Standard Operating Procedures (SOP): The Complete Guide


May 18, 2023

Standard Operating Procedures (SOP): The Complete Guide

Why do some companies scale while others grow, burn out, and collapse? Why do some small business owners barely work and make millions, while others become a slave to their business? 

Over the last two years, we have gotten inside looks into some amazing businesses, and the owners all share similar insights. Their secret? You need standard operating procedures.

Remarkably, the largest companies in the world make up to $2 million per employee (excluding the energy industry) while solo entrepreneurs make an average of $50k per year. SOPs, or standard operating procedures, are the basis for these gains because they are the stepping stone to automating a business.

What Are SOPs (Standard Operating Procedures) in Business?

business standard operating procedures

A standard operating procedure (SOP) defines the step-by-step process to complete a routine task. SOPs are created to help companies:

  1. Perform more effectively
  2. Maintain quality
  3. Maintain consistency
  4. Reduce rework
  5. Comply with regulations
  6. Delegate tasks
  7. Grow

Even small businesses and startups benefit from SOPs. For example, entrepreneur Christopher Mondragon told us:

Exceptional customer service will help cleaning companies start making money in days. Two things I do that others don’t is my phone support is available from 7 a.m. -11 p.m., seven days a week. I also have an online system where people can go online, put in their information, and book it without talking to anyone. Customers love it!

These are the kind of SOPs Chris used to grow his cleaning business to $1.5 million in record time. Would you like to achieve more in your business? 

Find out how Chris did it below.

Then sign up for our 7-figure cleaning blueprint where we provide all the tools Chris uses to succeed.

If cleaning doesn’t sound like the right business for you, get ready to dig deeper into what makes a good standard operating procedure.

Industries That Use Standard Operating Procedures

Every industry has standard operating procedures. Some industries have more government regulation and therefore more stringent SOP documents. Some of the most regulated industries include:

  • Manufacturing 
  • Transportation
  • Health care
  • Financial institutions
  • Energy production
  • Professional services
  • Business administration services

In fact, there are over three million regulations governing businesses in the United States.

I can’t imagine running a business that has employees without a clearly defined SOP document. We have dozens of them just to get this blog out to you. We have a keyword research SOP, a blog writing SOP, an editing SOP, a graphic design SOP, a WordPress SOP, not to mention all the accounting, payroll, and other SOP documents that businesses like ours need to follow.

Why Are SOPs Important?

importance of sops

Standard operating procedures are important because they:

  1. Reduce training time
  2. Increase quality 
  3. Improve brand loyalty
  4. Reduce regulatory penalties
  5. Prevent knowledge loss

Standard Operating Procedure (SOP) Templates

Our mission at UpFlip is to provide the best tools to help you succeed in business. That’s why we’ve created a template for SOP creation and other helpful resources. Check out some of the standard operating procedure documents we’ve created for you:

5 Elements of SOPs

A standard operating procedure (SOP) should include at a bare minimum:

  1. Purpose
  2. Roles and Responsibilities
  3. Quality Requirements
  4. Procedures
  5. References

If you want a more formal SOP document, you might also want to include a header, scope, appendix, revision history, and signatures.

How to Create SOPs

man working on a laptop

Creating Standard operating procedures follows a simple process:

  1. Identify Pain Points
  2. Establish Solution
  3. Implement Solution
  4. Write the SOP Document
  5. Implement SOP
  6. Train Employees
  7. Refine and Update

Entrepreneur Adam Hill also uses SOPs in his vending machine business. He uses them for standardizing machines, determining his route, and deciding how much to pay for a vending route. Check out our interview with him below.

You can also pre-enroll for our free vending machine training course.

Let’s look at each step in the process so you can start creating your own effective SOPs.

Step 1. Identify Pain Points

Pain points are routine tasks that impact your company on a regular basis. Your pain points may be challenges like:

  • Training new employees to do a specific job
  • Complying with industry regulations
  • Reducing the time a business process consumes
  • Improving quality control
  • Reviewing employee performance

Make sure to identify why these are pain points, how much time or money they consume, and what solutions you could use to solve them. This step will be the basis for the purpose section for your SOP forms when you create them. 

Next, we’ll provide an example of a pain point.

SOP Example Pain Point:

We’re going to provide standard operating procedure examples throughout the article.

Given one of the main pain points companies have today is the ability to find employees, I’m going to tackle this concern in many of the SOP examples. You might describe the pain point in one of the following manners:

  1. Hiring new employees costs the company $10,000 in lost productivity every time we hire. The goal of this SOP is to improve the company’s retention of employees.
  2. Our business is growing so fast that we can’t hire enough employees. We aim to attract more candidates so we can fill positions faster.

Step 2. Establish Solution

mobile phone, paper holder board and a notebook on a table

Once you’ve identified a problem, you’ll want to identify the solution.

Business processes will vary from company to company, but you want to consider solutions that solve the problem as easily as possible. Using the hiring example, some solutions might include:

  • Adopt an SOP to offer current employees up to 5% more pay than competing job offers to reduce turnover.
  • Increase employee referral bonuses.
  • Increase pay packages for new hires.
  • Partner with a staffing agency to offer temp-to-hire positions.
  • Run paid ads for job openings.
  • Include salaries in job descriptions.
  • Remove or reduce educational or experience requirements from job descriptions.
  • Do keyword research for job descriptions.

Numerous solutions can be implemented to solve any problem with business processes. Hopefully, you’re starting to get some ideas about what standard operating procedure we’re going to create to solve the problem of not finding enough employees.

Step 3. Implement a Solution

Next, you’ll want to implement the solution to your problem. When you’re in the process of SOP creation, you may not get it right the first time, but make sure to write step-by-step instructions of what you did. This will be the basis for the SOP format. 

Many of the suggestions to solve employers’ hiring problems employers centered around the job description, which means you might want to adopt standard operating procedures that work like this:

  1. Perform keyword research for job descriptions.
  2. Analyze pay for a position on the local level and set your salaries on the high end. (Yes, I know it costs more, but better pay means better candidates and happier employees. If the pay is higher than that of current employees, give your entire team a raise so they don’t get upset.)
  3. Write the job description. Make sure to include the keywords and salary information. 
  4. Reduce or remove educational or experience requirements from existing job descriptions.
  5. Share the posting with employees. Remind them about your referral program. Add a perk and ask them to share.
  6. Share the posting on job boards. You don’t have to do paid promotion at first, but it might help if you need an employee fast.
  7. Contact a staffing agency. Discuss your needs and budget with them.
  8. Run paid ads. If the above steps haven’t been successful, paying for preferential treatment in the job listings is worthwhile.

Step 4. Write the SOP Document

young beautiful woman writing on a notebook in front of a laptop

Now that you have a process, you’ll want to write the SOP document. You want to make it foolproof. Personally, I like to give the document to someone who has no understanding of the subject and ask them to follow the directions in the standard operating procedure. 

Let’s look at how to write SOPs.

How to Write a Standard Operating Procedure

Writing SOPs shouldn’t be difficult. The point is to make them easy to follow. You’ll want to:

  1. Consider your target audience
  2. Create a cover page 
  3. Add a Table of Contents
  4. Include the Purpose 
  5. Include Roles and Responsibilities
  6. Include Quality Requirements
  7. Write the Standard Operating Procedure (SOP)
  8. Provide References
  9. Include the Revision History
  10. Include Document Authorization
Consider Your Target Audience 

Before you begin developing SOPs, you should identify the relevant employees, their prior knowledge, and the SOP format most likely to communicate the SOPs properly. Do they need technical SOPs, step-by-step instructions, or hierarchical SOPs? 

Make sure to write in an active voice and use language employees understand. Once you’ve considered these factors, you can begin writing.

Create a Cover Page 

The first page you’ll create is a cover page. It should be obvious what the standard operating procedure is about. The best way to do that is to create a title page with the:

  1. Name of the company
  2. Name of the standard operating procedure
  3. Unique SOP identification number 
  4. Most recent revision date

We’ll provide you with an SOP cover page template. Get your copy and more helpful documents in our free SOP template download below.

Add a Table of Contents

If your standard operating procedures don’t fit on a single page, include a table of contents. This is especially true if you have a three-inch-thick notebook with all the standard operating procedures. No one wants to read an entire rule book to find a single policy.

Include the Purpose 

The purpose or scope tells people what the SOP is about. You should have already defined this in the previous steps. Now it’s just a matter of communicating what the SOP covers, what it doesn’t cover, and why employees perform the new SOP as directed. 

If you provide digital (not printed) standard operating procedures, provide links to other SOPs mentioned in the purpose.

Roles and Responsibilities 

You’ll want to define who will implement the standard operating procedure, who will check the procedure, and anyone who may need to be aware of the SOP.

Quality Requirements 
sops quality requirements

Depending on the standard operating procedure, you may have quality control measures in place to make sure you achieve a positive outcome. 

For instance, a t-shirt design SOP might specify that an acceptable design is only 1/16” off-center and that the measurements are taken by a machine. You might also want a human to check every 10 pieces to verify there is no equipment failure.

Write the Standard Operating Procedure 

SOP writing should be as concise as possible and should include images for a better understanding of the intent. Make sure to give examples of the key steps. Digital SOPs can have videos so people can watch the SOP in action.

