How To Start A Carpet Cleaning Business [Costs & Profit Potential]

The market size for the carpet cleaning industry in the United States is $4.6 billion in revenue for 2021 and is expected to increase by 2%.

That’s a massive number for such a simplistic and competitive business. The sheer competitiveness of this particular industry may make it difficult to get started if you are thinking of opening your own carpet cleaning service. 

Don’t let the competition steer you away, though. When I was opening my commercial cleaning business, I knew right from the start it wasn’t going to be easy due to how many other businesses were around me.

The main difference between my competition and I was that I had a passion for it, and I was not just in it for the money. I enjoyed seeing the look on my customers’ faces when I gave them their keys and a bill that I knew they were able to afford. 

The most important steps in starting a carpet cleaning business are to decide if you are going to service residential or commercial clients, what equipment to purchase, and decide on the legal structure of your company.

If you’re passionate about cleaning carpets and satisfying your customers, we got a detailed guide on how to get started.

How To Start A Carpet Cleaning Business

1.Create A Business Plan

The first step that has to be performed before starting a business is to create a business plan. The business plan is a document that you create that will describe in detail what you plan to do with your business and the objectives you want to achieve.  

This document will be an important part of your funding. Most banks require a business plan before they will give you a loan. Additionally, these plans should be updated occasionally to see if you are meeting your set goals or if they have changed. 

Any good business plan should describe all of the projected costs and drawbacks of every decision you make about your company would be. It should also extensively outline what the services and products will be as part of your business. You should also include an overview of the business and how it’s going to be different from that of your competitors. 

Here’s a list of everything your business plan should include: 

• Executive Summary: This is where you give your mission statement and all information regarding employees, operations, and where your business is located. 

• Products & Services: This is where you outline what products you will use and what services you will offer. This includes pricing, benefits to the customer, patents you may have, and any research and development information. 

• Marketing Strategy: How will you attract and keep your customers? This information should be included in your business plan as your marketing strategy. 

• Analysis of Your Market: You need to outline who your competitors are and how they will affect your business. This section will also voice the expected consumer demand for what service you are providing and how easy or tough it’s going to be to grasp the market share.  

• Finances: There should always be financial planning included in your business plan. This shows the reader what your projected estimates and targets are for the first couple of years in terms of profit. This is meant to attract investors to your business. 

• Budget: Lastly, all good companies will have a budget. This could include any business costs related to training, employees, equipment, marketing, and more. 

2.Apply For Local & Federal Licenses 

To permit them to operate within local, state, and federal guidelines. Each state and city has its own processes and fees that are associated with acquiring a business license. The average license will cost a few hundred dollars along with the renewal fees that go with it. 

This process is lengthy and can be one of the most frustrating aspects of opening your own business. 

You have to first determine what types of business licenses you need, and then gather up all the appropriate documents that are needed for each license you are applying for. Some of these documents may be: 

• A business description and list of activities being performed 
• Proof of tax status
• Ownership and management details
• The filing fees to the government

What Is A Business License?

It’s important that you fully understand what a business license is before you apply for one. By applying for and gaining a business license, you are registering your business in the city in which it’s located. 

Small businesses are required to acquire their business license before providing any type of service or goods. The license allows the county to collect revenue from the company. Additionally, they impose zoning restrictions and regulate the businesses that operate in their county. 

It’s important to remember that each county imposes different license requirements and regulations. Failing to comply with these regulations can lead to fines, license revocation, penalties, and late fees. This is why you need to first identify which licenses and permits are required before you open your services to the public. 

Additionally, the license benefits you. Becoming licensed shows potential customers, employees, and potential stakeholders that the business is properly operated and that the goods and services are dependable and honest. 

Different Types of Licenses & Permits

If you thought there was merely one type of business license, you were mistaken. There are actually a few options for licenses for what your company needs. If you are unsure of which one would work best with your company, you may find it helpful to seek legal counsel. 

