8 Road Blocks to Success in Your Home Cleaning Business
Starting a home cleaning business, or any business for that matter, is risky. There is an enormous amount of planning and preparation that has to happen before you can hang out your shingle. Unfortunately, many entrepreneurs don't properly prepare themselves and their new business to succeed. According to the Small Business Association (SBA), fifty percent of new businesses fail during the first five years.
Starting a new home cleaning business and making it successful is not an easy thing to do, but understanding the reasons why half of new businesses close and avoiding those reasons, may just keep your business from becoming a failure statistic.
The following are 8 reasons why home cleaning businesses fail to succeed:
- Not Having a Business Plan
To quote Benjamin Franklin; “If you fail to plan, you are planning to fail.” Just thinking it through is not enough; you need to take the time to write down your business plan. This forces you to take a serious look at all areas of your business and plan for what lies ahead. It is a guide that helps you to identify with your business and the specific services you will be offering, as well as legal and financial aspects.
Some of the things you should be addressing in your plan are:
- Where will you locate your business? Home based? Lease? Include a timeline for the transition plan.
- Who are your customers and how will you find them?
- Who is your competition and how will you deal with them?
- Even if you don't plan on hiring employees right away, you must plan for recruiting, hiring and training. You must also sign up for federal and state accounts to pay employment taxes, and other employer requirements.
- Will you have a management team and advisory team?
- Will you have an exit plan?
- You will need a financial plan to forecast at least the first two years of sales, expenses, cash flow, etc.
Your business plan is a living document that should be reviewed and updated on a yearly basis.
- Not Having a Marketing Plan
Your marketing plan will actually be developed in your business plan; however a separate, more detailed marketing plan should include a timeline on all marketing activities.
Some things to consider when developing your marketing system are:
- Who is your target market (single family homes, town-homes, condos, apartment complexes, retirement communities)?
- What services will you provide (general cleaning, window washing, carpet cleaning, hard floor care)?
- What is your market area?
- What is your marketing budget?
- What methods of marketing will you implement?
- What is the timeline for each activity?
- Under Capitalized
Most home cleaning companies start on a shoe-string budget, but if you're serious about growing your business, you'll need to have money available to cover the day-to-day operational expenses. Your business should also have the ability to secure bank loans for unexpected negative financial situations or emergencies.
Begin by researching start-up costs for a cleaning business. Some things that need to be considered are utilities, cleaning supplies, equipment, vehicle expenses, insurance, office supplies, accounting/bookkeeping costs, marketing costs, legal advice and so on.
Hiring employees will also incur additional business costs that need to be considered. Recruiting, administration, background/drug testing, orientation, and training, not to mention wages, all add up quickly.
This list is not all inclusive - there are many more expenses that must be contemplated. Remember, no two businesses are the same, make sure to estimate YOUR startup costs.
- Growing Too Fast
Most cleaning companies are ready to take on any job that comes along just to have money coming in. If you're having a lot of success adding new customers, it is exciting watching your business income grow rapidly. Proceed with caution, however. As exciting as it may be, oftentimes customers become neglected, and before you know it, you're losing them due to inattention and the loss of quality service you had once been providing.
It's much easier to keep existing customers than it is to find new customers, so be sure to take care of your existing ones. Think of ways to up-sell additional services such as yearly spring cleaning, appliance cleaning, holiday cleaning, laundry services, window washing and carpet cleaning. Control your growth; a slow and steady pace wins out every time. You're much more likely to become successful this way. At the same time you'll build a solid reputation for offering quality service that will result in a large referral business.
- Not Knowing the Competition
As stated earlier, it is important for you to know your competition. Unfortunately, many new business owners start their business without giving a second thought to what they may be up against.
Some of the things you should be aware when it comes to competition are:
- Who are they, how long have they been in business, how big is their presence, how many employees do they have?
- Are they independent or a franchise?
- What is their target market and are they in direct competition with you?
- What are their strengths and weaknesses?
- What do they charge for cleaning services?
- What services do they offer and how do they market them?
Knowledge of the competition can definitely give your cleaning business an edge. Also, many new businesses overlook creating strategic alliances with companies that are not in direct competition, but provide similar services to the same target market. Examples would be landscaping service providers, fire and water restoration companies, HVAC service providers, and so on. Creating alliances and a pool of referral companies can give your company the competitive advantage.
- Inadequate Hiring Practices
In the cleaning industry it's all too common for small business owners to quickly hire "warm bodies" just to fill an opening. The new employee is thrown into the job without the proper training and left to fend for themselves. No wonder employee turnover rates are so high within the cleaning industry!
It's never a good practice to hire someone just to fill an opening. Implement a structured interviewing process, and ask targeted questions designed to get the employee talking about how they would handle different situations. Find out about the employee's work history; find out why they left previous jobs and how they interacted with co-workers and team leaders. If possible, have another person conduct a second interview if the applicant appears to be a good fit for the position. Check references and conduct an employee background check.
Once the decision has been made to hire a new employee, conduct a detailed orientation process, discussing the company policies and procedures. From there the employee should be fully trained on their job responsibilities. It's a good idea to have an initial training period where the new hire can shadow trained employees as well as team leaders until they are comfortable with their new position and job duties.
- Lack of Employee Training
The best thing an employer can do in any industry is to invest in training and training programs for their team leaders and front line employees. Training helps your staff to develop the necessary skills, knowledge, and capabilities to be successful at their job. Consistent and continuous training is extremely important and boosts productivity, performance and longevity.
Invest in standardized training programs. Standardized training creates consistency and quality within your organization by eliminating mistakes, oversights, and excess waste.
Team Leaders need to be thoroughly trained in all programs as well as their role as a leader and how to manage employees. If your team leaders are not well versed in hiring, training, and evaluating your employees, your business is in trouble from the start.
Follow-up and review is equally important for all your staff. Go back after 30, 60, and 90 days and review the training procedures with the staff. Repetition will help them to retain what they've been trained to do.
- Lack of Industry Knowledge
Many new home cleaning business owners got their start because they had previous experience. Perhaps in a supervisory role or worked as a cleaning technician at some level. Then decided to open their own cleaning business; where they could make the decisions, and be the boss. Sounds easy enough, right? Although previous industry knowledge is a good bonus, it definitely isn't a fast track to success.
Many entrepreneurs feel they can run a successful business because of their previous experience but that cannot be further from the truth. As a new cleaning business owner, it's time to dig deeper into the industry and learn as much as possible. You need to stay one step ahead of the competition, stay on top of industry trends, and have informed control over all of your businesses operating procedures.
Some of the things you can do to become more knowledgeable about the industry is to:
- Subscribe to trade magazines and read them religiously.
- Use the internet and search engines to collect as much information as you can (be sure to check credibility first, there is a lot of bad information out there).
- Join trade associations and membership groups such as MyHouseCleaningBiz.com
- Have an internet presence; get to know other people in the industry (suppliers and vendors are a great source of information), use social media platforms to get your name and brand out there.
- Hire staff with experience in the industry.
- Learn successful business practices and use up to date technology, such as industry software and accounting software.
There is a lot to learn about running a successful business. Having and using what you learn effectively can definitely be a big step towards owning a successful cleaning company that stays around for a long time.
You started your home cleaning business with dreams of success, not failure. By avoiding the pitfalls that many new entrepreneurs fall into, planning ahead, and addressing the challenges of running a successful business upfront, your cleaning business can not only survive those turbulent first five years, but thrive for many years to come.
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