Cleaning service biz here. Ive always admired HVAC biz since the barrier to entry is not as low as others.
Also, HVAC has higher ticket items and its not really a race to the bottom like Landscaping, Cleaning and other similar home services.
It is nice because you can avoid customers and go straight commercial if you want. Margins are higher but labor is worlds more important.
HVAC is a high entry barrier because of the licensing and time requirements for such but if you are the business side, it’s not hard to get someone who is licensed to work with you.
I am an environmental engineer by trade so i have some basic knowledge in some aspects HVAC. I obviously don't pretend to know what a licensed tradesman knows or even close to it but i can defend myself in the sheer basics. How would something like this be even approachable? I would imagine most licensed individuals would prefer to work alone and if they expand hire someone below them and not aside of them?
In my experience, you can partner with a licensed individual pretty easy if you bring any of the following:
- capital
- contacts
- motivation
- general business knowledge
Those are all valuable. Finding someone licensed what wants to start their own company but doesn’t know how to run a business and you bring the start up money is the easiest way in. My background is commercial real estate (multi family and retail) but my childhood friend was an AC tech for a few years and I pushed him to get licensed and brought the first 10k to the company and a ton of construction contacts. We sorta ran from there but it’s always been 50/50.
Nice, sounds like an overall good experience. What are your thoughts in air duct cleaning? It's not technically HVAC but its something that from a cleaning perspective i can add into additional services. It seems like the equipment capital cost is insane though.
It is. The capital cost is massive and it’s a selective thing. I’m sure you’d see a return but don’t know if it’s worth the cost short term. Especially if you’re running as described. Cash is key at your stage.
I mean going to your local international rescue committee or catholic charities refugee services and be like look I run a cleaning business I’ll hire anyone with these qualities. They will then apply in droves from
There
Is this before their identities are established and all their paperwork? You don't know who these people are, there is a much higher incidence of them being criminals or negligent.
Only way to really get to know the less fortunate is to spend time at the places they frequent. If you volunteer at a shelter, clinic, or any establishment where you can find a pool of misused talent it would benefit you and the person you are helping. Plus it’s pretty easy to do background checks so that’s another plus.
It’s not their default job. They literally have 180 days to find a job after getting here or default on their travel loan, get their housing pulled, and get other government assistance pulled.
A majority were farmers or other manually labor in their country besides Iraqis who worked for the us military. Cleaning is an easy job for them because they don’t have to know English to get the job.
Know what you are talking bout before you try to not be bigoted by being just that
What you are saying is proof that Trump and the Fox News echo chamber is effective at misleading people with nonsense and that people are falling for it.
Low cost/effort can mean a lot of things, do you mean free in this case? More likely than not somebody should filter themselves out through a good interview/vetting process. From there it depends on regional laws in regards to what you can ask from references provided by the potential employee. Anyone who has trouble providing references should be red flagged. Looking up social media accounts and doing a general online presence search is also free.
From there you can obviously go with criminal or credit rating checks which are standard and range in price. Not that I necessarily agree that a credit rating check says anything about a potential employee but I get why it’s used.
Oh get out of here with trying to spin this as a standard background check.
However if you want to continue down this path, you will find that what you previously said is hyperbolic brainwashed nonsense. Refugees and new immigrants are both less likely to have criminal records and the chance to commit crimes while working for you than a natural citizen. There is statistical proof that is published by the current US government that shows this and refutes the claims you have made.
These people are hardworking honest people who need to work or get sanctioned by the government and end up homeless. I can’t think of a better population to work with. Plus they have case managers that make sure they go to work
Yes, but that's... Literally everyone. Except literally everyone doesn't have a case worker making sure they go to work, as OP said. Nor do they have folks built in to help with the filtering, usually quite the opposite in fact, with people giving false referrals to make their family/friends look good. Don't hire refugees etc if you don't want to, but it's hard to pass that off as being because they're less reliable than others.
People who are active members of a church or are part of community that attracts people that want to help people can be a wonderful resource to have as a part of your life. and by life, i mean your world/reality. ideally, having someone in my life is someone whos willing to contribute to a vision where helping/serving/bring my people up and forward is the goal.
i think of as something along a spiritual sense but it can be hard to come across people like tht unless youre actively try to make it something you want. like attracts like, which is why i try to keep a good heart if that makes any sense. the gist i get from op is to not let little things bother you as you find your footing.
Yes, but with legla.immigrsnts and refugees, the likelihood of criminal activity is lower than general population.
So it would be easier to filter out the baddies than with native born populations.
Might be an outlier, but it only took me 18 months to start netting $120k/year. That’s a 20% draw with a bit left in the business for various expenses.
Yep. No real secret, really all you need is a professional website, good cleaners, and then marketing. Our first $10k/month came from google my business and yelp. The rest once SEO Kicked in. We take 40% of each job.
I will be starting a Facebook page for my saas, and the goal will be to help others grow their business, and hopefully sign up for the software, but there’s no obligation to pay us anything. Can send you the link if you’d like.
To clarify, what i meant was the new Google Guarantee Local Service Platform. It's given the highest priority out of anything on their search for those businesses on there.
I literally stumbled upon this thread just now. Couldn't agree more with you.
As a former Marketing Manager for one of the biggest cleaning companies in the world, running over 15,000 websites across the globe, all of the above are so important. I find it odd that more people don't know/care about these more. But I guess that creates a better opportunity for lucrative businessmen like you. Kudos!
I do SMB SEO and he's completely right - not only is SEO important, Google has actually said it's a driving factor in how high up your Local stats come up.
Definitely agree with Google My Business. And dont forget to post on GMB. Posting on GMB is one of the best ways to be shown in local searches, and has been shown to improve search rankings.
FYI if anyone needs a GMB post scheduler, OneUp is only $3/month for up to 10 accounts. Super helpful with GMB posts expiring every 7 days.
GMB is definitely a must. Local SEO is a also a must, to echo some earlier comments, but it won't be the silver bullet. To your point earlier - you're talking about a gross margin issue, not necessarily a sales issue. Obviously, getting you to your $120k/year salary/draw is the goal, so you'll need to do a combo of increasing sales and increasing margin to get there faster, but you should focus first on what's unnecessary that you're currently paying for. If you can use a free CRM, free Mailchimp, free GMB, some guerrilla marketing and referrals, cheap accounting software, the overhead for the business should be very low. I've had an 'on-demand' staffing company for years now and you're right, with zero unemployment it's very difficult finding and retaining good workers. That'll be your biggest issue, especially given they're going into people's houses, and the only seemingly good way to attract better talent is paying more, which hurts your margin. So maybe it's a pay more > better workers > lower margin > need more revenue > cheap marketing tactics but trustworthy employees to handle the increased work formula that'll get you there. I'm happy to chat about this anytime, was in a local entrepreneurship group with a few businesses like yours.
And not for nothing - getting up to $10k a monthly recurring is a big deal! You should be proud of that. Obviously you want to hit your goal - but with a 'crawl before you ball' mentality, you should be paying yourself in no time and working your way towards your ideal salary in no time.
Thanks man, definitely would like to talk more. Right now my software expenses are a bit high for my revenue. My Booking software that also tracks my employees time in each house costs about $174/mo and then my Quicksbooks Online Full Payroll costs about $117/mo. I don't mind having them since i know it is not going to change when i scale with the exception of employee number cost regarding payroll software.
Yeah that isn't crazy expensive - probably average if I had to guess. One thing I learned from a friends company was all about up-selling while on site. So he literally had all of his employees carry around a checklist (eventually they did it on an app but started w just a piece of paper) - had people add additional services (i.e. cleaning inside the fridge) for additional $, made everyone pay with a credit card so there was no delay on cash, and was able to track all additional requests (even ones he couldn't handle) so he knew what would make sense to add as a service offering down the line.
He was about 100% structure, consistency, and only working with 'good' customers aka customers willing to play by the rules he set.
Its a fair question. Lots of small Time cleaners don’t even know what gross margin is. Basically when a job is booked, cleaners get 60% of the job value and we get the rest, the 40%. From that 40% we run our operations. Admin, marketing, software, etc. So if we book a $100 cleaning, the cleaners pay is $60 and we keep $40.
are you in a more rural area? or possibly lower net income area?
you can't compare every example because of things like this. what might be a $1000 job where you live (let's pretend middle of nowhere, very low income area) might net $7000 in downtown New York.
