Why some people fail in a cleaning business during their first 5 years in business. Owning a cleaning or any business for that matter, is risky. One must take great amount of planning and preparation and must be implemented from the start of your new career. Sadly, many entrepreneurs do not properly prepare themselves and their new business to succeed. Studies shows from the Small Business Association (SBA), fifty percent of new businesses fail during their first five years.
When Starting a new cleaning business and making it successful is not an easy task to do. But understanding the reasons why half of new businesses close and how to avoid those reasons, may just keep your business from becoming one of a failure, statistics.
8 Reasons why Cleaning companies fail during their first 5 years:
1. By Not Having a Business Plan
It is true about the legend Benjamin Franklin’s quote: “If you fail to plan, you plan to fail!” Having a plan is how you win in this game. Having a thought, out plan will force you to take a serious look at all areas of your business and plan for what lies ahead, a guide that helps you to identify with your business and the specific services you will be offering, as well as legal parameters and financial aspects.
Here are some important things you must address in your plan:
Where: Location of your business? (home-based, lease an office, and timeline on any transition plan).
Who: Find out who are your customers and how will you find them?
Who: Find out who are your competition and how will you deal with them?
How: Plan on how many employees you are planning on having and how will you handle hiring and training procedures?
Will you have a management team and advisory team and an exit plan?
Need: A financial plan to forecast 1 year, 3 years, and 5 years of sales, expenses, cash flow, etc.
Your business plan is a living document that should be reviewed and updated on a yearly basis.
2. By lacking or Not Having a Marketing Plan
Here are some things to consider when developing your marketing system are:
Who: Find out who is your target market (office buildings, medical, schools, retail, industrial)?
What: What services you will offer to provide (general cleaning, window washing, carpet cleaning, hard floor care, construction clean-up and Move in/out cleaning)?
What is your market geographic area and Advertising budget?
How long do you plan on this timeline?
3. By having poor Capital
With Any business you have, to have some- kind of budget. I know a lot of Cleaning company that are just starting are on a shoe-string budget, but if you are serious about growing your business, you'll need to have money available to cover the day-to-day operational expenses. Your business should be able to qualify and secure a loan and emergency budget just in case.
Start by researching start-up costs for a cleaning business. Here are some things that need to be considered are utilities, cleaning supplies, equipment, vehicle expenses, insurance, office supplies, accounting/bookkeeping-costs and advertising costs.
You will be surprised how much additional business costs incur and add up, here are some of them to consider. Staff, Recruiting, administration, background/drug testing, orientation, and training, not to mention wages, all add up very rapidly.
Make sure to estimate YOUR startup costs. I know there are more expenses to consider so make sure you do your homework.
4. When your company grows way too fast
This is very-important: A lot of cleaning companies are so excited to take on any jobs that comes along just to have money rolling in, but this is how we start failing on our business. If you are having a lot of success adding new business, yes, it’s true it’s exciting, to say the least, watching your business income grow rapidly but please proceed with care, however, as exciting as it may be, oftentimes customers become neglected, and before you know it, you’ve lost tons of customers due to distraction and the loss of quality service you once provided. This is when quality takes on better effect than quantity.
It is much easier to keep long term customers than it is to find new customers, so be sure to take care of your regular existing ones. There are a lot of ways to up-sell additional services such as air fogger disinfectant or window cleaning etc. Control your growth; a slow and steady pace wins out every time. This is for sure a WIN every time. At the same time, you build a solid reputation for offering quality service that will result in a large referral business in the years ahead.
5. Not Studying your Competition
As I have mentioned earlier, it is important for you to know and find out where your competitions are hanging out. Unfortunately, many new Cleaning business owners start their business without giving a second thought to what they may be up against and this is one of the reasons we plan to fail.
Here are Some of the things you should be aware when it comes to your competition:
Who, What and how long have they been in business, how big is their presence, how many employees do they have?
Are they independent or a franchise company?
What and How big is their target market and are they in direct competition with you?
What do you think or feel their strengths and weaknesses are?
What do they charge for cleaning services? Study this by calling them direct and asking how much they charge.
What types of services do they offer and how do they go about marketing them?
Having knowledge of the competition can absolutely give your cleaning the business advantage. Also, many new businesses neglect creating strategic plan with companies that are not in direct competition. But provide similar services to the same target market. Examples would be Carpet cleaning service providers, painters, restoration companies, handyman services and so on. By Creating communities and a pool of referral companies can give your company the competitive advantage.
6. Inadequate Hiring Practices
Yes, it is all too common in the cleaning industry to hire someone just like that or warm bodies just to fill in the gaps. The new employee is thrown into the lion cage not knowing or without the proper training and left to fend for themselves. It is no wonder employee turnover rates are so high in the residential and commercial cleaning industry!
By hiring someone just like that to fill an opening is never a good idea. You must 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 criminal background check, police clearance should also be in place when hiring someone, remember these employees will be coming to someone’s homes on a day-to-day basis so it is very- important to do your due diligence as you do not want any surprises upon hiring these people. Also, find out why they left previous jobs and how they interacted with co-workers and supervisors. If possible, have another person do a second interview if the applicant appears to be a good fit for the position.
Once you understand that that person is fit to do the job, you must conduct a detailed orientation process, discussing about the company policies and procedures. The employee must be fully trained and must not be left alone for the first 2 weeks of employment.
7. Insufficiency of Employee Training
Employers should always Train and have Training Programs in place for their supervisors and front-line employees. Having Sufficient Training helps your staff to develop and maximize the necessary skills, knowledge, and capabilities to be successful at their job. Steady and continuous training is significantly important and boosts performance, production and lastingness.
By having standardized training programs. Standardized training creates solidity and quality within your organization by eliminating errors, mistakes, and other things that may occur that could have been avoided.
All Supervisors need to be thoroughly trained in in your organization. Supervisors role play a big part in growing your cleaning company. They are the blood of what runs the organization so it’s important that they are fully knowledgeable and well trained in their field with the hiring process policies and procedures.
By Following-up and reviewing is equally important for all your staff. You must go back after a month to possibly up to 90 days and review the training procedures with your staff. By reminders and repeating the same process will help them to retain what they have been trained to do.
8. Having to Lack the Industry Knowledge
So many new cleaning business owners got their start because they had previous experience in the cleaning industry or was simply a cleaner at their previous employers or they were a Supervisor of some sort. So, they assume that what they have seen in their employers cleaning company is simple, then go ahead and decide to open their own cleaning business; where they could make the decisions, be their own boss. Sounds easy enough, right? so they think? Although previous experience is good knowledge and a good, bonus but it is not a fast track to success.
It is important for new business owners to dig deeper as much as possible in the industry that you’re getting yourself into, you need to learn and stay one step of the game and ahead of all your competition by knowing the industry trends and having informed control of the 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 to stay one step ahead.
By Using the internet, Youtube and search engines to collect as much information as you can (do your homework!)
You must Join trade associations and membership groups (there are many online)
By having an internet presence, get to know other people in the industry (suppliers and vendors are a great source of information), use FB, Instagram, Linkedin and Youtube or other social media platforms to get your name and brand out there.
Hire and Vet your staff with experience in the industry.
Be sure to learn successful business practices and use up to date technology, such as industry software and accounting software.
There are about a million different ways to learn about running a successful business. Those that go out there and put this into action and follow their dreams always win! Having and using what you learn effectively can undoubtably be a big step towards owning a successful cleaning company that stays around for a very- long time.
So, plan-ahead, before the pitfalls happens and addressing the challenges of running a successful Cleaning business upfront, your cleaning business can not only thrive those unstable scary first five years but thrive for many years to come. Success is just around the corner!