Financial Matters to Consider in Your Cleaning Business

Considerations for your cleaning business

The ability to manage and organize finances is a necessary skill in running a successful business. You may watch your business suffer due to a lack of money or confusion over expenses if you don’t plan and prepare. Do not let this happen with your new business. Instead, learn how to handle finances properly.

Process for Setting Prices:

You will need to decide how much you want to charge for each service that you provide. Many factors go into determining the cost of each service. These include equipment costs, labor hours, employee salaries, and job size.

It can be difficult to choose the right price, as you need to have it both high enough to earn a profit and low enough to keep customers. How do you find a realistic middle ground?

• Know your competition –Step 1: Research who you are playing against. Ask about the rates of businesses that offer similar services in your area. What is the speed of the most successful company in your locality? The current market rate will influence your prices since you want to remain competitive. You may want to lower rates in the beginning to gain an advantage over your competitors, but you should be cautious not to make your financial situation worse. When you speak to customers, knowing what other companies charge will help you compare your service and price to those they have heard about. It makes you appear to be knowledgeable and as if you are offering the best price.
• How To Set The Cost Per Job –As a newbie, you may not know how to quote a client. You can charge per square foot for the room that you are cleaning. This is a good option for businesses like floor cleaning or carpet cleaning. You may charge per hour for both domestic and commercial cleaning. You should remember that if you choose to charge per hour, your clients expect you to be efficient and to get the most from each hour. They will pay more if you stay longer, so they might not like it if you don’t finish the job quickly. You will become more experienced and learn how to estimate costs as you take on bigger jobs accurately.
• Consider Your Business Plan. Include a section in your business plan that addresses the projected profit and loss. What are your goals for profit? Cheap prices can hurt you more than help you if your current price isn’t high enough to meet your goals and keep your business afloat. If you’re not able to stay in business long enough to retain your customers, it’s pointless to lower prices to attract new clients.
• Calculate the costs for each job. This includes everything from travel expenses to supplies. Numbers will vary depending on the client. Each position has a different travel distance and may require additional supplies. You can determine the profit margins for each class by establishing a rough estimate of what it will cost. Add the cost and profit that you want to make together, and you get an estimated price. Adjust the price a little depending on what your competitors are charging.
• Rates for Contracts – You may not have a client who pays per job. Instead, you can sign yearly or monthly contracts with commercial clients. You can decide whether to offer these contracts or keep the payment terms shorter. You can submit a discount on your prices to encourage customers to choose you if you provide long-term contracts. A price reduction for long-term agreements shouldn’t harm your business since you’re getting a consistent and steady income from the client. This could be the best way to gain their business.
• Prepare to Negotiate with Clients Many clients are aware that you can change your price and will negotiate. You may have to accept their offer if you want them to do business with you. You can tell them that the price has been set and cannot be changed if you decide ahead of time not to negotiate. Prepare a prepared answer and train your employees to respond if the customer attempts to intervene. Set a price that is the lowest you can go and tell your employees not to deal below it. You may have to refuse a client’s request for a higher price if it will harm your business more than help.
• The Process of Keeping Records
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• You must learn how to keep track of customer information, including preferences and payments. You will soon see the results of disorganization in your day-to-day operations and customer relationships. You will lose your customers’ data and need to ask for it repeatedly. This can make them not want to use your service. Develop strong organizational skills to keep your customers and maintain a good image.
• To keep up with all the paperwork, you need to know which to save. How can you possibly keep track of all the documents and paperwork a small company generates in one workweek?
• Business documents –Do not lose track of any licenses, insurance papers, or other government-issued documentation that proves your right to run your business.
• ReceiptsYou need to keep any document that shows your business income. Save credit card statements, invoices, and receipts for check deposits, as well as any other documents that are related to your business income.
• Proof of Purchases If you are starting a cleaning business, then you will spend a lot on equipment and supplies. Keep a record of your purchases, including proof that the payment was made. This information may come in handy at some point. This information is important when you are preparing your annual budget. You can then see what you spend annually on resources and supplies.
• Information about Loans and Investments: Keep all documents and transactions you have made to date. You will have to pay off an SBA loan. Please keep track of your investors’ information to update them on any changes in business and how their money has been used.
• Tax Filings – At this point, you may realize that pretty much any document related to finances should be saved. File away any records that have to do with business taxes, your employee’s taxes, and taxes on purchases you made.
