How to Start a Cleaning Business in England and Wales

Are you looking to clean homes or business premises professionally? Alternatively, do you wish to start your own business doing so? Despite the benefits you may receive, starting any business can come with many hurdles, including choosing the proper business structure and creating a solid business plan. This article will explore some essential considerations that you should make before you start a cleaning business in England or Wales. 

Why a Cleaning Business?

Cleaning businesses can be a particularly profitable business opportunity as they often have a relatively low startup cost. Additionally, they can range from single-person businesses to large agencies with numerous contracted clients. Regardless of the size, it is what most consumers consider to be an evergreen industry. This means that people will typically always want a cleaner. 

Creating a Business Plan 

Depending on your ambition, a business plan may not be strictly necessary. For instance, if you only intend to have a couple of weekly customers who intend to supply you with cleaning material, then you may not need a formal plan. However, a business plan may be a good option if you intend to hire multiple cleaners and create a scalable business. 

Although, it may be helpful to note that a business plan is not a legal requirement. However, nearly all businesses will benefit from having a business plan as it provides some assistance with forecasting costs and setting yourself key benchmarks. Ultimately, these things should help your business succeed. 

What is a Business Plan?

A business plan sets out your short, medium and long-term business objectives. In addition, it will address questions like:

• Who is your targeted market, and how will you source your initial customers? 
• Is it necessary to market your services? 
• What is your overall marketing strategy?
• What are your upfront costs? 
• Will you provide your cleaning equipment, or do you expect your customers to provide certain products and equipment themselves?
• How do you intend to finance your business? Is it necessary to seek third-party funding from friends, family, or your high-street bank?
• Will you work alone or have a partner (or employees)?

Your Financial Plan 

You can think of your financial plan as a subset of your broader business plan. But, arguably, it is an essential part of your business plan.

Essentially, a financial plan aims to identify all costs upfront. Additionally, a financial plan can help forecast your revenue and determine how best to improve your profit margins. Therefore, you should familiarise yourself with the following tools and apply them to your business:

• your break-even analysis;
• what your profit and loss forecast will look like in the first year;
• your cash-flow forecast; and
• your balance sheet forecast. 

Although, if you know that your up-front costs will be pretty low, you may not need to undergo detailed planning. 

Startup Costs 

Startup costs refer to expenses that are particular to starting a business. It is essential to understand what these costs are so that you will be able to estimate when you will generate enough cash to pay them back. 

For a startup cleaning business, you should consider the cost of transit. So, will you travel on public transport or will you have a car? Additionally, you may consider what equipment you will use, such as: 

• vacuum cleaners; 
• steamers; 
• mops; and 
• cleaning products.

Other upfront costs typical to most businesses include:

• employee wages; 
• office rent and storage fees; 
• marketing costs; 
• legal and advisory fees; and
• building up a “war chest” of business savings. 

Choosing a Business Structure 

A business structure refers to the legal framework under which your business will operate. The four most common business structures for all businesses in England and Wales are:

• sole-traders;
• unincorporated partnerships;
• limited companies; and
• limited liability partnerships (LLPs). 

Each structure comes with its advantages and disadvantages. Further, not all structures will be relevant to your business. The structure you use will depend on your particular circumstances and intentions. However, as a business founder, you should familiarise yourself with the implications of trading through an unincorporated business structure instead of an incorporated one. 

The main benefit of an incorporated cleaning company is that you tend to benefit from the legal principle of limited liability. This means that your business’ assets and liabilities are separate from your personal ones. Although, the downside to trading through incorporated structures is that they require more administration and management. 

Suppose you run a residential cleaning business by yourself or with another person. In that case, you will unlikely benefit from limited liability, particularly if you have a decent insurance policy in place. However, you may benefit from incorporating your business if your business works with: 

• commercial clients;
• has multiple contracts; 
• multiple employees; or 
• a wide market. 

Insurance 

Insurance exists to mitigate risks and ensure that in the event that something goes wrong, someone other than yourself will cover the financial liability. Typically, this is an insurance provider.

Many cleaners operate in England and Wales without insurance, particularly those cleaning residential properties. Although, from a commercial point of view, obtaining insurance for your business is extremely sensible. However, it may be helpful to note that there is no strict requirement in England and Wales to obtain insurance as a cleaner.

To further develop your understanding, consider the case study below. 

Case Study 

Consider you are a small business of one with a modest but growing customer base. One of your residential customers recommends your business to a contact of theirs. You provide a quote, and the new customer agrees. 

On your first job with the new client, you are vacuuming in the living room when the cord catches a stand and sends a vase tumbling to the ground, smashing into pieces. Your new customer is quite cross because the vase has insurance worth £10,000. However, she understands that mistakes happen and says she will take it up with her contents insurance provider. 

Two weeks later, your customer’s insurance provider sends a letter demanding £10,000 because it believes you are at fault for breaking the vase. 

If you do not have insurance, they could likely pursue you personally to reimburse the vase cost. However, you will likely not be personally liable if you have adequate personal liability insurance. 

Tax Liability 

The exact nature of your business’ tax liability will depend on the business structure you trade through and your income and expenses. However, you should consult an accountant or tax professional to ensure you are complying with your obligations and maximising any credits and tax benefits your business may be eligible for. 

Key Takeaways

Whether or not you need a business plan for your cleaning business will depend on your intentions with your business. For example, if you intend to work as a commercial cleaner, you should likely have a plan. However, if you are servicing a couple of residential properties every other week, you stand to benefit less from having a comprehensive plan. Similarly, operating as a sole trader is often sufficient if you are a small enterprise. Although, all cleaning businesses — no matter what size — should have a comprehensive insurance policy. 

If you need help with your startup business, our experienced commercial lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us on 0808 196 8584 or visit our membership page.

Frequently Asked Questions