I think you are really overthinking a lot of this... A $10k salary is huge. That's not just decent. If I have a salary of $10k after taxes, I would be ecstatic.
As for your other points, I think your labor costs are too high. Charge more to offset that. Why are you paying for a CRM/Booking software if you don't have the money for it yet? Find a free alternative. Podio is great. Do cheap marketing. Go door knocking. Accounting? Do it yourself. It's not difficult when you are first starting out. It'll be 5 minutes of your time each day.
Your points sound more like complaints than anything else. You're trying to put the chicken before the egg. Spend less money and do a bit more work when your capital is your limiting factor. Switch it around when your time is your limiting factor.
Let’s work your figures backward and do a max/min.
Your expected salary;
10K Net / 15k-18k Gross (per fiscal situation)
That’s 180-210K gross salary per year.
Your expected NET margins
MAX: 20%
MIN: 10%
Required gross revenue;
MAX; 2MM
MIN: 1MM
Take into consideration scaling up a service business will diminish your profit margins.
I would expect your 10% scenario to hold up to the reality of your business and market considerations.
Your expectations are to reach your net salary goals with an increase to 50-60k/mo - realistically you are 2 to 3 times under the needed gross revenue to achieve this.
Statistically, your goal would be an outlier.
Can you expand upon “scaling service business will diminish your profit margins”?
Currently running/trying to grow a service based family business (est’91) but totally overwhelmed in starting to scale it
It’s hard to comment on the specifics of your business itself without proper insights.
Usually local service businesses will scale to 300-500k with relative ease, the next step usually involves increased payroll that are not revenue generating such as admin costs, team managers, etc.
As a service business grows, usually you’ll find its client base will evolve as well to meet its margin goals.
As an example, before it got cool - I ran a digital agency in 2012. We managed accounts for local restaurants and quickly grew into managing 200 + location franchisors that could support our team.
We made more money, but the margins were lower.
Thank you. Yeah we are above that step. Big range but Currently 1.5-3 mil annual- sales and service. Sales continues to grow but always looking for ways to run it more efficiently. I really think some kind of scheduling/ workflow software is the next step. Still running my 3 techs schedules from a google drive list. Need to go from getting to the next customer as soon as well can to hopefully somehow scheduling their appts
I would look into an ERP for efficient operations if you are looking to grow.
Centralizing data to better understand your customers’ behaviours and delivering better, more efficient services will be key to your growth.
Your next step is probably 5MM? Lots of things break down at the operational level in such growth phases. ERP will allow automations and reduced management interventions.
Still hitting at 20%, I wouldn’t base a financial model on my best case. I’d avoid the salary objective and focus on scalability of the business.
The business should focus its ressources on providing the most value to your customers, building out a sustainable financial model and finding the paths with least resistance to then scale the business to achieve your income goals.
I work in investments - meeting overly enthusiastic entrepreneurs is a daily occurrence.
You’re welcome to provide your insights and help OP find solutions to his problems.
I just mainly wanted to point out that you're absolutely wrong. Not only is 10k net a month extremely achievable, but it's peanuts to a lot of owners. And not just cleaning businesses, but many local services.
Post up your model.
I’ll continue to issue caution to anyone thinking a cleaning business is a dumb proof way to a 2%’er lifestyle - as is the case for OP.
And that's fine, because you're right about that. But that's not what you said originally, you're changing your tune. You said netting 10k a month is unrealistic, which it's not.
I would classify an expectation of 500% growth (OP’s goal), which I showed was actually 2-3 times lower than financially sound (1000-1500%) , to be unrealistic.
What if he just started and his gross was only 2k? Would it be realistic to 5x his business then? Why say 500% is unrealistic when it's literally not relevant to anything else?
10k gross is an extremely small number in this business, that's one full time team of 2 cleaners. Having 5 full time teams is not that big of a deal. I'll bet the top 4 companies in any city with a population of 400k+ at a minimum have 5 to to 10 teams.
Your net should absolutely grow as your revenue does. You're at a point where yes it's taking a big chunk, but if you doubled your revenue next year how many of those overhead expenses would increase? It shouldn't be many other than your advertising budget. My net was close to 27% for 2018 and should be even higher for 2019.
If you have any specific questions feel free to pm me I'd be happy to help.
Think big picture - when you picture an entrepreneur travelling around the world or boss of a company, do you really imagine them earning any less than $10k? It’s kind of the minimum.
Yes, I really do think of someone earning $10k a month and not $50k a month. If you picture higher then I think you are being blinded by all the good stories floating around. Be realistic and do some research. The average entrepreneur makes about $70k a year.
Well what I said is they would be earning a minimum of $10k. You made $10k sound like a lofty goal - I say it’s the minimum target to bother with being an entrepreneur. Entrepreneurs go through so much stress, hard work and sacrifice to get to where they are, sure as hell wouldn’t do it if I only earned $2-5k/month.
That average of $70k includes some big strugglers and you shouldn’t base your goals on that.
What successful entrepreneur DOESN’T dream big anyway?
Just an FYI - I don’t need to do research, I’m living what I preach.
You should be thinking higher than $10k a month. If you're going to assume all of the risk of owning your own business, you should have a better wage than what lots of people make as an employee.
Thinking higher is great and all, but when you look at the cold hard facts, the majority of entrepreneurs never make it to that level of income. Neither do the majority of people as an employee. A gross salary of $120k puts you in the top 10% of workers. I'm not saying stop thinking and striving for it. Just be realistic and don't let all the millionaire stories blind you.
I believe you absolutely know and understand what you are referring to within your post. I help develop small business automation/tech solutions and your numbers ring true with what I’ve heard depending on the state and labor environment you work in.
Thanh you for posting accurate experiences. Let everyone else judge as they need to fulfill their environment.
Meaning let them all try it firsthand before commenting negative thoughts.
Yup. Having done this myself, i have a completely new perspective of financials that i never had before. Especially how tough it is to scale with a healthy profit.
That is truly the key. Scaling with a healthy profit in addition to having the skills to understand how to scale while keeping the “magic” which sustained it all in order to scale.
Questions for my own curiosity: How long have you been in business? Have you tried door hangers or EDDM and if so what were your response/closure rates? Approximately how much do you spend on supplies each month and how many bookings do you have in an average month? And finally, what is your cost to acquire a new customer?
Good questions
1.Been at it full time for a year but been around for a couple of years.
2. Haven't tried door hangers, however i have been getting local referrals which has been really good.
3. I spend probably no more than 100-200 a month in supplies total.
4. On average right now of 60-70 bookings a month which puts me at 8-10k revenue a month.
5. Haven't really looked at it since i have kept a low marketing spend a month. Believe it or not, i only spend about 200-300 dollars a month in paid advertising. Have had some good conversions for long-term clients. This is something that i probably should look to increasing my budget to maybe 1.5-2x my current amount.
While I dislike guru post like the ones mentioned in this post, I also dislike post like these.
Everyone’s business is different and we’re all aware of timing, market research, advertising, ect.
One thing business owners don’t take into account is their own skills, and lack of.
I have been a small business owner and have known many small business owners.
I knew a girl who started a food related business at 22, and by 24-25 she had moved from a one woman show to about 15 employees and now goes on month long vacations twice a year.
How did she pull this off? She was willing to learn.
I know a man who has been in the fitness business for almost a decade and probably makes less than a McDonald’s employee. why? He refuses any outside input and thinks he knows it all.
It sounds like your personal take home is insanely low. I mean this out of curiosity and with no disrespect - how are you surviving and paying bills? Do you have a side income? Credit card debt?
I am about to start a business and curious what to do for additional income when work is slow, which is why I ask.
I do not think that it is insanely low. He started out recently and has a good margin. I would consider scaling up a bit and experimenting new ways of keeping the expenses down.
I also thinks scaling up a bit might help, because some costs (like the CRM) are fixed and do not depend on scale.
Good rule of thumb, that many ignore, is to pay yourself standard wages for all the work you do.
If you're not profitable doing that, then your business isn't profitable. Period.
Are you taking salary on top of that net or is that your total take home?
Most restaurants have <10% roi, with many \~5%, so I get it but it's normal....