Provide References

young beautiful woman holding a orange log book

If there are additional resources that a team member needs to understand, make sure to include them in the resources. This might include customer complaints, organizational knowledge, internal processes, relevant laws, and more.

Include Revision History

As you grow, your standard operating procedure will evolve to be more effective. You’ll want to document changes. This can be helpful for helping employees understand how the SOP format has changed over time and why.

Document Who Authorized The SOP
sops authorization

Large organizations might need authorizations from specific people before they implement standard operating procedures. Make sure to include a space for these. 

Step 5. Implement the SOP

At this point, you’ve defined the SOP and written out the documentation, but you still need to implement it. Implementation could mean:

  1. Adopting and integrating software into your business
  2. Buying new tools or equipment (This is common in fields that require personal protective equipment.)
  3. Training employees

During this stage, your main goal is preparing your business to implement clearly defined SOPs. If your new SOP impacts other SOPs, edit them as well. For instance, new compliance standards would impact both the onboarding process and ongoing employee training SOPs.

Step 6. Training Employees

Creating SOP templates for your employees to work with can help you achieve more with fewer resources, but you’ll need to train your employees on the new SOP to reach maximum efficiency. Common ways of training employees on the company policies include:

  • Providing written SOPs upon hire.
  • Top employees training new employees.
  • Sending an email about policy changes.
  • Having a team meeting or training. These can be virtual or in-person, but allowing employees to perform the step-by-step SOP to see it in action normally works best. It helps them see the SOP’s impact on their workflow and provides useful feedback.

Step 7. Refine and Update

sops updates

No matter how effective SOP writing is, you’ll always find better ways to complete a process as technology changes, your skill sets increase, and your business grows. 

After you create standard operating procedures, make sure to go back to them occasionally and make sure that they still adhere to regulatory compliance and best practices.

What Are the Three Types of SOP Format?

A standard operating procedure will normally use one of three SOP formats:

  1. Step-by-step SOP
  2. Hierarchical SOP
  3. Flow Chart SOP

Let’s look at each SOP format to understand how to create standard operating procedure documents.

Step-by-Step SOP

A step-by-step SOP shows how to complete a task by completing a series of steps from a sequentially ordered list. How-to guides and recipes are good examples, but there are many other uses as well.

In fact, every blog we write on how to start a business follows a standard operating procedure (SOP) template. We just alter them based on the requirements to start each business.

These SOPs follow the sequence:

  1. Step 1.
  2. Step 2.
  3. Step 3. 

These are the most common SOPs and are sometimes referred to as step-by-step instructions or workflows. These can be automated in many scenarios to create a quality output faster.

Hierarchical Format SOP

When written instructions would be too complex for employees to follow, you may need to break them down into a hierarchical SOP where the knowledge for one part of the task is covered in one SOP document, and the next part of the process is separate. 

For example, hiring employees is a huge task. If you try to include the entire process in one step-by-step guide, it will be overwhelmingly long.

Developing standard operating procedures using the hierarchical format might follow an SOP template that looks like this:

  1. SOP: Hiring Employees (SOP1)
    a. Notifying HR of Hiring Needs (link to SOP2)
            i.   Submit termination paperwork
            ii.  Submit form to create job description
            iii. Other associated tasks (List all)
    b. Researching Hiring Market (Link to SOP3)
    c. Creating Job Descriptions (Link to SOP4)
    d. Sharing Job Descriptions (Link to SOP5)
    e. Interviewing Applicants (Link to SOP6)
    f. Confirming New Hire Job Acceptance (Link to SOP7)
    g. Preparing New Hire Paperwork (Link to SOP8)
    h. Procuring Tools (Link to SOP9)
    I. Granting Software Access (Link to SOP10)
    j. Setting Up Workspace (Link to SOP11)
    k. First Day Tasks (Link to SOP12)
    l. Orientation Tasks (Link to SOP13)
    m. Probationary Meetings (Link to SOP14)

Each of the letters in this list would serve a specific purpose that has hierarchical steps. The full process to complete the fourteen tasks listed could require hundreds or thousands of steps, and the people involved could span across different teams of employees. 

Flow Chart SOP

When processes depend on changing variables. use flow charts like the one below. To create an SOP template for a flow chart, you need to determine what the relevant decisions are. 

As an example, we created this flow chart to help you decide what type of standard operating procedure templates to use. There are 3 relevant decisions that impact which template you should create:

  1. Is there a process to follow?
  2. Is the process difficult to follow?
  3. Do decisions change the process?
woman working on laptop with an orange background

 

Based on the answers, you get a different result that shows you how to make SOPs easier to follow. Using this strategy maintains organizational knowledge and can be the basis for an SOP plan, which we’ll discuss next.

What Is a Standard Operating Procedure (SOP) Plan?

An SOP plan is a document you may need to create when you grow from being a single person running a small business to hiring employees.

You have certain ways you like things done, and the best way to get employees to follow your hierarchical steps is to create an SOP for anything that is important to you. You’ll then train the employees using the SOP and provide them documents and work tools that make it easier to follow the SOP.

You might include the following elements in an SOP plan:

  1. What SOPs you need
  2. Templates for standard operating procedures
  3. SOP naming conventions
  4. When and how to edit each standard operating procedures template

Sample Standard Operating Procedure Checklist

We’ve created a sample standard operating procedure checklist for hiring and onboarding employees. Download the checklist along with the standard operating procedure guidelines and other templates we created to help you get started with SOPs.

SOP Frequently Asked Questions

What is an SOP? 

sop meaning

The SOP meaning in business stands for standard operating procedure. The definition of standard operating procedure is a written process that is followed every time the process needs to be repeated. 

Why SOPS Are Important

SOPs are important because the majority of tasks are repeated consistently during the course of business. Documenting and following standard operating procedures helps businesses:

  1. Reduce decision making
  2. Increase efficiency
  3. Increase quality
  4. Comply with government regulations
  5. Train new employees
  6. Maintain the body of knowledge 

Technical vs. Management SOPs

Technical SOPs explain how to perform and complete tasks while management SOPs explain how to create, update, distribute, and oversee other SOPs. As an example, Technical SOPs are used for routine tasks like payroll, work orders, and inspections, while management SOPs are used to maintain consistency in the SOP full form creation.

How Businesses Use SOPs to Improve Efficiency 

sop efficiency

Every time you make a decision, you have to think about the factors that go into the decision. When businesses create standard operating procedures, they eliminate the decision-making process for that procedure, which increases efficiency.

This also makes training easier because everyone has the same method of performing a task. This standardization also decreases defects and errors, which leads to greater efficiency. 

What is a Standard Operating Procedures Manual?

A standard operating procedure manual is a list of all standard operating procedures gathered in one place.

Today, an SOP manual is best kept in the cloud where all employees can access it, but for brick and mortar businesses, the standard operating guidelines may also need to be printed and stored in a readily accessible location.

What Are SOPs Doing for Your Business?

As you can see, there are many benefits to implementing SOPs in a business. No matter the size of your company, you can benefit from defining your standard operating procedures. 

What are some ways that you have defined your business operations?

  • Complying with Government Regulations
  • Automating Processes
  • Training Employees
  • Other – Tell us in the comments!

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Related articles

Do you want to buy a franchise?  Nic Reed and Sanford Booth have both purchased franchises, while Mike Andes has sold around 70 franchises. Nic and Mike share their experience in franchising at Augusta Lawn Care, while Sanford Booth shares his experience buying a Big Frog franchise. We’ll explain the process of finding a good franchise, preparing to reach out to the franchisor, creating the documents you need, getting financing, attending a discovery day, and preparing to operate the company well.

What is a franchise?

A franchise is a business model with which the franchise owner, known as the franchisor, allows business owners to run a franchise location using their business processes, suppliers, and company name in exchange for paying franchise fees.

How is a franchise different from a chain?

There are several important differences between a franchise and a chain. A chain is owned by a single business entity, while a franchise is typically owned by multiple different business entities. A franchise may have corporate stores as well. For instance, Augusta Lawn Care’s Founder Mike Andes owns multiple corporate locations as well as offers franchises. He told us: [su_quote]I use my corporate stores to test new processes before passing them on to the franchisees.[/su_quote] Check out the video below that explains the differences between buying a franchise and starting your own business.  [su_youtube url="https://www.youtube.com/watch?v=MTnmagGo32Q&t=1085s"]

Where can I find the laws governing franchising?

Franchises are governed by the Federal Trade Commission (FTC). They specify:
  • The features of a business that qualifies as a franchise:
    • Promises to provide a trademark or other commercial symbol 
    • Promises to exercise significant control or provide significant assistance in the operation of the business 
    • Requires a minimum payment of at least $500 during the first six months of operations. 
  • The laws franchises must follow.
  • The items included in the Franchise Disclosure Document
  • The items included in the Franchise Agreement.
Make sure to read the FTC guidance before buying a franchise. Keep reading for the pros and cons of buying a franchise.

