Owning a housekeeping business can be rewarding and profitable, but it requires hard work and some financial planning skills. Whether you’re just starting out or looking to scale your business, we’ll cover the essentials of housekeeping business finances.
Creating a Solid Financial Foundation
Business budgeting basics
First, creating a budget is critical to the success of your housekeeping business. Your budget should list all of your business costs, including:
- Startup costs: Consider the cost of purchasing initial equipment, cleaning supplies, and business liability insurance. You also may want to set money aside for marketing, including creating a website and for advertising.
- Monthly costs: If you have employees, add their salaries to your budget. Add other expenses too, such as the space you rent and the costs associated with driving a company vehicle. You should also budget for new cleaning supplies, and have an emergency fund for equipment and vehicle repairs.
Next, estimate your monthly income. It’s crucial to be realistic as under- or over-estimating what you earn could impact your cash flow. Stay profitable by keeping your business expenses within budget and earning more than you spend. Don’t forget to set aside a percentage of your income for taxes and savings.
Pricing strategies for profitability
Pricing your services correctly can help attract clients and keep your business profitable. To determine the prices of your services, start with market research. Find out what your competition is charging for similar services and whether your target customer will pay for them. You can also test other pricing strategies, such as:
- Tiered pricing. Try offering a lower rate for basic cleanings. Then charge more for a standard clean and the most for premium services, like a deep clean.
- Add discounts or bundled services. Attract and lock-in clients with discounted, recurring services. Or try offering bundled packages such as window cleaning with a deep clean.
Above all, keep up with the market. Prices can change over time to reflect the market. It’s important to adjust your rates and communicate with clients.
Expense tracking and management
To stay within your budget, it’s essential to keep track of your business expenses. First, choose a system for tracking and labeling expenses. For example, try categorizing expenses by supplies, labor, transportation, insurance, and more.
Next, it’s critical to save your receipts. Rely on a financial app or use software that can scan and create digital versions of your receipts. Finally, review your expenses on a monthly basis and look for areas where you can cut costs or invest more. This approach can help you stay within budget and make informed financial decisions.
Financial Tools and Resources for Housekeepers
Accounting software
Software can help you keep accurate records, be more efficient, and manage your cash flow. Plus, most accounting software offers reports, such as profit and loss statements and balance sheets.
A few popular options for tracking your business’s finances include QuickBooks, FreshBooks, Wave, and Xero. Learn more about the best small business accounting software here — and how to choose the right solution for your business.
Financial planning apps.
In addition to accounting software, financial planning mobile apps can help you budget, track expenses, and send invoices while on-the-go. For example, QuickBooks, Freshbooks, Wave, and Xero have mobile app versions. In addition, many small business owners rely on these apps:
- Plan Guru: Use it to budget expenses, forecast revenue, and create a financial analysis.
- LivePlan: Create a business plan, predict your income, and create a realistic budget.
- Float: Track your cash flow on this app, which integrates with QuickBooks and Xero.
Once you choose software and other tools that are best for you, track everything. Accurate bookkeeping is the foundation to financial success.
Professional financial advice.
As your business grows, consider seeking professional financial advice. A certified public accountant (CPA) or financial advisor can help you with:
- Tax planning: Talk to a CPA to make sure you’re taking advantage of all available deductions and credits.
- Financial forecasting: A financial advisor can help you grow your housekeeping business — and stay profitable.
- Investment strategies: A professional can advise on where to reinvest your earnings for the best return.
Remember, professional help can pay off. A financial professional can help you avoid costly mistakes and guide you toward success.
Strategies for Financial Success
Increasing revenue streams
It takes more than cleaning skills to run a successful housekeeping business. You also need business acumen to increase your revenue. To earn more faster, consider:
- Expanding your services: Add specialized services, such as window washing, carpet cleaning, and organizing.
- Offering seasonal promotions: Advertise a holiday or spring cleaning package at a discounted rate.
- Promoting referrals: Encourage your existing clients to refer new customers by offering them a discount.
Try out different approaches. When you discover what works, keep it up. Then throw out the ideas that fell flat.
Managing cash flow
It’s essential to effectively manage your finances and have a positive cash flow.
To ensure you receive your earnings, send prompt invoices to your clients. If you don’t send invoices, request payments another way and set clear terms. It’s also helpful to remind your clients when needed. If a client struggles to pay on time, consider adding a late fee.
In addition, store a cash reserve to pay for unexpected expenses. Equipment could break, or a client could forget to pay on time. Above all, closely watch your cash flow to make sure you have enough funds to cover your expenses and growth.
Tax planning and compliance
As a small business owner, it’s crucial to stay compliant with tax laws. To do so, you’ll want to plan ahead. First, keep up-to-date and accurate financial records to support your tax filings. Your financial planning software and apps should help with this.
Secondly, know your local, state, and federal tax requirements. Consider talking to a certified public accountant (CPA) to ensure you adhere to the law. A CPA can also help you maximize deductions and minimize how much you owe in taxes.
Don’t Forget About Insurance
Once you build a profitable housekeeping business, it’s essential to protect it. Simply Business can help you find the right professional and general liability insurance at an affordable price. We work with nationally recognized insurers who offer coverage for small businesses.
Over the years, we’ve helped more than one million customers worldwide. Our process is easy and fast. To get a business insurance quote for a housekeeping company, complete our online form, and we can recommend business liability insurance in just a few minutes.
If you have questions about your coverage options, our licensed insurance agents are here to help. Talk to a member of our team Monday through Friday from 8 a.m. to 8 p.m. by calling 844-654-7272.
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Success is at Your Fingertips
We’re here to help you be successful. Check out our Resource Center to get insightful information about small business liability insurance, as well access tools and tips for growing your business.
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