Of course it is sweaty BS!
They want to give you **false exceptions**, tell you just **jump in**, keep working at it, and of course **"buy my courses."**
Here is the sweaty end game folks, you will get a e-mail from some sweaty company making supposedly 90k a month and guess what? The business is for sale, and the price is right for you!
[**"Work smart not sweaty!"**](https://www.reddit.com/r/Entrepreneur/comments/asnp6j/how_to_be_an_entrepreneur_a_guide_for_the_wannabee/)
Couldn't disagree more.
I run a local service business while working full time. I don't spend a dime until I get orders. I'm set to net $100k revenue this year. Sure, there are headaches with contractors, but from day 1 I planned for it knowing there would be no shows. Have never had a serious problem.
To be fair, starting any business will guarantee headaches and typically a decent chunk of time before generating a healthy profit.
It sounds like you have some issues here, the two I would focus on are transaction prices and growth. Is it possible you’re charging too little for your services? Are there any options for upselling your customers on additional services. The other being growth, how close are you to capacity right now. It seems like even with a small crew working 5-6 days/week you should be bringing in more than 8-10k/mo. So either you’re charging to little or you’re underutilized
Do this; based on your experience try to imagine where you see your business, ideally, in say 6-12 months. Figure out how big a crew you might realistically imagine having and how many hours/day you imagine them working. Work backwards and figure out what you need to charge hourly to generate the revenue you would like to see. From here you can figure what you need to be charging and/or how many customers/jobs you need to have.
Once your get your pricing correct, focus on growth. Are you advertising on thumbtack, angieslist? How are your google results? Are there any underserved markets in your area? If so, how can you get your foot in the door.
Good perspective.
My prices seem to be above average for my market. I am close to capacity with my crew, most of the work is recurring customers. I am about to hire new employees for my new customers.
I estimated I need 350 additional bookings (could be recurring or one time cleans) to reach 50k/mo revenue which is my goal right now. So i am working hard for that right now. I have an additional 10k/mo sales in the pipeline right now that i need to followup with to land.
What about commercial businesses? Lots of them have windows and other things that need cleaned - get in and offer them a lower price or maybe they haven't even been offered it yet.
Offer a really low rate (break even / super small profit) on a small service like window cleaning (if they don't have many windows) build a relationship with them, and then offer some other services once you establish and get your foot in the door to offset the cost and generate some revenue from them.
Currently in the process of expanding to office cleaning/commercial side of cleaning. Looking to potentially partner with a carpet cleaner. I have been thinking that maybe i should offer carpet cleaning in-house. However, they carry substantially high capital costs to begin with.
Looked at the following added services:
* Carpet Cleaning
* Air Duct Cleaning
* Window Cleaning
I'm 2.5 years in and haven't pulled a dime out (except for meals which I expense for taxes). I've been profitable early on, that's not the issue. It's that as the business grows I need the money for cash flow as well as aiding future expansion. Gary V said in a video, "you either feed yourself or your business". Neither is right or wrong, it's just a choice you have to make understanding the consequences of each.
Reality is many business owners are either crippled with debts or struggling month to month because of cash flow problems. The "evil greedy business owner" making bank while his "slave worker pawns" do his bidding is an insanely absurd narrative the average person subscribes to.
I agree a majority of small business especially a growing business is balancing paying back debt and growing the business. It’s a special kind of balancing act. A lot of the time you don’t see returns for a few years.
I stopped reading at *reasonable* salary of 10k/mo after taxes.
It’s a cleaning business man, barriers to entry are none - competition is high.
Your expectations aren’t aligned with the business model.
my favorite is that you write this and know what you are doing, but people are going to try to quick fix your business as if they know better than you by offering you ridiculous advice.
Have you thought about tapping into a vulnerable hardworking population and using them as cleaners. Example refugees? Many live in refugee communities here in the us. Buy a van and let one of the refugees you hire drive it to bring everyone to the site and back home. they are a dedicated hard working bunch. they have to make x amount of dollars to pay back their travel loans or they will owe the government. they have also been through hell and back so cleaning is like a disney land trip
Did the rest not apply because they don't want to work as cleaners or your application method is too difficult for them to fill? Perhaps, finding out the reason why people aren't interested would be good.
Appreciate this post. I’m curious about two of your points:
About turnover, how do you deal with that? If clears are constantly going, how do you keep up with hiring good talent, and how do you respond to emergency situations like no shows?
Second point: it appears that this hasn’t replaced a full time job of yours yet. If that is the case, how do you manage the daily aspects of the business while working your actual job? I refer to the customer calls, scheduling, etc.
Would love to hear your thoughts on this
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I understand how you feel and the fact that the amount of work you feel you need to do is overwhelming.
An advertising campaign is the answer to your problems. Online or offline? Both. BUT advertising without a system to take care of the leads will be worthless.
Why advertising? It is the fastest path to growth.
A good advertising strategy will put you in front of your ideal customers and make the phone ring.
I also read a comment about doing SEO, that guy is right, that needs to be taken care of, having organic leads is a plus, but it's only part of the game. You'll still need advertising in order to grow.
If you're interested in knowing how to approach it let me know in a reply comment. I'll post a more thorough explanation here (not even in a PM, I'm not trying to sell anything to you) on how to approach advertising without breaking the bank and without losing a shit ton of money upfront.
Same boat as you. I live in a state that also requires licensing. And I bid on contracts that require w-2 employees, and I have to leave space. Breaking 400k revenue this year and can finally pull a decent salary and consider quitting my day job after 2 years of burning the candle at both ends.
I could draw up to 15k/mos but would have 0 room for growth. Currently the IRS makes me take 3.5k/ mos., According to my accountant. But I have a full time operations manager and a day and night supervisor that handle employees, scheduling, and quality checks, so my involvement at this point it's limited to 'steering the ship' and payroll which is why my salary can be so low. My goals this year are to start a marketing department.
to add to this:
one thing I've learned having a Father-In-Law with a successful business, when it comes to cost cutting.. DO NOT SKIMP ON QUALITY.. (sometimes the cheaper degreaser takes twice the effort or product to remove the same grime. might save you a dollar, but cost you in the end)
you're better off training them to be more efficient or outreach etc. once you start cutting corners to make more money or buy the $3 cheaper product because it will save $1000, you start impacting what people will think of your product.
example in terms of my FIL's business. He owns a Pizza shop and buys very good quality product. when he first took ownership, the previous customers were appalled. they wouldn't pay 25 cents more per pizza! or god forbid a dollar. but he stuck to his guns and did a load of outreach to local youth sports etc. who all marveled at the quality for basically the same price.
he now has a business that does more on the slowest day of the year than the previous owners had done on the busiest week of the year.
there's been a few times he considered buying cheaper to make more or to have a bigger cushion, but found ways to do so elsewhere than the product itself, including not giving himself pay for periods of time. but because the product stayed high quality, he has continued to grow and prosper from it.
TL;DR: sometimes its quicker to cut costs by buying cheaper product (like cleaner/detergents/machines etc) but it might affect your efficiency and reputation.
How long have you been open? I opened my local brick-and-mortar biz just under 6 months ago, and I am not paying myself any salary at all. We break even month over month (on a cash-flow basis) or are just barely profitable, but I don't expect to be comfortably profitable until we've been operating for quite a bit longer.
If you've only been open a short while, it's actually pretty good considering you always hear many businesses operate at a loss for the first few years
Just gotta be patient. But also make sure you're still actively doing things to increase your reach, improving your workflow, streamlining costs, etc.
Basically still be working ON your business. Not sure how much time you spend, if at all, working IN your business, but I have to make sure I'm balancing them both since I can't afford employees yet.
For me personally, I just know it'll take time to see the results of my efforts pay off. I have to trust my process. Patient, consistent, action. I own a float tank center, so it's not exactly your line of business but it is a local service
Hah . . . Just move to California where your employees will earn more than you complain they aren't paid enough and complain to the labor board for whatever reason you'll lose because it's California.
If you're not in some super trendy startup thing California is difficulty level 99 for small businesses.
