Unlike many businesses, carpet cleaning businesses are mobile, which may provide a lower cost to start, operate, and provide greater flexibility. Rather than worrying about keeping a store staffed, you’ll be on the road meeting with clients and cleaning homes, offices, and more. If you’ve ever wanted a business that you could start with a small investment and have attention to detail, you may be able to “clean up” with a carpet cleaning business.
If you’re considering starting a carpet cleaning business, you likely already have some of the necessary technical skills, like operating equipment and removing stains. However, there’s more to running a successful carpet cleaning company than just cleaning carpets well. This article is here to help, by providing an overview of the carpet cleaning industry, steps to start your business, and answers to frequently asked questions to help guide you through the process.
Business Overview
Carpet cleaning businesses offer residential services, commercial services, or both, and services include the deep cleaning of carpets, rugs, and upholstery. Some companies offer additional specialized services such as rug dyeing, carpet restoration, and more. These businesses bring in professional-grade equipment that your typical homeowner or business owner doesn’t have access to, allowing them to do a more thorough cleaning to remove stains and dirt that common retail carpet cleaning products can’t remove.
Because carpet cleaning isn’t a service that clients need daily or even monthly, these businesses need to build up a significant client list to stay busy. A business can be as small as one person with a single cleaning van or several teams of employees.
Especially as many consumers have moved away from putting carpeting in their homes and moving more towards hardwoods and laminates, some carpet cleaning businesses have expanded their offerings to cleaning services such as hard surface floor cleaning, window cleaning, exterior washing, and air duct cleaning to increase sales.
You will also need to decide whether you should start a business from scratch or buy into an existing business as a franchisee. There are pros and cons to each option. When buying a franchise, you may face higher startup costs than you would when starting your own business, but you also have the advantage of operating under the name of an established business with an existing reputation.
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Industry Summary
The carpet cleaning industry has witnessed steady growth over the years. In 2022, the industry reached $6.6 billion in sales and, over the last five years, has grown 3.9% annually. As consumers become more conscious of cleanliness, the demand for professional carpet cleaning services continues to rise. Increasingly, customers are looking for prompt and reliable services from trusted businesses. This presents an opportunity for aspiring entrepreneurs willing to meet these demands and build a reputation for exceptional service quality.
The cleaning industry is a stable and often recession-proof sector, as cleanliness is a continuous need regardless of economic conditions. Within this field, carpet cleaning services are always in demand due to the regular wear and tear of residential and commercial flooring. A key advantage is the recurring revenue from clients who need periodic cleaning, offering a steady income stream.
While no companies hold major shares of the market, franchise cleaning companies bring in 10 percent of the industry’s total revenue. These commercial franchises have just a 2 percent annual employee turnover rate.
Most carpet cleaning clients are return clients who will request services repeatedly, which allows carpet cleaning businesses to build up a large, loyal clientele. However, cleaning companies lose up to 55 percent of their customers, on average, because of poor service quality or poor performance on the job. Carpet cleaners who offer quality services, show up on time, and perform well should be able to establish plenty of repeat clients for a steady income.
Steps To Start A Carpet Cleaning Business
Step 1: Research the Market
Before starting a carpet cleaning business, the first step should be to assess the market and determine if there is an opportunity for another service in your area. By analyzing customer demand, economic factors, and local competition, you can make a better informed decision about the viability of starting a new business.
To gauge customer demand for carpet cleaning services, start by considering your area’s demographics to estimate if there are enough people who need carpet cleaning. Factors such as the number of households, property types (residential or commercial), and income play a role in determining potential demand. For example, areas with middle to high-income households tend to have a higher demand for home carpet cleaning. Gather demographic data from sources like the Census Bureau website to better understand your target market.
Next, economic conditions can significantly impact the demand for carpet cleaning services. Evaluate the economic climate in your area to determine if it supports a thriving market. For example, a robust real estate or construction sector often indicates a higher demand for carpet cleaning due to moving, renovations, or new construction. On the other hand, a struggling economy might lead to a decrease in demand. Visit your local economic development office or look at local economic indicators to gain insights into the economic conditions that may affect your business.