Operating License

The operating license is the one we have already talked about. This is a state and city-issues license that allows you to legally operate your business within your state and city. You may have to apply for these at each level since each jurisdiction carries its own ordinances and conditions.

DBA

A DBA or “Doing Business As” permit or license allows you to operate your business under a different name than what you have previously registered as. This is considered a trade name. The requirements for a DBA will differ by location. 

Zoning and Planning Permits

There are different regulations for each municipality that define what types of businesses can operate and where. You should ensure your business location is within the proper zone if you plan to open a physical shop. 

If you are working out of your home, you may not have to report to zoning. If you do plan to open a shop and it isn’t properly zoned, you will need to apply for a zoning variance and prove your business isn’t going to disrupt the community. 

Home Occupation Permit

If you are operating your business out of your home, as mentioned above, then you may have to apply for a home occupation permit. This allows you to run your business from your home. 

This permit is to ensure that your neighborhood is zoned for home business activity. It is granted to home-conducted businesses that don’t add additional traffic or noise to the area. 

Fire Permit

Your business must comply with local fire and safety standards. To gain your fire permit, the fire department will conduct a thorough inspection of your building to ensure it is up to code and complies with local building codes. 

Certain jurisdictions require this permit before the business opens, but others may only require a simple annual inspection. It’s a good idea to check with your local government official to clarify which level of inspection regulations apply. 

Taxes

This is probably one of the most frustrating parts of owning a business. One of the most essential elements of operating a business is ensuring all required tax regulations are met. Small businesses are going to need multiple licenses for tax purposes. 

One of these licenses is an Employer Identification Number. This allows you to hire employees and collect taxes for payroll. If you plan to sell goods, like carpet cleaning solutions or carpet cleaners, then you will need to acquire a seller’s permit or a sales tax license. 

Sign Permits

If you don’t have a permit for a sign in some jurisdictions, you’re subject to hefty fines. Most local governments will tell you how big your sign can be and where you can place it on your property. To avoid such fines, check with your local officials before erecting a sign. 

3.Obtain The Proper Insurance

Believe it or not, carpet cleaning businesses require several insurance policies to be deemed fully covered. Here’s a list of the types of insurances you are going to need to get started: 

• General Liability: Covers expenses due to client injury or property damages.
• Commercial Property Insurance: Covers the cost of lost or damaged equipment by flood, fire, or other events.

• Worker’s Compensation: Covers the expenses for lost wages or medical bills if an employee is injured on the job.

• Automobile Insurance: Covers the driver and vehicle being used.

• Surety Bond (Worth considering but not required): This protects your business if you have to pay for damages and makes the customer feel at ease if you make a deposit and don’t finish the work.

4.Consider What Services You Will Offer

Next, you will need to think about what services you are going to offer. There are three types of carpet cleaning methods that many companies utilize. These include dry foam cleaning, dry chemical cleaning, and hot water & steam cleaning. 

Most companies don’t bother to offer dry foam cleaning, as it’s the most ineffective cleaning method of the three. This leaves dry chemicals, hot water, and steam cleaning. 

Dry Foam Cleaning

Dry foam carpet cleaning consists of low moisture cleaning that uses 90% air and 10% liquid. A dry foam carpet cleaner has a pressure tank that houses a mixture of water and shampoo.

The compressor in the machine turns the solution into foam, then dispersed it to the carpet with a revolving brush. Once the carpet is cleaned and the foam is dry, it must be vacuumed extensively to ensure the dried crystals of dirt are removed. 

Dry Chemical Cleaning

Dry chemical cleaning utilizes a special machine that cleans carpets with either no moisture or low moisture (VLM) cleaning. It removes stains, dirt, allergens, and sand from carpets. The machine requires dry compounds and cleaning solutions to effectively work. 

The dry compound used is absorbent and 98% biodegradable. It is spread over the carpet and brushed or scrubbed in. It is then vacuumed off and the carpet is left dry. 

