The Profit Question
We frequently get asked “how much money can a cleaning business can make its owners?” Being a commercial cleaning franchise, we believe in owing a cleaning business! Of course, as with most things, how much your commercial cleaning company can make depends on multiple factors. There are four main considerations when estimating profitability of a cleaning business: Owner Involvement, Cleaning Efficiency, Overhead, Customer Acquisition.
Let’s dive in!
If you’re working full-time in your janitorial business as the manager, you obviously won’t need to hire a key manager. At first, this sounds like a great way to make more money from your cleaning business, however, now you don’t own an asset that works for you even when you’re not around. If your staff retention isn’t healthy, you can quickly end up grinding 80-hour weeks and falling behind on growth for months and even years. That being said, our commercial cleaning franchise is designed to make affordable managers highly effective. There’s no need to overpay a manager if your systems are smooth and ironed out.
The ideal role of the owner is to not manage the day-to-day of their cleaning business, but instead to focus on building systems that attract new customers and improve the efficiency throughout their operation. When starting out, you will have to put on many of the management and customer acquisition hats to get off the ground. Your goal should be to remove yourself from the operational management as soon as possible and focus on winning janitorial customers while greasing the wheels. Matt, our Founder, developed systems that allowed him to keep growing our original operation with less than 10 hours per week of effort. These methods and systems are what franchisees receive with their protected Reliable Facility Group Commercial Cleaning Franchise in our system. You can learn more about that here.
The largest single cost in a cleaning business is labor. The longer it takes your team to clean a space, the higher the cleaning will cost you. The other side of the coin is if your team cleans too fast, it’s a signal that your customer may experience sub desired results. You can invest in training, equipment, and new methods to improve speed while improving results. This is something we’ve already done for our commercial cleaning franchisees.
When starting your cleaning business, it’s important to note that your total payroll size will also affect how much you pay in extra payroll related costs such as FICA taxes, Federal and State Unemployment Insurance, Worker’s Compensation Insurance, and General Liability Insurance.
Here in Asheville, North Carolina the total extra costs of payroll are 14.116% of the payroll amount. So, if we pay a team member $100, it costs us $114.116 in the end.
The next cost related to cleaning efficiency is supplies. The average amount most cleaning companies spend on cleaning regular daily customers hovers between 2-2.5%. We stay away from one-time project work. Costs in these circumstances can be substantially higher.
All together, these costs makeup Cost of Goods Sold. The average commercial cleaning company spends 55-70% on these costs.
We will gladly share our Year 1 Financials with you, and you’ll see our Cost of Goods Sold was 44.71%. We didn’t start out with staff, so this number is slightly skewed lower. However, we hired fast and by the end of the year we had over 30 team members employed.
Overhead is everything it takes to run your janitorial business, but it doesn’t increase proportionately with revenue. This is costs like office rent, office assistant salary, management pay, etc. Just because you take your business from $300,000 to $600,000, doesn’t mean your rent will increase. Yes, management may increase slightly, but not at the same speed as your Cost of Goods Sold as long as your systems are strong.
The average commercial cleaning business budgets around 20-30% for overhead.
Your overhead cost depends on how efficient your office and management systems are, staff retention, and the consistency of positive cleaning results. If you have to pay for an expensive manager to keep inspecting behind cleaners, and you have high turnover, and the office work is overwhelming, you’re going to lose more to overhead than an efficient operation.
If you decide to leverage our janitorial franchise company model, you get everything needed to efficiently run your business, plus we never stop improving it for you!
The final main expense that affects how much you make is Customer Acquisition. This is the all-inclusive label for anything you do to win new customers. Most commercial cleaning services invest under 5% (honestly most are below 1%) of their revenue into winning their market. High growth janitorial companies reinvest around 10% of their revenue into highly effective marketing. Of course, you can choose marketing methods that don’t work well, and not get the same results as other methods. We’ve developed a highly effective marketing approach that attracts ideal customers to us that is highly scalable.
The other way to grow your cleaning business is by investing time instead of dollars. Most commercial cleaning franchise owners are told to knock on doors and do cold calls/telemarketing. These tactics do work; however, they require significant sales skills and grinding through rejection after rejection to eventually having a win. Our favored approach is to invest in marketing that attracts your ideal customers for you, instead of chasing them down.
Customer Acquisition can become your own private investment plan that yields results far greater than the stock market and passive real estate. Of course, you can choose marketing methods that don’t work well, and get a wide range of positive and negative returns. We give franchisees our most effective and proven marketing methods, so they don’t have to learn the hard way. Our original location went from $0 to $557,600 Annual Recurring Revenue within 12 months (verified by Item 19 in our FDD) without sales tactics or cold calling. The Reliable Community would kick us out if we shared how we did that on here! Launch your own Reliable Facility Group and we will gladly give you everything we know.
How much profit you make with your commercial cleaning business is heavily dependant on these factors. If you want to bypass the headaches, mistakes, and losses we experienced along the way, then check out our commercial cleaning franchise opportunity. It’s your opportunity to build a real cleaning company, and not get stuck in the day-to-day as an owner-operator. The Reliable Facility Group Franchise is exclusive for every territory, so space is limited. Get started by requesting more information on our franchise and we will be glad to give you the details!