Last, research existing carpet cleaning businesses in your area to assess the competition. Look for their locations, services offered, pricing, and customer reviews. Online platforms like business directories, search engines, and social media provide valuable information on competitor offerings and customer satisfaction. Analyze customer feedback to identify gaps or areas where current service providers are falling short. Pay attention to gaps or underserved segments in the market where existing carpet cleaning businesses may not meet customer needs or preferences. This involves more than just clean carpets; it could be convenience, reliability, cost-effectiveness, and sometimes even eco-friendly cleaning methods that are missing in the market.
Step 2: Write a Business Plan
There’s an undeniable excitement that comes with the idea of starting your own carpet cleaning business. The idea of being your own boss, making your own hours, and reaping the rewards of your hard work are just a few of the reasons, but a business plan helps you stay grounded. It makes you take a good, hard look at your idea and ask some tough questions. Think of it as a reality check for your dream. Writing a business plan forces you to move from the abstract to the concrete, from “What if?” to “Here’s how.” It’s a tool that helps you outline your vision, set goals, and define the steps to achieve them.
Another benefit of having a business plan is that it allows you to project income and expenses, giving you an estimate of whether or not your business idea is financially feasible. It asks critical questions: How much will you charge for your services? What are the startup and ongoing costs? How many carpets do you need to clean to break even? And, importantly, how much can you potentially earn? It’s always better to know in the planning stage whether your idea is realistic rather than finding out after you’ve already started your business.
Also, if funding is needed from a bank, lenders will need a business plan to evaluate your idea and ability to execute.
Related: How to write a business plan
Step 3: Source Funding
After verifying there is a market and completing the business plan, the next step in starting a carpet cleaning business is to secure the necessary funding. Finding the money to start a business can be a challenging process, and in this section, we will discuss the types of funding commonly available for a carpet cleaning business.
The first source of funding to consider is self-funding. If you have personal savings that are sufficient to cover the startup costs, this can be an effective way to finance your business. However, if your savings are not enough, you will need to explore outside funding sources. Some common options include:
Lenders: When seeking funding from lenders, it’s important to note that they typically require borrowers to invest at least 15% of their personal funds towards the total cost of the project. In addition, having a good credit score and sufficient collateral are often necessary. It’s worth mentioning that if a bank considers the loan to be too risky, they may utilize an SBA (Small Business Administration) loan guarantee to provide added protection.
Friends and family: Another potential source of funding is friends and family. While this can be a viable option, put any agreements or arrangements in writing to avoid misunderstandings or conflicts in the future.
Microloans: If your funding needs are relatively low or you are unable to secure credit through traditional lenders, consider exploring microloans. Some microloan providers also offer business training in addition to funding, providing valuable support for new entrepreneurs.
Related: Finding the money to start a business
Step 4: Register the Business
When starting your own carpet cleaning business, it’s important to properly register your business and ensure its legal to operate. Each state has different requirements, but here is a general overview to help with the process:
Choose the right business structure: There are four common types of business structures to consider:
- Sole proprietorship: This is the simplest and most common structure. It offers ease of startup and the lowest cost, but the owner is personally liable for the business.
- General partnership: If you are starting the business with someone else, a general partnership is an option. In this structure, responsibilities, profits, and liabilities are shared between partners.
- Corporation: A corporation is a separate legal entity from its owners, providing limited liability protection. However, it involves more complex legal and financial requirements.
- Limited Liability Company (LLC): The LLC structure provides liability protection similar to a corporation while offering more flexibility and simplicity.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
Related: Tips and ideas for naming a carpet cleaning business
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Obtain licenses & permits: Like any business, a carpet cleaning business owner will likely need to obtain a variety of business licenses and permits in order to operate. Depending on your location, these could include a business license, seller’s permit, and Employer Identification Number (EIN).