Hot Water & Steam Cleaning

These are two of the most popular forms of carpet cleaning that various companies are utilizing. Hot water extraction will require water hot enough to effectively clean the carpet deeply, but it can’t be so hot it turns into steam. The heat from the water also sanitizes the carpet fibers. 

Steam cleaning, in contrast, uses steam to sanitize the carpet fibers. This method isn’t as effective as the others are because the fibers aren’t rinsed off. Sure, it will work well for reducing allergens and killing germs, but the stains and soil embedded in the carpet may remain.

5.Secure Financing 

Most individuals who don’t have the money on hand to start their business will need to secure financing. Securing financing for a business is tougher than it may seem. There are many hoops that you may have to jump through and a lot of frustration can come with it. 

Collateral

Collateral plays a massive role in securing financing for your business. You can choose to use your personal assets to borrow against or give to the bank as collateral to obtain the loan.

These could be items that you own that the business won’t use such as stocks, jewelry, boats, cars, etc. The bank will also look into your personal financial statement to get a better understanding of your assets and liabilities. 

Loans

A loan is a popular choice for individuals who are starting a business, but they’re not easy to obtain. Luckily, there are a few options you have when it comes to loans from the bank: 

Conventional Small Business Loan

These loans are created by the bank and use collateral and a promise to repay the loan. These loans help with the purchase of equipment, vehicles, buildings, and more. You can obtain a loan for wages, advertisement, and cash flow, but it’s more difficult to obtain.

A credit score for this type of loan is between 650-800 and full collateral. You will also need to invest 15%-25% of personal funds for the total project amount. The bank will also require a business plan, tax returns, and financial projections. 

Revolving Funds

Revolving Loan Funds are short-term loans with a lower dollar amount. These loans are typically between $500-$150,000 and the process isn’t as stringent as it would be through a bank. These programs are part of an economic development tool that helps communities prosper. These loans are given to entrepreneurs who are unable to obtain the loan through the bank. 

Peer to Peer Lending

If you don’t want to go through the bank, P2P lending is a good alternative. This type of lending eliminated the bank completely and utilizes borrowers and investors through an internet marketplace. Your credit score will determine the interest rate. 

Credit Cards 

Credit cards are a quick and easy way to fund your business’s startup costs. Sometimes you can find a card that has a 0% introductory rate. You will still need a decent credit score to acquire a high credit limit and any type of business, from freelance to LLC, can obtain a business credit card. There is a little more risk that comes with a credit card than a fixed loan, but these are much easier. 

Home Equity Loan

If you own a home with equity, this is a great way to secure funding. The bank will ask for a lien on the property to obtain the loan. Unfortunately, if you don’t pay back the loan, you could lose your home.

These loans are generally used as a down payment for the initial loan for the business or as collateral. These loans have a lower interest rate and are quicker to process than traditional loans. 

Retirement Account

Did you know you can use your IRA or 401k to start a business? You won’t even have to pay taxes or certain penalties on that. You can use a self-directed IRA to obtain the money or utilize Rollovers as Business Startups. This is similar to the self-directed IRA, but the ROBS will be involved as an employee.

The IRA is an ideal option for those who don’t want to be directly involved in running the business, but the rules and regulations make this option unfeasible. If you plan to be involved with the business, the ROBS plan is the better choice.   

Online Lenders

Receiving financing from banks for a small business is difficult and lengthy. It seems as if fewer small businesses are eligible for traditional funding through a bank. Since there is such a large gap between the number of businesses that apply and are approved, online lenders have started to step in to fill that gap.

There is much less paperwork involved when obtaining financing through an online lender and there’s almost instant approval between hours and days. Unfortunately, you’re subject to higher interest rates and shorter repayment terms. 

Leasing

Leasing equipment and vehicles is a great way to reduce the upfront costs for starting the business. The lease allows you to pay minimal upfront costs and monthly payments. However, leasing will cost more in the long run because you have to pay for it even if you aren’t using it. 

