cost structure of a new cleaning company (what should your cleaning business be doing?)
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Cost structure of a new cleaning company
Cost Structure Analysis and Forecasting (Based on assumption your cleaning company is grossing $25/hour):
Payroll: 40%
Overhead/Business Related Costs: 10% (website, insurance, marketing, etc)
Supplies/Equipment: 8%
Payroll Taxes: 7.65%
Sales Incentive Program: 5%
Managerial/Administrative Fees: 5%
Misc. Costs: 2% (Maybe this should also go under overhead…this way you will have a little left over for state unemployment tax, raises, savings, etc)
Total costs of service = 77.65%
Gross Profit Margin =22.35%
*This is just a very safe estimate… and you should feel free to change this Budget sheet up as we move forward. I don’t really think that supplies and equipment will really take up that much of the budget and I think the sales incentive could possibly even be higher to help motivate your employees to get new customers. I also see some of the overhead possibly shrinking as the business grows, but then again maybe as your company grows you will be more apt to use fringe benefits of a solid overhead budget (drinks and dinner, small gifts, etc…). You could also always re-visit the budget and use that money to hire someone to manage it full time and earn passive income (where a day at the office consists of you collecting your checks each month…)
New Cleaning Company Scenario (see the table below for specifics): By cold calling, word of mouth, and direct mail you end up contracting totaling 40 hours of work each week (20 bi-weekly contracts averaging 4 hours each). All you need to do is hire 2 temporary employees to do the work…
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Hopefully this will give you a better idea of what kinds of costs to expect as you start your new company.
Cleaning Business References
Scenario for Cleaning Company
Weekly
| Monthly
| Yearly
| |
|---|---|---|---|
Receivable
| 1000
| 4000
| 52000
|
Payroll
| 400
| 1600
| 20800
|
Overhead
| 100
| 400
| 5200
|
Supplies/Equipment
| 80
| 320
| 4160
|
Taxes
| 76.50
| 306
| 3978
|
Sales Incentives
| 50
| 200
| 2600
|
Managerial Fees
| 50
| 200
| 2600
|
Misc.
| 20
| 80
| 1040
|
Gross Profit
| 223.50
| 894
| 11622
|
Additional References
Thank you for reading my article on cost structure of a cleaning business. If you enjoyed it please feel free to drop a comment (below), or check out my other recent articles...
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