There are countless different ways to start, grow and run a successful carpet cleaning businesses. If you’re going to be successful, it’s important to understand the most common expenses for newbies that transcend across all the different business models. In most carpet cleaning businesses your everyday expenses will include the 10 following items:
One of the most common ways of “jump-starting” your carpet cleaning business is by borrowing money to leverage the start-up costs associated with getting things off the ground. While some people are afraid of incurring any debt, most folks recognize the power of leverage and putting someone else’s money to work for your business. Debt can be a useful tool that provides a sufficient initial investment that will allow you to afford equipment and other elements that will help make your business more successful.
If necessary, don’t be afraid to use debt as a tool to start your business, but understand the costs and be careful to not take on more than you can handle.
2: Fuel & Vehicle Costs
Whether you are starting out in low-moisture cleaning with eco-friendly vehicles or running truck mounted gas-guzzlers – fuel and maintenance costs are a variable expense that will adjust according to the volume of work you provide and the service area(s) you decide to work in. In addition, the cost per gallon adjusts sometimes daily and is unfortunately out of your control. You should attempt to estimate vehicle costs as best as you can, based on your specific circumstances – and don’t forget to re-evaluate regularly to adjust your expectations based on real-world data!
3: Chemicals (chemistry)
No matter the type of cleaning you wish to provide, there will be variable expenses of the chemistry that allows you to remove soil from carpet fibers and flooring. This category can vary greatly depending on the type of cleaning you provide and the type of chemistry you decide is best for your company. Make sure to research this topic sufficiently, and try to estimate monthly costs for the chemicals you’ll need to excel.
4: Cleaning Equipment
You can provide hot water extraction (HWE) cleaning with a $120K truckmount, or a used portable you purchase from a pawn shop for $650. Even with low-moisture cleaning methods, equipment cost can be ongoing and significant. Many cleaners continually upgrade and re-invest revenue back into their business through equipment purchasing, often times increasing productivity and efficiency within their business model. You should probably plan to save a certain percentage of your revenue toward equipment repairs, replacements, and upgrades.
5: Advertising, Brand, & Marketing
Even at the lowest level most carpet cleaning companies recognize the power of investing at least a small amount into advertising their company and services. While “word of mouth” advertising is free – many cleaners have purchased at least refrigerator magnets or business cards to compound its effectiveness.
Your brand and marketing defines how your customers will perceive your business. You can easily spend money on vehicle wraps, logo-design, a quality website, t-shirts, uniforms, and digital marketing programs – choosing which to invest in and when is a difficult decision. Powerful and effective marketing lends itself to building strong brand recognition, which can significantly lower advertising costs over time.
As with many variable expenses, marketing and advertising is an area where one can easily overspend or invest money that doesn’t produce a worthwhile return on investment (ROI). Carefully evaluate your options, and experiment to find those that tactics that make your brand stronger, and bring in more quality leads. Ideally you should direct at least 10% of your revenue toward continually improving your marketing and advertising efforts.
Having a general liability policy and commercial vehicle coverage is imperative for protecting your business and also required by most customers if you intend to ever benefit from commercial work. Get a few quotes and understand the amount of work you’ll need to do every month just to cover insurance costs.
7: Professional Services
Many cleaners immediately incur expenses in the areas of accounting, taxes, payroll or legal to help them in areas where they aren’t qualified, or are too busy to handle themselves. Most small business books will advise seeking outside expertise in most of these areas, even in the beginning.
This category will also include software fees, for software like Quickbooks and a customer relationship management (CRM) tool. These types of programs save a lot of time, energy, and money by optimizing and organizing your business. Evaluate which professional services you can handle yourself, and which you should hire out – and be careful, finding a quality bookkeeper and tax accountant can be some of the most important choices you make in your business success.
8: Rent & Utilities
Cell phone bill, commercial space (rent), water, electric, and gas also can be very small or extremely large expenses depending on the the business model you decide on. Many carpet cleaning folks initially start in the “home-based business” model, which can help save considerable amounts of cash flow, while others rent space for a rug shop or an office.
No matter which path you take, you should try to understand the base costs of running a business with the various options, and document the expenses to optimize tax deductions later.
9: Labor & Payroll
Even if you intend to be a solo owner-operator forever and never hire even one helper – your paycheck needs to be a separate factor in considering expenses. It’s always smart to separate the funds of the company from personal funds in order to gain better perspective financially. Decide concretely when and how you will be paid before you start, and don’t forget to reinvest into your business before taking profits!
If you do plan to have an employee or two, spend a few minutes understanding the true cost of paying them by factoring in FICA taxes and other factors.
Unfortunately not ALL of the money your company generates belongs to your company. It is important to play by the rules and understand how to best optimize your ability to offset potential income taxes in your new carpet cleaning business (this is one area where a great tax accountant can be worth the cost).
Some states, counties, or cities require you to collect sales tax on services as well, so be sure to know what specific rules and laws exist in your area. It almost always saves you money to hire outside assistance in the tax arena (at least when you’re first starting), as it can be very complicated and always changing.
Spend Time Understanding and Projecting Expenses
Overall, having a clear idea of what expenses most carpet cleaning companies incur helps you to better plan and move forward with your vision to start a successful carpet cleaning business. Even if you’ve already started your business, this list may assist you in understanding more clearly an area you’ve previously neglected to consider. Don’t forget that by increasing spending in one or more of these categories many carpet cleaning businesses can dramatically increase their success and revenue, thereby enjoy healthier and more robust profits.
Balancing money-saving choices with those that will propel your success is always challenging. Take the time to ask questions and budget effectively, making improvements to your carpet cleaning business plan over time, and you will strengthen your company’s earning ability by reducing stress. And if you aren’t sure how to start, consider signing up as a member of our community (fill out the form below), and you will get immediate access to our exclusive revenue projection worksheet designed to help you get a better understanding of your business expenses and monthly cash flow.