How to Start a Day Care (in 9 Simple Steps)


August 8, 2023

How to Start a Day Care (in 9 Simple Steps)

According to Move.org, infant childcare costs between 10.6% and 26.3% of household income. It’s no wonder that many parents decide it’s more beneficial for a parent to stay at home than to go back to work and spend a large portion of their income to pay someone else to watch their own children. That’s why we’re going to show you how to start a daycare.

Kristy Bickmeyer started Twinkle Toes Nanny Agency when she struggled to find placement in daycare centers and nanny agencies required a $1K-2K placement fee just to provide a list of nannies. She created a network that provides nannies and families better in-home child care. 

In less than 15 years, Twinkle Toes has grown to a franchise with more than $12 million in revenue and 20 locations across 5 states. We’ll share Kristy’s approach to the daycare business and how it’s revolutionized the daycare industry. Best of all, she’s done all this with word-of-mouth marketing.

Let’s start by discussing the future of the daycare business.

Should I Start a Daycare Business?

Teacher and children in a classroom

According to IBIS World, daycare businesses in the United States make $60.8 billion in revenue with a median profit margin of 9.3%. Business consistently grows with the birth of new babies which means it is virtually recession-proof. 

You can make even higher profits if you run a daycare like Kristy which is a nanny service. The median nanny service is approximately 51.7% profit because they provide at-home childcare. Kristy told us:

I went through a lot of business models before I finally found one that worked for everyone. I considered the standard model, monthly recurring fees, and finally found the model I have now.

Check out the rest of our interview with her below.

How to Start a Day Care Business

Ultimately, your goal is to provide child care for parents. Whether you go to their home, they drop their kids off at your house, or you run a facility with multiple people, you’ll want to follow our 9-step process when starting a day care company:

  1. Get Early Childhood Education (ECE) Credentials (Optional)
  2. Research Your Location’s Daycare Licensing Requirements
  3. Perform Competitive Analysis of Daycare In Your Area
  4. Write a Daycare Business Plan
  5. Research Childcare Tax Credits
  6. Pursue Early Childhood Education Grants and Funding 
  7. Create a Childcare Contract
  8. Market Your Child Care Business
  9. Provide Great Customer Service

Step 1. Get Early Childhood Education (ECE) Credentials (Optional)

Cceionline website early childhood education

This step is mostly for those running a child care facility or preschool, but if you’re running a nanny business, the early childhood education credentials could be a differentiating factor.

What Certifications Do I Need to Open a Daycare?

Some states may have certification requirements for daycare business operations, but it is always useful to have the following certifications. 

  • CPR and First Aid: Current CPR certification is important for any daycare provider because it will teach you how to provide basic life support in an emergency. Find CPR training near you.
  • Child Development: This certification will teach you about child development and how to care for children of different ages. It requires 120 hours of education and passing a test. Learn more.
  • Early Childhood Education: This 180-hour certification will teach you about the principles of early childhood education and how to create a stimulating and educational environment for children. It is offered by the Childcare Education Institute.
  • Food Safety: This certification will teach you about food safety practices and how to prevent the spread of foodborne illness. These are normally offered by your local health district.
  • First Aid for Infants and Toddlers: This certification will teach you about the specific needs of infants and toddlers and how to provide first aid for them. You can take this with the Red Cross online.
  • Trauma-Responsive Care Certification: This certification will teach you about the philosophy of responsive care and how to create a nurturing and responsive environment for children.
  • Positive Discipline: This certification will teach you about the principles of positive discipline and how to use positive reinforcement and redirection to discipline children.
  • Child Passenger Safety: This certification will teach you to be a child safety technician and install car seats properly.

These are just a few of the many certifications that are available for daycare providers. By obtaining these certifications, you can demonstrate your commitment to providing quality care for children. 

Some of these may apply to other daycares like adult daycare and home health assistants.

Step 2. Research Your Location’s Daycare Licensing Requirements

Childcareaware website state resources

Childcare.gov states that a childcare business should meet these minimum requirements:

  • Building safety standards
  • Child and caregiver health standards
  • Emergency preparedness
  • Monitoring government regulatory environment for new health and safety requirements impacting child care providers
  • Perform criminal background checks on all daycare employees
  • Routine CPR, first aid, and safe sleep for infants training for employees
  • Sanitation standards
  • Business insurance requirements

Check out Childcare Aware for state-specific resources for early childhood education providers.

Kristy told us:

I wish someone had told me, ‘Don’t even bother researching going with a child care service. I would go straight to offering nanny services.’

Requirements for nanny services are much easier to meet, but make sure you aren’t violating the laws. You’re taking care of other people’s children. It’s important they can trust you with their kids.

UpFlip cautionary tale

 

In June of 2023, a Las Vegas resident’s husband was arrested for sex crimes. The resident was running an unlicensed in-home childcare center and intends to continue. Parent groups in the area have started an active campaign to prevent her from doing so.

This story displays the importance of being cautious about who you hire in childcare providers. If your business gets caught in something like this, there is no recovery. Make sure to comply with all government regulations.

As Kristy said:

As a mother, I wouldn’t let anyone watch my clients’ kids that I wouldn’t let watch my own.

That’s why background checks are so important.

Keep reading to learn how to analyze the budding child care centers in your area.

Step 3. Perform Competitive Analysis of Daycare In Your Area

Daycare research and analysis

Research the daycare and nanny agencies in your location. You’ll want to know:

  • How many daycare centers are there?
  • Where is each daycare center located?
  • What complaints and praise can you find about each child care center?
  • How much does each profitable daycare business charge?
  • Are there waiting lists for each daycare center?
  • What services does the daycare industry have or lack?

This information will help you write your daycare business plans, which we’ll discuss next.

Step 4. Write a Day Care Business Plan

Planning your daycare business

A business plan for a daycare service can be used to help you achieve your goals faster, get financing, and help employees make decisions based on the mission statement and values. Your business plan should include the following:

  • Business Purpose: What makes your business different, how you’ll help customers, what your goals are. Make sure to include your mission and vision, too.
  • Local Demand: Use the Census Bureau and your competitive analysis research to establish how many kids between 1-6 years old are in your area, how many need daycare, and how much they can pay.
  • Financial Plan: A detailed budget of how much you’ll attempt to make and what you’ll spend it on. Be realistic. You should include both startup costs and ongoing expenses for up to 5 years.
  • Insurance Policies: Day care facilities definitely need insurance. What happens if a kid is injured or dies?
  • Standard Operating Procedures: Make sure to document rules and policies for everything you can think of. Make this a living document.
  • Marketing Plan: Document exactly how you will market your daycare to find customers, nannies, and employees.

Kristy told us:

The benefit of buying a Twinkle Toes franchise is that we’ve already created the business plan. You just have to follow it.

You’ll need $35K for the original franchise fee and an ongoing royalty of 3%. Learn more.

Keep reading for information on differentiating your own business from other local businesses when starting a daycare business.

Decide What Makes Your Daycare Business Unique

Your unique selling point for a daycare could be any number of differentiating factors. It might be the cleanliness of your facility, pricing, education, or in Kristy’s case:

The parents don’t have to deal with recruiting or nanny contracts and payroll. We handle it all so they only have to focus on choosing the one they like best. Then they pay the weekly invoice.

Prepare a Budget

You can prepare a budget for your daycare startup and ongoing costs using the following percentages. Make sure to stay within your state limits for clients per caregiver.

Daycare cost data graph

Managing business finances by the numbers is the best way to build financial freedom over the long run.

Next, we’ll discuss the financial assistance available to families and small businesses opening a daycare center.

Step 5. Research Childcare Tax Credits

The federal government and some states offer tax credits to help people pay for child care. You can find information on the child and dependent care credit by going to IRS Topic 602.

Basically, it allows credits of up to $3,000 for one child or $6,000 for more than one child under 13 years old. If the child qualifies, they can claim between 20% and 35% of their income. The percentage claimable decreases as income rises.

A daycare owner should understand these tax credits to help people navigate them. The tax credits also impact how much people can realistically afford to spend. If you open a daycare for after-school care, you might want to charge the amounts in the table below.

Time Period  Amount to Qualify Assuming 180 Day School Year
Daily $16.66/kid
Weekly $83.33/kid
Monthly $500/kid
School Year $3,000/kid

Don’t forget to see if your state has any tax credits. I found the Keeper Tax write-off guide useful for common tax deductions during tax season.

Next, let’s discuss some unique opportunities a business owner has when starting a daycare.