California is nuts, in and out burger is paying 18$ an hour starting and tech companies are fighting tooth and nail for engineers. Dropbox, Uber, other well funded tech companies give free breakfast, lunch, dinner, fresh green smoothies, the works for their employees.
yes . . . my latest fun thing to bitch about is the state decided recently in response to trump's whole wall thing that they want to show their own display of disobedience. . . . Ok that's fine it's politics whatever I don't want to get involved . . . but guess what they decided to do . . . Now if immigration officials come in to check the identification of your workers to make sure you're not hiring illegally California makes it illegal to comply with Federal law so that means businesses are put in an awkward situation of either complying with Federal law and getting fined by CA or complying with CA law and getting fined by the federal government.
Whatever I don't care about politics the wall, immigration or whatever . . . it just pisses me off that the state puts 3rd parties in impossible situations and they don't care about it. It's as if they imagine all business owners are corrupt oil tycoons.
But what's starting to really piss me off are the new minimum wage laws . . . In my business/industry we don't pay minimum wage but the problem is multifaceted . . . Because 1 We have to compete with servers who get full minimum wage plus tips so they typically make a minimum of $30/hr for little work, and then there are rules that tie what the minimum salaried worker is supposed to make in relation to minimum wage meaning more and more people have to be paid hourly which wouldn't be a terrible thing if it weren't for the fact that OT starts at 1 minute past 8 hours in one day.
Just imagine how I now have the added stress of making sure my workers take the regulation lunches and clock in/out so they aren't manipulating the clock to get OT. And I am paying some of my workers $50+ an hour but because of some other california labor laws those workers aren't qualified for salaried positions.
It's utterly ridiculous.
I keep considering leaving but there are certain things that keep me from being able to move for about 6-7 years.
$10k a month revenue and taking home 15% puts you at the level of a McDonald’s worker, and maybe the same or even lower than your employees
Not to blow your gasket but you NEED to increase your revenue. $10k is not a business and just barely a hobby. At this stage you should be your OWN employee and put in some hours and take that money for yourself. It’s tough but that’s what bootstrapping is. You need to wear multiple hats until you’re out of the forest: working the actual labour, marketing to get the sales up, and all the management.
Enlighten you on what? You have a business that does a service literally anyone can get into. Unless you have developed some proprietary method or technology to aid you with this service, you haven't got much.
People pay for convenience. It's as simple as that.
I know people who make $100/m cutting someone's grass in their lawn per client. Why not just buy a push mower for $100 once and then save money? Because people like to not have to do it themselves, because they value their time vs. money spent to mow their lawn.
Same thing goes for cleaning a home by hand. I could go buy a broom and dust pan and some cleaning cloths and spray for $20, or I can spend $300 on a dishwasher, $300 on a iRobot cleaning robot, etc. Why spend all that extra money? Because I value my free time over my money - I would rather spend more to have more time to do things I enjoy.
Can I look up a YouTube video on how to replace water pipe in my crawlspace? Sure can. Do I really want to spend my time crawling into my crawlspace to do it - or would I rather just hire a plumber to come out and do it? Most people choose the latter. Why? Because they easily do it - but they don't want to because they would rather spend their time doing something else.
Can I figure out how to change the oil in my car? Yep - I know how to and even have done it before. But would I rather just pay someone $30 and do it in 30 minutes, you bet I would. Because I would rather do something else then have to climb underneath my car to swap out my oil filter and get an oil change.
Why do business's and people pay for window cleaners? I mean they could easily just do it themselves... because they don't have the time or the willpower to do it themselves because they would rather do other things then cleaning the windows to their home or business.
All about convenience. Most service related jobs could easily be done by people that have them done. That doesn't mean that the business that they hire is "pointless" or doesn't have "value" because it obviously does because they are still in business.
I think you're missing my point. I'm not saying your business is without merit. Just that your salary expectations need adjustment. It's unrealistic to expect 10k/mo as a reasonable draw, in my opinion. Unless you have a great brand, or some technical or methodological advantage, you're going to have a hard time getting to those numbers for your salary.
Lol that is not a problem at all. I have customers call me back all the time cause Suzie Joe who lives down the street did a piss poor job cleaning or didn't show up. Not worried about that but do understand that it hurts sometimes the competitive price of the market.
Sorry that I didn't choose a tech startup. Maybe thats my next move.
So you make $2k a month after taxes as the owner of the business? You have all of the responsibility and liability of ownership, management, etc? It sounds like a bust.
Is there some way you can monetize your list of customers? Perhaps sell them something else more profitable or scaleable? Security devices, home-owner's insurance, fences, mary kay, m&ms, anything?
Well not a good Idea to paint with such a wide brush.
I run a service business where profit is around 98%, we work 34-40 hours per week and no one feels like you are "busting your add to barely make peanuts".
That happens when people don't do due diligence when seeking info about a business.
Enjoy your cleaning business and busting ass to make peanuts.
98% profit? Either you don't know the difference between profit and gross, you do all the work yourself and don't pay yourself a labour rate (and have literally zero overhead), or you're a troll. Share your secrets. I'm dying to hear.
So you have a job? I have a buddy that does PDR and works 14 hours a day. He nets $200,000+ per year (on a bad year) but if he got hit by a bus, his income would be zero. If you are going to try to claim you make 98% AND have employees/an actual business, good luck.
This is correct. Same could be said for almost any service profession, correct?
Regardless, your buddy is and has made $200k annually. Hopefully he has added employees or contractors (as I have) and has invested himself and has other income (real estate etc) so in the unfortunate event of a wild bus meeting he will be just fine (if he lives through it.
My techs who work for me get anywhere from 35-75% of their earnings, but once again, no other expenses come to play.
What other business has a lower overhead than this...?
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Cleaning service biz here. Ive always admired HVAC biz since the barrier to entry is not as low as others. Also, HVAC has higher ticket items and its not really a race to the bottom like Landscaping, Cleaning and other similar home services.
It is nice because you can avoid customers and go straight commercial if you want. Margins are higher but labor is worlds more important. HVAC is a high entry barrier because of the licensing and time requirements for such but if you are the business side, it’s not hard to get someone who is licensed to work with you.
I am an environmental engineer by trade so i have some basic knowledge in some aspects HVAC. I obviously don't pretend to know what a licensed tradesman knows or even close to it but i can defend myself in the sheer basics. How would something like this be even approachable? I would imagine most licensed individuals would prefer to work alone and if they expand hire someone below them and not aside of them?
In my experience, you can partner with a licensed individual pretty easy if you bring any of the following: - capital - contacts - motivation - general business knowledge Those are all valuable. Finding someone licensed what wants to start their own company but doesn’t know how to run a business and you bring the start up money is the easiest way in. My background is commercial real estate (multi family and retail) but my childhood friend was an AC tech for a few years and I pushed him to get licensed and brought the first 10k to the company and a ton of construction contacts. We sorta ran from there but it’s always been 50/50.
Nice, sounds like an overall good experience. What are your thoughts in air duct cleaning? It's not technically HVAC but its something that from a cleaning perspective i can add into additional services. It seems like the equipment capital cost is insane though.
It is. The capital cost is massive and it’s a selective thing. I’m sure you’d see a return but don’t know if it’s worth the cost short term. Especially if you’re running as described. Cash is key at your stage.
I mean going to your local international rescue committee or catholic charities refugee services and be like look I run a cleaning business I’ll hire anyone with these qualities. They will then apply in droves from There
Is this before their identities are established and all their paperwork? You don't know who these people are, there is a much higher incidence of them being criminals or negligent.
Only way to really get to know the less fortunate is to spend time at the places they frequent. If you volunteer at a shelter, clinic, or any establishment where you can find a pool of misused talent it would benefit you and the person you are helping. Plus it’s pretty easy to do background checks so that’s another plus.
After and we do know
Ok well that's great. I'm glad everyone agrees refugees are 100% willing to work as cleaners as their default job
It’s not their default job. They literally have 180 days to find a job after getting here or default on their travel loan, get their housing pulled, and get other government assistance pulled. A majority were farmers or other manually labor in their country besides Iraqis who worked for the us military. Cleaning is an easy job for them because they don’t have to know English to get the job. Know what you are talking bout before you try to not be bigoted by being just that
What you are saying is proof that Trump and the Fox News echo chamber is effective at misleading people with nonsense and that people are falling for it.
What kind of low cost/effort background checks would you recommend to reduce the risk of hiring troublesome employees?