Pros and Cons of Owning a Franchise

As Mike told us, franchise ownership is not for everyone. There are some people that prefer to figure out everything and some who just want to increase their earnings without investing a lot of time learning. Let’s look at the pros and cons of owning a franchise. [su_note note_color="#dbeafc"] Pros
  1. All the systems in place
  2. Less to figure out
  3. Built-in mentors available
  4. More defined profit expectations
  5. Might have built-in customers
Cons
  1. Higher startup costs
  2. Requires less creativity
  3. Business strategies might not work in your area
  4. Annual or monthly franchise fees
  5. Service area is often dictated by the franchisor
[/su_note] Check out our interview with Nic Reed to learn more about the benefits of owning a franchise location. He told us: [su_quote]The nice thing about a franchise is I don’t have to figure out all the processes. Mike’s already done that. I just have to use his resources and see which (ones) work best in my market.[/su_quote] [su_youtube url="https://www.youtube.com/watch?v=9HwEN2uQlxM"] Keep reading to learn more about the franchise buying process.

How to Buy a Franchise You Love

When considering a franchise system, you’ll need to follow a specific process. There are nine steps to follow when buying a franchise:
  1. Research Franchises.
  2. Request the Franchise Disclosure Document.
  3. Go to Discovery Day.
  4. Apply for Financing.
  5. Review and Return the Franchise Agreement.
  6. Buy or Rent a Location.
  7. Get Training and Support.
  8. Prepare for the Grand Opening.
  9. Operate the Franchise.
Let’s start by researching franchise businesses.

Step 1. Research Franchises

Like any small business owner, someone who wants to own a franchise should do their research first. Opening a franchise is a huge commitment and the franchisor does a thorough review of each potential franchisee to make sure they meet the requirements to be successful. You’ll want to be aware of typical franchise requirements and how to find good franchises. We’ll look at both to help you find the perfect franchise for you to start as a small business.

Typical Franchise Qualification Requirements

Prospective franchisees should be aware of the following requirements that most franchisors require:
  • Credit score: Most franchisors will require a minimum credit score. If you have a 680 or better, you shouldn’t have an issue. Use Credit Karma to check your credit score.
  • Net worth: Most franchise owners will require a minimum net worth of at least $100K, but estimates suggest that a new Mcdonald's costs $2.3 million. It’s gotten so high, they only let new franchisees buy an existing franchise.
  • Liquid assets: You have to have enough liquid assets to pay the franchise fee without financing unless you are approved by franchise financing. 
  • Other income: If you want your own franchise, you’ll need outside income. It can take six months to a year without revenue. During that time you have to be able to cover the costs of opening a franchise.
  • Industry experience: You may need experience in the industry. If you don’t have it, you might want to go work in the industry before buying a franchise.
  • Management experience: Franchise owners may want prospective franchisees to have management experience because it improves the likelihood of becoming a successful franchisee.
Make sure to have documentation of your financial situation and experience ready before researching franchise opportunities. Each particular franchise has different requirements. Don’t spend a lot of time applying to become a franchisee Keep reading to learn how to use the International Franchise Association (IFA) to evaluate franchise opportunities.

Check the International Franchise Association

Franchise association website The IFA has a database that helps people find the right franchise out of more than 1,400 opportunities across the globe. The franchise search can be sorted by:
  • Industry: There are 15 choices including cleaning, business services, senior care, and food-related franchises.
  • Location: Global or any continent other than Antarctica.
  • Investment amount: $0 to $1 million. Make sure to reduce the highest amount unless you have $1 million to invest.
  • Opportunities for the military: Some franchise business opportunities offer benefits for Veterans.
Once you conduct a search, you can view different franchise business opportunities by age, startup costs, veteran discount ranking, or alphabetically.  Be aware that some companies try to hide their franchise fee behind the total investment. There are some with no startup costs, but they might have total investments of $400K+. Meanwhile, most include their website information as well as startup and initial costs. The point of mentioning this is that some franchised business opportunities are more disclosive than others. It is always easier to work with a management team that is fully disclosive. I personally would not consider a franchise opportunity that is not. You’ll want to go through the franchise website and establish whether they are:
  • An established brand: Look at the number of followers on social media accounts and the reviews on sites like Google and TrustPilot.
  • Oversaturated: Do they have too much competition in your area?
  • Disclosive about their fees: Some will openly disclose their initial fee, royalty fees, marketing fees, and other costs on their site. Others won’t.
  • Offering training and support: Most franchises offer some business training and support to new franchise owners. It will normally be governed by the company culture and age of the franchise.
You can also try looking at some of these easy-to-buy franchises.

Easiest Franchises to Buy

The easiest franchises to start are typically: Mike told us: [su_quote]If someone works for an Augusta Lawn Care franchise for a couple of years, they qualify to buy a franchise without paying the initial franchise fee.[/su_quote] Once you have narrowed it down to one or two franchises, you can reach out to them to request the Franchise Disclosure Document.

Step 2. Request the Franchise Disclosure Document

Franchise disclosure agreement This step includes gathering information that is not readily available unless the company is a publicly held company. The FTC  Franchise Rule requires a Franchise Disclosure Document that includes 23 items.

Necessary Elements in a Franchise Disclosure Document

  1. Company history, predecessors, parent companies, and affiliates.
  2. Officers’, directors’, and executives’ professional history.
  3. Current and past litigation involving the company and major players in the organization.
  4. Franchisor and management bankruptcies if any.
  5. Initial franchise fees and what impacts their costs.
  6. Ongoing costs such as royalty fees or marketing fees.
  7. The initial investment to get the franchise fully operational (in table form).
  8. Purchasing restrictions for equipment and supplies.
  9. List of franchisee’s obligations including a table showing where each obligation is in the Franchise Agreement.
  10. Terms and conditions of financing through the franchisor (if any).
  11. Any assistance the franchisor will provide including advertising, computer systems, and training.
  12. Description of the geographical territory the franchisee receives and whether it can be modified.
  13. How the brand’s trademark(s), service and trade names may be used by the franchisee.
  14. How the franchisee can use copyrights, patents, and other information.
  15. What, if any, participation requirements are expected of the franchisee. 
  16. Restrictions on products and services the franchisee may participate in.
  17. How to renew, transfer, and terminate the business arrangement. Also how to dispute conflicts between the franchisor and franchisee.
  18. Public figures that are employed by the franchisor and how much they are paid.
  19. Optional unit financial performance information.
  20. Location and contact information of all existing franchise locations.
  21. Audited financial statements for the past three years. 
  22. All the contracts that will be part of the formal contract including:
    1.  Franchise Agreement
    2.  Non-Disclosure Agreement (maybe)
    3. Non-Compete Agreement (likely)
    4. Supplier Agreements (common)
  23. Confirmation of receiving the FDD.
Most franchises will have a contact form on their website. Others may request an initial consultation before providing the Franchise Disclosure Document.  When considering starting a franchise, you should review all of this information before going for a discovery day.

Step 3. Go to Discovery Day

Discovery day is when you go to the corporate headquarters to meet the franchisor and their team. They show you around, explain how they operate, and give you more information on the business.  A business owner should be looking for indications whether the franchise ownership is legit or just trying to make money through the franchise fee. Indications that the franchise opportunity may not be as attractive as it is on paper include:
  • Personality clashes
  • Cultural differences 
  • Corporate office being unprepared for the business owner
  • Statements that are not in the Franchise Disclosure Document
  • Not answering questions directly
  • Failing to address concerns
  • Pressuring you to enter a franchise agreement
If you’re ready to move forward, the next step is to focus on how to buy a franchise.

Step 4. Apply for financing

People sitting at the table The process to buy a franchise is similar to buying a business. It is easier to get a small business loan for a franchise because they already have a proven success record.  The franchisor may already have a deal with a bank to offer a small business loan to their new franchisee. When applying you will need to have:
  • A business plan
  • Documentation of personal finances
  • FDD to show lenders the average annual income and financial risk of the franchise
  • Proof of any assets you want to use for a secured loan
There are multiple options for funding when you decide you want to own a franchise. Some of the most common include:
  • Liquid capital: Using cash, stock, and bonds to finance your business
  • Secured loans: Using assets like a home, stocks, or crypto to secure a loan.
  • Business partners: The franchise contract might limit this option.
  • Business line of credit: Revolving credit that lets you borrow as needed and pay interest only on the amount outstanding. Great for preventing cash flow issues involving inventory and payroll.
  • Equipment financing: For large purchases like kitchen equipment.
  • Traditional business loans: 3-5 year loans to buy a business.
  • SBA loans: We’ll discuss using an SBA loan to buy business startups and franchises below.
Check out our Hub article for a more detailed look at how to fund a business or keep reading to learn about loans from the Small Business Administration.

Apply for Small Business Administration Loan 

The U.S. Small Business Administration guarantees loans called SBA loans. These small business loans have some of the most favorable lending terms because they are backed by the faith of the US government.  When wondering how to get an SBA loan to buy a business or franchise, you’ll want to review the SBA’s guide. Three main types of SBA loans are available:
  1. (7)a loans: Up to $5 million for working capital, refinancing debt, and major purchases.
  2. 504 loans: Up to $5 million for construction projects, land, and equipment.
  3. Microloans: Up to $50,000 and cannot be used for construction or debt.
You’ll have to exhaust all other options before qualifying for SBA loans, but if you qualify they are definitely one of the best ways to buy a business.  As long as you qualify for the funding, the next step in how to become a franchise owner is to review and return the franchise agreement. If you don’t qualify, then you’ll need to rebuild your credit, earn more revenue, or sell assets before you can buy a franchise.