Step 6. Pursue Early Childhood Education Grants and Funding 

Childcarelounge website early childhood education

There are numerous grants and funding opportunities when opening a daycare or other childcare location. Utilize as many as possible to improve your own daycare business and help children develop during their early years. 

Check out daycare center grants available at some of the following locations:

  • Childcare Lounge: Site for finding grants for childcare facilities.
  • Health and Human Services: Government department that provides aid for families and business expenses.
  • Family Services: Offers assistance to families. A childcare center can accept funds directly from the agency, too. These are run by local agencies.

Next, we’ll discuss the importance of creating a daycare business contract before opening a daycare.

Step 7. Create a Childcare Contract

Your childcare contract is the basis for the services and payments exchanged between your daycare business and your customers. You’ll want to include the following sections:

  • Parties: The names of the day care provider and the parents
  • The Children: How many kids, names, and birth dates
  • Duration: The beginning date, length of contract, and end date
  • Child Care Services: What services will and will not be covered
  • Schedule: Days of the week and times the daycare will watch the children
  • Holidays: Any provisions for how holidays are handled
  • Payment Amount: How much you’ll charge per period of time
  • Payment Method: How often the parent needs to pay
  • Deposit: Any charge for a security deposit
  • Absences: How to handle absences
  • Vacation Times: How to handle vacation periods
  • Damages: How to handle damages
  • Governing Law: The state the contract law is based on
  • Severability: This is a standard contract term that makes it where one clause does not render the full contract useless
  • Additional Terms & Conditions: Place to add additional terms
  • Entire Agreement: Clause stating that the daycare contract is the primary contract and can only be superseded by contracts signed by both parties after the original contract

You should always consult with a licensed attorney to verify your contract is enforceable, but download our childcare contract template to get started.

In-home daycares should modify the contract because it is written for a daycare center where parents drop off their kids.

Next, we’ll discuss the importance of marketing when opening a daycare.

Step 8. Market Your Child Care Business

Childcare business marketing

Marketing your daycare opening is crucial to help get customers to your business. Most daycares use a combination of several different marketing strategies including:

  1. Paid and free social media
  2. Search engine optimization
  3. Word-of-mouth
  4. Email marketing
  5. Door hangers/mailers
  6. Referral agreements
  7. Create flyers and hang them on local bulletin boards

Keep reading for more advice on how to open a daycare.

Advice on Word-of-Mouth Marketing

Kristy told us:

I primarily used word-of-mouth because I had more time than money. One of my first clients was my former boss at the surgery center. Two of the surgeons I worked with sent out an email blast to all the employees and that was the turning point where I could quit my day job and focus solely on Twinkle Toes.

Next, we’ll talk about how relationships with a child care center can be highly beneficial for in-home daycare providers.

Referral Agreements

Woman showing a contract

One of the unique strategies that Kristy uses is trading referrals with childcare centers in her area. When there is a waiting list, the day care centers will refer their clients to her and Kristy’s company will provide nannies until the daycare center can admit the kids. She also explained:

During the lockdowns, child centers closed, but we were still operating. The centers sent all their employees to us so they could come back once the lockdown ended.

Whether you run a home daycare or provide childcare in home, you can benefit by providing great customer service. Find out how.

Step 9. Provide Great Customer Service

Kristy explained that customer service is the primary driver of a successful daycare center.

Parents want to know that their children are safe. In my scenario I won’t hire anyone that I wouldn’t let watch my own kids. That makes them feel more comfortable. Then, when something goes wrong, you need to be there for them.

I have seen daycares that just offer a discount and don’t show they care. I don’t want to be that kind of small business owner.

Day Care Business Ideas

List of ideas for day care business

There are different types of day cares you can start including:

  1. Doggie day care
  2. At-home day care
  3. In-home child care
  4. Adult day care
  5. Special needs day care
  6. Day care centers
  7. In-home preschools

How to Start a Dog Day Care Business

Dog day cares focus on providing a place for a dog to go play while the person is at work or on vacation.

  1. Create a doggie daycare business plan
  2. Decide where you’ll host the dogs.
  3. Hire staff
  4. Get equipment to care for dogs
  5. Evaluate dog behavior
  6. Market your daycare
  7. Provide service

These care facilities are less profitable and consistent than other small businesses, but pet owners love their animals and are willing to pay a premium for good care.

Have Your Own Children? Consider How to Start an At-Home Daycare

Woman with money inside the house

At-home daycare is when you host day care services in your home. This is perfect for people with their own kids. You can make money and watch other people’s kids in your home. You’ll have fewer kids in an at-home daycare and you probably won’t have employees. 

There will be special rules you’ll have to follow if you choose to start a small business this way, but your business will pay part of your housing payment. Most parents would actually prefer for the more personalized care, but kids can get possessive of the stuffed animals.

How to Start an In-Home Child Care Business

In-home child care businesses, or nannies, go to people’s homes and watch their kids exclusively. Kristy described the difference between a nanny agency and the way Twinkle Toes works.

Normal nanny agencies don’t handle all the contracts, while we do. At Twinkle Toes, when a client is going out of town, the nanny can pick up shifts with other clients. If a nanny doesn’t work out, we help them cover it.

Effectively Kristy started a home daycare that is part daycare, part nanny service.

How to Start an Adult Day Care

Care giver accompanying an old man

An adult day care helps adults that can’t care for themselves. This may mean taking care of people with disabilities or health problems. You’ll probably need special licensing based on the type of patients you’ll be helping.

Providing adequate care is a big business, but you’ll want to make sure you follow all the laws, like the Americans with Disabilities Act and any other laws governing elderly care.

How to Start a Special Needs Day Care

Special needs day care facilities are specifically focused on helping kids or adults with mental, physical, or health issues. The care will normally be focused on a specific category of problems like Alzheimer’s patients or kids with Down’s syndrome. Because each health issue requires different care, you’ll need to research requirements for caring for their specific challenges.

How to Start a Day Care Center

Day Care centers have specific rules that have to be followed about:

  • The ratio of children per adult
  • Hiring standards
  • Insurance
  • Inspections

Start by researching your location’s laws about day care centers, and then follow the rest of this guide. 

How to Start an In-Home Preschool

Necpa.net website enrollment program

In-home preschools are much like day care centers but have an added emphasis on learning. Education facilities will normally have additional accreditation processes like those from NECPA. Make sure to check with your school board to see what accreditations they require. 

How much does it cost to start a daycare?

A daycare is not the least expensive business to start, but it can be a rewarding career with lots of potential clients. You’ll also have plenty of professional development work as you start your own business 

It may be beneficial to understand the financial commitment you’ll make when starting a daycare. The cost to start a daycare business is between $10K and $100K, but most can start daycares for under $50K.

Overall, at-home daycares normally require lower start-up costs because there are no costs associated with buying or renting a space. 

The operating costs of running a daycare center include:

  • Rent or mortgage
  • Utilities
  • Insurance
  • Food
  • Supplies
  • Staff salaries
  • Marketing
  • Licensing and permits

Let’s look at the typical costs associated with daycare businesses.

Rent and Utilities

Piggy bank with money in a jar

Most commercial spaces charge between $0.60 and $2.50 per square foot. Plus, you’ll need to pay expenses like electricity, water, heating, TV, phone, and internet.

Home-based daycare centers won’t have these costs, but you’ll still be able to deduct the expenses if you run an in-home daycare. If you go to other people’s homes, you’ll have costs of transportation.

Employee Compensation

The Bureau of Labor Statistics estimates childcare workers in the U.S. earn between $21K and $40K per year. The employee salaries will vary based on education, location, certifications, and years of experience. You can find detailed statistics about day care positions and their hourly pay on Payscale.com.

Licensing Fees

Daycare licensing process

Every state has different daycare business licensing fees and requirements. Contact your state’s early childhood education department for more information. The licensing process can be quite challenging. 

We’ve provided a picture of Nevada’s process as an example. Don’t be surprised if you are spending $10K+ and 6 months to complete everything.

Insurance

Insurance normally costs $3K to $5K annually and varies based on location, credit, and state laws. Kristy told us:

Insurance is my largest expense after paying all the nannies. It is also the largest startup cost unless you rent a facility.

You may have to buy the following insurance policies: 

  • Liability Insurance
  • Workers’ Compensation Insurance
  • Property Insurance
  • Errors and Omissions Insurance

Go to Simply Business to find the best quotes for childcare businesses.

