Forming A Company
About This Section
This section of our How to Start a Cleaning Business Guide is for those start completely from scratch.
We’ve been as specific as possible, however the requirements for things like registering your business name, getting licensed / bonded, etc. depends on your state and country.
We’ve also kept the advice in this section generic enough that it should apply whether you plan to offer residential cleaning commercial cleaning, or both.
Here are some quick links to the various topics in this section:
- Developing a Business Plan
- Choosing the Right Business Structure
- Figuring Out Your Funding
- Registering Your Business Name
- Opening a Business Bank Account
- Getting Licensed, Bonded & Insured
- Developing Your Brand
- Buying a Website Domain Name
- Building Your Website
Developing a Business Plan
This can seem like a daunting task, especially if you aren’t sure what exactly you want your cleaning business to look like. The good news is that in some cases, a business plan can be as simple as answering some questions on the back of a napkin.
Unless you’re seeking funding and required by a potential lender to provide a detailed, traditional business plan, we recommend going more of the napkin route and creating a plan using a newer, more high-level approach called the Lean Canvas method.
This article by the Small Business Administration (SBA) explains the difference between the 2 types of business plans. We’re big fans of the Lean Canvas method, so here’s a template for creating a plan if you’d like to take that route.
If you feel you’re going to need a traditional business plan (in order to secure a loan, for instance,) here’s a link to sign up for SBA’s free business plan tool.
Choosing the Right Business Structure
The type of business structure your choose impacts many factors — from your business name, to your liability, to how you file your taxes. Here are the options you have to choose from:
- Sole proprietorship: This is a business formed and managed by a single owner. The business and the owner are one in the same. The owner enjoys all the profits but also incurs any and all losses. The owner pays personal income tax on the business’ profits. This type of business has unlimited liability on the owner, meaning the owner’s personal property can be taken to settle debts of the business.
- Partnership: A business owned by two or more people. Each partner contributes to business capital, operation, and management. Profits are shared based on the initial ratio of capital contribution or an agreed percentage. This type of business has unlimited liability, partners’ personal property can be used to settle business debts.
- Limited Liability Company (LLC): A business that operates as a separate legal entity. Owners are referred to as members and pay personal income tax on business profits. Owners have limited liability in an LLC, meaning personal property is not at risk to pay back business debts.
For more information on the pros and cons of each type, check out this helpful article.
Figuring Out Your Funding
The next step is to put together an estimate of both your startup costs and your ongoing expenses to determine whether or not you’ll need funding from other sources (beyond your own pocketbook.) This article outlines the different costs associated with starting a business to help get you started.
Credit: Small Business Administration
We also recommend this great Startup Cost Calculator developed by the SBA to help you calculate your startup costs.
If you determine that you’ll need outside funding to get your business off the ground you have a few options to choose from. This article explains the different options you have for funding your business.
Registering Your Business Name
If you’ve made it this far, you likely already have a name in mind for your cleaning business. Before you can register your business you’ll need to find out if that name is already trademarked or in use. If it’s available, you’ll need to protect the name by registering it. Here are the different ways to register your business name:
1. ENTITY NAME
An entity name prevents someone else from registering a business with the same name as yours in your state. Some states require you to register a legal entity name, whereas others don’t. Each state has its own rules around what your entity name can be. For instance, in some states your entity name must reflect the type of business you’re operating.
A trademark can protect the name of your business nationally. In the US, it prevent others from using the same name for their business, goods or services. It’s recommended that you check the business name you’d like to use against the official trademark database.
3. DOING BUSINESS AS (DBA) NAME
If you’d like to operate under a different name than your legal entity or trademarked name, you may need to register it as a DBA name, depending where your business is located. Registering a DBA name doesn’t protect your name legally, but most states will require you to register a DBA name if you wish to operate under a differentname than your legal entity / trademarked name.
If your state that requires your legal entity name to reflect the type of business you’re operating, a DBA name will give you the freedom to choose something different under which to operate. For example, a small business owner could use Hawthorne Building Services LLC for their entity name but use Magic Touch for their DBA.
Opening a Business Bank Account
Before you can open a business account at your bank you will need to get a federal tax ID number, also referred to as your Employer Identification Number (EIN).
It’s free to get your EIN. To apply visit the IRS website.
With your new EIN you can now open a business account with your local bank. Make sure to pay attention to account minimums, fees, and requirements. Shop around for the best account for your business needs and sales projections.
Getting Licensed, Bonded & Insured
LICENSING & BONDING
Depending on your state, your business may be required to have a cleaning business license, or just a regular business license. This may require that your business be bonded.
Surety bonds are a type of insurance that is an assurance policy for you clients. It is between three parties: your business, your clients, and your insurance company. This type of insurance agrees to pay your client for their losses if a claim is made, and then your company reimburses the insurance company for what it paid to your client. You can read more about surety bonds for the janitorial industry here.
To find out what kind of license a cleaning business needs in your state Google “cleaning business license [your state name] and do some research.
Insurance fills in the gaps to make sure both your personal and business assets are protected from unexpected losses. Every business with employees is required to carry workers’ compensation, unemployment, and disability insurance. Good insurance coverage can mean the difference of your business succeeding or failing so insure with a reputable company that understands and is knowledgeable about your industry and prioritize coverage over cost.
