Like many employees, Rita is wondering if she should take the plunge into
small business ownership. Many do. According to the U.S. Census Bureau, there
are over 17.6 million businesses with the owner being the only employee. The
same report indicates that 20% of the new businesses started in the previous
year were for janitorial services.
If Rita is serious about making a change, there are some preliminary steps
that could help her make a good decision. Let's walk through some of those
Rita will need to decide if the business can be profitable. She should
estimate how much work she'll get. From those sales she'll need to pay for
cleaning supplies, insurance, marketing and other incidentals. What's left over
is her profit. Naturally they'll be taxes on her profits. What's left is her's
Rita will need to decide what to charge. She probably won't be able to charge
as much as the company she works for now. They already have a list of clients, a
good reputation and might offer more services that Rita can at the start.
One way to determine prices is to check what other similar services are
charging. Remember that newcomers generally are cheaper as they try to win over
Rita may want to accept credit cards. The internet makes that easier. PayPal
has a service that will allow Rita to charge clients' credit cards through a
website. She'll pay about 2.9% to PayPal for the transaction.
One of her main costs will be equipment and supplies. Buying from a
janitorial supply will lower her costs. Again, a few phone calls should provide
the needed info.
She'll have taxes to pay and forms to file. Software might get the job done.
If she's the type that doesn't like paperwork, she might want a bookkeeper.
Rita should check with the city or county that she lives in. They'll tell her
what's legally required for her to start a business. Often a license is
Once Rita has all that completed she should be able to estimate her revenue,
expenses and profit. It's tempting to just charge a little less than the
established companies and assume it will all work out. But the simple act of
planning will help her establish a roadmap for the business. And allow her to
know when she's going off course.
Next, we'll look at bonding and insurance. It's only natural that people are
concerned about who they let into their homes. Especially someone who would have
access to areas of the house where valuables are kept. So janitorial services
are often 'bonded and insured'.
Usually 'bonding' means that the homeowner is covered if the cleaner steals
from them. "Insured" typically means that the cleaning company has liability and
property damage coverage.
We found one web site that offered $5,000 of 'janitorial services' bonding
coverage for a $100 annual premium. Liability insurance can run into the
hundreds of dollars. In both cases, Rita should call her local insurance agent
She may find that she's not legally required to have either. Then it will be
up to her whether she wants the coverage.
Finally, let's look at some marketing ideas. Rita is correct that flyers are
a good way to promote her new business. Another great, inexpensive advertising
tool is the simple business card.
Rita will probably also want to encourage referrals. She might want to offer
a 'thank you' present to existing clients who refer new customers to her. She
doesn't need hundreds of clients. So a few referrals could fill her schedule
with a minimum of effort.
Rita could be well on her way to a successful new business. She's identified
something that she does well and that other people want to have done. Hopefully
her research will lead to a decision that works for Rita and her family.
Gary Foreman is a former financial planner and the editor of
The Dollar Stretcher.com website. If
you'd like more time or money, visit
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