Supplies and Equipment 

Young woman checking the document

You will need furniture and equipment at your daycare. Indoor furniture can cost between $30K and $40K. You might need:

  • Chairs
  • Changing stations
  • Computers
  • Cribs
  • Mats
  • Playground equipment
  • Tables

You might also want toys, books, craft supplies, cleaning supplies, diapers, and wipes.

Food

You’ll also need to calculate the cost of food and kitchen utensils if you provide meals. Most daycares follow USDA Child and Adult Care Food Program nutrition standards.

Advertising and Marketing

Young woman advertising with a megaphone

Expect to spend between $1K and $1.5K monthly on advertising. This includes expenses such as printed flyers, marketing materials, website costs, and social media ads.

If you are social, you might be able to get by without it. Kristy’s main marketing expense is sweat equity, or spending time instead of money to get the word out. She told us:

Everywhere I went I was talking about the in-home daycare. That’s all I could do. I had more time than money.

Resources for Daycare Owners

Take a look at some of the industry organizations in child care and nanny services.

Ready to Start Your Own Daycare?

At this point, we’ve shown you how to start a daycare center. We’ve also provided all the resources you’ll need to help you open a successful day care. 

Which type of daycare business sounds best to you?


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Are you interested in starting a home business? Today, working remotely has become increasingly popular, which provides an abundance of opportunities for aspiring entrepreneurs.

Starting a successful home-based business can be overwhelming for many people just beginning their journeys. Our guide will help simplify the process with the essential steps and advice from small business owners who have already launched their business ventures from their residences.

We focus on helping you by discussing the following topics. Just click on a link to jump right to the home business information that interests you.

[su_note note_color="#dbeafc"]

Get ready to start a small business at home.

Short summary

  • Start a successful home-based business by carefully considering the type of business, creating a comprehensive plan, obtaining necessary permits and licenses, setting up an ergonomic workspace, marketing your venture effectively, and delivering quality products or services.
  • Identify and focus on specialized market segments to help ensure success in any home-based venture. We show you how.
  • Learn from inspiring success stories of individuals who have turned their ideas into thriving home businesses with hard work and the right strategies.

What is a home-based business?

Home-based businesses can be any size as long as the primary office is in the small business owner's home. Small business owners have lots of options to choose from, including:

  • Local service businesses
  • Online and dropshipping businesses
  • Consulting
  • Freelance business ventures

Cristobal Mondragon started Queen Bee Cleaning Services as a home-based cleaning business. Now it makes over $1.5 million annually.

Check out Chris Mondragon's FREE training to kickstart your own cleaning business. You can learn more about his inspiring journey by watching the interview below.

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Read on for all the info you need to decide on a profitable home business idea that will work for you based on your skills and interests in combination with the resources available to you.

What are some advantages of a home-based business?

A home enterprise has several advantages over other small business ideas. Some of the best benefits of a home business include:

  1. Flexible schedule
  2. Lower startup costs
  3. Lower overhead costs
  4. Increased productivity
  5. More opportunities
  6. Higher pay
  7. Less risk than renting a space
  8. More room for personal growth
  9. Tax deductions
  10. Great creative outlet
  11. Reduced personal expenses
 Pros Cons
Flexible schedule Self-discipline required
Lower startup costs Paying attention to daily tasks
Lower overhead costs Lack of privacy
Increased productivity Separating work and home life
More opportunities Lack of space
Higher pay Not taken as seriously
Less risk than renting a space Lack of coworkers to collaborate with and learn from
More room for personal growth Feelings of isolation
Tax deductions Procrastinating or overworking
Great creative outlet  
Reduced personal expenses  

What are some disadvantages of a home business?

Concept of entrepreneur sitting at desk feeling confused about starting home business with dizzy stars and little black cloud over head

When starting a small business from home, many business owners struggle with aspects like:

  1. Self-discipline required
  2. Paying attention to daily tasks
  3. Lack of privacy
  4. Separating work and home life
  5. Lack of space
  6. Not taken as seriously
  7. Lack of coworkers to collaborate with and learn from
  8. Feelings of isolation
  9. Procrastinating or overworking

Many small business owners will attend networking groups that help them overcome these common challenges. Start practicing good habits early to give your home-based business idea the best chance of success.

Factors to consider when starting a business at home

Starting a home business can be a huge advantage or disadvantage to a business venture. Ask yourself the following questions before starting your own business from home:

  • What type of business suits your skills, interests, and resources?
  • Do you have the space for your new business?
  • Does your neighborhood have rules against certain small businesses?
  • Will your family be supportive if you start a small business at home?

UpFlip Cautionary Tale

Many local business owners will find that their neighborhood has rules about running small businesses from home. I have lived in neighborhoods that don’t allow local service trucks, ones that won’t allow any small businesses, and ones that will only allow online businesses.

Make sure you understand the rules for your area before you start a service-based business from home.

How to start a home business

Successful home business ideas will normally follow a nine-step process for the best odds of success.

  1. Decide on a home business idea
  2. Write a home-based business plan
  3. Name your home-based business
  4. Get an LLC for your at-home business
  5. Get business licenses for your home business
  6. Get a home business bank account
  7. Set up your home office
  8. Market your home-based business
  9. Serve your customers

Keep reading to find some of the best home business ideas.

Decide on a home business idea

The first step in starting a home-based company is choosing a business idea. The best small business ideas from home normally fall into the following categories:

  • Online Business Ideas
  • Service Business Ideas
  • Professional Services

We’ll provide you with some home business ideas for each of the three categories next.

Online business ideas

Concept of young man business owner with new idea illustrated by a bright lightbulb over shoulder and laptop in hand

Many successful business owners choose to start an online small business. These make a great new business from home because they don’t require a lot of space and can be started with just the internet and a computer. Consider options like a:

Dropshipping business

This business idea requires creating an online store, finding dropshipping suppliers, and marketing their products. Learn more about dropshipping.

Affiliate marketing business
Woman entrepreneur with megaphone in one hand, cash in the other, and social media icons including Facebook, Instagram, and YouTube drawn around her

Small business owners can make a great living through affiliate marketing. You’ll need a marketing and sales plan because you’ll be paid on commission for selling other companies' products.

Social media business

A social media manager uses digital marketing skills to help other businesses with marketing on social media. Make sure you don’t forget to build your own social media presence, too. Check out our interview with a successful social media manager.

[su_youtube url="https://www.youtube.com/watch?v=kb1czTEK8f8"]
Online store

Whether you have a subscription box business or a dropshipping business, you’ll need an online store. You could even buy an existing eCommerce business.

Check out more online business ideas.

Service business ideas

Check out some of the most popular service businesses that many small business owners run from home.

[su_note note_color="#dbeafc"] EXCITING ANNOUNCEMENT: Get FREE training to start a home business. During the FREE business courses, successful business owners share their proven secrets for starting your own 7-figure business. You don't want to miss this rare FREE opportunity to learn from entrepreneurs that have built multi-million dollar businesses![/su_note]
Car detailing business

Start a small business at home in the car detailing industry. You’ll be washing cars all day. This profitable business can make a ton of money.

Find out how Alan Tursunbaev turned an idea for a summer into a small business that brings in $50K per month.

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House cleaning service

You can make a great living when you start a small business that’s a house cleaning service. Just ask Chris Mondragon, who started Queen Bee Cleaning, which makes nearly $2 million per year.

[su_youtube url="https://www.youtube.com/watch?v=d4Iip7BHXwg"]
Dog grooming business

There are lots of businesses involving animals. You could start a pet-sitting business, a dog-walking business, or even a mobile grooming business.

Professional services

You can start a professional services small business at home. Consider one of the businesses below.

Renting commercial real estate

Real estate agents can make a great living and work from their own homes. Check out how Thach Nguyen has built a $100M real estate empire.

[su_youtube url="https://www.youtube.com/watch?v=TWCzwn3R78A"]
Consulting business

Whether someone needs a freelance writer, help with social media, inventory management, or financial projections, consulting is a great business.

Learn more about consulting businesses.

Perform market research

Once you have identified the best home business idea, it’s time to research how to make your small business idea work in more detail. This could involve conducting:

  • Target market research
  • Competitive analysis
  • Research on barriers to entry
  • Opportunities research

Once you’ve selected a small business idea, you should write a business plan.

Write a home-based business plan

UpFlip’s How to Write a Business Plan blog loaded on a tablet

Did you know a well-written business plan can help a company grow 30% faster than one with no business plan?

A detailed business plan is essential to any home-based venture's success. It functions as a roadmap. Plus, the business plan details your goals, strategies, and financial outlook.

Check out our blog about business plans to download a business plan template and learn how to write your business plan.