Step 5. Review and Return the Franchise Agreement

Man sitting at the table reviewing documents You’re ready to be your own boss. You just need to review the franchising agreement. Franchise agreements are very similar to the FDD, but they are legally binding contracts between the franchisor and franchisee. If you haven’t already been working with a franchise attorney or other franchise consultants, you should probably hire someone who is well versed in franchise law. Any required fees will be well spent in exchange for professional help when you are learning how to start a franchise business. Franchising.com lists the 10 provisions in Franchise Agreements. These elements are the parts of the FDD that both parties are contractually obligated to follow:
  1. Location or territory: What are your territory boundaries and exclusivity clauses? These will impact where to implement your marketing strategies and where you can do business.
  2. Operations: What operating procedures do you have to follow to own a franchise? The operations policies are a major portion of why people consider buying franchises. These are the best practices that take time and money to develop when starting from scratch.
  3. Training and ongoing support: What training and ongoing support is provided, who pays for it, and how much does it cost? Each program may be different, but the goal here is for you to be capable of running the business when you open the doors.
  4. Duration: How long is the contract valid? 
  5. Franchise fee or investment: What is the upfront cost and what does it cover? You should probably calculate the payback period based on other franchisors' experience.
  6. Royalties or ongoing fees: What are the terms of ongoing fees and what do they cover? 
  7. Trademark, patent, signage: How are you allowed to use the franchisor's trademark, patent, logo, and signage?
  8. Advertising, marketing: What advertising does the franchisor pay, and what advertising does the franchisee pay? If they require more than 8% of revenue for marketing, you might want to be cautious.
  9. Renewal rights, termination, and cancellation policies: How is the franchising contract renewed or terminated by each party? How are legal disputes handled?
  10. Exit strategies: Does the franchisee have the right to put existing franchises up for sale? Does the franchisor have to approve the sale of a franchise? Does the franchise have to let the franchisor offer a buyback? Is the only way to sell the franchise through the franchisor?
This is the last real chance you have to decide to back out of the agreement. Review the agreement documentation against the FDD with a legal representative. If there are any red flags, you may want to consider whether the opportunity is the best franchise to own. Keep reading for information on how to buy a business location.

Step 6. Buy or Rent a Location

If you haven’t already, this is when you really have to ask, “How do franchises work?” and begin understanding what it means to operate one. When buying or renting a business location, ask the franchise to help with considering options.  Some may tell you that increased foot traffic is best, while another business system might suggest you go with the lowest cost per square foot. Meanwhile, According to their 2020 Annual Report, McDonald's owns 55% of the land and 80% of the buildings that franchisees utilize. There will be different considerations based on whether you are operating a retail establishment, office building, restaurant, manufacturing, or service and install company.  Read our blog about choosing a business location for more information.

Step 7. Get Training and Support

People undergoing a training in the office You’ll have to go to the corporate training to learn how to operate the business. Corporate training can be anywhere from a couple of days to several weeks. They’ll typically cover:
  • Where to find resources
  • How to perform the customer-centric functions of the business
  • Introduce you to the software they use
  • Walk you through the accounting process
  • Train you on any machines that are unique to the company
  • Marketing tasks
After that, you’ll be preparing for the grand opening.

Step 8. Prepare for the Grand Opening

Now you can prepare the franchise location for opening day. There will be three aspects of opening the franchise:
  1. The location
  2. The inventory
  3. Marketing and advertising
Except for choosing the final layout, major preparations will likely be conducted by construction crews. I would discourage completing your own construction work unless you are well-versed in permits, building parameters, and timelines for such tasks.  The layout may be driven by the franchisor or by you. Make sure you follow any requirements the franchisor has.  Inventory should be entirely specified by the corporate office when opening. Afterward, they might allow you to make decisions about how to run the most profitable franchise in your location. They might have the inventory fully automated as well.  You might have guidance from the franchisor about marketing, advertising, and setup, or you might need to reach out to other franchise owners to ask them what worked and didn’t work when they opened their specific franchise. Remember to focus on getting the word out so when someone asks you, “How much do franchise owners make?” you can reassure them that it is worth it. You’ve learned how to own a franchise, but there is still one more step. You have to operate it.

Step 9. Operate the Franchise

Once you reach this stage, you are just operating a business like any other. You’ll be serving customers, managing employees, handling accounting, marketing, and filing taxes. We have a ton of interviews with franchise owners. Big Frog is a clothing printer that can give insight on how to own a franchise. Check out our interview with him below. [su_youtube url="https://www.youtube.com/watch?v=BmYCYMAsQ8Y"]

Buying a Franchise FAQs

Should you buy an existing franchise?

Yes, if it’s profitable. When you buy an existing franchise, remember to ask a lot of questions. Some franchise owners, like McDonald’s, will only let new owners buy an existing franchise because they want successful (experienced) franchisees to open new stores. Ask the following questions before buying an existing franchise:
  1. Why are you selling your franchise?
  2. How long have you owned the franchise?
  3. Why did you originally buy the franchise?
  4. What’s the annual gross revenue? Is it growing or shrinking?
  5. How much profit have you made over the years? Is it growing or shrinking?
We include these questions and more in our blog 41 Essential Questions To Ask when buying a business. I suggest reading it for more information on why the questions are important.

What investment costs and franchise fees should I consider?

Initial investment costs are the costs that occur before the franchise draws revenue, but the franchise fees are what you pay directly to the franchisor. Initial investment costs can include:
  • The franchise fee
  • Forming an LLC or a Corporation
  • Business licensing
  • Buying or renting a location
  • Remodeling
  • Purchasing equipment
  • Purchasing inventory
  • Software not provided by the franchisor
  • Furniture for the franchise location 
  • Insurance
  • Marketing
  • Travel costs

What if I want to buy a franchise without money?

Most will not let you. They expect some actual investment. If you find one let us know, but franchises have requirements for:
  • Credit
  • Net worth
  • Liquid assets
If you have a high net worth but low liquid assets, consider getting a secured loan or creating a corporation with a rollover business startup (ROBS).

How much does it cost to buy a McDonald's franchise?

According to the 2020 McDonald’s Annual Report, total development costs to open a new restaurant were approximately $4.4 million, but McDonald’s pays that and rents the equipment and land to the franchisee with a 20 year agreement.  McDonald's does not sell new franchises to new franchisees because they believe it protects their business to have experienced franchise owners open new locations. You’ll find a ton of answers online saying $45,000 franchise fee and $500,000 of liquid assets.  In addition, you’ll be paying a 4% per year royalty to purchase a McD’s.

How much money can I make by owning a franchise?

Each year most franchisees make between $50,000 and $100,000 per franchise location they own. 

How should I prepare to buy a franchise?

Learn as much as you can before approaching the franchisor. Then prepare your financial statements that prove credit score, net worth, and liquid assets.

How does buying a franchise save money?

Buying a franchise removes most of the learning phase of business development. The franchisor has already:
  1. Created a business plan.
  2. Created branding.
  3. Conducted market research.
  4. Conducted product research.
  5. Created the business systems.
  6. Created a successful marketing plan.
  7. Proven the business model successful.
  8. Created the processes to follow.
All you have to do is find customers in your area and follow the rules.

Live Wealthily Ever After

At this point, we’ve discussed everything from choosing a certain franchise to writing a business plan, how to get an SBA loan to buy business assets, and the documents you’ll see when buying a franchise. Once you’ve got a few years under your belt, you can start thinking about how to expand, hire more people, or buy more franchises. At this point, you have the information to start buying a franchise.  What franchises would you like us to interview?
Have you ever wondered how to start a carpet cleaning business? Matt Crimi started North Seattle Carpet Cleaning with a $3,000 loan and a course from a janitorial supply company. Now he's on track to make $108k this year! We’ll show you how to do it too. If you want to know how to start a carpet cleaning business, keep reading. We’ll walk you through the process with tips on:
  1. Developing the skills to run a carpet cleaning business.
  2. Choosing a name for a carpet cleaning business.
  3. Writing a business plan for a carpet cleaning business.
  4. Registering a carpet cleaning business.
  5. Funding a carpet cleaning business.
  6. Preparing for launch
  7. Operating a carpet cleaning business
  8. Marketing a carpet cleaning business

Step 1: Developing the skills to run a carpet cleaning business

Before starting a carpet cleaning business, you'll need to develop some skills. When creating a carpet cleaning business, you'll need to be familiar with the following skills or hire someone who is: Each of the links will take you to free Udemy classes on the subject matter to help entrepreneurs develop their skills in their personal time. I know. Learning these skills can be a challenge, so let me answer some common questions.

Is carpet cleaning an excellent business to start?

A lady cleaning a carpet using a vacuum cleaner There are a ton of articles written on the best business to start. Most consider cleaning businesses like North Seattle Carpet Cleaning one of the most accessible types of companies for a new small business owner to start. Matt told us: [su_quote]I had an Economics degree and experience doing forestry and wildlife management work. The logistics and equipment management are similar (Outdoor environmentalism vs. indoor environmentalism).[/su_quote] He went on to explain: [su_quote]My dad lent me $3,000, and I took a carpet cleaning tech course offered at a local janitorial supply company.[/su_quote] That sounds like a reasonable startup cost, but how much can you make owning a carpet cleaning business? Matt told us: [su_quote]I make $9,000 in revenue per month.[/su_quote] According to ChemDry, their franchise owners average over $90k per franchise. The carpet business is a pretty reasonable industry to operate in.