6.Buy Your Equipment

Now that you know what types of carpet cleaning methods you can utilize, the next is to consider which equipment you’re going to need to acquire for the methods you choose.

If you are going to offer dry chemical cleaning, you’ll need to invest in a dry cleaning compound and a special two-headed vacuum that will rub in the compounds to trap dirt. A popular choice for equipment is the Rotovac 360i, which costs around $2,000. 

If you are going to provide hot water carpet cleaning, you will need to invest in a mounted or portable extraction unit or hot water. The truck-mounted units, like the Sapphire Truckmount 370SS, are more powerful and expensive than the smaller units that can be rented at local hardware stores. 

This particular unit is upwards of $22,000. However, these units need to be emptied on a regular basis, which can make it difficult when working in a home. If you choose a portable unit, it’s important to remember that they will require separate machines for solutions and vacuuming.  

As far as steam cleaning goes, you will need to acquire a steam cleaning machine, as well as soap and water. A machine like the Hydro-Force Steam Cleaner will cost around $900. No matter which machine you choose, they’re not going to be cheap. It may be a good idea to invest in used machines rather than new ones, at least until you begin to bring in a profit. 

Here’s a list of equipment that you may consider looking into: 

• Carpet foam 
• Carpet shampoo
• Pre-spray for heavy traffic areas
• Defoamer
• Industrial vacuum
• Steam carpet cleaner
• Air mover
• Wands and stair tools
• Portable carpet extractor
• Spotting machine
• Truck-mounted hot water extractor

7.Marketing Your Business

I’m sure you already know that customers aren’t exactly going to fall into your lap. You’re going to have to fish for them.

Marketing your business is going to start out slow. You need to figure out if you are going to set up a website, utilize a website like Craigslist, or send out auto mailers to every mailbox in a designated radius. 

Marketing expenses can vary depending on how you choose to market the business. You can hire a professional marketer, or you can create your own website for free or for a monthly payment. I chose to do auto mailers and a Facebook website when I opened up my business. 

The auto mailers went to everybody within a 10-mile radius and featured coupons and services I offered. It cost around $100, and the Facebook business page was free.

I found the auto mailers brought me more new customers than the Facebook business page did. I was constantly having customers say to me, “I had no idea you were here until I got your flyer in the mail!”. 

Commercial vs Residential

One of the most critical elements of your carpet cleaning business is how you market it. You have to fully understand what your target market is.

If you are considering performing only residential cleaning services, you will want to target homeowners who want to save time and have extra income. If you plan to perform commercial services, you will want to target building owners and facilities managers. 

STP Marketing Strategy

The STP marketing strategy stands for segmentation, targeting and positioning. For this method, you will need to divide your market into segments of customers who share specific characteristics. This can include demographics, psychographics, geographics, and behavioral characteristics. You will then use these to determine which one(s) are your best target audience. 

Once you have determined your ideal targets, you will then analyze each segment and decide which to target with your marketing plan. If you are going with commercial services and the size is too small, it may not be worth targeting.

You have to also determine whether or not the reachability is feasible. Can you get your business to reach a specific commercial company effectively? You should also run the numbers on the possible profit expected from each segment based on how much it’s going to cost to actually reach the targets. 

Positioning is the last step. And it refers to the position your business occupies in your potential customer’s mind. If your business isn’t well-known in a certain segment, you will need to change the message you want to convey. 

SEO

The cost of advertising both commercial and residential services is generally close on the price range. It honestly depends on how far you plan to go with the marketing.

One of the most costly ways you can market your business, which may be more beneficial if you plan to perform commercial services, is to utilize SEO, which is search engine optimization. This can cost roughly $600-$5,000 per month. 

This method uses keyword research, analytics setup & reporting, link building, and on-page optimization to help consumers find your business. This method can be used for both commercial and residential targeting. You can mix and match your keywords so that it matches exactly what you are offering. 

