60. Cleaning Companies are boring businesses. On the surface....
...until you start looking under the hood.
Cleaning companies are boring businesses.
It’s one of the reasons why they make good acquisition targets.
I’ve spent the last 3 months looking at opportunities to buy a cleaning business.
I’ve spoken with 15 owners of businesses ranging from £200,000 to £20m in annual revenue.
Here are some things I’ve learned.
In today’s email:
The Clean
The Team
The Numbers
The Interesting Bits
👇🏾 Listen: The importance of brand for growing your cleaning business
THE BIG IDEA
The Clean
Most businesses I’ve spoken with provide daily office cleaning and commercial cleaning.
Commercial cleaning includes industrial (factories, warehouses), manufacturing, leisure (pubs + restaurants) and retail (shopping centres and stores).
A close second is construction cleaning. I spoke with one owner who’s business was the only cleaning business on Amazon’s framework. He cleans all the new warehouses and logistics centres they build in the UK and Europe.
Other interesting types of cleaning include:
Medical - One owner I spoke with is the official contractor for Berkshire Primary Care Trust, part of the NHS. She cleans all the Trust’s medical centres and any new ones that get added.
Education - I spoke with another owner who only cleans schools and colleges. These clean are tied into long term contracts - either 3 or 5 years with the option to renew for a further 2. Long term, secure income.
Housekeeping + Hospitality - I’ve had conversations with owners who manage, clean and provide laundry for holiday homes. Although the cleaning is seasonal, they had laundry contracts with local hotels for recurring revenue.
Fleet + Tankers - Bit of a random one. This owner carved out a niche cleaning trucks and tankers for food businesses.
I’ve spoken with an owner of a Molly Maids franchise. Decent business, offering weekly domestic cleans, tenancy cleaning and carpet cleaning.
The Team
Team size varied based on the type of clean:
Office, Commercial and Education - 100+ staff.
Construction - between 30 and 50 staff.
Housekeeping + Hospitality - between 20 and 30 staff, up to 50 during the summer season
Domestic - between 10 and 20 staff
Fleet - 25 staff
Medical - 10 staff
Three things I’ve noticed:
Revenue per employee
Construction cleaning businesses generated 2/3 times more revenue per employee than commercial cleaning businesses.
To put this into context, an office and commercial cleaning business needs 90-100 staff to generate £1m revenue.
In contrast, a construction cleaning business needs 30-40 staff to generate a similar amount of revenue.
Second tier management
All businesses generating £1m+ annual revenue had second tier management in place.
They had a combination of:
Operations Managers
Area Managers
Office Manager
Admin Team
With business generating less than £1m revenue, second tier management is hit and miss.
In most cases, the owner still has day to day involvement in the business, serving as a supervisors, manager, admin and cleaner.
No Sales Function
None of the businesses have a sales function.
Zero.
No sales person, sales team or sales process.
They rely on reputation, referrals and existing relationships to win new business.
Crazy.
The Numbers
Cleaning businesses with £1m+ annual revenue focus on daily office, commercial, education and construction cleaning.
These businesses range from £1m to £20m in size.
For these businesses, the net margin ranges are:
Office and commercial: between 17 - 22%
Education: between 7 - 12%
Construction: between 25 - 30%
The biggest business I’ve spoken with so far is an office and commercial cleaning business turning over £20m a year at a 20% margin. It’s service area is London, the South East and the Midlands.
The Amazon cleaning business I mentioned earlier is turning over £5m a year at a 25%+ margin.
The sub £1m cleaning businesses mostly provide domestic, construction, housekeeping and hospitality cleaning.
Average margins for these businesses are between 14 - 20%.
On the face of it, cleaning businesses are boring businesses.
However, the more business owners I speak to, the more I’m learning about different niches, opportunities and businesses models they’ve used to grow a successful boring business.
Need More Help?
Want to 3x revenue growth for your cleaning business in the next 12 months? Book a call.
Email me with the growth strategy for your cleaning business. The more details you provide, the more personal I can make my response.
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Thanks for reading!
Matt @ The Growth Lab
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