Custodial Cleaning Company
Custodial Cleaning Company
Spic and Span
1A Prestwick Ln.
Wilshire, Mississippi 39730
A recent college graduate established his own custodial cleaning company after working with a consulting company, analyzing the marketplace, and writing this business plan.
After graduation from Cooke Community College, Mark Hubbard knew he wanted to run his own business. One of Mark's first jobs was working for a cleaning crew. Mark worked in this job for two years, and then one day it hit him. He knew how to make this business more profitable and better for both the owner and the clients he worked for. So Mark proceeded to contact a firm to help with industry research and write the business plan. After doing this, Mark enlisted the help of his family to get the business going. While they are not partners, they helped finance the business. Starting in Year 2, each family member will be paid back their original investment plus 15%. Each of the four family members invested $17,000 to get Mark started in this venture.
Mark set up the company as a limited liability company, and has all four family members on the board of directors, along with one accountant and one lawyer.
We have reviewed the market and have determined that there is a lot of room for another Custodial Cleaner in the city. The city of Wilshire has a population of 400,000. Its business district is vibrant and prosperous. The GDP for the city puts Wilshire in the top twenty for growth this year. This is fueled by a strong manufacturing sector, since the biotech and computer sectors have been very stable and growing at a slow rate.
Right now there are ten firms listed in the local Building Owners & Managers Association Directory (BOMA), as well as fourteen other firms listed in the local yellow pages. According to the yellow page ads there are only a few that offer services in all business sectors. This is good, because we aim to be a full service firm offering services to all sectors.
Right now there are 8,000 business listed with the city license department. There are 11,000 office spaces, warehouse, and commercial buildings in the city limits. Based on this, we are very confident that the new entrant to the market would be welcome. We made some marketing calls and determined that 40% of the respondents would welcome competitive quotes. We also discovered that the respondents have used a number of different providers but were not satisfied. They were willing to pay a higher rate if they could get reliable suppliers to cleaning services. This was especially a very strong statement from the banking sector. This sector had a total of 149 branches in the city.
Currently, the average cleaning company charged between .22 per square foot to .26 per square foot to clean office and commercial locations. After discussions with a major bank, they told us that if we could clean their 27 branches for a three month trial period with no issues or complaints, they would be more than happy to give us a three year contract. Based on this one contract, this would give us the following single-client revenue potential: 27 locations, with an average of 1500 square feet = 40,500 square feet × .34 per square foot. = $13,770 per month.
While we will grow our business, we have determined to start with our focus on winning this one client and, if we do, we will use this as a foothold to grow our business.
We will be cleaning 27 banks per night; this will include vacuuming, washing windows, cleaning bathrooms etc. Two staff will take 45 minutes to clean the average-sized bank (based on national averages). Therefore, in an eight hour shift starting at 6:00 PM, including travel time, each two-man shift can clean eight banks every night. We will then require the hiring of three two-man shifts to operate the cleaning; the owner will rotate in these shifts to insure quality control is being met.
The average cleaning firm is paying $7.00 per hour for cleaning staff. We will pay $7.25 per hour as a base wage. However, if there are no client complaints for the previous month, we will pay the two-man cleaning crew a bonus of $2.00 per hour. We are very confidant this will insure quality cleaning and low turnover. We want to keep turnover very low, as it costs $125 for each new employee to get bonded and trained. If there are no complaints for the previous six months, we will pay the two-man crew a $400 bonus. This bonus will be reduced by $100 per complaint.
All staffing will be given extensive training before they actually go into the market and clean our clients' offices. We will use a national training model that takes about four days to complete. We will do this in a rented training room within a local hotel.
All staff will be required to be bonded. Having said this, some new hires may not be bonded (i.e. recent bankruptcy victims), and if we have a good feeling about the employee we will absorb the fee for bonding.
All staffing will be required to have a driver's license; however they do not require a vehicle, as we will offer them a company van. This will insure there is never a situation where our staff are stranded or can't make it to a client's job site.
We will become a member of BOMA (Building Owners Managers Association). This will allow us to connect with all of our potential clients at functions. We believe this will be one of our keys to success. The other key to our success will be referrals from happy clients, so we will work hard to win and keep clients. We will also join the local board of trade and other business associations.
We will run ads for our services in the local yellow pages; we will run a sustaining ad campaign in the local business newspaper. This will give us a targeted market advertising approach, with the key to success: winning new long-term clients. There will come a time when these clients will grow us to a point where we have reached a market share that meets our goals.
Products & Services
The cleaning business is as simple as a business can get. All you need to do is keep things clean, using state-of-the-art cleaning products and skills, and as required by the client.
- Office cleaning
- Carpet shampooing
- Warehouse cleaning
- Window cleaning, high-rise
- Shredding of documents (with clients' equipment)
- All general cleaning
- Hazardous waste cleaning (will be added Year 2)
- Crime scene clean up
The rates we charge for this service varies from a per square foot to a flat fee service. An example of flat fee service is crime scene clean up, where we charge a flat fee starting at $995 plus supplies up to $5500. These fees are assigned by the local city purchasing department and each service is given a number in terms of severity by the police department. The higher number gets the higher fee.
- 4 company vans
- 4 complete sets of cleaning equipment
- 20 company uniforms
- Office equipment (laptop computers, maps, etc.)
- 1 carpet steamer/shampooer
- 6 vacuum cleaners
We have also set up an account with a local wholesaler to supply us with large volumes of the required cleaning products at discounted prices.
We just bought the company vehicles, allowing us to write them off. We will trade them in every four years or sell them outright while buying new replacement vehicles. These units will serve a couple of purposes: they will provide our image as professional and they will transport our workers to each site without the worry of staff not showing up for work.
- The cost of these bare bone vans are $12,250 each or a total of $49,000
- Specialized cleaning equipment—$2,500
- First month cleaning supplies—$700
- Yellow page ad deposit—$1,200
- Memberships in clubs—$1,400
Total start-up costs—$60,600 plus any employee hiring expense.
After we get the contract signed from the bank for the three month trial we will have thirty days to assemble our staff and equipment. Based on review we can have all the equipment in one week; we will start running ads now to get the hiring process started.
As mentioned above in the market analysis, we have determined that the competitors in the market are working at a maximum. They are either very happy with their market share or can see the need to expand the market share. This is to our benefit as we move forward. Of all the competitors, there are only four that are affiliated with a national chain, the rest are small independent firms. Having said this, when we called each of them to drop into our accountant's office to offer their services we noted that only the four from the national chain had company vans. The rest of the companies said this was not required. We also noticed that based on their appearance and presentation, we would very quickly be able to take market share away from them.
While we don't want to underestimate our competition, we do believe that sales presentation and appearance will go a long way in selling our services to new clients. We need to separate ourselves from the competition and by doing so will win the high fee contracts.