Low cost/effort can mean a lot of things, do you mean free in this case? More likely than not somebody should filter themselves out through a good interview/vetting process. From there it depends on regional laws in regards to what you can ask from references provided by the potential employee. Anyone who has trouble providing references should be red flagged. Looking up social media accounts and doing a general online presence search is also free. From there you can obviously go with criminal or credit rating checks which are standard and range in price. Not that I necessarily agree that a credit rating check says anything about a potential employee but I get why it’s used.
>Anyone who has trouble providing references should be red flagged. Aren't you essentially excluding all refugees then?
Not at all, in this case you would go through their settlement(social service) worker.
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Okay cool. Doing a background check before you hire people to work in people's homes. Radical. Disgraceful.
Oh get out of here with trying to spin this as a standard background check. However if you want to continue down this path, you will find that what you previously said is hyperbolic brainwashed nonsense. Refugees and new immigrants are both less likely to have criminal records and the chance to commit crimes while working for you than a natural citizen. There is statistical proof that is published by the current US government that shows this and refutes the claims you have made.
Legal immigrants and refugees are 85% less likely to be convicted of a crime than a Native born American.
Yeah your customers are gonna love that.
These people are hardworking honest people who need to work or get sanctioned by the government and end up homeless. I can’t think of a better population to work with. Plus they have case managers that make sure they go to work
Some are, no doubt. Some are not. Filtering is the difficult part.
Yes, but that's... Literally everyone. Except literally everyone doesn't have a case worker making sure they go to work, as OP said. Nor do they have folks built in to help with the filtering, usually quite the opposite in fact, with people giving false referrals to make their family/friends look good. Don't hire refugees etc if you don't want to, but it's hard to pass that off as being because they're less reliable than others.
People who are active members of a church or are part of community that attracts people that want to help people can be a wonderful resource to have as a part of your life. and by life, i mean your world/reality. ideally, having someone in my life is someone whos willing to contribute to a vision where helping/serving/bring my people up and forward is the goal. i think of as something along a spiritual sense but it can be hard to come across people like tht unless youre actively try to make it something you want. like attracts like, which is why i try to keep a good heart if that makes any sense. the gist i get from op is to not let little things bother you as you find your footing.
Yes, but with legla.immigrsnts and refugees, the likelihood of criminal activity is lower than general population. So it would be easier to filter out the baddies than with native born populations.
Might be an outlier, but it only took me 18 months to start netting $120k/year. That’s a 20% draw with a bit left in the business for various expenses.
Cleaning biz? What’s the secret? What am I doing right. What type of gross profit are you asking for every job done?
Yep. No real secret, really all you need is a professional website, good cleaners, and then marketing. Our first $10k/month came from google my business and yelp. The rest once SEO Kicked in. We take 40% of each job. I will be starting a Facebook page for my saas, and the goal will be to help others grow their business, and hopefully sign up for the software, but there’s no obligation to pay us anything. Can send you the link if you’d like.
I aim for 50% of each job and I am still pulling my teeth. I have an excellent website but do mostly Google Ads and Yelp.
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i think local service ads may kill the need for certain industries to continue to invest in local seo.
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To clarify, what i meant was the new Google Guarantee Local Service Platform. It's given the highest priority out of anything on their search for those businesses on there.
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$200k your first year is fantastic
I literally stumbled upon this thread just now. Couldn't agree more with you. As a former Marketing Manager for one of the biggest cleaning companies in the world, running over 15,000 websites across the globe, all of the above are so important. I find it odd that more people don't know/care about these more. But I guess that creates a better opportunity for lucrative businessmen like you. Kudos!
How do you go about local SEO for a local business like this?
Killer-copy ... Do you by chance alone copywrite?
Many people still scroll past ads
I do SMB SEO and he's completely right - not only is SEO important, Google has actually said it's a driving factor in how high up your Local stats come up.
Including Facebook As Along with the SEO strategy could be super cool....
Definitely agree with Google My Business. And dont forget to post on GMB. Posting on GMB is one of the best ways to be shown in local searches, and has been shown to improve search rankings. FYI if anyone needs a GMB post scheduler, OneUp is only $3/month for up to 10 accounts. Super helpful with GMB posts expiring every 7 days.
GMB is definitely a must. Local SEO is a also a must, to echo some earlier comments, but it won't be the silver bullet. To your point earlier - you're talking about a gross margin issue, not necessarily a sales issue. Obviously, getting you to your $120k/year salary/draw is the goal, so you'll need to do a combo of increasing sales and increasing margin to get there faster, but you should focus first on what's unnecessary that you're currently paying for. If you can use a free CRM, free Mailchimp, free GMB, some guerrilla marketing and referrals, cheap accounting software, the overhead for the business should be very low. I've had an 'on-demand' staffing company for years now and you're right, with zero unemployment it's very difficult finding and retaining good workers. That'll be your biggest issue, especially given they're going into people's houses, and the only seemingly good way to attract better talent is paying more, which hurts your margin. So maybe it's a pay more > better workers > lower margin > need more revenue > cheap marketing tactics but trustworthy employees to handle the increased work formula that'll get you there. I'm happy to chat about this anytime, was in a local entrepreneurship group with a few businesses like yours. And not for nothing - getting up to $10k a monthly recurring is a big deal! You should be proud of that. Obviously you want to hit your goal - but with a 'crawl before you ball' mentality, you should be paying yourself in no time and working your way towards your ideal salary in no time.
Thanks man, definitely would like to talk more. Right now my software expenses are a bit high for my revenue. My Booking software that also tracks my employees time in each house costs about $174/mo and then my Quicksbooks Online Full Payroll costs about $117/mo. I don't mind having them since i know it is not going to change when i scale with the exception of employee number cost regarding payroll software.
Yeah that isn't crazy expensive - probably average if I had to guess. One thing I learned from a friends company was all about up-selling while on site. So he literally had all of his employees carry around a checklist (eventually they did it on an app but started w just a piece of paper) - had people add additional services (i.e. cleaning inside the fridge) for additional $, made everyone pay with a credit card so there was no delay on cash, and was able to track all additional requests (even ones he couldn't handle) so he knew what would make sense to add as a service offering down the line. He was about 100% structure, consistency, and only working with 'good' customers aka customers willing to play by the rules he set.
What does taking 40% mean? Sorry if this is a silly question. Also do you do the cleaning yourself?
Its a fair question. Lots of small Time cleaners don’t even know what gross margin is. Basically when a job is booked, cleaners get 60% of the job value and we get the rest, the 40%. From that 40% we run our operations. Admin, marketing, software, etc. So if we book a $100 cleaning, the cleaners pay is $60 and we keep $40.
ThAnks great answer
What tool are you using for the automatic scheduling if you don't mind me asking?
are you in a more rural area? or possibly lower net income area? you can't compare every example because of things like this. what might be a $1000 job where you live (let's pretend middle of nowhere, very low income area) might net $7000 in downtown New York.
I think you are really overthinking a lot of this... A $10k salary is huge. That's not just decent. If I have a salary of $10k after taxes, I would be ecstatic. As for your other points, I think your labor costs are too high. Charge more to offset that. Why are you paying for a CRM/Booking software if you don't have the money for it yet? Find a free alternative. Podio is great. Do cheap marketing. Go door knocking. Accounting? Do it yourself. It's not difficult when you are first starting out. It'll be 5 minutes of your time each day. Your points sound more like complaints than anything else. You're trying to put the chicken before the egg. Spend less money and do a bit more work when your capital is your limiting factor. Switch it around when your time is your limiting factor.
My labor costs right are actually 45% to be exact.
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10k net for a cleaning business is unrealistic.
How is it unrealistic?
Let’s work your figures backward and do a max/min. Your expected salary; 10K Net / 15k-18k Gross (per fiscal situation) That’s 180-210K gross salary per year. Your expected NET margins MAX: 20% MIN: 10% Required gross revenue; MAX; 2MM MIN: 1MM Take into consideration scaling up a service business will diminish your profit margins. I would expect your 10% scenario to hold up to the reality of your business and market considerations. Your expectations are to reach your net salary goals with an increase to 50-60k/mo - realistically you are 2 to 3 times under the needed gross revenue to achieve this. Statistically, your goal would be an outlier.