Some local governments may also require that carpet cleaners hold specific cleaning business licenses, health permits, or environmental permits due to wastewater disposal; however, this is not common.
Related: What licenses do carpet cleaners need?
Step 5: Set Up Operations
Starting a carpet cleaning business involves many moving parts, and the next step finally gets to something tangible, which is setting up operations.
Start by deciding where you’re going to run your business from. While many carpet cleaning operations are managed from a home office, others may require a separate office, warehouse, or storage space for equipment and supplies. The decision often hinges on the scale of your operation and personal preferences. It’s important to remember that facility costs can be one of the major expenses for your business. Weigh the benefits of a professional space against the potential savings of a home office to find the right balance for your situation.
Next, finalize what services you’ll offer and at what price. Once your services and pricing are in place, choose an accounting system like Wave Accounting (FREE) or Quickbooks or industry managment software like Jobber to track revenue, expenses, invoicing, and mobile payments to simplify operations.
Last, you’ll need to decide between different types of equipment, like truck mount or portable options, and whether you want to buy or lease them. After this, you’ll need to find reliable vendors for your supplies. Look for those who offer products like cleaning solutions, detergents, spot removers, deodorizers, and towels.
Step 6: Hire Staff
The next step is to determine whether you can operate the business solo initially or if you will require additional help from technicians and administrative staff.
Operating solo can have advantages, such as lower labor costs and more control over operations. However, it also means you’ll have to handle all the cleaning duties, customer service, and administrative tasks yourself. If you decide to hire, knowing what’s required as an employer is important. Every state has different regulations on reporting, labor laws, etc. Also, with employees comes the responsibility of managing payroll, which includes taxes, Social Security, and Medicare. Be sure to account for these expenses when determining your pricing structure.
Related: State guides for hiring your first employee
Step 7: Prepare to Open!
As you continue your journey to start a carpet cleaning business, there are several more steps that we haven’t covered that you’ll want to consider. While the specific needs of each business will vary, these are some common areas that you might need to address:
Business insurance: One of the most important things to secure when starting a business is insurance. This can protect you from potential financial losses due to accidents, property damage, and legal claims. There are various types of business insurance, but for a carpet cleaning business, you might consider general liability insurance, commercial auto insurance, and workers’ compensation if you have employees.
Related: What types of insurance do carpet cleaners need?
Contracts: In order to protect your business and set clear expectations with your clients, it’s important to have well-drafted contracts. Some examples of contracts you may need include a Service Agreement Contract, detailing the services you’ll provide and the terms of payment, and an Independent Contractor Agreement if you’re planning to hire contract workers. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.
Opening a business bank account: Separating your personal finances from your business finances is important for keeping your financial records organized.
Market your services: Once your business is ready to go, you’ll need to let people know about it. This could involve creating a website, printing flyers, or running ads. There are also free business listings such as Google My Business, Angi, and others to sign up with. Additionally, direct outreach to potential commercial clients such as residential buildings, offices, and hotels can be effective.
Common Questions When Starting A Carpet Cleaning Business
How much does it cost to start a carpet cleaning business?
The startup costs will vary according to the type and amount of equipment needed and whether or not you can find a deal on a used van that’s already outfitted. Purchasing used or refurbished equipment can also help to keep costs down. The cost to start a carpet cleaning business can range from $2,000 to $60,000.
Here’s a breakdown of the initial expenses you might expect.
Business registration: Registering your business can range from $50 to a few hundred dollars, depending on your location and the type of registration required.
Facility: If you’re not operating from home, the cost of renting a space can vary widely. You’ll typically need to cover the first month’s rent plus a security deposit, which can be equivalent to another month’s rent.
Equipment: The choice between portable units or truck-mounted systems will greatly affect your startup costs. Basic portable machines can start around $1,000, while sophisticated truck-mounted systems can exceed $20,000.
Supplies: Initial stock of cleaning solutions, detergents, and other consumables may cost around $500 to $1,000.