Name your home-based business

Next, you’ll want to name your home-based business. Your business name is the foundation of your brand identity and will inspire your logo, marketing, and customer service.

Your unique business name should be easy enough to remember yet reflective of the values held by you and the company. Try our business name generator. You can find a small business name you love and check the availability on Name Cheap.

Get an LLC for your at-home business

Home business owner wearing Apple watch sitting at sunlit desk reading UpFlip’s Types of Business Structures blog on a laptop

Setting up a limited liability company (LLC) for your home-based business is an essential step in safeguarding yourself and preserving your individual assets.

An LLC provides its owners with restricted liabilities, meaning you won't be personally liable for any debts or duties of your organization. They're easy to create and manage and offer tax benefits for successful businesses.

Establishing an LLC for your at-home business requires registering with the Secretary of State.

By forming this type of legal entity, you protect both your small business and your personal assets. You might also consider a different legal structure like a sole proprietorship or a corporation.

Get business licenses for your home business

When starting a home-based business, it's vital to acquire the essential licenses and permits. Depending on where you're located and what kind of business you're running, there will be various requirements for

  • licenses such as general enterprise approvals
  • sales tax documentation
  • professional credentials
  • any local requirements

Check local and state laws for any rules that might apply to your business. You may receive harsh penalties if you do not follow them. Make sure to keep track of your records and renewal periods, too.

All this needs to be done so that your company remains legit during its operations. Complying with legal requirements helps you avoid issues. Just ask Cristobal Mondragon:

https://www.youtube.com/shorts/keieMgRWF9A?feature=share

Get a home business bank account

For any home-based business, it is essential to open a bank account to separate business finances and personal ones. This simplifies tracking profits and expenses for bookkeeping purposes like tax filing.

To establish such an account, you’ll need your legal paperwork like your LLC registration, Tax ID, business licenses, and EIN (Employer Identification Number).

A dedicated credit card may be beneficial so that you can cover costs while your business builds credit history. All these play into managing your business finances. The better you manage the finances, the easier it will be to identify opportunities for improvement.

Set up your home office

Happy man working at home behind a minimalist desk with laptop, tablet, and notebook and cell phone in hand

A dedicated home office is essential for managing your work and keeping up efficiency. Designate an area that provides privacy and limits disturbances so you can focus on running the business from your house. Comfort should be of utmost importance. Get an ergonomic chair and make sure the lighting facilitates whatever type of work you’ll be doing.

You’ll also want reliable, high-speed internet and software that will help you manage your business. The software you need will vary depending on the type of company you’re starting. Check out our HR blog for human resource provider reviews. Other software we suggest is:

Market your home-based business

You need an effective marketing strategy to launch and grow a home-based business. It's essential to have insight into your target audience and research the competitive landscape. Reach potential customers on social media platforms, websites, or by partnering with related service providers.

Track and measure your promotional efforts using key performance indicators (KPIs) like web traffic or customer inquiries to decide where to allocate advertising dollars. Google Analytics is the tool most small businesses use to monitor their success at getting people to their websites.

Most importantly, marketing is a long-term game plan that requires consistency and dedication. Be patient and you'll stand out from other home-based business owners.

Serve your customers

Woman home business owner meeting with clients in her dedicated office space

Successful home-based businesses rely on providing their customers with stellar service. Depending on the type of business you start, this could be anything from offering personalized attention to delivering high-quality products. Practice operating on the old adage “Under-promise and over-deliver.”

Every happy customer will help build strong relationships that lead to loyalty and often positive word-of-mouth referrals. These can help you grow your at-home venture even faster.

Home business FAQs

What business can I start in my home?

Most businesses can be started from home as long as there are no homeowner association rules or local government prohibitions. You probably won’t be able to start home-based manufacturing or energy companies, for example.

How do I start a small home-based business?

Concept of woman feeling confused about starting a home business shown with laptop, coffee, miniature house model, and question mark speech bubble

Beginning a small, home-based business can be achieved by following the essential steps we’ve outlined. First, consider potential ideas and determine if they are suitable for working from your residence.

Consider profitability by creating an organized blueprint of how to move forward. Pick out the right company configuration, give it an apt name, register it with your state authority, and attain an applicable tax ID number and licenses to pave the way for a successful at-home venture.

Can a tenant run a business from a rental property?

You may be able to start a home business if you rent. You’ll need to:

  1. Check your CC&Rs or lease.
  2. Talk with your apartment complex manager, HOA, or landlord.
  3. Research zoning laws.
  4. Check for other laws prohibiting home businesses.
  5. Get a landlord permission letter for home business activity.

You may need a signed letter of authorization (see our sample) giving permission to use the property for business purposes.

What are the three general rules for qualifying your home office as a business expense?

Smartly dressed woman entrepreneur gesturing to screenshot of IRS home office requirements webpage

According to the Internal Revenue Service, you have to meet three main criteria to claim a home office as a business expense:

  1. Exclusive and regular use: Your home office must be used exclusively for business purposes on a regular basis. It should not be used for personal activities.
  2. Principal place of business: Your home office should be the primary location where you conduct substantial administrative or management activities for your business.
  3. Meeting clients or customers: You must use your home office to meet your clients, customers, or patients, or the office space must be a separate area used exclusively for business purposes.

As long as your home office is exclusively used for work and is where you consistently do admin work, you will normally qualify to deduct 100% of direct business costs and a percentage of indirect but relevant household costs.

What percentage of utilities can I deduct for home business?

According to the Internal Revenue Service, you can deduct utilities using two methods:

  1. Simplified Method: Up to 300 square feet at $5 per square foot for a total of $1,500.
  2. Actual Expenses: This method allows you to use the same percentage of the home you actually use for business. Keep reading to find out how to calculate it.

Using actual expenses, you can either use the percentage based on square feet that are used exclusively for your business, or, if the rooms in your home are approximately equal in size, you can use the percentage of rooms used.

For instance, my office is approximately 15x15 feet or 225 feet out of 1,600 square feet in my home, which equals 14%. I can’t use the rooms method because they are not approximately equal. That calculation would suggest my office space is 33% of the home, which is not a fair representation.

My utilities are around $12,000 per year, which means I can claim 14% of that or $1,687.50 of my utilities. Given my mortgage is $1,700 monthly, 14% of my annual mortgage is $2,856, making my total home office claim $4,543.50—a far better deduction than the Simplified Method’s $1,500.

What insurance do I need to run a business from home?

Insurance agent holding up clipboard with liability insurance form

A home business will normally want a business owner policy (BOP) that bundles together three important coverage types:

  1. General liability insurance
  2. Commercial property insurance
  3. Business interruption insurance

It's typically cheaper to buy a BOP compared to buying each policy separately and you can add additional coverage types as needed. Simply Business is a great place to get your business insurance because it compares rates from 16 major insurers.

Balancing work and life at home

While running a home-based business provides advantages, work-life balance may be compromised. You’ll want to create good rules for yourself to balance your personal time and work time. Here are some rules people suggest (and I wish I followed):

  1. Create a schedule for yourself with regular breaks and start-stop times. This helps keep your work from infringing upon personal time. My wife wishes I’d listen to this one.
  2. Maintain a separate space for your work so you can avoid being in it during personal time. This one is the easiest to follow.
  3. Schedule personal activities including exercise, hobbies, and dates. I try to do this one, but only exercise works flawlessly. My dog and I go for a mile walk every morning.
  4. Send your kids to boarding school if they start plying in your home office (jk).

Expanding and scaling your successful business

Small town concept with wooden block houses, upward-trending arrows, and Scrabble letters spelling out "success"

Once you start a small business at home, you’ll operate the business. As you build success, your business entity will likely need to hire more people, automate systems, or diversify income streams. Careful planning and research are essential for a successful business idea to grow. Some of the best ways to scale a business include:

  • Introduce new services and products.
  • Add another market segment.
  • Explore partnerships.
  • Upgrade technology.
  • Add staff members. (This might mean you need to change the legal structure or move the business out of your own home.)
  • Add new locations.
  • Create a franchise.
  • Increase the budget for your marketing and sales plans.

Ready to start your own business?

Now you know how to choose a business idea, create a business entity and legal structure, and some of the unique features of a home business. It’s up to you to take the time to create a solid business plan, build your business model, and market your business.

What business will you start from home?

Did you know that it costs less than $5K to start a cleaning business, but with the right strategies you can make more than $1.5M per year?

Join us as we discuss how to start a cleaning business from scratch. We’ll explore Cristobal Mondragon’s remarkable journey from starting Queen Bee Cleaning Services in 2015 to becoming a featured speaker at cleaning conventions.