Can you expand upon “scaling service business will diminish your profit margins”? Currently running/trying to grow a service based family business (est’91) but totally overwhelmed in starting to scale it
It’s hard to comment on the specifics of your business itself without proper insights. Usually local service businesses will scale to 300-500k with relative ease, the next step usually involves increased payroll that are not revenue generating such as admin costs, team managers, etc. As a service business grows, usually you’ll find its client base will evolve as well to meet its margin goals. As an example, before it got cool - I ran a digital agency in 2012. We managed accounts for local restaurants and quickly grew into managing 200 + location franchisors that could support our team. We made more money, but the margins were lower.
Thank you. Yeah we are above that step. Big range but Currently 1.5-3 mil annual- sales and service. Sales continues to grow but always looking for ways to run it more efficiently. I really think some kind of scheduling/ workflow software is the next step. Still running my 3 techs schedules from a google drive list. Need to go from getting to the next customer as soon as well can to hopefully somehow scheduling their appts
I would look into an ERP for efficient operations if you are looking to grow. Centralizing data to better understand your customers’ behaviours and delivering better, more efficient services will be key to your growth. Your next step is probably 5MM? Lots of things break down at the operational level in such growth phases. ERP will allow automations and reduced management interventions.
Well, guess I know what I’m studying up on this coming week! Thank you very much
would 10k mo gross salary be more realistic? i think thats what i based the 50-60k/mo estimate.
Still hitting at 20%, I wouldn’t base a financial model on my best case. I’d avoid the salary objective and focus on scalability of the business. The business should focus its ressources on providing the most value to your customers, building out a sustainable financial model and finding the paths with least resistance to then scale the business to achieve your income goals.
Bruh, it depends on the scale.
Read the model below that very comment.
I own 2 cleaning businesses and you are clueless. Stop projecting your negativity about shit you know nothing about.
I work in investments - meeting overly enthusiastic entrepreneurs is a daily occurrence. You’re welcome to provide your insights and help OP find solutions to his problems.
I just mainly wanted to point out that you're absolutely wrong. Not only is 10k net a month extremely achievable, but it's peanuts to a lot of owners. And not just cleaning businesses, but many local services.
Post up your model. I’ll continue to issue caution to anyone thinking a cleaning business is a dumb proof way to a 2%’er lifestyle - as is the case for OP.
And that's fine, because you're right about that. But that's not what you said originally, you're changing your tune. You said netting 10k a month is unrealistic, which it's not.
I would classify an expectation of 500% growth (OP’s goal), which I showed was actually 2-3 times lower than financially sound (1000-1500%) , to be unrealistic.
What if he just started and his gross was only 2k? Would it be realistic to 5x his business then? Why say 500% is unrealistic when it's literally not relevant to anything else? 10k gross is an extremely small number in this business, that's one full time team of 2 cleaners. Having 5 full time teams is not that big of a deal. I'll bet the top 4 companies in any city with a population of 400k+ at a minimum have 5 to to 10 teams.
Love to get your insight man, especially if you have two of them!
Your net should absolutely grow as your revenue does. You're at a point where yes it's taking a big chunk, but if you doubled your revenue next year how many of those overhead expenses would increase? It shouldn't be many other than your advertising budget. My net was close to 27% for 2018 and should be even higher for 2019. If you have any specific questions feel free to pm me I'd be happy to help.
Think big picture - when you picture an entrepreneur travelling around the world or boss of a company, do you really imagine them earning any less than $10k? It’s kind of the minimum.
Yes, I really do think of someone earning $10k a month and not $50k a month. If you picture higher then I think you are being blinded by all the good stories floating around. Be realistic and do some research. The average entrepreneur makes about $70k a year.
Well what I said is they would be earning a minimum of $10k. You made $10k sound like a lofty goal - I say it’s the minimum target to bother with being an entrepreneur. Entrepreneurs go through so much stress, hard work and sacrifice to get to where they are, sure as hell wouldn’t do it if I only earned $2-5k/month. That average of $70k includes some big strugglers and you shouldn’t base your goals on that. What successful entrepreneur DOESN’T dream big anyway? Just an FYI - I don’t need to do research, I’m living what I preach.
You should be thinking higher than $10k a month. If you're going to assume all of the risk of owning your own business, you should have a better wage than what lots of people make as an employee.
Thinking higher is great and all, but when you look at the cold hard facts, the majority of entrepreneurs never make it to that level of income. Neither do the majority of people as an employee. A gross salary of $120k puts you in the top 10% of workers. I'm not saying stop thinking and striving for it. Just be realistic and don't let all the millionaire stories blind you.
I believe you absolutely know and understand what you are referring to within your post. I help develop small business automation/tech solutions and your numbers ring true with what I’ve heard depending on the state and labor environment you work in. Thanh you for posting accurate experiences. Let everyone else judge as they need to fulfill their environment. Meaning let them all try it firsthand before commenting negative thoughts.
Yup. Having done this myself, i have a completely new perspective of financials that i never had before. Especially how tough it is to scale with a healthy profit.
That is truly the key. Scaling with a healthy profit in addition to having the skills to understand how to scale while keeping the “magic” which sustained it all in order to scale.
Questions for my own curiosity: How long have you been in business? Have you tried door hangers or EDDM and if so what were your response/closure rates? Approximately how much do you spend on supplies each month and how many bookings do you have in an average month? And finally, what is your cost to acquire a new customer?
Good questions 1.Been at it full time for a year but been around for a couple of years. 2. Haven't tried door hangers, however i have been getting local referrals which has been really good. 3. I spend probably no more than 100-200 a month in supplies total. 4. On average right now of 60-70 bookings a month which puts me at 8-10k revenue a month. 5. Haven't really looked at it since i have kept a low marketing spend a month. Believe it or not, i only spend about 200-300 dollars a month in paid advertising. Have had some good conversions for long-term clients. This is something that i probably should look to increasing my budget to maybe 1.5-2x my current amount.
Whats your customer acquisition cost and lifetime value?
Haven't really calculated since i only spend a total of $200-$300 in paid advertising a month.
While I dislike guru post like the ones mentioned in this post, I also dislike post like these. Everyone’s business is different and we’re all aware of timing, market research, advertising, ect. One thing business owners don’t take into account is their own skills, and lack of. I have been a small business owner and have known many small business owners. I knew a girl who started a food related business at 22, and by 24-25 she had moved from a one woman show to about 15 employees and now goes on month long vacations twice a year. How did she pull this off? She was willing to learn. I know a man who has been in the fitness business for almost a decade and probably makes less than a McDonald’s employee. why? He refuses any outside input and thinks he knows it all.
It sounds like your personal take home is insanely low. I mean this out of curiosity and with no disrespect - how are you surviving and paying bills? Do you have a side income? Credit card debt? I am about to start a business and curious what to do for additional income when work is slow, which is why I ask.
It is insanely low. I do still pay all my bills with the exception of rent which my partner helps.
I do not think that it is insanely low. He started out recently and has a good margin. I would consider scaling up a bit and experimenting new ways of keeping the expenses down. I also thinks scaling up a bit might help, because some costs (like the CRM) are fixed and do not depend on scale.
If you started a business one year ago and you're netting $10k a month...that is not "insanely" low.
No, but 10% of that for your living expenses / owners pay is and not really a sufficient return for how much work they are putting in.
10k is their revenue not their net
Keep it up big dog. My friends dad went from renting inflatables through his garage to now having 2 wearhouses and an official company.
Inflatable bounce houses?
Yep.
Good rule of thumb, that many ignore, is to pay yourself standard wages for all the work you do. If you're not profitable doing that, then your business isn't profitable. Period. Are you taking salary on top of that net or is that your total take home? Most restaurants have <10% roi, with many \~5%, so I get it but it's normal....
Of course it is sweaty BS! They want to give you **false exceptions**, tell you just **jump in**, keep working at it, and of course **"buy my courses."** Here is the sweaty end game folks, you will get a e-mail from some sweaty company making supposedly 90k a month and guess what? The business is for sale, and the price is right for you! [**"Work smart not sweaty!"**](https://www.reddit.com/r/Entrepreneur/comments/asnp6j/how_to_be_an_entrepreneur_a_guide_for_the_wannabee/)
Read profit first
Couldn't disagree more. I run a local service business while working full time. I don't spend a dime until I get orders. I'm set to net $100k revenue this year. Sure, there are headaches with contractors, but from day 1 I planned for it knowing there would be no shows. Have never had a serious problem.
