Cleaning Industry Profile

Demographics

Non-residential, or commercial, cleaning services account for the majority of work performed in the cleaning industry, according to the Freedonia Group. Industry analysts describe this segment as being less susceptible to the effects of economic changes because cleanliness is necessary to maintain a safe and healthy workplace.

For commercial clients that require cleaning services, it often is more efficient to outsource cleaning services rather than pay the cost of hiring, training, salary, and benefits for a full-time cleaning staff.

The majority of non-residential clients include a combination of commercial and retail businesses, according to an industry report by Scott-Macon, an investment services company. Industry analysts identify educational and healthcare facilities as representing some of the biggest growth areas in the cleaning industry. Increases in the educational market were attributed to the trend among municipal school districts and public universities to pursue cost savings by outsourcing specialized services, including cleaning and janitorial contracts.

According to data from the Small Business Development Center Network (SBDCNet), the prime target market for residential maid service includes individuals age 45 and over with higher than average annual household incomes, generally about $100,000 and up. The oldest individuals, along with those having higher incomes, college educations and two-income marriages spend more than average on cleaning services.

Baby boomers also represent a significant target market for cleaning services. With 35 percent of baby boomers having a household income of $100,000 or more, this demographic of 75 million people control about 70 percent of all U.S. disposable income, according to a report by U.S. News & World Report. The fact that this group has the income to spend on cleaning services at the same time that their increasing age may put limitations on their physical abilities, positions baby boomers as a prime market for cleaning industry businesses.

Growth Potential

In an analysis of the U.S. contract cleaning industry, The Freedonia Group projected annual increases of 3.2 percent, resulting in a value of $65 billion by 2019. Industry growth, contingent on projected economic and social changes, was expected in several segments. Analysts at Scott-Macon predicted an increase in the demand for non-residential services due to:

• a 1.7 percent annual increase in the number of U.S. businesses in operation, resulting in 8.3 million companies in operation by 2019
• continuing expansion of the amount of occupied office space
• increasing construction and growth in the educational, health and medical industries

Industry analysts predicted growth in residential services would result from:

• an increase in the percentage of households with annual incomes exceeding $100,000, with numbers rising from 23.1 percent of the U.S. population in 2014 to 24.9% by 2019
• a growing number of busy two-income households, a demographic traditionally more willing to pay for home cleaning services
• accelerating growth in disposable personal incomes due to economic trends

Common Business Models for Cleaning Industry Businesses

Success in the cleaning industry hinges on being able to do the job right the first time. As a result, many cleaning industry businesses cater to specific business segments or services in which they master the techniques and systems necessary to complete projects efficiently and effectively. cleaning industry businesses succeed by tailoring their unique products and services to accommodate consumers' needs for accessibility, convenience and personalized experiences.

According to First Research, the cleaning industry is fragmented, with the 50 largest companies generating just 30 percent of revenue and no business owning an overwhelming majority of the market. This situation leaves plenty of room for new and expanding franchises to make gains in the market. Some of the most common business models in the cleaning industry include:

• Commercial Cleaning: This is the most common service offered in the cleaning industry. Franchises such as Coverall and OMEX International Cleaning offer the types of services that offices, schools, and healthcare clients require for them to maintain a safe and healthy environment for their employees, clients and others they serve.
• Carpet and Upholstery Cleaning: About 10 percent of total cleaning revenue is earned in the carpet and upholstery services segment. Franchises such as Chem-Dry and Oxi Fresh specialize in the techniques needed to ensure that commercial and residential carpets and upholstery are safely cleaned without damage to these investments.
• Clothing Dry Cleaning and Laundering: The dry cleaning and laundry facilities industry combined is valued at $11 billion annually by First Research. Franchises such as Martinizing Dry Cleaning and Maytag Commercial Laundries offer a range of specialized fabric cleaning and restoration services.
• Damage Restoration: Franchises such Delta Disaster Services and PuroClean provide fire and water damage restoration, mold and mildew removal and biohazard cleanup in a relatively recession-proof model since disasters aren't deterred by economic slowdowns.
• Green Cleaning: Franchises such as Filta Environmental Kitchen Solutions and Enovana Green Cleaning offer environmentally friendly services to meet the demands of consumers and businesses that insist on green alternatives to achieve the same results as traditional processes.
• Pool and Outdoor Cleaning: Franchises such as ASP – America's Swimming Pool Company and Sparkle Wash Professional Pressure Washing serve the outdoor cleaning needs of both residential and commercial clients in a segment that industry analysts have identified as having growth potential.
• Residential Cleaning: Franchises such as MaidPro and Home Cleaning Centers of America target the residential market with strategies that emphasize dependability and convenience for homeowners.
• Specialized Services: The number of specialized cleaning applications is limitless. Franchises such as Hood Guyz (commercial hood exhaust cleaning), Bar-B-Clean (barbeque cleaning), Squeegee Squad (window cleaning), and The Solar Scrubbers (solar panel cleaning), concentrate on cleaning products in narrow niches. In doing so, these franchises establish themselves as the local go-to "experts" in their individual markets, often with little direct competition to their proprietary systems.

Financial Matters

Many cleaning industry businesses require relatively low capital investments to get started in the industry. Though options exist at all investment levels, you can purchase a cleaning industry franchise with a cash requirement under $20,000. Initial costs typically include a franchise entry fee, supplemented by ongoing costs for items such as royalties and advertising. Factors such as proprietary products, cleaning equipment, mobile cleaning units and company vans vary by the franchise in the amounts they will add to your total costs.

However, given the nature of cleaning industry businesses, you may realize cost savings due to the following industry characteristics:

• Many cleaning industry franchises can be operated as home-based businesses, saving the costs of maintaining a physical location.
• You may be eligible for tax deductions of a home office if it is used exclusively for your business, subject to IRS conditions at the time of your tax filing.
• There are no specific licenses or regulations required for cleaning industry franchises, other than standard business licenses and occupational health and safety regulations that apply to any industry.
• Employees typically require a low level of initial training and ongoing education, with most skills learned on the job.
• Group discounts negotiated by your franchisor can reduce the costs of franchise products and equipment.

Even with lower financial requirements, you may require financing to secure a cleaning industry franchise. The good news is that you may find financing easier to accomplish with the backing of a franchise since your money is supported by a proven business plan. This association may mean that you present less risk to wary lenders. In some cases, franchisors may assist in financing your loan, helping to negotiate a loan, or even arranging equipment leasing to save the initial costs of equipment purchases at start up.

You can find a cleaning franchise that may work for you by searching Franchise Opportunities' Cleaning Franchises category.

Benefits

The most significant benefit of owning a cleaning industry business is the reduced risk of failure. By purchasing a cleaning industry franchise, you'll be investing in a proven business plan based on profitable products and services. A franchise association is a demonstrated benefit for cleaning industry businesses. In a report on U.S. janitorial services, IBISWorld identified being part of a franchise as one of 250 key success factors for businesses in this industry.

Being associated with a successful franchise brand also means that your new business will have a solid reputation from the start. As a franchisee, you're offering customers a consistent service with the backing of the established franchise organization. When customers seek out your franchise, you'll be protected from franchise competition by having a geographically defined territory. Even if potential customers aren't familiar with your franchise, your position as a franchisee conveys credibility versus an unknown independent contractor.

As part of a franchise partnership, your franchisor will provide the support you need to remain competitive and profitable. Your corporate franchise team has the experience and expertise to help you make decisions and execute the franchise business plan. You'll have the benefit of advisors and experts who can help you:

• Determine the best target market for your franchise
• Fulfill appropriate insurance requirements
• Hire, train and retain employees
• Establish and implement franchise standards and practices
• Identify the most effective marketing techniques
• Navigate franchise-specific challenges

Given this level of support, the opportunity to own a cleaning industry franchise has significant benefits for franchisees with little business experience in areas such as marketing, payroll, billing or social media. An inexperienced independent contractor can lose valuable opportunities while trying to maintain a growing business alone or coordinate assistance from outside professionals. Instead, franchisees receive this expertise as part of their franchise agreement.