We’ll share his story, the strategies and lessons Chris learned from starting a cleaning business from home, general information about the cleaning industry, and how you can start one of your own. Chris told us:

[su_quote]This is the best time to start a cleaning business.[/su_quote]

[su_note note_color="#dbeafc"] Get ready to learn how to open a cleaning business. Click on any link below to jump to that portion of the article, or just read on.

This guide will show you exactly how to start a cleaning service. Let's start by discussing the Queen Bee Cleaning Services:

Case Study: Queen Bee Cleaning Services

Cristobal Mondragon and his wife started Queen Bee Cleaning Services in 2015. Today, he makes over $1.5M annually and has opened a second location. He’s been recognized by industry organizations for his excellence, and he’s used his success to expand into courses, customer relationship management, and coaching.

But it hasn’t been without challenges. Chris made the costly mistake of misclassifying employees as subcontractors, leading to a hefty fine.

That might stop many business owners, but he overcame the $10K hit and is passing his knowledge on to you.

Check out our interview with him below.

https://www.youtube.com/watch?v=d4Iip7BHXwg

Now, let's look at what you need to know about the industry before starting a cleaning business.

Cleaning Industry Outlook

Janitorial workers cleaning an office space

According to IBIS World, the contract cleaning industry made over $90B in revenue in 2022 and will grow to nearly $100B by 2027.

There are 1,163,718 cleaning companies in the U.S., so considering the revenue figure above, that means they average $77,122.63 in annual revenue each. With wages being approximately 38.4% of revenue, that means it's pretty easy for cleaners who want to start their own business to take home around $45K after expenses.

Chris provided a spreadsheet of his accounts, which I modified to make his accounting match IBIS World's database for an easy comparison. His strategies help him earn nearly double the after-tax profit and nearly four times the take-home pay of the average cleaning business owner.

[su_table responsive="yes" alternate="no" fixed="yes"]

Year Converting Industry To Average Business QueenBee (Using Numbers Adjusted For Income Privacy)
2022 Ind Revenue in Millions $89,749.00
Industry Revenue $89,749,000,000.00
Number of Businesses 1,163,718
Rev/Est $77,122.64 $1,130,896.00
COGS $30,463.44 $895,841.20
Gross Profit $46,659.19 $235,054.80
Salaries $11,876.89 $80,000.00
Other Expenses (Most likely rent, utilities, etc. that pertain specifically to running a home-based business) $31,157.55 $55,296.00
Net Income $3,624.76 $99,758.80
Approximated Owner's Earnings $46,659.19 $188,758.80
Net Income Percentage 4.70% 8.82%
Owners Income Percentage 60.50% 16.69%

[/su_table]

Get ready to find out the answers to these frequently asked cleaning company questions. We’ll answer questions like:

  • How much can a cleaning company owner make?
  • How much money do I need to start a cleaning company?
  • What is the easiest cleaning company to start?

How profitable is starting a cleaning business?

According to The BBQ Cleaner, cleaning services can earn between $20K and $100K in annual profit. A solopreneur cleaning business normally makes around $50K per year.

The Janitorial Store estimates the average profit margin for commercial cleaning businesses is between 10% and 15%. Profitability will vary based on your location, target market, pricing strategy, and the size of your business.

The factors below could make your cleaning business profitable:

  • High Demand: Most wealthy families and businesses need cleaning professionals.
  • Growth Potential: Cleaning businesses can grow from a one-person operation to cleaning business dynasties with locations across the country or world.
  • Low Overhead: Cleaning businesses have low startup costs and are commonly run from home.

How Much Does It Cost to Start a Cleaning Business?

Chris started Queen Bee with less than a $5K budget. He estimates you can start for less than $2.8K if you have a car. You can expect around 50% of earnings to go to payroll, including your wages. Another 30% of revenue will be spent on bookkeeping, advertising, overhead, and taxes.

Udemy offers inexpensive courses on budgeting that are worth checking out. Many cleaning companies love using Jobber as their cleaning business software to help lower costs.

What is the best type of cleaning business to start?

Residential cleaning is the easiest type of cleaning business to start because it requires less initial investment than business cleaning services or specialized cleaning services.

You might also consider starting the following:

  • Commercial Cleaning Company: Cleaning services for offices, manufacturing spaces, and commercial spaces make higher profits but have higher startup costs.
  • Specialized Cleaning: Upholstery cleaning, vehicle detailing, closet organization, mattress cleaning, and clothing cleaning services require additional knowledge to provide proper cleaning techniques, but they have less competition and a narrower target market.
  • Other cleaning services: Carpet cleaning, chimney cleaning, window cleaning, and crime scene cleaning are all high demand cleaning solutions in local markets.

Consider Cleaning Certifications

Completing International Sanitary Supply Association (ISSA) certifications will land you on their database of certified professional cleaners. That's a high-authority link to your website!

Queen Bee has a certification from the Association of Residential Cleaning Services International (ARCSI) as well as the Institute of Inspection and Restoration Certification (IIRC). He told us:

[su_quote] ARCSI certification teaches you how to use chemicals properly and avoid creating toxic fumes. It basically comes down to teaching you the chemistry behind each product and how to clean each [surface] … and avoid damaging them. [An] IIRC certification is similar to the ARCSI certificate but focuses on carpet cleaning and tile cleaning.[/su_quote]

Find out about more than 45 cleaning certifications.

Learn to Run a New Cleaning Company Successfully

Get FREE training for building your cleaning business with Chris Mondragon's webinar, “How to Start a $125K Per Month Cleaning Business From Scratch.”

During this FREE training, Chris will share his proven secrets for starting your own 7-figure cleaning business in just one week. You don't want to miss this rare opportunity to learn from this multi-million-dollar cleaning business entrepreneur for free!

How to Start a Cleaning Business

Home cleaner carrying a bucket of supplies

Starting a cleaning service company doesn’t have to be hard. We've outlined the process for starting a successful cleaning business in nine steps:

  1. Choose a target market.
  2. Choose your specialty.
  3. Create a cleaning business plan.
  4. Fund your business.
  5. Register your business.
  6. Price your services.
  7. Find clients.
  8. Invest in advertising.
  9. Hire a cleaning crew.

Let's start by discussing what cleaning company customers to serve.

Step #1. Choose Your Target Market

You need to understand who your target clients are to run the business successfully. Do some market research to find out where they are located.

A house cleaning business will normally do cleaning jobs for more affluent homeowners, while an office cleaning company will be looking for new business owners. Both groups can benefit from finding prospective clients who are unhappy with their current provider.

Take some time to do market research about how to align your brand and company values with the target market. Then choose a cleaning business name.

Next, you’ll learn what cleaning company services to provide.

Step #2. Choose the Type of Cleaning Business to Start

Research different types of cleaners and establish what is right for you. Specialized services tend to do particularly well. We created a list of cleaning company types and what they offer. Consider starting some of these cleaning businesses:

Offering a variety of services can help you reach more clients. Queen Bee Cleaning Services provides house cleaning (including Airbnb and move-out cleaning), janitorial services, carpet cleaning, and hospital-grade disinfectant services. Chris told us:

[su_quote] Recurring house cleaning is our bread and butter. Move-in and move-out services can have some surprises. Airbnb can be really profitable when you get it right. [/su_quote]

Next, you’ll learn what goes into a business and marketing plan for a local cleaning company.

Step #3. Create a Cleaning Business Plan

You need a business plan to help guide your decision-making. It keeps you focused. The plan will help define your vision, target market, objectives, startup costs, and strategy to get potential clients.

A business plan is a living document that will help you secure financing and help you manage logistics better than other small business owners. Make sure you write one!

Try out our business plan templates and resources below as you learn how to start a cleaning business.

Establish a Location

Most cleaning businesses operate from home for the following reasons:

  • Home-based businesses have lower startup costs.
  • Equipment and supplies can be stored at home.
  • A room in the home can be converted into an office.
  • Work is performed on an external job site.

Chris runs his small business from home, and when we interviewed him two years ago, his business expenses for rent and utilities were only $750 per month. He even told us most of those expenses actually helped the business from an accounting standpoint.

However you plan to do your bookkeeping, don't forget to check the Municode Library to find the local ordinances about starting a home-based cleaning business.

Keep in mind that running a cleaning business where children and pets live can be dangerous. Cleaning materials can be toxic, and some are explosive if combined. The EPA offers guidance on handling household hazardous waste.

Templates and Resources

These business plan templates and resources will help you prepare to get residential and commercial cleaning jobs. Want to know the best part? They're all free!