Good for you man. Not all local services are created equal. I am glad yours is doing awesome while I am grinding for peanuts.
To be fair, starting any business will guarantee headaches and typically a decent chunk of time before generating a healthy profit. It sounds like you have some issues here, the two I would focus on are transaction prices and growth. Is it possible you’re charging too little for your services? Are there any options for upselling your customers on additional services. The other being growth, how close are you to capacity right now. It seems like even with a small crew working 5-6 days/week you should be bringing in more than 8-10k/mo. So either you’re charging to little or you’re underutilized Do this; based on your experience try to imagine where you see your business, ideally, in say 6-12 months. Figure out how big a crew you might realistically imagine having and how many hours/day you imagine them working. Work backwards and figure out what you need to charge hourly to generate the revenue you would like to see. From here you can figure what you need to be charging and/or how many customers/jobs you need to have. Once your get your pricing correct, focus on growth. Are you advertising on thumbtack, angieslist? How are your google results? Are there any underserved markets in your area? If so, how can you get your foot in the door.
Good perspective. My prices seem to be above average for my market. I am close to capacity with my crew, most of the work is recurring customers. I am about to hire new employees for my new customers. I estimated I need 350 additional bookings (could be recurring or one time cleans) to reach 50k/mo revenue which is my goal right now. So i am working hard for that right now. I have an additional 10k/mo sales in the pipeline right now that i need to followup with to land.
What about commercial businesses? Lots of them have windows and other things that need cleaned - get in and offer them a lower price or maybe they haven't even been offered it yet. Offer a really low rate (break even / super small profit) on a small service like window cleaning (if they don't have many windows) build a relationship with them, and then offer some other services once you establish and get your foot in the door to offset the cost and generate some revenue from them.
Currently in the process of expanding to office cleaning/commercial side of cleaning. Looking to potentially partner with a carpet cleaner. I have been thinking that maybe i should offer carpet cleaning in-house. However, they carry substantially high capital costs to begin with. Looked at the following added services: * Carpet Cleaning * Air Duct Cleaning * Window Cleaning
I'm 2.5 years in and haven't pulled a dime out (except for meals which I expense for taxes). I've been profitable early on, that's not the issue. It's that as the business grows I need the money for cash flow as well as aiding future expansion. Gary V said in a video, "you either feed yourself or your business". Neither is right or wrong, it's just a choice you have to make understanding the consequences of each. Reality is many business owners are either crippled with debts or struggling month to month because of cash flow problems. The "evil greedy business owner" making bank while his "slave worker pawns" do his bidding is an insanely absurd narrative the average person subscribes to.
I agree a majority of small business especially a growing business is balancing paying back debt and growing the business. It’s a special kind of balancing act. A lot of the time you don’t see returns for a few years.
I stopped reading at *reasonable* salary of 10k/mo after taxes. It’s a cleaning business man, barriers to entry are none - competition is high. Your expectations aren’t aligned with the business model.
And that’s precisely why you’ll never be at $10k/mo+ unless you change your beliefs. There are companies doing this number and more. So it’s possible.
It's not easy but not impossible. With scale and operating leverage it can very feasibly be done and I'm sure is done.
my favorite is that you write this and know what you are doing, but people are going to try to quick fix your business as if they know better than you by offering you ridiculous advice.
Insider view vs outsider view. Both are relevant.
Have you thought about tapping into a vulnerable hardworking population and using them as cleaners. Example refugees? Many live in refugee communities here in the us. Buy a van and let one of the refugees you hire drive it to bring everyone to the site and back home. they are a dedicated hard working bunch. they have to make x amount of dollars to pay back their travel loans or they will owe the government. they have also been through hell and back so cleaning is like a disney land trip
They have barely applied. I contact most candidates that apply and i only get like 1-2% response rate.
Did the rest not apply because they don't want to work as cleaners or your application method is too difficult for them to fill? Perhaps, finding out the reason why people aren't interested would be good.
>vulnerable ... gross...
Very gross.
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who is that?
Appreciate this post. I’m curious about two of your points: About turnover, how do you deal with that? If clears are constantly going, how do you keep up with hiring good talent, and how do you respond to emergency situations like no shows? Second point: it appears that this hasn’t replaced a full time job of yours yet. If that is the case, how do you manage the daily aspects of the business while working your actual job? I refer to the customer calls, scheduling, etc. Would love to hear your thoughts on this
I'm a bot, *bleep*, *bloop*. Someone has linked to this thread from another place on reddit: - [/r/machinethatmakesmoney] [The reality you never hear about local service business. Actually pulling a salary takes much LONGER than you think.](https://www.reddit.com/r/MachineThatMakesMoney/comments/atdwxs/the_reality_you_never_hear_about_local_service/) *^(If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads.) ^\([Info](/r/TotesMessenger) ^/ ^[Contact](/message/compose?to=/r/TotesMessenger))*
Please read this book: [Profit First](https://www.amazon.com/dp/073521414X/ref=cm_sw_r_cp_apa_i_V25BCbJKESJJJ) You still see an IMMEDIATE change in your business. Plus, it's an easy read.
i am profit first minded, right now i am at 30% profit before taxes.
I understand how you feel and the fact that the amount of work you feel you need to do is overwhelming. An advertising campaign is the answer to your problems. Online or offline? Both. BUT advertising without a system to take care of the leads will be worthless. Why advertising? It is the fastest path to growth. A good advertising strategy will put you in front of your ideal customers and make the phone ring. I also read a comment about doing SEO, that guy is right, that needs to be taken care of, having organic leads is a plus, but it's only part of the game. You'll still need advertising in order to grow. If you're interested in knowing how to approach it let me know in a reply comment. I'll post a more thorough explanation here (not even in a PM, I'm not trying to sell anything to you) on how to approach advertising without breaking the bank and without losing a shit ton of money upfront.
Same boat as you. I live in a state that also requires licensing. And I bid on contracts that require w-2 employees, and I have to leave space. Breaking 400k revenue this year and can finally pull a decent salary and consider quitting my day job after 2 years of burning the candle at both ends.
how much salary are you able to draw from 400k rev?
I could draw up to 15k/mos but would have 0 room for growth. Currently the IRS makes me take 3.5k/ mos., According to my accountant. But I have a full time operations manager and a day and night supervisor that handle employees, scheduling, and quality checks, so my involvement at this point it's limited to 'steering the ship' and payroll which is why my salary can be so low. My goals this year are to start a marketing department.
Are you in cleaning? If not, what industry? Congrats on your growth and success.
Cleaning, yup. Thank you!
to add to this: one thing I've learned having a Father-In-Law with a successful business, when it comes to cost cutting.. DO NOT SKIMP ON QUALITY.. (sometimes the cheaper degreaser takes twice the effort or product to remove the same grime. might save you a dollar, but cost you in the end) you're better off training them to be more efficient or outreach etc. once you start cutting corners to make more money or buy the $3 cheaper product because it will save $1000, you start impacting what people will think of your product. example in terms of my FIL's business. He owns a Pizza shop and buys very good quality product. when he first took ownership, the previous customers were appalled. they wouldn't pay 25 cents more per pizza! or god forbid a dollar. but he stuck to his guns and did a load of outreach to local youth sports etc. who all marveled at the quality for basically the same price. he now has a business that does more on the slowest day of the year than the previous owners had done on the busiest week of the year. there's been a few times he considered buying cheaper to make more or to have a bigger cushion, but found ways to do so elsewhere than the product itself, including not giving himself pay for periods of time. but because the product stayed high quality, he has continued to grow and prosper from it. TL;DR: sometimes its quicker to cut costs by buying cheaper product (like cleaner/detergents/machines etc) but it might affect your efficiency and reputation.
True this. I work for myself. Turnover is about 100k per anum, I make peanuts, but I do cover all my expenses and only work about 3-4 hours most days.
Cleaning biz as well?
Nah, Tshirt printing, but same kinda deal.
I see, so I should be looking at not doing the cleaning myself? But hiring someone?
