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I like service business'. I already have a business offering outdoor property maintenance. This would be a separate business from my current one but I will market to my current contacts.
What Im asking is can I make good money doing this? Is a 30-35% profit margin attainable? I know it is a competitive business,I just dont want to waste my time getting started with it to find out the margins are not worth chasing?
My daughters girlfriend and her husband have an office cleaning business.
If you are good, and reasonable price, you will make money.
They spent some money on the initial equipment by buying it second hand
from someone leaving the business, the equipment was used, but it was a good
business decision offering the floor buffing, shampooing, ect.
They are doing good financially, so I would say go for it.
It depends a lot on how saturated the market is. In the Miami / Ft. Lauderdale area I used to have theatres cleaned for about 1/4 of the cost of a salaried janitor. I have no idea how the janitorial company made enough to cover expenses. Office "cleaning" is usually a lick and a promise. Having been working when cleaners came through, I was a little startled just how little they actually did. If you have a business with wastebasket emptiers and toilet flushers, there isn't much overhead.
The market is smaller, but a good janitorial supplies jobber can turn a profit. When I first started my business, it kept food on the table. The key is that you have to keep up with which products are being cheapened and downgraded in quality/quantity and be ready to switch quickly, and you have to push to get the proper discounts from your wholesaler. Sam's club tried to take a lot of the smaller market away, but couldn't compete once people realized the hassle.
True, there isnt much overhead in a business like this. Unfortunately, that brings down the rates by letting anyone with a heartbeat in to the business.
Question: most of the replies are from people that were self-employed or the people they know in this busines are self employed. All of which is not the same as owning a business.
Which do you want: A business or a job that you own.
For a business, it's very profitable. The profit margins are very high.
For a job that you own. You'll barely grow.
I know a guy, true story, that started a CLEANING BUSINESS back in 2002. He sold it for $400 million in 2012.
That's the difference between some one that starts a business and someone that does something "to keep food on the table". Both are not the same.
Source: Me. I've spent years managing big cleaning companies at the Senior management level.
Question: most of the replies are from people that were self-employed or the people they know in this busines are self employed. All of which is not the same as owning a business.
Which do you want: A business or a job that you own.
For a business, it's very profitable. The profit margins are very high.
For a job that you own. You'll barely grow.
I know a guy, true story, that started a CLEANING BUSINESS back in 2002. He sold it for $400 million in 2012.
That's the difference between some one that starts a business and someone that does something "to keep food on the table". Both are not the same.
Source: Me. I've spent years managing big cleaning companies at the Senior management level.
Rocco, Thanks for commenting. You are exactly the type of person I wanted to hear from. I am not interested in actually doing any of the cleaning myself, I would be hiring crews to do the work. From the numbers I have seen it definitely sounds like a volume business and I will need quite a few employees to make serious money. What I do like about this business is the steady, scheduled work.
Is it hard to get my foot in the door at these commercial accounts? Should I hire an outside salesperson?
Question: most of the replies are from people that were self-employed or the people they know in this busines are self employed. All of which is not the same as owning a business.
Which do you want: A business or a job that you own.
For a business, it's very profitable. The profit margins are very high.
For a job that you own. You'll barely grow.
I know a guy, true story, that started a CLEANING BUSINESS back in 2002. He sold it for $400 million in 2012.
That's the difference between some one that starts a business and someone that does something "to keep food on the table". Both are not the same.
Source: Me. I've spent years managing big cleaning companies at the Senior management level.
True that is like any business in any industry.
Some people run mom and pop pizza places making enough to keep food on the table or pay the bills..and other start Papa John's and are worth hundreds of millions.
Rocco, Thanks for commenting. You are exactly the type of person I wanted to hear from. I am not interested in actually doing any of the cleaning myself, I would be hiring crews to do the work. From the numbers I have seen it definitely sounds like a volume business and I will need quite a few employees to make serious money. What I do like about this business is the steady, scheduled work.
Is it hard to get my foot in the door at these commercial accounts? Should I hire an outside salesperson?
The business is great but volatile. What I mean is, as soon as your customer gets a itch, their going to scratch it. Meaning, customers can be very "dumb". They'll change a cleaning company contract out in the blink of an eye. You're in a commodity business. There is nothing unique about the service.....having said that........
You'll definitely want not only a sales person but a well defined organization. Management team on down. Be honest with yourself as it relates to what YOU want your role to be.
You're right, it's all about volume. So if you're thinking in those terms, the worst way to grow is by way of internal growth i.e- your sales team.
The biggest and most successful cleaning companies that I know of, all got there the same way--acquisitions. They started small and once the foundation was laid, they went on non-stop buying sprees. Instead of slugging it out in the marketplace trying to "steal" market share, they bought market share. Essentially, they bought all of their competitors as well as synergistic companies.
That's how you get big. Buy your growth. Companies like Coke, Google and Amazon get big by acquisitions, not selling products.
You will not get big by sending out sales teams to land new contracts. That will get you to a certain point than after that, you have to focus on buying other companies. That's how you get to a point to where you cash out after 10 years and go do something else.
IF IT WERE ME:
If I were to "start" a cleaning business today here is what I would do.
I would offer a PPM (Private Placement Memorandum) Essentially, you quietly soliciting private investors for capital. Lot's a of S.E.C. regulations to follow to do this. Consult your local securities lawyer.
After I secured about $2-$3 million in my fund. I'd used the funds to make down payments for purchases of cleaning companies. I'd structure my deals so the cash flow from the business will service the debt payments but no more than 50% of cash flow.
I would keep doing that over and over until I built up a big cleaning company than sell it to a Private Equity Group.
Buy it, grow it, sell it, Rinse and repeat.
That's not the traditional advice you're going to get from MOST business folks.
There are just to many ways to do it. I'll be doing something similar but NOT in the cleaning industry.
WOW, thats a pretty aggressive plan !! I like it, but, that may be over my head, I will do some research in to that way of doing it. Sometimes I dont think big enough.
I know what you mean about there is nothing unique about the service, its kind of like my current business that is seasonal, but this would be a more steady income year round.
I like service business'. I already have a business offering outdoor property maintenance. This would be a separate business from my current one but I will market to my current contacts.
What Im asking is can I make good money doing this? Is a 30-35% profit margin attainable? I know it is a competitive business,I just dont want to waste my time getting started with it to find out the margins are not worth chasing?
It depends. You'd have to get some contracts first. It can be profitable if you have enough contracts. You also have to do a good job to keep the clents happy, and keep on top of the contract re-signings so you can ensure future business. I'd make sure they sign for at least a year.
If you do the work yourself it is easy, but if you have to hire employees...I'm not so sure. The government has made it really risky to hire people as subcontractors. So you may have to employ them and pay at least minimum wage, FICA taxes and do a bunch of paperwork and stuff. In that case, I'm not sure how well it would pay off.
Then if you lose a contract or something, you'll now have all these employees to worry about...
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