Seeing where your own cleaning business venture will take you is exciting, but it’s also normal to feel nervous about financing. Managing the cash flow of your new business is one of the most challenging aspects of ownership when starting out. Oftentimes, new franchisees come from work backgrounds where cash flow monitoring and regular forecasting are not commonplace.
At Ovenu, we’ve helped hundreds of franchisees build profitable cleaning businesses which stand the test of time. This is thanks to our proven business model, containing all the training and support you’ll need to stay on top of your cash flow. Below, we cover the key areas of business cash flow you should focus on.
Common costs for a cleaning business
In order to maintain a positive cash flow for your business, you must balance the two main types of costs. These are:
- Fixed costs – outgoings you can accurately predict each month, such as insurance, management fees, wages, and subscriptions.
- Variable costs – these are expenses which can vary depending on your workload and other factors. For example, transport and cleaning supplies.
It’s important to track both for complete cash flow management and forecasting. This will ensure you can fund the same quality of service your customers are accustomed to, whilst having a buffer to handle any higher variable costs. Our oven cleaning business plan contains all the information you need to monitor costs and projected sales for your new cleaning business.
Budgeting for start-up costs
Every business requires an initial investment to get off the ground. This could be equipment, training, branding, insurance, or any combination of things. If you’re choosing to set up your business independently, you’ll need to sit down and plan out exactly how much money you’ll need to sink into your new venture. This will allow you to make adjustments based on your available funds and budget for the future.
When joining a franchise, each franchise package will have a clear upfront cost. This lets you budget more effectively from the start, as you know exactly what your costs will be. Simply going for the lowest cost franchise option is not recommended, as it can very much be a case of ‘you get what you pay for’. Instead, you need to weigh up what you’re getting for your investment in terms of support, opportunities, and prestige.
Strategies for healthy cash flow
The following are some of the proven cash flow management strategies we’ve seen succeed for various kinds of cleaning businesses.
Payment Terms and Conditions
One of the most common sources of poor cash flow is late payments from customers and business partners. Oftentimes, businesses rely on sums of money coming in at certain times to cover various outgoings. Setting out clear terms and procedures for late payments is essential to protect cash flow. Clearly displaying the costs for your services will help avoid confusion and potential hesitation with payments. If your operation requires that you send invoices, these should be sent as soon as possible and followed up on at regular intervals.
Building a Broad Customer Base
Focusing on one type of customer creates risk, as there might be external factors that affect demand. For instance, if you only perform cleaning for student halls, then you might not have much work during the summer holidays. Having a diverse range of clients can ensure a more reliable level of demand for your services. A strong brand reputation and effective marketing will help your business generate enquiries from people across your territory.
Account for Seasonal Demand
Although this will affect each business differently depending on the type of cleaning services it provides, there will always be peaks and troughs in demand throughout the year. Higher demand typically comes during times when people are hosting more parties, such as Christmas, spring cleaning, and the summer. Budgeting for seasonality ahead of time, whether that’s for a busy period or a quiet spell, helps balance the books month-on-month.
Correct Pricing
One of the cornerstones of cash flow management for small businesses is charging the right amount for products and services. The temptation will be to charge a low rate to undercut competitors and quickly attract customers. We’d strongly advise against this, as it can harm your business’s profitability. Of course, it’s fine if you want to create a reputation as a budget cleaning services provider, but just keep your bottom line in mind.
We’ve drawn on all our years of success to create a pricing structure for the Ovenu franchise that’s competitive, fair, and profitable for your area of operation.
“As a franchisee, I chose Ovenu as the start-up costs were affordable and it offered an immediate return on my investment, making the process cash flow positive from day one.” – Jeremy Beard, Ovenu Durham and Dorset South
Real-Time Monitoring
Nowadays, there are many tools that can be used to track payments in real time. Software can also be used to manage expenses, record income over time, and generate financial reports. It is recommended that you regularly review your business ingoings and outgoings, which is made easier through the use of dedicated technologies. Monitoring tools can also be used to help you make more informed cash flow decisions. For instance, they could reveal customer trends that you can capitalise on to improve the effectiveness of certain deals.
Insurance and Public Liability
This is essential for cleaning business owners to protect against accidental damage to customer property. While you ideally won’t ever have to use it, the cost of appropriate insurance should be factored into your budget. It’s far better to have the fixed cost associated with insurance, which can be included in monthly financial planning, as opposed to facing high and unpredictable costs.
Get Top-Tier Financial Support With a Franchise
The prospect of managing business cash flow might feel intimidating if you’re someone who has never run a business before. With Ovenu, you aren’t doing it alone. We understand that cash flow is the lifeblood of every successful business, which is why all our franchisees benefit from a tried and tested model.
You’re free to build a business you’re proud of without having to constantly worry about money. Get in touch with the Ovenu team today to get started. We’ll be happy to answer any questions about what it’s like to establish a successful cleaning business.