’s revenue. As with growing an investment portfolio, diversifying your customer base can drive down risks that are inherent in having too much of your success coming from one area. Also, keep in mind that relying on one industry can be equally risky if the industry encounters issues. So diversify your clients and industries that they work in (commercial) and in turn you’ll have a stronger, more desirable company.
7. Too Thin of Margins
Be careful when negotiating your fees with your customers. Don’t give away too much of your margin. You need to know the market and understand what is expected but at the same time not give away too much. If you set your margins correctly out of the gate you will be much happier with the income in the long run. Also, it will make the process of selling your business a much simpler one. If you need help with understanding how to set margins, be sure to contact us.
8. Basic Training is the Only Training
As an operational standard you should include additional training as your home cleaning company evolves, especially if it evolves into a commercial cleaning company. The fact that an employee has cleaning experience does not mean that they have cleaned homes the way that your cleaning company does. You need all your employees to be on the same page and clean in the same manner, this is your “standard”.
Likewise, if they have commercial cleaning experience, that’s not the same as residential and visa versa. Your cleaning staff needs the relevant cleaning processes in both home and commercial properties. This will ensure that your business succeeds and your employees have the knowledge to succeed in their positions.