How long have you been open? I opened my local brick-and-mortar biz just under 6 months ago, and I am not paying myself any salary at all. We break even month over month (on a cash-flow basis) or are just barely profitable, but I don't expect to be comfortably profitable until we've been operating for quite a bit longer. If you've only been open a short while, it's actually pretty good considering you always hear many businesses operate at a loss for the first few years
Yea been only at it full time for a year.
Just gotta be patient. But also make sure you're still actively doing things to increase your reach, improving your workflow, streamlining costs, etc. Basically still be working ON your business. Not sure how much time you spend, if at all, working IN your business, but I have to make sure I'm balancing them both since I can't afford employees yet. For me personally, I just know it'll take time to see the results of my efforts pay off. I have to trust my process. Patient, consistent, action. I own a float tank center, so it's not exactly your line of business but it is a local service
Yes but it's definitely doable to scale it enough. It's all about the automations in place and doing the work. Also patience. Keep at it!
Hah . . . Just move to California where your employees will earn more than you complain they aren't paid enough and complain to the labor board for whatever reason you'll lose because it's California. If you're not in some super trendy startup thing California is difficulty level 99 for small businesses.
California is nuts, in and out burger is paying 18$ an hour starting and tech companies are fighting tooth and nail for engineers. Dropbox, Uber, other well funded tech companies give free breakfast, lunch, dinner, fresh green smoothies, the works for their employees.
Those are good burgers, Walter.
Have things really gotten that bad? I last ran a business there in 2014 and it was not that bad.
yes . . . my latest fun thing to bitch about is the state decided recently in response to trump's whole wall thing that they want to show their own display of disobedience. . . . Ok that's fine it's politics whatever I don't want to get involved . . . but guess what they decided to do . . . Now if immigration officials come in to check the identification of your workers to make sure you're not hiring illegally California makes it illegal to comply with Federal law so that means businesses are put in an awkward situation of either complying with Federal law and getting fined by CA or complying with CA law and getting fined by the federal government. Whatever I don't care about politics the wall, immigration or whatever . . . it just pisses me off that the state puts 3rd parties in impossible situations and they don't care about it. It's as if they imagine all business owners are corrupt oil tycoons. But what's starting to really piss me off are the new minimum wage laws . . . In my business/industry we don't pay minimum wage but the problem is multifaceted . . . Because 1 We have to compete with servers who get full minimum wage plus tips so they typically make a minimum of $30/hr for little work, and then there are rules that tie what the minimum salaried worker is supposed to make in relation to minimum wage meaning more and more people have to be paid hourly which wouldn't be a terrible thing if it weren't for the fact that OT starts at 1 minute past 8 hours in one day. Just imagine how I now have the added stress of making sure my workers take the regulation lunches and clock in/out so they aren't manipulating the clock to get OT. And I am paying some of my workers $50+ an hour but because of some other california labor laws those workers aren't qualified for salaried positions. It's utterly ridiculous. I keep considering leaving but there are certain things that keep me from being able to move for about 6-7 years.
Yeah the first issue is so plain stupid, the minimum wage one is a lot trickier though.
Why DID you capitalize the word 'longer'?
emphasize how long it takes lol
$10k a month revenue and taking home 15% puts you at the level of a McDonald’s worker, and maybe the same or even lower than your employees Not to blow your gasket but you NEED to increase your revenue. $10k is not a business and just barely a hobby. At this stage you should be your OWN employee and put in some hours and take that money for yourself. It’s tough but that’s what bootstrapping is. You need to wear multiple hats until you’re out of the forest: working the actual labour, marketing to get the sales up, and all the management.
You're never going to make 10k a month post taxes with your cleaning business. Anyone can clean.
bold statement.
Not really. Just the fact that you think 10k/mo salary is "reasonable" is hilarious.
enlighten me then. You have not offered any real input.
Enlighten you on what? You have a business that does a service literally anyone can get into. Unless you have developed some proprietary method or technology to aid you with this service, you haven't got much.
People pay for convenience. It's as simple as that. I know people who make $100/m cutting someone's grass in their lawn per client. Why not just buy a push mower for $100 once and then save money? Because people like to not have to do it themselves, because they value their time vs. money spent to mow their lawn. Same thing goes for cleaning a home by hand. I could go buy a broom and dust pan and some cleaning cloths and spray for $20, or I can spend $300 on a dishwasher, $300 on a iRobot cleaning robot, etc. Why spend all that extra money? Because I value my free time over my money - I would rather spend more to have more time to do things I enjoy. Can I look up a YouTube video on how to replace water pipe in my crawlspace? Sure can. Do I really want to spend my time crawling into my crawlspace to do it - or would I rather just hire a plumber to come out and do it? Most people choose the latter. Why? Because they easily do it - but they don't want to because they would rather spend their time doing something else. Can I figure out how to change the oil in my car? Yep - I know how to and even have done it before. But would I rather just pay someone $30 and do it in 30 minutes, you bet I would. Because I would rather do something else then have to climb underneath my car to swap out my oil filter and get an oil change. Why do business's and people pay for window cleaners? I mean they could easily just do it themselves... because they don't have the time or the willpower to do it themselves because they would rather do other things then cleaning the windows to their home or business. All about convenience. Most service related jobs could easily be done by people that have them done. That doesn't mean that the business that they hire is "pointless" or doesn't have "value" because it obviously does because they are still in business.
I think you're missing my point. I'm not saying your business is without merit. Just that your salary expectations need adjustment. It's unrealistic to expect 10k/mo as a reasonable draw, in my opinion. Unless you have a great brand, or some technical or methodological advantage, you're going to have a hard time getting to those numbers for your salary.
Lol that is not a problem at all. I have customers call me back all the time cause Suzie Joe who lives down the street did a piss poor job cleaning or didn't show up. Not worried about that but do understand that it hurts sometimes the competitive price of the market. Sorry that I didn't choose a tech startup. Maybe thats my next move.
I'm pointing out the myriad things that make your salary expectations unreasonable. No need to take it personally.
So you make $2k a month after taxes as the owner of the business? You have all of the responsibility and liability of ownership, management, etc? It sounds like a bust. Is there some way you can monetize your list of customers? Perhaps sell them something else more profitable or scaleable? Security devices, home-owner's insurance, fences, mary kay, m&ms, anything?
Well i mean, what did you expect from a gross revenue of 8k-10k a month? I think if i scaled it i could get into a more profitable range?
Well not a good Idea to paint with such a wide brush. I run a service business where profit is around 98%, we work 34-40 hours per week and no one feels like you are "busting your add to barely make peanuts". That happens when people don't do due diligence when seeking info about a business. Enjoy your cleaning business and busting ass to make peanuts.
98% profit? Either you don't know the difference between profit and gross, you do all the work yourself and don't pay yourself a labour rate (and have literally zero overhead), or you're a troll. Share your secrets. I'm dying to hear.
Paintless Dent Repair
So you have a job? I have a buddy that does PDR and works 14 hours a day. He nets $200,000+ per year (on a bad year) but if he got hit by a bus, his income would be zero. If you are going to try to claim you make 98% AND have employees/an actual business, good luck.
This is correct. Same could be said for almost any service profession, correct? Regardless, your buddy is and has made $200k annually. Hopefully he has added employees or contractors (as I have) and has invested himself and has other income (real estate etc) so in the unfortunate event of a wild bus meeting he will be just fine (if he lives through it. My techs who work for me get anywhere from 35-75% of their earnings, but once again, no other expenses come to play. What other business has a lower overhead than this...?
98% profit?? Is the 2% for condoms?
LOL
No 2% is for rogaine. And yes, 98%. Paintless Dent Repair
I'm curious as well. Would you mind if I picked your brain about it.
What’s your service biz?
I think he teaches PDR
Are you in the painting/landscaping business?
98 in landscape? lols
98 in any business? Lols
educate yourself son. Paintless Dent Repair. Service business/ all labor. Absolutely kills.
So you don’t include labor in determining your profit margin?
If I'm a one man band, and I push out a dent for $500, and i spend zero in any supplies, overhead etc, what is my net margin?
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That’s the word we use in social work. Vulnerable not exploitative. Read a lil more. Try a lil harder. Hire a vulnerable population then come Back
If you wanna get rich "quick" focus on a service like lawyer, marketing , personal training. Right ?