Step 2: Choosing a Name for the Carpet Cleaning Business

Every carpet cleaning business is going to need a name. It's how your customers will identify the carpet cleaning business. Several considerations should be considered when naming your carpet cleaning business. Keep reading for some considerations.

Does the name explain the carpet cleaning business?

North Seattle Carpet Cleaning tells precisely what it does. It cleans carpets. Try to follow their example to create a company name that readily identifies your services.

Is the carpet cleaning business name easy to spell?

Make sure your carpet cleaning business name is easy to remember when using a search engine. Register domain names for common misspellings and forward them to your website to ensure you don't lose customers due to spelling mistakes.

Does the carpet cleaning business name include your location?

Including your state, county, or city identifies you as a local business. North Seattle Carpet Cleaning took this approach. Matt told us: [su_quote]I went with a territorial name ‘North Seattle’ so it would naturally come up in online searches.[/su_quote]

Does the branding fit the carpet cleaning business?

Designers creating a good branding for business Does your name fit your branding? Some business owners focus on visual ideas for a logo before a name. North Seattle Carpet Cleaning uses a logo that readily communicates what it does. In addition to the name, the logo shows a person cleaning carpet and the Space Needle, a famous attraction that is readily identifiable as a Seattle landmark.

Register a .com

Find a name for which the .com domain is available. It’s the most recognizable. Use Namechk to find out if the domain name you want is available.

Give it a go!

See how people like it. Make sure to check what happens if people shorten it.  You wouldn’t want to name a carpet cleaning business Seattle Uber Clean Klub because it could get shortened to SUCK, and that isn’t what you want to communicate. Check Google Trends. Read articles like Five Tools for Naming a Business. Check out our blog about cleaning business names. Finally, register your business name with the government. Keep reading to learn more about registering your name and choosing a legal structure.

Step 3: Writing a Carpet Cleaning Business Plan

Small business owners who write a business plan tend to have 30% faster growth because the business plan helps guide their decision-making. Matt is on board with this thinking. He explained: [su_quote]I initially wrote out a business plan. I think it helped orient me in the right direction. I think I should write it out again now that I'm in a different place than when I started.[/su_quote] If you want to start a successful carpet cleaning business, I highly recommend you write a business plan and use it to guide you while you grow your carpet cleaning business. The aspects that need to be covered include:
  • Business Plan Cover Page
  • Table of Contents
  • Executive Summary
  • Company Description
  • Description of Products and Services
  • Marketing Plan
  • SWOT Analysis
  • Competitor Data
  • Competitive Analysis
  • Marketing Expenses Strategy 
  • Pricing Strategy
  • Distribution Channel Assessment
  • Operational Plan
  • Management and Organizational Strategy
  • Financial Statements and Financial Projections
  • Funding
This outline is an excerpt from our previous article, How to Write A Business Plan. Make sure to read it and download the template to create a business plan that will walk you through the steps to starting a commercial cleaning business. [su_note note_color="#dbeafc"] IMPORTANT: What to learn the best way to start a cleaning company? Check out  The 7-Figure Cleaning Business Blueprint. You’ll discover exactly how Chris Mondragon created $4.5M cleaning services revenue in record time! [/su_note]

Step 4: How to Register a Carpet Cleaning Business

A man doing online registration on his iPad Once it's time to register your new carpet cleaning business, you'll deal with several government agencies. Federal, state, and local laws govern an owner's legal requirements when starting a business. Let's look at the most common conditions.

 Licenses, Permits, and Taxes

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your carpet cleaning business needs. Keep reading for information on different legal structures.

Options for Business Structures

Sole proprietorships and Limited Liability Companies are the most common business structures for carpet cleaning businesses, but some people opt for partnerships or corporations. We'll discuss each.

Sole proprietorship

A sole proprietorship is the easiest way to start a company, but the structure doesn’t protect the owner’s assets from legal issues. If something goes wrong, you could lose your carpet cleaning company and your home. I’d only start a sole proprietorship if you need to save some money initially. Because you'll be in customers' homes and offices providing your service, it is essential to prevent personal liability. As soon as you can, convert it to an LLC. To start a sole proprietorship, fill out a particular tax form called a Schedule C. Sole proprietors can join the American Independent Business Alliance.

Limited Liability Corporation (LLC)

An LLC is the most common business structure used in the United States because the company protects the new business owner’s assets. It’s similar to partnerships and corporations but can be a single-member LLC in most states. An LLC requires a document called an operating agreement. Each state has different requirements. Here’s a link to find your state’s requirements. People may register in specific states due to the cost of doing business. Delaware and Nevada are common states to file an LLC because of their business-friendly laws. Here’s a blog on the top 10 states to get an LLC.

Partnerships and corporations

Partnerships and corporations are typically for massive organizations or legal firms. Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations.

Apply for an EIN

Every business operating in the United States needs an employer identification number. It’s like a social security number for your business. Apply for it on the IRS website. When filing taxes, it’s used on tax forms and to tie employees’ pay to the proper employer.

State/Local Business Licenses

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your business needs. You'll want to look for a cleaning business license as the type of license.

Unemployment Insurance

The U.S. Chamber of Commerce has many resources on unemployment insurance (UI) and offers links to each state agency that handles state unemployment. You’ll have to pay $420 per employee on a federal level plus any state UI.

Step 5: Funding a Carpet Cleaning Business

Man at with a monitor on his desk Opening a cleaning service requires time, money, or both. Hopefully, you've created a business plan already and have a good idea of the minimal financial resources necessary when starting a carpet cleaning business. Here are some considerations you should look at when seeking funding:
  • What equipment, software, and inventory do I need?
  • How much will the carpet cleaning equipment cost?
  • Will I need a location where customers can come? If so, how much will it cost?
  • What are the costs for marketing and a website?
  • Will the company have employees or sub-contractors?
  • How much money is currently available to start a carpet cleaning service?
  • How many routine customers do I have? Will the current revenue and savings cover costs?
  • How much financing do I need?
  • How will I get the financing?
You'll need to know the answer to these questions when starting a carpet cleaning service. If you have created a business plan, you'll already know the costs and financial needs of the cleaning services. Keep reading to learn more about ways to fund carpet cleaners. Matt explained how he got funding and what it went to: [su_quote]My dad lent me $3000 to get started. Much of the initial cost was the equipment I needed. I bought a portable carpet cleaning machine and the hoses and attachments necessary to start cleaning.  I had to trade my car for a larger vehicle to transport the equipment to jobs.  One of the first things I did was join BNI, which meant paying about $500 for their annual fees. I also took a carpet cleaning tech course offered at a local janitorial supply company.[/su_quote]

How much does it cost to start a cleaning business?

Most commercial carpet cleaning businesses can be started with less than $5,000. A commercial carpet cleaning business will typically get funding from at least one of the following sources:
  • Personal Savings
  • Loans or Gifts from Friends and Family
  • Small Business Loans
  • Crowd Funding
  • Credit Cards

Personal Savings

If you're working, put aside part of your income every paycheck. Most financial advisors recommend placing at least 8-10% of your income into savings. One of the best ways to fund mobile carpet cleaning is to open a business bank account and transfer money into it every paycheck. This will help you develop a banking relationship under your business name if you decide to take out a business loan in the future. Nerd Wallet has a great list of free business checking accounts. Check it out and decide which one is best for you.

Loans or Gifts from Friends and Family

If your friends and family have the money, they may be willing to help launch your cleaning business. Just make sure you get the loan terms or gift in writing. Make sure to follow through on the agreement. You may be able to negotiate pre-payment for services to fund your small business if you can negotiate to provide your family and friends your business services, congratulations! You have your first customers. I thought, "When I start my own business, everyone I know will be supportive." I was wrong. Most of my network fell into two categories:
  • "Isn't this risky? Shouldn't you go get a job?"
  • "Can I get your service for free?"
Neither of these responses helped start a business. Be careful about working for your personal network. They can be a drain on your business.

Small Business Loans

A lady holding an iPad and a credit card Most banks offer small business loans. If you can qualify for them, loans are a great way to start a business. Unfortunately, the requirements for business loans have become more challenging than they were in the past. Banks want to invest in a successful business, so they'll be looking to loan to people in a growing field and have unique ideas. If your business model is similar to existing businesses, you may find it challenging to get bank loans before generating substantial revenue. Business owners should document their business idea meticulously before applying for loans. A bank will expect entrepreneurs to thoroughly understand the industry, customer, and costs associated with the business idea. The business plan will be crucial while applying with banks. Upflip has developed relationships with lenders to help our readers seek business funding. Check out our Business Loans page for our preferred resources.

Crowd Funding

With the rise of social media and online businesses, companies have a new way of reaching customers and getting funding for their business idea. Crowdfunding is a way to start a business where you come up with the business idea, create a request for funding, and people who like the idea help fund it. GoFundMe and Kickstarter are the most well-known crowdfunding sites, but others help people start businesses. Take a look at this article to find the right crowdfunding site for you. Read our blog about Pooch Selfie to get insight into Jason Hernandez's process to start his company with Kickstarter.

Credit Cards

You can use business or personal credit cards to start a carpet cleaning business, but their rates can dramatically increase the costs. Businesses that use credit cards to start a carpet cleaning business should know the interest rates and make sure they have the funds to pay the monthly bills. If you have to pay interest on the credit because you didn't pay it in full, you may be paying up to 25%. While credit cards are one of the more costly ways to start a business, carpet cleaning, they are also one of the easiest. As long as the business owner has good credit, it is easy to get a credit card. After routinely paying it off, you can request a higher credit limit. For some, it might be the best option. I prefer using Credit Karma to decide which kind of personal credit card to get. They have recommendations based on your individual credit history. Find out what they recommend online today.