Important Considerations

As the owner of a cleaning industry business, you'll be entering an industry with a wide range of business models. It will be up to you to ensure that you remain competitive with other franchise brands, veteran independents and local start-ups in the industry. While you'll stand out with your association to your franchise name and reputation, it will be important for you to regularly assess the competition and how you can maintain an edge within the standards of your franchise.

Even with the backing of a franchise, you won't be immune to some common challenges of managing a business in the cleaning industry. Employee retention is one of the most significant concerns for owners of cleaning industry businesses. Employee turnover rates of over 200 percent are not uncommon, according to Cleaning & Maintenance Management magazine. The fact that many cleaning positions are part-time or second jobs for workers means that workers may feel less committed and, therefore, more likely to leave with little notice. However, industry experts say that employee turnover can be reduced with systems that increase job gratification.

Cleaning industry businesses also are subject to circumstances unique to the way business is conducted in this industry. As a franchisee, you and your employees typically will work in a customer's business or residence. This situation positions your business, as well as your customer, for a range of potential liabilities. To maintain customer satisfaction, you will have to prioritize safety in all tasks and systems so that efficiency and effectiveness aren't compromised. In addition, you likely will need:

• liability insurance to cover damage to a customer's location or possessions
• worker's compensation insurance to protect your business from claims due to accidents on the job site
• employee bonding to protect your company from claims of employee theft

While you'll have the marketing support of your franchisor, it will be up to you to ensure that your franchise remains relevant in your territory. The sudden loss of one or two key contracts can be traumatic for cleaning industry businesses that become lax on marketing, then find themselves scrambling to produce a plan to replace lost customers. To maintain a steady flow of new cleaning contracts, you should be prepared to:

• Ensure your franchise maintains a positive image in the cleaning industry
• Guarantee customers receive consistent quality and value to maintain their business
• Encourage referrals and positive online reviews since a Harris Poll Survey found that 86 percent of Americans with a household income over $100,000 said they seek recommendations when considering a purchase

Characteristics for Success: Who Should Consider a Cleaning Industry Franchise?

Franchises in the cleaning industry include many options for pursuing business ownership. You'll have the best potential for succeeding if you're prepared for the unique demands and challenges that cleaning industry franchise owners encounter most. You'll also be better positioned to reach your professional and personal goals with a cleaning industry business if you possess the following strengths and skills:

• You understand the business of cleaning. You'll need a basic understanding of how employees, products, and industry systems combine to create a profitable cleaning business to recognize if your franchise is operating at full potential.
• You have the knowledge or are willing to learn about the cleaning process. You'll need to learn your franchise's techniques for combining the right products with the most efficient techniques to get the best results.
• You're willing to get your hands dirty. Whether you're planning to participate as a regular cleaner or oversee your employees, you'll likely need to step in and contribute when extra help is needed to get the job done.
• You don't mind working nights and weekends. In the lucrative commercial segment, it's common for cleaning contractors to perform their services after traditional business hours, when there is less disruption to employees or the client's core business.
• You can establish a work environment that emphasizes "safety first." You'll need to prioritize safety since wet floors, ladders, chemicals and heavy equipment each have the potential to cause injuries to employees or customers, as well as damage to the work environment.
• You can identify and retain honest, reliable employees. In addition to finding hardworking employees, you must work to help them feel valued and connected to the success of the franchise to avoid costly and time-consuming employee turnover.
• You understand the value of keeping your customers satisfied. By keeping an eye on customer satisfaction, you'll increase repeat business and referrals in an industry in which word-of-mouth is an important part of franchise success.

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Industry Snapshot*:

Minimum Cash Required: $ 10,000
Average Cash Required: $ 60,630

*Based on currently active listings at FranchiseOpportunities.com