Also, check out our interview with Mike regarding business plans. Mike offers lawn care services, but his advice applies to commercial cleaning services. Plus, his small business is one of the fastest-growing franchises in the country.

https://youtu.be/Seac5PbUZXk?si=42fVImtwTT6DfATH

Create Standard Workflows

Chris has tons of resources to help you start your own cleaning business. Check them out in his free training course.

He emphasizes the importance of getting every facet of your process documented to create workflows. His clients appreciate the transparency he provides with his pricing. You can be confident in your endeavors if you seek to model your business after Queen Bee.

Get Cleaning Supplies and Equipment

Your cleaning supplies depend on the services you provide, but you can start by purchasing equipment like a vacuum cleaner, window cleaner, and a few microfiber towels.

For more information about what cleaning equipment you'll need for a maid service, check out our guide. It's effectively a cleaning business starter kit!

Chris even offers a hospital-grade disinfecting service, which requires specific supplies. He told us:

[su_quote]We use an electrostatic sprayer to apply the disinfectant. The sprayer ‘loads’ the mist with a positive charge, making the disinfectant stick to all surfaces, killing 99% of the pathogens. Our hospital-grade disinfectant is an EPA-certified product safe to use around children and pets and safe on all surfaces.[/su_quote]

Next, we’ll discuss whether you need a business loan when you start your local cleaning company.

Step #4. Get Funding

Ever wonder why so many people get into the cleaning business? It has a low barrier to entry. The initial investment to start a home cleaning business can be one shopping trip to a home improvement store.

Funds to start your cleaning service can come from:

  • Personal funds: People commonly pull from their savings and paychecks.
  • Loan from family or friends: Sometimes friends and family are willing to help people start a business. At the very least, they might hire you to clean their homes.
  • Business partners: It's easier to get twice as much done if you have a business partner. They can be an active or a silent investor.
  • Government programs: Some people will qualify for Small Business Administration loans or other government grants.
  • Crowdfunding: If your business idea is something that can be scaled to sell all over the country, crowdfunding is an option.
  • Credit cards: Your business may need credit cards to pay for expenses. Each business purchase could earn some cash back and help build business credit. Like personal credit scores, business credit scores impact loan rates.
  • Home equity loan: Refinancing your home loan is a great way to get startup cash.
  • Rollover for business startups (ROBS): If you start an S-Corp or C-Corp, you can move your 401(k) from your employer to your new corporation and buy the company stock with the 401(k), giving your business an influx of cash. During operations, you can reinvest dividends into the 401(k) to increase the funds in it.

Check out our article about business funding. We cover 17 ways of funding a business to help you decide which practices are best for you.

Alternatively, the SBA offers free courses on financing options and funding programs. The Hartford published the pros and cons of using personal funds to start a business.

Don't forget to check out our lending partners.

Once you’ve got the money, it’s time to register your business and get your cleaning business license.

Step #5. Register the Cleaning Business

Once you have a business plan, you'll want to come up with a memorable name. Considering each of these aspects will help you beat out your competition:

  • Does it state what you do? If you wash windows, does the name or logo indicate you perform window washing? Don't be too specific, though, because businesses evolve.
  • Is it easy to remember? Potential customers will need to search your business name.
  • Does it indicate the location you serve? Major cities can be too big to serve in their entirety. Using local terms can narrow the audience and improve ranks on Google.
  • Does it communicate the brand message? Queen Bee Cleaning Services’ company logo is a picture of a bee along with the name of the company. Simple, right?

Queen Bee does a great job as a brand because it is the hive leader (best of the local residential cleaning businesses), but it doesn't clarify for potential customers where the service is, widening its potential customers.

Register a Dot Com

Top-down shot of a woman using a tablet to search for available domain names

Once you have a name idea, run it by your friends and family. Test it on Google Trends. Our business name generator connects you directly to NameCheap when you click on one of the business names. There, you can buy the domain name and other services.

Pro Tip: Aid your brainstorming even more with our ultimate list of cleaning business names.

Establish a Legal Structure and Register With the State

When you have your name, you'll want to choose a legal structure. Legal structures include sole proprietorships, limited liability companies, and corporations.

To establish a legal business structure, work with an attorney, accountant, tax specialist, or government official for the best results. Then you can register your business with the necessary state and local agencies.

Next, you'll want to get your business licenses.

Licenses, Permits, and Tax Forms

Regardless of the business structure, determine if your cleaning company requires a business license, permit, or a specific set of tax forms to operate legally. We researched each state to create our guide to cleaning business licenses. Alternatively, you can use the SBA tool to find out which business licenses you need.

Get Cleaning Services Insurance

A local business owner should purchase general liability insurance, especially if they serve commercial clients, which require it. General liability insurance covers property damage and bodily injury.

Check out our blog about how to get business insurance for more information. We recommend using Simply Business to find the best business insurance rates.

How to Start a Cleaning Business Franchise

A franchise consists of a franchisor company and a franchisee in a joint venture to sell the franchisor's products and services. In essence, a franchise enables you to enter the market with a ready-made cleaning company.

Many franchise opportunities exist in the cleaning industry. Well-known franchises are The Maids, ChemDry, and PuroClean. Learn more about buying a franchise.

At this point, you know how to set up proper licensing, but a successful business needs to provide consistent services and pricing.

Step #6. Price Your Services

Cleaners meeting with a new client in her home

A small business owner will need to establish how much to charge for cleaning services. Research reasonable prices to stay competitive while still making a profit.

There are three typical ways house cleaning prices are calculated by a house cleaner:

  • Hourly: $25 to $90 per hour, per cleaner
  • Flat fee: $100 to $800 weekly or biweekly for standard cleaning of a single-family home
  • Room rate: $100 for 1 bed/1 bath + $10 to $20 for each additional bedroom and bathroom
  • Per square foot: $0.05 to $0.10 per square foot

Learn more in our house cleaning pricing guide.

Next we’ll discuss how to get commercial cleaning contracts.

Step #7. Get Cleaning Clients

Building customer relationships is crucial for starting a cleaning business. Some of the best digital and traditional marketing techniques when you start a cleaning business include:

  • Market your business: Identify your target audience and the cleaning services they need. Then use social media, flyers, and local associations to promote your brand. You’ll also want a website to show potential customers the services you offer.
  • Get reviews: Client testimonials on social media or Google Business Profile help attract new customers. Make sure to ask for them and make them easy to provide.
  • Build a network: Local business and trade associations are great places for business networking and referral groups.
  • Use online marketplaces: Let people know about your services on marketplaces to help get low-cost leads.
  • Get referrals: Ask clients to refer their friends. Starting a cleaning company is easier when satisfied customers, friends, and family recommend your business to other people.
  • Offer discounts: First-time customer discounts often attract new clients. You can also provide subscription-based discounts for routine cleaning.
  • Optimize your website: Make sure your website directly answers customer searches.

Learn more about how to get clients for your cleaning business.

Chris reveals all these incredible tactics, plus his pricing structure, in his 7-Figure Cleaning Business Blueprint course. You get to see how Chris executes all the most important techniques from the course live.

It’s time to implement your marketing plan next.

Step #8. Invest in Advertising

Advertising and promotion marketing are important for starting any business, especially a cleaning service. In fact, marketing is one of Chris’s biggest expenses in his budget.

His marketing budget is an average of $4,212.50 per month. He spends primarily on Google Local Ads, but he also spends a portion on Yelp, Craigslist, and Facebook. He told us:

[su_quote] Craigslist ads are low-cost and have done really well. You should definitely include them [in the list of places you run ads]. [/su_quote]

Chris has become highly ranked on Google, Yelp, Nextdoor, Houzz, Thumbtack, HomeAdvisor, and Porch. Focusing on building your business presence on highly ranked websites helps increase your site's authority.

He shares his Facebook ad strategy in our master course. It's surprisingly simple but gets a return on ad spend of 16-41X.

You'll want to use a combination of:

  • Digital marketing: This includes email newsletters, social media, and search engine optimization. Neil Patel is a renowned authority in this area. Check out his website.
  • Printed materials: This includes business cards, flyers, brochures, T-shirts, and even car magnets. Canva is an excellent tool for designing your own business cards. And here's our guide for getting them cheap.
  • SMS marketing: Sending text messages is a highly successful digital marketing strategy.
  • Branding: Uniforms, vehicles, and customer service are all crucial aspects of marketing for residential cleaning businesses.