• Health and Safety Documents – Hold on to any documentation regarding health and safety regulations so that you can use them for future reference.
• Contracts – If you choose to make long-term cleaning contracts with clients, you need an organized way to hold onto these valuable documents. You can’t have the client responsible for keeping up with their copy, but you can be accountable for your copy. Should anything arise that requires the contract to be pulled out of the files and possibly renewed, you should know where it is and how to access it.
• Business Decisions – This is especially important if you are not the sole owner of the business, as you will need to record agreements and decisions about changes to the company. File any changes you make to the business plan or customer agreements.
• If there are any of these documents that you are not legally required to keep but choose to do so just in case you might need them, figure out the appropriate length of time to hold on to them. If you keep everything from the moment you start your business, you may have too many documents to keep up with. Hold on to documents you aren’t sure about until you are certain you can operate your business efficiently without calling upon them, and then clean out your files of unnecessary documents.2 If you are unsure about how long to keep up with important business documents, search online for information about your specific question or contact a professional just to be sure you have valid information! This is something you don’t want to get wrong, as it plays such a critical role in the success of your business.
• Keeping up with the required business documents will help you stay out of trouble regarding taxes, promote efficient customer service and customer relations, protect your business against potential lawsuits, and assess your business’s profitability.
• How can you make sure that you are organizing and keeping up with all these documents efficiently? Here are just a few tips:
• Keep it separate from your personal life. Don’t make payments for the business on your credit card, and don’t use the business credit card for personal expenses. In the beginning, it may seem easy to pay yourself back with either, but in the long run, it just gets confusing, especially when you’re trying to keep up with expenses and records. Save yourself the trouble and keep the two entirely separate. This will help with professionalism as well by maintaining customer relations different from your personal life. If necessary, look into getting a business phone rather than using your phone to make customer calls. You can get a cheap deal on a phone plan that suits your needs for the business.
• Give yourself time to work on records. Don’t just expect yourself to find the time if you don’t purposefully set aside the time in your schedule. It doesn’t take much time out of your plan if you make it a weekly routine to sort and organize records and documents. Keeping up with a weekly schedule will also help you stay in tune with the ins and outs of your business and how things are looking financially. You can see firsthand any progress or decline that your business’s finances have taken and keep up to date with current customers or contracts. You will be able to spot potential trouble areas before they have the opportunity to present an issue for your business.
• Check for financial holes and inconsistencies. A sloppy job of following through on invoices and payments can lead to you not being paid, and you may not even realize it if you don’t follow through. If you take the time each week to look over customer payments and make sure that all is in order, then you should be able to catch any instances where a customer didn’t turn in their invoice or something along those lines. Checking up on your financial situation on a weekly basis can keep you from overspending during times of financial stress and help you put money to good use when your business is doing well.
• Call in a professional as needed. If you’re new to the business world and aren’t quite sure where to begin on your own, it would be more beneficial to pay a little extra for an expert than to hurt your business with poor record-keeping skills. Lack of expertise in this area can lead to loss of income, tax issues, and even lawsuit issues that could have been prevented. Over time, you should get the hang of the system and may no longer need to call in a professional, or you may still choose to do so for peace of mind and confirmation.
• Billing Process:
• Please talk with your customers about their preferred method of billing, as it could vary from client to client. If you prefer to set a standard billing process, then you can let them know upfront about your policies. Some residential cleaning services, for instance, have their customers pay with a check at the time of the cleaning. Others might send a bill in the mail or over email after the cleaning is finished. With residential clients, you are best served by letting them pay in the manner that they are accustomed to, whether that be by credit card, cash, or check. Just make sure that their payment is legitimate and consistent, especially since the billing process is typically done after your services have already been provided.
• For residential customers, you will have some clients who have a routine cleaning schedule and others who only hire you on an occasional basis. You need to develop a system for each, which includes setting up a regular billing schedule for the client with recurring billing. You will find the same situation with commercial clients, in which they hire you to clean on a regular basis. You can set up an email invoice to go out on the occasion of each cleaning; make sure to remember to cancel the invoice if they cancel the cleaning.
• Once you begin a routine contract with a client, you may get into the habit of relying on your billing system to send out the invoice, and you won’t even have to do it manually. Just be careful not to get too comfortable with automated billing systems because you may not be as wise if the customer misses a payment. This makes record-keeping critical in order to ensure that you are paid!