Step 6: Preparing to start a commercial cleaning business

We can't discuss how to start a carpet cleaning business without discussing preparing for carpet cleaning services. You'll want to take these actions to prepare to start cleaning carpets during this stage. Some of the primary tasks in this phase will be:
  • Getting equipment, inventory, and other supplies.
  • Creating a website.
  • Setting up social media accounts.
  • Signing up for payment processors.
  • Setting up a Customer Relationship Management system and other administrative software.
  • Establishing a physical location if necessary.
  • Getting general liability insurance.
If you want the best experience when starting your cleaning business, sign up to be one of the first to take our cleaning business course Let's look at what you need to do with each of these to start your own carpet cleaning company.

Carpet Cleaning Equipment, Inventory, and Other Supplies

Every cleaning company will have specific equipment they need to accomplish the job. In the case of a carpet cleaning business, you'll need:
  • A truck or van - Just search "dealerships near me." They should have a truck that works.
  • A Carpet Cleaning Machine - Bissell, Janilink, and Hoover are some brands to consider. 
  • Carpet Cleaning Tools - Make sure they are compatible with the model of the machine you buy.
  • Cleaning products - Make sure they are compatible with the model of the machine you buy. Eco-friendly products can be used as premium or differentiating products.
I would typically look for cleaning equipment online or at trade stores. If you have a Home Depot or Lowes nearby, you can find carpet cleaners there.

Create a website

An entrepreneur creating a website for his business Everyone should have a website. If you are selling products, you may need an online store. Mobile apps are great for restaurants and companies with reward programs. They all serve the same purpose: helping your customers learn more about the products or services the business is selling. Check out our blog on creating a website to learn how to build your website or online store.

Setting Up Social Media Accounts

Every business needs social media. Your customers expect to be able to reach you there. Which social media you need depends on where your customers are. In general, my suggestions are to use the following:
  • Facebook - Selling products or services to people over 30.
  • LinkedIn - Selling products or services to other businesses.
  • Twitter - Best for current events.
  • TikTok - Best for products and services for kids and teens
  • Instagram - Best for products and services targeting people under 35.
You just need to create an account and start posting relevant content. Each platform has a ton of tips for how businesses can make money using their marketing tools. Check out our blogs about finding cleaning clients and commercial contracts for more great information on finding clients.

Choosing a payment processor

Paypal and Square are the payment processors that most businesses use, but there are plenty of other options. Unless you have large quantities of transactions and high ticket items, the differences between most are nominal. Payment processors typically charge a per-transaction fee and a percentage of sales. Make sure to price that into the cost of doing business. You'll also need to consider your where you'll accept payments?
  • Online
  • In a store
  • At different locations
  • A combination of the above
The ways your company will accept payments will impact which processor is best for you. To determine which payment processor is best for you, try Credit Donkey's payment processor quiz.

Setting up a CRM and other administrative software

Every company needs software to support operations. Typically this will consist of a Customer Relationship Management program like Hubspot or Salesforce. Both CRMs can connect to email, social media sites, marketing, inventory platforms, etc. The purpose is to have as much knowledge about your customers as possible to make better decisions about how to market to them. A CRM also helps establish which types of prospective clients generate the highest sales. Other platforms you might want to connect with Hubspot include Xero for accounting.

Finding a physical location

If you need a physical location for your carpet cleaners, I suggest reaching out to a commercial real estate agent. They'll help you find a site that meets your needs. I'd suggest waiting until you have another truck or two before getting a physical location. This will reduce startup costs and help you grow your business faster. Once you have several employees and need more space to store all the equipment associated with carpet cleaning businesses, I'd recommend looking in the commercial warehouse district.

Getting business insurance

A man holding a stamp with the word "insurance" Carpet cleaning businesses may need several types of business insurance that most people don't usually carry. The three primary insurances the cleaning industry might need are:
  • General liability insurance- Used when a freak accident occurs. Typically $1m/2m coverage is needed, but it varies based on location and type of business.
  • Professional liability- Used when the work you are doing causes damage. If a carpet cleaner causes mold, this will cover the mold remediation service.
  • Cybersecurity insurance- This insurance protects against cyber attacks. If your systems are hacked, it will help protect your company.
Contact your insurance agent to see what insurance costs are. If they don't offer the proper insurance, they'll be able to recommend someone who provides the coverage your industry needs.

Step 7: How to operate a carpet cleaning business

You've done all the preparation to get started. Now it's time to start washing your customers’ carpets. Time management is the key here. Some tips I've learned over the years of running a business include:
  • Plan specific times of day to focus on tasks like:
    • Sending emails
    • Performing marketing tasks
    • Handling payroll
    • Doing interviews
  • Keep consistent business hours. If customers don't know when you'll be available, they'll go to someone who they know is available.
  • Provide estimates you know you can meet. A customer would rather be quoted more and spend less than be approached for more money later. The same goes for time.
  • Set time aside for life. Entrepreneurs are notorious workaholics. If you don't make time for the other aspects of life, they will suffer and seep into your work.
  • Keep business and personal accounts separate. Depending on your legal structure, this is mandatory.
  • Put 50% of the revenue aside for ongoing expenses, tax payments, and business re-investment. If you don't do this, you'll eventually have a scenario where you have to come up with the money you don't have.
  • The customer expects their home to be spotless when you leave. Use Industry best practices like wearing booties in their home to protect the customer's property.
[su_note note_color="#dbeafc"] IMPORTANT:  The 7-Figure Cleaning Business Blueprint prepares you for everything you need to know to provide cleaning services. Find out how Christopher Mondragon made $4.5M in record time! [/su_note]

Step 8: Marketing Your Commercial Carpet Cleaning Companies

Marketing is done to make money, but it costs a substantial amount of money. The SBA suggests spending 8% of the desired revenue on marketing. If you want to make $100k/year, you need to spend $8,000 a year on marketing. That is a lot for a carpet cleaning business income. If you don't have the 8%  of desired revenue to spend on marketing, use 8% of your startup costs. In Matt's scenario, 8% would be approximately $240, but he spent more. He told us: [su_quote]One of the first things I did was join BNI, which meant paying about $500 for their annual fees.[/su_quote] This sounds like a great strategy. Before today, I hadn't heard of BNI, but it's a networking and referral program for local businesses. I found it so interesting that I have scheduled an appointment to meet with my local chapter. I'd suggest checking it out. Matt also told us: [su_quote]I went with a territorial name "North Seattle,"  so it would naturally come up in online searches. I made sure to have a nice-looking website and a Google business page. I recently hired my first employee and am now exploring Facebook and google ads. I also put up ads on Next Door and Yelp occasionally.[/su_quote] Matt used some of the best cost-effective ways of marketing a carpet cleaning business. I'd suggest using similar strategies if you pursue a carpet cleaning business opportunity. When you start going into Google Ads and Facebook Ads, you need to have a more thorough understanding of your target market. You also need to understand the CPC and CPA strategies because the advertising costs can add up quickly. I strongly recommend hiring a marketing professional to manage any paid ads. Upwork is a great place to find freelancers you can pay based on the level of service you need.

Related Reading

A book of ideas for a successful business Usually we would provide a list of influencers to follow, but Matt offered us a list of his favorite books and business resources. I felt like this might help you better understand how to start a successful cleaning business. Check out his list of suggested reading! Also, check out this incredible story of Chris starting $120K/month cleaning business here.

Conclusion

Now that you know how to start a carpet cleaning business, I hope you'll attempt to start a small carpet cleaning company. Alternatively, you could start a home cleaning business, buy a carpet cleaning business from our  business listings, or check out these carpet cleaning franchises: Because these franchise opportunities have a proven method, it will be easier to get your cleaning business started. Subscribe to our blog to keep up with what business owners are doing to maximize their profits. 

Some people love being on the go, experiencing new places, and networking. The best mobile business ideas all require traveling. 

Want to know the best part? Every mobile business idea on this list has the potential to make you rich! Find out how number 13 on our list made a 19-year-old a millionaire.

We discuss the characteristics of a mobile business and different types of mobile business ideas, then give you examples of different types of mobile businesses. 

[su_note note_color="#dbeafc"]

Click on any of the links below to jump straight to the mobile business idea that looks good to you.

What is a Mobile Business?

There are a couple of things that people can mean when they talk about a mobile business model. It can mean either:

  • A portable business that doesn’t have a fixed location, either because it goes to customers’ homes or because it operates out of a truck, cart, or other vehicle
  • A business enabled by wireless technology like a smartphone app or Bluetooth connection, also known as an m-business

Many businesses fit both of these definitions, while other mobile businesses are just one or the other. What all mobile business ideas have in common, though, is that they don’t rely on a traditional brick-and-mortar storefront to connect with customers. 