Cost

The cost of target marketing for residential vs commercial services greatly depends on how much you really want to market your business. It’s harder to reach commercial businesses, so you are going to need to market more than you would with residential services.

Commercial marketing would greatly benefit from SEO services, which could cost thousands of dollars per month. You can also choose to advertise on other websites, which costs even more. 

A general rule of thumb is to spend 2-5% of your sales revenue on marketing. If you make $5,000 in revenue per month, you should be spending upwards of $250 per month on advertising. SEO would not be feasible in this situation. 

8.Hire & Train Employees

Before you can effectively run your business, especially if you have multiple clients, is to hire and train employees. Before you do any hiring, you need to figure out which type of employees you want. Here are some traits you should take into consideration: 

• Friendly
• Trustworthy
• Previous experience
• Problem-solving abilities
• Dedication

After you’ve figured out which traits you are looking for, you should then create your ad. Your job ad should have a catchy job title and description. Your ad realistically should include what the company is about, the expected salary range, and benefits if you are offering them.

When ending your description, ensure that it is ended with a “click here” or “send your resume here”. This is called a “call to action” and it motivates potential employees to reach out.  

You can use a variety of posting sites to post your job such as these: 

• Facebook
• Indeed
• Linkedin
• Your personal website
• Craiglist
• Monster
• Snagajob
• Local newspaper
• Twitter
• Pinterest
• Instagram
• YouTube

The Hiring Process

Once you have obtained some resumes, you should begin reviewing the applications. It’s a good idea to separate them by your level of interest. From there, you can move on to the interview process and screening. 

A lot of small businesses will conduct a simple phone interview as part of their initial screening. You can ask them simple questions regarding their interests in your company and what they are looking to get out of your business. 

The interview process can give you some insight into the applicants’ personalities. You can utilize this time to ask them about their previous jobs and where they see themselves as part of your company in a few years. Remember, you cannot ask them about their religious preferences, age, or ethnicity. 

Once you have your candidates, you can then conduct background checks to see if they have any criminal history. Your candidates have to consent to this, but it’s a form that can be found online. 

After you have conducted the background check, you can move on to the reference checks. These references can give you information about what they think about your potential employee. Once this is done, give them a job offer if they are the right fit for your business. 

Training

Most companies that require training for their employees will offer free training. These are simple courses that your employees can complete to become certified carpet cleaners.

You can use whatever training program you would like, but a lot of companies choose to use Jon-Don or Rotovac training courses, especially if you plan to use their equipment and products. You can also have your employees use the carpet cleaning training program to obtain a certification. 

9.Choose Your Accounting System

This is one of the most critical steps to take when starting your carpet cleaning business. The accounting system will help you keep up on taxes that keep your business legitimate with the government.

It can also track and monitor trends and cash flow to help maximize profits. These accounting systems can also assist you in making decisions about the company. 

One of the leading accounting systems for small businesses that are both effective and affordable is FreshBooks. This is a straightforward software that allows you to create invoices, auto-schedule payments, charge late fees for unpaid balances, and keep track of how profitable you are. 

The lowest plan is only $4.50 per month billed at $108 annually, and the most expensive is $15.00 per month billed at $360 annually. You can try both plans for free, or scroll all the way down and create your own custom plan. 

On the accounting system, you will find some basic accounting financial statements, including: 

• Balance sheet
• Profit and loss statement
• Cash flow statement

The cash flow statement is the most frequently overlooked portion of the accounting statements. If you aren’t looking at this frequently, you may find yourself out of business if you run out of cash. 

10. Decide If To Franchise or Join A franchise 

Franchising your business is a huge step to take. This gives you the ability to grow your brand, especially if you’re extremely successful. However, you have to ask yourself whether or not your business is actually franchisable. 

Is Your Business A Success?

Your business must be successful and have proof of it. When you franchise your business, you’re taking your systems, business, and brand and duplicating them for your partners. 