One of Chris's marketing strategies is putting door hangers on three houses in each direction after each cleaning. These fliers give first-time customers discounts. Many customers who took advantage of this sale were so impressed with the service they happily joined his subscription plans.

Pro Tip: Check out our article on how to get cleaning contracts.

As a business owner, you might have a goal for your house cleaning services to create jobs and make more profit. If you do, check out this next section.

Step #9. Hire a Cleaning Crew

Imagine what it would be like to have so many referrals and so much business that you can't handle it all yourself!

While many cleaning businesses are one-person operations, owners often find that it helps to have employees for practical and profit-based reasons. After all, you might want to take a vacation!

Before you hire employees, you must address the following:

  • Employer Identification Number (EIN): Get your business an EIN from the IRS. Apply for one online or call 800-829-4933.
  • Tax Filing and Withholding: The IRS publishes a handy guide for employers that is available here
  • Unemployment Insurance Tax: You will need to pay Unemployment Insurance Tax through the UI Program under the Social Security Tax for employers.
  • Federal Employment and Labor Laws: All employers must display workplace posters that are downloadable on the U.S. Department of Labor website.

Other requirements include:

  • Employment Eligibility Verification (Form I-9)
  • Reporting to your state's new hire program
  • Worker's compensation insurance
  • Disability insurance, as required by some states
  • Occupational Safety and Health Administration (OSHA) training

Compensating employees is probably going to be your most significant expense. It is for Chris. You can either pay employees an hourly rate or per task. Chris pays an hourly rate of about $19, but local businesses can choose which works best.

If you're a busy house cleaning company with lots of customers near each other, both you and the employees can benefit from performance-based pay.

Ready to Start Your Own Cleaning Business?

Now you have the tools and knowledge to embark on your path to success in the cleaning industry.

Remember, it's crucial to understand your target audience, choose the right type of cleaning services, and create a solid business plan. Proper funding, registration, and pricing strategies will lay a strong foundation for your business.

Once your business formation is complete, build a loyal client base through effective marketing and excellent service. Don’t forget to ask for reviews to ensure long-term success.

As your business grows, don't forget the importance of hiring and managing a reliable cleaning crew.

Whether you're dreaming of starting a small residential cleaning service or building a multi-million-dollar empire like Queen Bee Cleaning Services, the journey begins with a single step. Take the knowledge and insights gained from this guide and start your journey to entrepreneurial success in the cleaning industry today.

What's stopping you from starting a cleaning business?

Selling on Amazon is a lucrative field. The tech behemoth has so many ways to create an Amazon store and generate sales.

We talked to leading pet supplies seller Casey Walters, who started ShedDefender to protect his friends' couches from pet messes. From there, he appeared on Shark Tank and is currently making $1.5 million in yearly revenue.

He makes two-thirds of his revenue from selling on Amazon, which gives you a good idea of how important Amazon is when you sell online.

We’ll share tips about creating an Amazon store, the importance of using Fulfillment by Amazon (also known as Amazon FBA), and how to encourage reviews without violating the Amazon Seller agreement.

[su_note note_color="#dbeafc"] Click on any of the links below to jump ahead.

Get ready to sell on Amazon!

How much money do you need to start selling on Amazon?

Shipping box with the Amazon logo printed on it next to a stack of hundred dollar bills

Jungle Scout, a leader in Amazon analytics, did research that found most new sellers start selling on Amazon with less than $5K. This covers their product costs, Amazon fees, and other required costs.

That’s consistent with how Casey Walters started selling ShedDefender on Amazon FBA:

[su_quote]My mom sewed the first product. We kinda went viral overnight. I had a seamstress making five per month. Then, I had to borrow $30K from my parents to create 2,000 of them in the first two months. Then $140K over the first year.[/su_quote]

Hear more in our exclusive interview:

https://www.youtube.com/watch?v=XTiks_VFTMo

Is it good to sell on Amazon with FBA?

Selling on Amazon is highly beneficial to new businesses. Some of the benefits of becoming an Amazon seller include the ability to:

  • Increase sales
  • Spend less
  • Simplify operations
  • Grow your business

Want to know how?

Increase sales

Casey used Fulfilment by Amazon to deliver orders with the speed and reliability of Amazon Prime. Customers love the speed of delivery, which will help you increase sales and encourage repeat purchases.

In fact, Casey sells twice as many products on Amazon as he does on his own website, and it means he’s earning an extra $100K per month!

Spend less

When you sell on Amazon, you can have Amazon manage your shipping. Amazon gets huge discounts because of its purchasing power and delivery network. That’s why FBA saves 30% off standard shipping and up to 70% on premium shipping options.

Simplify operations

Selling on Amazon FBA means Amazon handles payment and order processing, customer inquiries, returns, and review software. Free up your time to focus on product development, marketing, and delighting customers.

Grow your business

Selling on Amazon gives you access to a global network with hundreds of fulfillment centers to sell products globally without figuring out the logistics.

How to sell on Amazon

Young woman researching how to become an Amazon seller on her laptop

Starting an Amazon business has never been easier. There are so many ways Amazon sellers can sell on Amazon. You’ll want to follow this easy 15-step process to selling on Amazon:

1. Start with market research
2. Find your niche
3. Create a business plan
4. Identify product suppliers
5. Place orders
6. Set up seller account
    a. Configure your account
    b. Enroll your brand
7. List products
    a. Take good photos
    b. Be descriptive
8. Research the right selling price
9. Package items with care
10. Select a fulfillment method
    a. Amazon FBA
    b. Self Fulfillment
    c. Dropshipping
    d. Amazon Print-on-Demand
11. Manage your inventory
12. Promote products
13. Get product reviews
14. Optimize listings
15. Grow with tools

Get ready to learn how to sell on Amazon.

Start with market research

You'll want to decide what to sell online. The best way to do that is to establish what kind of eCommerce store you want to be. A good Amazon store will offer something people will pay for, and you won’t mind spending your time becoming an expert on the subject.

Once you have an online business idea, you’ll want to establish its potential to grow into a profitable business. That requires market research.

Find your niche

The key to selling on Amazon is finding product categories to buy products at a competitive price, markup, and generate sales. Check out our blog about the best products to sell on Amazon. We discuss considerations about product categories including:

  • Games and Toys
  • Health & Household
  • Beauty Products & Personal Care
  • Grocery & Gourmet Food
  • Clothing, Shoes, and Jewelry
  • Baby Products
  • Home & Kitchen
  • Kitchen & Dining
  • Tools & Home Improvement
  • Pet Supplies
  • Sports & Outdoors
  • Patio, Lawn, and Garden

Next, you’ll want to write a business plan that outlines your approach to selling on Amazon.

Create a business plan

Your business plan can be as straightforward or as complicated as you want to make it. The more detailed the business plan you write, the more accessible selling products will be. Those with a plan have a 19% higher success rate.

That doesn’t mean you have to be confident you’ll achieve success from Day 1. As Casey told us,

[su_quote]This all started ’cause my friends didn’t like my dog shedding all over their house.[/su_quote]

At this point, you have a successful sales performance target, so it’s time to start finding the products to sell in your eCommerce store.

Identify product suppliers

Next, you’ll want to find manufacturers that can create the products you need and ship products to you. You’ll want to look for quality manufacturers that won’t ship counterfeit products.

You might need to find a manufacturer—or check out Amazon Merch to see if they carry the products you want to sell.

Place orders

Once you have found a manufacturer or wholesaler for your products, you must place an order and get the products shipped to you. Before you order, ensure the products aren’t on the restricted product list.

Alternatively, you may be able to have them shipped to an Amazon warehouse, though you’ll probably want to check your own products to ensure they meet quality control standards before shipping them to the Amazon warehouse (especially if you’re just getting started).

Next, it’s time to start your Amazon Seller Account.

Create an Amazon Seller Account

Business owner using a laptop to join Amazon Seller Central

All Amazon sellers will need an Amazon Seller Account before they can open their Amazon store and create product listings.

You’ll need to choose a selling plan. There are two options: Individual and Professional. The individual selling plan is free to start and $0.99 per item sold.

Meanwhile, the Professional selling plan is $39.99 and offers lots of tools to boost sales and manage items in bulk.

Configure your account

To become an Amazon seller, you’ll need to configure your account following the steps below:

  1. Gather your personal and business information (including bank account routing number and credit card that allows international charges).
  2. Choose to apply for either an Individual or Professional seller account.
  3. Enter your email address and password.
  4. Add your business location and type.
  5. Enter your personal and business details.
  6. Enter your payment method.
  7. Hover over the gear icon.
  8. Click “User Permissions”.
  9. Enter contact information for new account users.
  10. Optionally: Manage settings for existing users.