Always choose a deductible that you can afford if there is a claim. Typically janitorial businesses will, at a minimum, want to carry:
- General Liability Insurance
- Property/ Business Owner’s Policy
- Workers’ Compensation Insurance
Developing Your Brand
WHAT EXACTLY IS A BRAND, ANYWAY?
There’s often some confusion around what brand is, likely because the definition has changed so much throughout history. In today’s society most marketing, public relations, and business experts would agree that a “brand” is more than just a product name or logo — it encompasses everything from your tone of voice in the marketplace, to the way the public feels when they think of your company.
Some of the elements that make up your brand are your company’s:
- Tone of voice
- Marketing channels
- Public relations efforts
WHERE TO START
We recommend starting with the mission and values you want to use as a foundation for your business. For instance, our mission at Swept is to “build an extraordinary company that helps janitorial businesses succeed by creating great jobs for their cleaners.”
Our values at Swept are:
People at the Core — We believe that people are the core of every successful business. We trust and believe in our people as the foundation of our success with our clients and shareholders.
Seriously Fun — We are serious about our job and light hearted about our day. We are obsessively kind to, and respectful of one another, and appreciate each other’s quirks.
Aim High and Be Bold — We learn from others, then we write our own rules to be a pioneer in our own Industry and create a model workplace. We take risks, challenge complacency, mediocrity and challenge decisions that don’t make sense.
Your mission and values will help you set the tone for the type of business you want to build, keep you focused on your goals, and make it easier to develop other elements of your brand.
PERSONALITY + TONE = VOICE
Next you’ll want to give some thought to your brand’s voice in the marketplace. Chances are there will be many other cleaning companies offering the same services in your city or town, so it’s important to get clear on how you want to sound compared to them.
Start by brainstorming lots of different personality traits that would complement and support your mission and values, then try to narrow it down to your top three.
Some examples of personality traits are: passionate, energetic, confident, generous, calming, spontaneous, tough, playful, etc. This article gives examples of well-known brands and their key personality traits.
Once you have your top 3 personality traits defined, determine how they influence the tone of your company’s voice.
Hint: If you’re beginning to feel lost, think of your company as if it were a person. Is someone whose personality traits are playful, energetic, and spontaneous more likely to sound poised and professional, or casual and down to earth when they speak?
Picking a few words that describe the tone of your company’s voice will help you write marketing messaging for your website as well as any future promotional materials you create — from Facebook ads to proposals.
FINALLY, THE VISUAL ELEMENTS
Though visual elements are what most people think of first when they hear the word “brand,” we suggest working on these last because your mission, values, and voice should shape and influence the design of your visual brand.
The basic visual elements of your brand should include a color palette, brand standard fonts, and a logo. We recommend working with a professional graphic designer to select these elements and help you develop a brand standards guide to ensure consistency across all your communication channels as your company grows.
To find an inexpensive designer we recommend using Fivver, a freelance marketplace where you can purchase a logo or other brand elements for as little as $5.
Buying a Website Domain Name
You’d probably agree that as a business owner in 2018, your company needs a website in order to be taken seriously in our digital world. If you disagree, we recommend checking out this article about how millennials are changing the janitorial industry.
The first step to building a website is registering a domain name (also known as your website address, or URL.) For example, our domain name at Swept is “sweptworks.com.”
Some domains cost as little as $0.99/year whereas others are $15, $20 or more. There are many websites from which you can purchase a domain name, such as GoDaddy, HostGator and NameCheap. You can find a list of recommended domain providers here.
You can also purchase your domain through your website provider (ie. WordPress, Squarespace, Wix, etc.) which we talk more about in the section below on websites.
If someone else has already registered the domain you wanted to use, that’s okay. Your domain name doesn’t actually need to be the same as your legal business name, trademark, or DBA. For example, Hawthorne Building Services LLC could register the domain name www.magictouchcleaning.com.
You’ll need to renew your domain registration on a regular basis, so be sure to verify how long you are purchasing it for (ie., one year, two years, etc.) Once you register your domain name, no one else can use it for as long as you continue to own it. It’s a good way to protect your brand presence online.
Building Your Website
A common question asked by new business owners is “Do I reeeeally need a website? Right now?”
The short answer is YES!
In 2018 most entrepreneurs would agree that having a website gives your business legitimacy, and without it customers may not take you seriously. We understand that building a website can seem overwhelming, but rest assured there are many affordable resources available to help you in this area!
If you’re not prepared to hire a professional designer or design agency, you have a couple options for ready-made or customizable website template.
READY MADE WEBSITES
For those who want to do the minimum amount of work personalizing their website (ie., you want something that’s practically ready to go,) we recommend checking out Theme Street — their single-page website templates (like this one,) start at $10/year and give you the ability to customize the text and images on your website within a set web page design.
For the additional feature of online booking consider purchasing a Theme Street template through Launch 27 (an online booking tool) to get both a single page website that also allows customers to book your services online. A cleaning company theme like this one from Launch 27 costs $450 US, while their basic booking subscription is $59/month.
CUSTOMIZABLE WEBSITE TEMPLATES
If you’d like to try building your own with the help of a theme or template (meaning you’ll have more flexibility in terms of number of pages, elements on each page, etc.) some popular options are Squarespace, Wix, and Weebly. A basic website theme on Squarespace, for example, will cost you $16/month.
Do your research on each of these platforms before committing to a theme or template, as each has its limitations and requires a different level of tech skills.
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