How a Cleaning Service Business Can Utilize Additional Financing
To offer all of this to your customers, you may need to apply for additional working capital. With the extra cash on-hand, you can invest in various aspects of your cleaning business. In your cleaning services business plan, you can likely determine the areas of your business where you could use extra financing. Here are a few ideas to get you started:
Benefits of Additional Working Capital
1. Staffing – A cleaning service business is labor-intensive. It takes experience and energy to earn repeat business in this industry. You may have many good cleaning business ideas, but the need for labor creates several challenges.
First, you need to recruit good workers who have the skills and the temperament to do the job well. The best employees will work at companies that offer the most competitive pay, benefits and working conditions. If you’re interested in increasing your revenue, you’ll need to invest in your cleaning staff and hire more employees. This means you’ll have to use your business financing to pay for additional salaries, administration costs and benefits. The last thing you want is to not be able to offer decent pay, or to miss payroll altogether, which is why additional working capital can help you avoid this.
2. Purchasing – As a cleaning service business owner, you’re well-aware that you need specialized equipment and supplies to provide your services. These supplies include cleaning products, polishes, rug shampoos, vacuum bags, paper towels, garbage bags and many other materials. There is also a variety of cleaning equipment, some of which can be quite expensive. As your business grows, so does your need for capital to pay for your equipment and supplies. To make the most of your additional working capital, try to pursue bulk and prompt-payment discounts. This will help you get more value!
3. Vehicles – Its standard practice for a cleaning company to have vans or trucks with the equipment and supplies necessary to perform jobs. A van could cost more than $10,000, sometimes much more. If you can’t afford enough vehicles, you’ll be limiting your revenues. This is why you should finance the purchase of your fleet with additional working capital. Many cleaning businesses assign a truck to each cleaning crew leader so that this person can travel directly to the customer, an important efficiency you don’t want to sacrifice for lack of vehicles. You’ll also need additional financing to clean and maintain your vehicles – it would be a terrible statement if you showed up at a customer’s site with a dirty or decrepit vehicle.
4. Back office costs – As a cleaning business owner, you’ll need cash flow for important marketing and other back-office expenses, such as insurance. The bigger your company is, the more you need to streamline your costs. But even if you are very efficient, a working capital shortage may cause you to cut your advertising budget or reduce your insurance coverage. While these moves can preserve some cash in the short term, they expose you to several risks. For one, your competitors might steal your business if they advertise and you don’t. Another important cost is insurance, especially liability insurance. This is vital to protect you from claims of customers (and employees). Other back-office costs are those for accounting, legal services and management. Your periodic expenses normally include rent, utilities, insurance (if not prepaid), payroll and taxes. When cash flow runs short, your business is put into jeopardy, so applying for additional working capital is beneficial.
Clearly, your access to business financing can be extremely important for the survival of your cleaning business. Don’t let your cleaning business ideas go down the drain for lack of working capital!
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