Types of Mobile Businesses

Even beyond the two broad categories of mobile businesses above, there are many different forms this type of venture can take. Some of the most common include:

  • In-home mobile service business - These mobile businesses travel to a customer’s home to provide a service. Examples include house cleaning, interior designers, private chefs, pet sitting, or other businesses that serve customers in their own homes.
  • Business truck - Running out of a truck or cart is an obvious way to turn a business mobile. This is the best option when the business requires equipment that’s otherwise not easily portable, like a food truck or mobile pet groomer. 
  • Pop-up business - These businesses interact with customers face-to-face outside their homes in a temporary location, like a short-term stay in a commercial space or a booth at a market, fair, or festival. 
  • App-based business - These can be businesses that customers engage with only online, like an SaaS company or a mobile company that allows customers to book a service through an app, such as a shuttle or delivery service business. 

Whatever type of business you open, mobile businesses offer a lot of benefits. They often have a lower initial investment, for one thing, since you don’t need to worry about a commercial space. It’s also very convenient for customers to have a business come to them and lets small business owners go where their customers are rather than needing to attract customers to a specific location. 

Wondering how to start a mobile business? Check out the options on this mobile business ideas list to learn about some of the best mobile businesses to start.

Top 2 Most Profitable Mobile Business Ideas

#1. Mobile Car Detailing

Average Annual Revenue: $73,100
Average Profit Margins:
16.1%
Startup Costs:
$500-$5K
Time To Revenue:
3+ months
Annual Market Growth Rate:
1.0%
Best for: Car lovers and experts, detail-oriented entrepreneurs with customer service skills

A mobile car wash or detailing business hits the sweet spot for many aspiring entrepreneurs. It’s affordable to start, doesn’t require special licensing or experience, and is a convenient way to offer customers an in-demand service. 

If you want to offer even more value to customers (and diversify the revenue streams in your business plan), you can offer other vehicle services, like a mobile oil change business or on-site car wrapping. 

You can also make substantial revenue from just offering mobile detailing services. GoDetail was started with $500 and now makes more than $900,000 in revenue, with 60% margins. Hear how Alan Tursunbaev started his mobile business in this interview:

[su_youtube url="https://www.youtube.com/watch?v=riTWH_MG6Uc"]

#2. Vending Machine Business 

Average Annual Revenue: $182,100
Average Profit Margins:
4.3%
Startup Costs:
$2K-$10K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.5%
Best for: People with strong networking and sales skills, system-oriented entrepreneurs who like driving, those looking for flexibility and passive income potential

Vending machines are almost like money printers—as long as you have the right machines in the right locations. Adam Hill, who makes over $58K a month in vending machine revenue, says a single machine can earn upward of $2,000 a month. Now imagine having two, three, four of those.

The best part is you can operate your vending machine business from virtually anywhere. All you need is enough space to store your snacks, drinks, or whatever else you’re selling. Intrigued?

We were, too! We pestered Adam until he agreed to spill the beans and take us behind the scenes of his vending machine empire. The best part? UpFlip readers get free access to his vending masterclass.

You can also hear his insights in this video interview: 

[su_youtube url="https://www.youtube.com/watch?v=-s_Y-O1nosw"]

9 Mobile Service Business Ideas

#3. Mobile Pet Grooming Services

Average Annual Revenue: $73,533
Average Profit Margins:
11.5%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
1.1%
Best for: Dog lovers and experts, salon and grooming professionals, empathetic and detail-oriented entrepreneurs with strong customer service skills

There are millions of pet owners in the United States, and that number grew substantially during the pandemic. That’s part of what’s grown the pet grooming industry to more than $5.3 billion in 2021, and it’s projected to continue growing at a compound annual growth rate (CAGR) of 7.09% through 2030. 

A mobile pet grooming business is a unique and convenient way to tap into this fast-growing niche market. It gives busy pet owners an easier way to take care of their animals on their own schedule. Any time you can make customers’ lives easier, you’re on your way to running a successful business. 

There are a few ways to start a mobile pet grooming business. One option is to buy a business truck where you groom the animals. You can also schedule time in an apartment building common area or other communal space close to your customers, which can be one way to save money on the initial investment if you’re starting with a tight budget. 

#4. Cell Phone and Electronics Repair

Average Annual Revenue: $560,320
Average Profit Margins: 5.7%
Startup Cost: $500-$5K
Time To Revenue: 1-3 months
Annual Market Growth Rate: 1.4%
Best for: Electronics experts, DIY makers and fixers, repair pros, and system-oriented entrepreneurs with a sharp eye for detail

People today rely on their electronic devices more than ever before—and have more of them. This has driven steady growth in the electronics repair and maintenance industry, a sector that’s expected to more than double in value over the next 10 years. 

Operating as a mobile business is an excellent way to stand out in this niche. Instead of customers needing to take their broken phone or device to a shop, you go to them and either fix the device on-site or pick it up and bring it back when it’s repaired.

Joe’s is a device repair service that was started with about $45 and grew to seven figures of revenue in less than five years. Part of this growth was driven by offering mobile repair services in addition to in-store services. Find out how Joe Pilat grew his business in this interview:

[su_youtube url="https://www.youtube.com/watch?v=Rqce8NAZWYw"]

Another way to grow your repair business revenue is by offering other electronics-oriented services. For example, you could provide mobile tech support for businesses with remote workers, or buy broken electronics then repair and flip them for a profit. 

#5. Mobile Bike Repair Services

Average Annual Revenue: $726,530
Average Profit Margins:
4.5%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.2%
Best for: Mechanics, avid cyclists, hands-on and mechanically minded entrepreneurs

Between rising fuel costs and growing interest in sustainable living, bikes have seen a resurgence in popularity. While cars are still the most common form of transportation, 11% of U.S. commuters biked to work in 2023, roughly double the figures from 2019, and that doesn’t include the millions of people who ride a bike for fun. 

Those figures put a bike repair service among the most profitable mobile business ideas to start today. Bike repair equipment and spare parts are portable enough to offer mobile bike services using a personal vehicle if you don’t have the budget to invest in a truck. 

#6. Airport Shuttle Service

Average Annual Revenue: $1,522,430
Average Profit Margins:
6.9%
Startup Costs:
$100K-$3.5M
Time To Revenue:
6-18 months
Annual Market Growth Rate:
6.7%
Best for: Skilled drivers with strong organization and time management skills

The air travel industry is back in full swing, and that presents an opportunity for prospective mobile business owners: getting people to and from the airport. 

Even people who normally drive or take public transportation often seek out a designated shuttle service for trips to the airport. For longer trips, it’s often cheaper to pay for a shuttle than for parking, while luggage can be a hassle on subways or buses.

The main expense to start an airport shuttle service is the vehicle you’ll use. If you’re just buying one, it’s often best to invest in a passenger van that will accommodate multiple travelers with their luggage. A solo entrepreneur can start off with a single van then reinvest their profits into more vehicles as they grow their mobile business.

#7. Cleaning Business

Average Annual Revenue: $74,880
Average Profit Margins: 6.7%
Startup Costs: $1K-$30K
Time To Revenue: 1-6 months
Annual Market Growth Rate: 1.2% 
Best for: Detail-oriented and organized entrepreneurs, neat freaks, people who like working with their hands

The demand for cleaning services has skyrocketed in recent years. Between Airbnb and Vrbo creating an enduring need for rental-specific cleaning services and people’s heightened requirements for hygiene and cleanliness brought on by the pandemic, the industry is on track to be worth more than $10 billion by 2026 (seriously!).

Cleaning services have transitioned from a luxury to a need, and that shift is allowing cleaning business owners to achieve six- and seven-figure earnings quickly. Our friend Chris Mondragon, for example, is pulling in over $125K a month from his cleaning business, Queen Bee Cleaning.

If you’re after a mobile business idea, this is definitely one to look into as you won’t need an office, just enough space to store your cleaning supplies. In collaboration with Chris, we created a free cleaning business masterclass that takes you from A to Z and covers everything you need to get started. Gain free access here.

Chris also talks about starting Queen Bee Cleaning in the YouTube video below:

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

#8. Clothes Cleaning Services

Average Annual Revenue: $311,220
Average Profit Margins:
22.1%
Startup Costs:
$100K-$3.5M
Time To Revenue:
6-18 months
Annual Market Growth Rate:
-0.1%
Best for: System- and detail-focused entrepreneurs

If you’re looking for mobile business ideas with a low barrier to entry, a laundry or dry cleaning service can be a great option. Individuals aren’t the only customers who will appreciate the convenience of pickup and drop-off laundry. You can also find customers in other local businesses that use towels and linens, like restaurants and Airbnbs. 

The cost to start a mobile laundry service can be as low as $2,000 or as high as $35,000 or more, depending on the size of your business and the services you offer. If you have the budget, investing in one or more commercial washers and dryers will allow you to clean more clothes faster, though you can start off using your home equipment or even a public laundromat if you’re starting on a shoestring. 

#9. Delivery Services

Average Annual Revenue: $131K
Average Profit Margins:
3.6%
Startup Costs:
$100-$9.5K
Time To Revenue:
3+ months
Annual Market Growth Rate:
6.7%
Best for: Organized and system-driven entrepreneurs with strong communication and customer service skills

Online shopping exploded during the pandemic, and while the eCommerce share of the retail sector has cooled from its 2020 peak, consumers still appreciate the convenience of at-home delivery. 