You can create your account using the email address associated with your Amazon customer account or opt to set it up using a separate business email address.

Note that receiving approval to open an Amazon Seller Account can take a few days to a few months.

Enroll in the Amazon Brand Registry

You’ll want to enroll in brand protection through the Amazon Brand Registry. When you have a trademarked brand image, you can sign up, and Amazon will help protect your brand's intellectual property and provide tools for a more creative brand experience.

Create a product detail page

Business owner setting up an Amazon product page on a desktop computer

You can create a product detail page once your Amazon account is set up. You’ll need a product detail page for each product you offer, but product pages allow for variations (different color and size combinations) on a single page.

Two of the most critical features of a product detail page include the photos and the text, which we’ll discuss to help you create a beautiful Amazon store.

Take good photos

Many sellers emphasize the importance of beautiful pictures to help sell their products on Amazon and other eCommerce stores.

Amazon sellers should follow Amazon photo requirements precisely for the most success. Some types of products have additional requirements, but the main requirements are:

  • Use a pure white background (255,255,255 is the color code if you do your own editing).
  • Show the whole product.
  • Fill 85% of the picture.
  • Name the image the same as the Product Identifier for books and some other products.
  • The long side should be between 1,000 and 10,000 pixels.
  • Files should be JPEG (.jpg or .jpeg), TIFF (.tif), PNG(.png), or GIF (.gif) file formats.

Any other photos should follow the exact technical requirements, but you are not required to use a white background or the product identifier as the title. You can include videos, infographics, and models, except for babies.

Pro Tip: Review specific product category requirements before adding pictures to your product detail page.

Be descriptive

An Amazon store with compelling titles and descriptions on the product detail page will have more product visibility. Both the title and the description should have relevant keywords to highlight the particular product features that Amazon shoppers are searching for.

Amazon allows up to 200 characters in the product title, so you might use them to target as many search results as possible. Shed Defender, for example, uses the following title:

Shed Defender Original Dog Onesie – Seen On Shark Tank, Contains Shedding of Dog Hair for Home, Car, Travel, Anxiety Calming Shirt, Surgery Recovery Body Jumpsuit, E Collar Alternative

Generally speaking, this is borderline keyword-stuffing (adding many keywords for SEO purposes), and some search engines penalize pages in search results when you stuff too many keywords in a small space. It seems to work alright for the Shed Defender Amazon Store, though.

I’d be interested to see what happens with search results if they cut the title to:

Shed Defender Original Dog Onesie – Seen On Shark Tank

Once you come up with a great product title, you’ll want to include the following information in your product descriptions:

  • Sizes offered
  • Colors offered
  • Product category-specific information requested by Amazon.
  • Bullet point list of the essential features.
  • Sizing guide to help people choose the right size for garments.
  • Answers to frequently asked questions.

Pro Tip: Look at top-performing product pages in your product category to understand what they do. Then, use Jungle Scout to research the keywords people are using to search for products in your category. You can also check search engine optimization tools like Semrush, SurferSEO, or Google Trends.

Research the right selling price

Amazon shoppers are going to compare prices and deals online. You should, too. A dynamic pricing tool is a cost-effective way to provide competitive prices. Amazon includes a built-in option with a Professional selling plan, but you might want external dynamic pricing software that you can use on your own website, too.

These tools make it so that third-party sellers can match or beat the best pricing online, but you need to include minimum pricing so that you don’t drop below the costs of replacing the product, Amazon shipping costs, and additional selling fees.

Package items with care

Whether you are shipping items directly to customers or to Amazon fulfillment centers, you’ll want to have the products in packaging that protects them from the damage that occurs during shipping.

Check out the Amazon Seller Guide sections below to learn more about how Amazon expects you to ship products that participate in Fulfillment by Amazon (FBA).

Select a fulfillment method

You’ll need to select a method of fulfillment for each product. The primary options include:

  • Amazon FBA (Fulfillment by Amazon)
  • Self Fulfillment
  • Dropshipping
  • Amazon Merch

Next, let's look at these approaches to selling on Amazon.

Amazon FBA

Man in an orange ball cap and matching polo holding a large shipping box in an Amazon warehouse.

When you start selling on Amazon with Amazon FBA, you must ship your products to an Amazon fulfillment center. We’ll discuss why you might want to use Amazon FBA and its associated costs.

Why choose Amazon FBA

When you use Amazon FBA, you benefit from Amazon Prime shipping, which means Amazon provides customer service and handles customer returns to Prime members.

According to Statista, 71% of Amazon customers are Prime members, which means you gain access to the customer service standards their customer base expects. You are more likely to get positive reviews if you meet their expectations when you sell on Amazon.

Fulfillment costs

The sales costs on Amazon start at $2.45 per item and increase based on the product type, weight, dimensions, and time of year. You will pay 1.5% to 8% more for holiday packing and shipping.

Costs of storage space

You’ll also pay for storing the products, which is substantially more during the holidays than the rest of the year.

Month Standard Oversized
 January to September  $0.87 per cubic foot  $0.56 per cubic foot
 October to December  $2.40 per cubic foot  $1.40 per cubic foot

Self Fulfillment

Some sellers prefer to handle fulfillment, especially if they profit from their own website or run multiple product shipping businesses.

Pro Tip: I strongly recommend seeking out the input of a shipping and fulfillment specialist before you try to sell this way. The decisions you make when you are managing fulfillment can make or break the company.

It impacts both pricing and customer service, which can cause you to lose money when you sell. (It’s happened to me on a couple of products I tried selling before I created and started implementing various helpful calculators for selling on platforms.)

Dropshipping

Dropshipping is similar to Amazon FBA, but a third-party fulfillment center or distributor will ship the product after you sell it on Amazon. You may have shipping delays when you sell using this method if there is a lag between when the customer pays and when the dropshipper gets paid.

The main benefit of this strategy is you don’t need as much inventory to sell on Amazon.

Amazon Merch

Amazon Merch is a print-on-demand offering that allows you to sell on Amazon by submitting your designs for products. Every time you sell an item, Amazon prints the product, ships it, and gives you a royalty.

Manage your inventory

Woman in a warehouse holding a tablet and checking stacked boxes while performing Amazon inventory management

You’ll need to keep your inventory available when you sell on Amazon. This might mean ordering in bulk and having shipments sent to the nearest Amazon fulfillment center or staying updated on unavailable products through your dropshipper.

Pro Tip: You might need to invest in more sophisticated inventory management tools to update your channels’ inventory when you start selling on multiple sales channels.

Promote products

There are numerous ways to promote your products both on and off Amazon. You can use strategies like:

  • Sponsored brand campaigns: Invest in cost-per-click (CPC) ads featuring your logo, headline, and multiple products. These ads appear at the top, bottom, and inside of mobile and desktop shopping searches.
  • Stores: You can customize your Amazon store to highlight your brand, emphasize product listings or categories, and generate sales.
  • Sponsored display ads: Amazon has a huge network of affiliate websites that earn a commission for advertising projects. Show ads on and off Amazon with display ads.
  • Posts: Create content to help people understand your product listing more. Then highlight it on your Amazon shop.
  • Sponsored products: Show a specific product detail page when an Amazon customer searches for relevant keywords. These work similar to brand ads.
  • Amazon Live: Create a video to highlight products and sell on Amazon.

Selling on Amazon has evolved to allow you to do most aspects of social media marketing and content marketing directly on Amazon.

Get product reviews

Amazon Vine webpage on a laptop

Selling on Amazon requires positive reviews. The more positive online reviews you have, the better. Amazon allows you to automate review requests, but be careful not to break their rules. If you need to solicit reviews for a new product, try Amazon Vine.

Optimize product listings

We’ve already talked about Amazon SEO some, but I cannot emphasize this enough. Consumer behaviors shift, and you have to adjust to them. Use the Amazon Seller app to track your sales and adjust product SEO when you see a drop in sales.

Grow with tools

Selling on Amazon comes with numerous benefits. Because it is the largest eCommerce platform on the planet, they have many Amazon seller tools, plus thousands of approved service providers and apps to choose from.

Ready to start selling on Amazon?

Now, you understand the key strategies to start selling on Amazon. It’s up to you to find the products you are most comfortable selling.

Have you created an Amazon Store before? What parts of selling on Amazon did you find most challenging? Let us know in the comments.


Comments

Sophie@ 2023-08-15 06:29:38

I’m interested in work as educator meaning look after children into my home as long daycare services

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