Is Your Brand Protectable? 

Your brand has to be secured and protected. You will need to won your business and trade name as well as control it. You should register your trademark with the United States Patent and Trademark Office. You must also be able to control your website URL domain name for your brand. 

Is Your Company Scalable?

Are franchisee partners able to duplicate your business model successfully? If so, your company is franchisable.

Your franchisee should be able to deliver the same products or services that made your business a success, match the quality of customer service that you have, deliver the necessary products, be profitable by following your business model and improve business systems with your help. 

Are You Committed Enough?

To be franchisable, you have to be committed to building a system. You should be ready to commit to a multi-year plan that will focus primarily on building your franchise system that will grow steadily and not overnight. Additionally, you have to keep in mind that your franchise will be more successful if you are focusing and executing your strategies consistently. 

Is The Budget Correct?

When you launch a franchise, you’re essentially launching a new business. This means that you’ll need the proper budget. You can’t take any shortcuts here. You have to consider what it’s going to cost to launch the new franchise, what costs come with protecting your trademarks and brand, what it’s going to cost to register your FDD with the registration states that you want,t be in, what the legal costs are associated with the launch of your franchise, and how much it’ll cost to promote and market your franchise. 

Once you have met all of these requirements, you can now franchise your business, but should you? You need to sit down with your franchise lawyer to determine whether or now franchising your business can help you achieve your growth goals. 

Determining whether or not your franchise depends on these 6 factors: 

• Understanding franchising
• Personal goal evaluation
• Business goal evaluation
• Strength and weakness evaluation
• Cost of franchising 
• Figuring out what comes after you franchise your business

Typical Profit of Carpet Cleaning Business

A carpet cleaning business has one of the highest investment return rates of any business. The average cost of cleaning supplies is generally less than 5% of the job, which leaves a 95% profit margin. 

Most successful carpet cleaners make $75-$150 or more per hour per vehicle. Today, equipment, chemicals, and cleaning systems are relatively cheap to obtain.

You don’t even need a large vehicle to transport your supplies unless you’re using a truck-mounted hot water extractor. On average, you can make upwards of $50,000-$75,000 per year cleaning carpets. 

Costs of Carpet Cleaning Business 

Since this is a mobile business and not one conducted out of a traditional storefront setting, there may be more costs. The cost of starting the business may vary depending on what equipment you choose to work with. Some of the most common costs for starting your carpet cleaning business can include: 

• Transportation for equipment such as a van or truck
• Various carpet cleaning equipment such as a portable hot water tank or dry foam cleaning system
• Cleaning products
• Other miscellaneous chemicals and tools

By the time everything is said and done in terms of equipment, marketing, and other costs, it could cost anywhere between $500 to upwards of $80,000 if not more. Considering used equipment would be your best option if you have limited funds. 

Can I Start A Carpet Cleaning Business From Home?

There have been many successful business owners who have started their carpet cleaning business from the comfort of their own homes. Not everybody can do this, though. You need to ensure your home can be used as a base for your business.

You may also need to obtain a home occupation permit. This permit is to ensure that your neighborhood is zoned for home business activity. It is granted to home-conducted businesses that don’t add additional traffic or noise to the area. 

Additionally, you must take into consideration where you will store your carpet cleaning equipment. Is your home large enough? Where will you handle your phone calls? Will you have a home office? You should also ensure that your vehicle is legally and safely parked. 

Are You Ready?

Now that you have all the information you need, do you think you’re ready to launch your carpet cleaning business? This is a lucrative business, bringing in between $50,000-$75,000 per year if you have a large enough clientele base. 

This is an ever-growing industry, giving you the potential to rise above the rest. If you want to take it a step further than many of your competitors, consider taking the carpet cleaning training program.

 It’s an online carpet cleaning training school that teaches you basic skills and strategies that you can master. Once you complete this, you can add your training certificate to your website to give your customers even more peace of mind.