Starting a mobile business in delivery services isn’t just a way to capitalize on this trend, but it also lets you help other local businesses get their products to customers. That was Adam Haber’s goal when he started Trellus, and in less than two years they’ve made more than 35,000 deliveries for their more than 300 merchant partners. Hear how he built his company in this podcast:

There are also lots of unique mobile business niches that you can focus on as a delivery company. Some of the most in-demand options include: 

  • Becoming a personal shopper 
  • Grocery delivery business
  • Courier service for packages and important documents
  • Print delivery service
  • Newspaper or magazine delivery

#10. Party Bus Business

Average Annual Revenue: $689,656
Average Profit Margins:
8.8%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.7%
Best for: Outgoing and social entrepreneurs, people with event planning and party planning experience

Do you like to party? Why not take that on the road? Starting a party bus is a unique mobile business idea with the potential to be very profitable. The average party bus rental costs about $700 for a four-hour trip, and you can grow that revenue even further if you have multiple buses people can rent. 

You can have a lot of fun getting creative with a party bus business. If you live in a city with an active nightlife, you can offer bar crawls or brewery tours as part of the package. You can also change up the decorations to offer theme parties, or partner with other local businesses like wineries or distilleries for mobile tastings. 

#11. Mobile Yoga Business

Average Annual Revenue: $243,063
Average Profit Margins:
7.2%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.8%
Best for: Yogis, fitness instructors, physical fitness trainers

Yoga and Pilates are popular forms of exercise for many Americans. Tech companies, music festivals, and affluent people all have yogis come out to their sites to help people stay in shape in a manner that helps build self-control and confidence without straining the body too hard.

The average studio makes $143K per year, according to IBIS World Report OD4185.

6 Mobile Truck Business Ideas

#12. Mobile Coffee Business

Average Annual Revenue: $865,800
Average Profit Margins:
5.8%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
1.2%
Best for: Baristas, customer service pros, morning people, coffee lovers with strong time management and communication skills

A good portion of the population starts every day with coffee, so why not start a business that brings their favorite beverage right to them? Like a food truck, a coffee truck or coffee cart is much cheaper and easier to start than a brick-and-mortar cafe and can be a great small mobile business on its own or as a gateway to starting your own permanent space.

The main expense to start a mobile coffee business is the truck itself. You can save money by instead starting with a coffee trailer, which you can get for as little as $10,000 if you buy one used.

#13. Truck Delivery Service

Average Annual Revenue: $131K
Average Profit Margins:
3.6%
Startup Costs:
$100-$9.5K
Time To Revenue:
3+ months
Annual Market Growth Rate:
6.7%
Best for: Commercial drivers, people with strength and stamina who like physical work

We mentioned delivery services as a business idea earlier, but doing it with a full truck expands your options and is enough of an industry on its own to warrant a separate section. 

A trucking service can be either local or nationwide, depending on the scope and size of your business. Having a large truck lets you haul heavy, large objects that most people can’t move on their own—things like heavy machinery, appliances, or furniture. 

You don’t need any specific skills or experience to start a trucking business, either. Mikael Sant started Sant Lines when he was just 19 and brought in $150,000 in revenue in his first three months. Hear how he got started in this interview:

[su_youtube url="https://www.youtube.com/watch?v=-8TnsjDRXUE"]

#14. Mobile Billboard Trucks

Average Annual Revenue: $697,840
Average Profit Margins:
13.5%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
-7.3%
Best for: People with sales and marketing skills, proficient networkers, advertising professionals

Cars are still the most popular way to get around in the United States. People spend a lot of their time on the road. This is what makes billboard trucks a great mobile business idea, giving other local businesses a new way to get their brand in front of customers.

Outdoor advertising, like mobile billboard trucks, has seen an 11% increase over the past five years, and that trend shows no signs of stopping. The best part is you can combine a billboard business with another mobile business idea, like a delivery service, to get even more revenue out of every trip your drivers take.

#15. Mobile Hair Salon Truck

Average Annual Revenue: $51,380
Average Profit Margins:
5%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.9%
Best for: Beauticians, barbers, hair stylists, style and fashion experts

If you love cutting and styling hair, starting your own mobile salon can be an excellent mobile business idea. Running your business out of a truck lets you use the same chairs, sinks, and other equipment you would in a brick-and-mortar while also giving you the flexibility to go to customers where they are. 

A mobile salon can also operate in a range of niches. For example, you can specialize in doing hair for special events, like proms or weddings. 

Now, unlike many of the mobile business ideas on this list, you do need a cosmetology license to legally operate a mobile salon. Make sure to research the licensing requirements for your state when you’re writing your salon’s business plan.

#16. Mobile Farmers Market Truck

Average Annual Revenue: $112,644
Average Profit Margins:
3.4%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.8%
Best for: People with strong networking skills, entrepreneurs passionate about sustainability and farm-to-table food

Turning a truck into a mobile farmers market lets you bring people fresh vegetables, fruit, and meats straight from the farm, and that’s a win-win. You can support local farmers, help people eat healthier, and grow your own business, all at the same time. 

The first step to starting a mobile farmers market is to connect with the local farms that will provide your inventory. While you’re writing your business plan, decide if you’ll buy their products wholesale or sell their products on a commission basis.

#17. Mobile Clothing Boutique

Average Annual Revenue: $141,492
Average Profit Margins:
5.3%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
0.5%
Best for: Fashion designers, stylists, people with retail experience, business acumen, and communication skills

The eCommerce fashion industry is booming, especially resale and secondhand apparel, a sector that grew by 24% just in 2022. The main downside of online fashion stores is that customers can’t feel the clothes or try them on before they buy. 

Mobile boutique stores are the best of both worlds. Customers can get up close to the clothes and make sure they fit, just like in a brick-and-mortar retail boutique store. At the same time, operating as a mobile business means you don’t have to rent or buy a storefront in a high-traffic area to connect with buyers. 

The first thing to decide when you’re writing your business plan is whether you’ll focus on new or second-hand clothes. You can also make your items available for people who can’t get to your truck by pairing your mobile boutique offerings with an eCommerce storefront. 

Mobile Businesses for Corporate Events

#18. Food Truck Business

Average Annual Revenue: $41,040
Average Profit Margins:
6.4%
Startup Costs:
$1K-$100K
Time To Revenue:
3+ months
Annual Market Growth Rate:
1.2%
Best for: Chefs, bakers, cooks, and others with restaurant industry experience, foodies with customer service skills

Like catering, food trucks are a more affordable way to start your own business in the restaurant industry. While a new food truck can cost $100,000 or more, you can find used trucks for half that price or less or start with a food cart if that’s still outside your budget. 

Kyle Gourlie started his food truck, the Vet Chef, in 2016, and within a year was already one of the most popular trucks in Western Washington. Learn how he grew his food truck business in this interview: 

[su_youtube url="https://www.youtube.com/watch?v=YCnE13BaQlk"]

#19. Mobile Photography Services

Average Annual Revenue: $50K
Average Profit Margins:
7.3%
Startup Costs:
$1K-$10K
Time To Revenue:
1-6 months
Annual Market Growth Rate:
0.3%
Best for: Photographers, videographers, and visual artists who are excellent communicators

A photography business is a natural fit for a mobile business model because most of the things people want to have photographed don’t happen in a studio. Running a mobile business lets you keep costs low while meeting your customers where they need you. 

Like other options on this list, there are a lot of niches you can focus on in this industry. The event photography business has rebounded from its 2020-21 slump, and taking photos for weddings and corporate events can be a highly lucrative business in 2024. 

Another way to differentiate your photography business is to offer drone photography services that let you take sweeping panoramas and overhead shots. This opens up potential clients like real estate agents who need full shots of properties they’re listing. 

Mile High Productions turned their expertise with drone photography into a $35,000-a-month business. You can hear how they started and grew in this YouTube interview:

[su_youtube url="https://www.youtube.com/watch?v=EUcv1HAAbns"]

#20. Catering Services

Average Annual Revenue: $124,410
Average Profit Margins:
5.5%
Startup Costs:
$1K-$100K
Time To Revenue:
6-18 months
Annual Market Growth Rate:
1.0%
Best for: Cooks, chefs, and foodies with strong communication and customer service skills

When people need to feed the attendees at corporate events or special events like a wedding, a catering service is the go-to way to do it. It’s also one of the most affordable ways to start your own business in the food industry. The average initial investment for a catering business is $30,000—not chump change, by any means, but much lower than the 6- or 7-figure investment to start a brick-and-mortar restaurant. 

A mobile catering business can take a few forms. Many mobile caterers rent commercial kitchen space to prepare the food. Others may use on-site kitchens in event spaces or at customers’ homes, or use mobile kitchens similar to food trucks.

The right option for you will depend on your startup budget, the type of food you make, and the kinds of events you plan to cater. These are all questions to ask yourself as you’re writing the business plan for your new mobile food business. 

#21. Event Planning

Average Annual Revenue: $34,380
Average Profit Margins: 12.2%
Startup Costs:
$500-$5K
Time To Revenue:
3 months
Annual Market Growth Rate:
1.0%
Best for: Strong networkers, great party planners, outgoing and social entrepreneurs

Event planning is a great mobile business. An event planner can organize music events, corporate events, sporting events, weddings, and other parties. The largest segment of the industry is corporate events. Make sure you have connections with other professionals in the corporate events sector if you are going to plan events, as you’ll be responsible for hiring them.

Hit the Road and Make Some Money

Now that you have some mobile business ideas, it’s time to take one of them and turn it into a career. Check out our business hub or courses for more in-depth walkthroughs on how to start a mobile business.

Which mobile business idea sounds best for you?


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