Vehicle: If you need to purchase a van or truck, prices can range from $10,000 for a used vehicle to over $30,000 for a new one. Leasing is another option that can reduce initial costs.
Business insurance: The cost for general liability insurance can start at around $500 per year, while specific policies such as commercial auto insurance or workers’ compensation insurance may incur additional costs.
Marketing: Initial marketing efforts, such as website development, flyers, and ads, can run between $500 and $2,000.
Training and certification: Courses and exams for certifications like those offered by the Institute of Inspection Cleaning and Restoration Certification (IICRC) can cost several hundred dollars.
How profitable is a carpet cleaning business?
Calculating the potential profit of a carpet cleaning business requires an understanding of both expected revenue and expenses. Here’s how the profit might break down in the carpet cleaning industry:
Revenue: A carpet cleaning business might charge between $25 to $75 per room or by square footage, typically between $0.30 to $0.50 per square foot. If a business owner cleans ten average-sized rooms a day at an average rate of $50 per room, the daily revenue would be $500. Multiplying this by the number of working days in a month (let’s say 22), the monthly revenue would be $11,000.
Expenses: Operating expenses vary widely but can include costs such as equipment maintenance, fuel for vehicles, cleaning supplies, labor, insurance, and marketing. A simplified monthly breakdown of expenses might include:
– Supplies: $500
– Fuel: $300
– Equipment maintenance: $200
– Insurance: $100
– Labor (if not sole-operated): $2,000
– Marketing: $300
– Miscellaneous: $100
This totals $3,500 in monthly expenses.
Profit calculation: With a monthly revenue of $11,000 and monthly expenses of $3,500, the business would have a monthly profit of $11,000 – $3,500 = $7,500.
Annual profit would then be $7,500 * 12 = $90,000.
These figures are highly simplified and can vary based on a multitude of factors, including geographic location, the scale of operations, and competitive pricing.
What skills are needed to run a carpet cleaning business?
Starting a carpet cleaning service doesn’t require a business degree, but business owners can benefit from having certain skills and experiences.
Mechanical knowledge: Carpet cleaning equipment sees heavy use and requires regular maintenance. The more that a business owner can do when it comes to servicing and repairing equipment, the less downtime a business will see. Being able to diagnose and repair a mechanical problem on your own can also save on expensive repair costs.
Physical strength: Transporting and using carpet cleaning equipment is physically demanding and requires someone strong enough to transport equipment several times a day.
Experience in the cleaning industry: Understanding the different chemicals and techniques used in the carpet cleaning industry will ensure that any business owner understands how to address different stains on different materials for the best results.
If you don’t have industry experience or would like training and certification to be ahead of the competition, check out the Institute of Inspection, Cleaning and Restoration Certification (IICRC), a non-profit certifying body for the cleaning and restoration industry.
Attention to detail: Cleaning carpets is all about details. To do a good job, a business owner needs to pay attention to details in the clients’ rooms to ensure that the job is done fully and well.
Management skills: When carpet cleaning businesses grow large enough to hire employees, management skills, and experience are valuable when training and overseeing employees. A key skill as the team grows and the owner isn’t directly overseeing jobs ensures employees use their time efficiently to stay profitable.
Customer service experience: From answering calls to addressing customer questions and concerns, previous customer service experience will put a carpet cleaning company owner ahead of the game. Because many carpet cleaning clients are returning clients, providing a positive experience to customers with every cleaning is important to their profits.
It may take time to build your reputation, but with a dedication to great customer service, you can build a base of returning customers and enjoy a profitable business.
Marketing skills: Marketing a carpet cleaning business requires some talent, and a business owner can save money on marketing if they can do some or all of the marketing themselves.
What is the NAICS code for a carpet cleaning business?
The NAICS code for a carpet cleaning business is 561740.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?
Resources
Low Moisture Carpet Cleaners Association
International Cleaning and Restoration Association
National Carpet Cleaners Association
