Over half of all new businesses fail within four years.  One study found that 95% of new businesses failed within five years. Those are sobering statistics for new entrepreneurs and for those wanting to start their own businesses. 

Sadly, for those reading this article who have just started their cleaning businesses, less than one in two will still be in business four years from now.  The other fifty- to sixty-percent will be out of business and doing something else for a living, unless they take steps now to avoid that from happening.

As a prudent businessperson, you will not read cold, hard statistics such as these and be intimidated, nor will you think that they apply to others and not to you.  Failure waits at the threshold of every new business . . . and every established business.  It’s very possible to be among the failures, if you are not forearmed with knowledge to help you make wise business decisions.

Interestingly, new franchises do not have the same failure rate as other businesses.  When a franchiser is a solid company with a favorable track record, nearly all of its franchisees are successful.  There is only a 4% failure rate among franchises. Industries with hundreds or thousands of successful franchises, such as the fast food industry, have strong corporate support, name recognition, systems, and processes in place that virtually guarantee success.  While the franchisees still have to work hard to be successful, they have a proven prototype to imitate, the original store or business in the franchise chain.

What about Janitorial Service Franchises?

Although a number of janitorial service franchises are successful, some have marginal success on the franchisee level.  Their success is not the same as franchises in other industries.  One reason for this is that the franchiser—the company that sells franchises--requires a disproportionately high percentage of the monthly income, in some cases 20% or more—making it difficult for the franchisee to hire employees and earn a profit. 

Another reason for the marginal success of some janitorial service franchises has to do with the nature of the cleaning maintenance industry as a whole.  For the most part, employees are working off-site--and out of sight--in client buildings and not under the continuous scrutiny of the franchisee or his manager.  Good supervision, benefit packages, employee buy-in to the company mission and vision statements, employee training, and competitive wages can do much to improve the overall success of a franchise operation.  The same is true, of course, for non-franchise operations.

Should You Consider Becoming a Franchisee or Franchiser?

There is no doubt that franchise businesses in general have a much higher rate of success.  One of the main drawbacks, however, to becoming a franchisee or franchiser in the cleaning service industry is the high cost of getting started.  A franchisee can expect to initially invest many thousand dollars, if not tens of thousands of dollars; and a franchiser can expect to invest multiples of tens of thousands of dollars.

Over the years, much of the new contract business I have obtained has been the dissatisfied customers of franchise operations.  One franchisee even called to say that our company must have been doing things right because he couldn’t even get in to talk to our customers in an area of the city where he and we were doing business.  He said all of our customers were satisfied and wouldn’t even allow him an interview.  He was a franchisee with national name recognition and we were a locally owned and operated business with only local name recognition, and we didn’t have to pay any initial or monthly franchise fees.  All the profit remained in our company and was not shared with a parent franchiser.

There is always a trade off, of course.  You can start and operate your own business, the business you created and designed yourself, or you can purchase a turnkey franchise operation.  If you create and design your own business from the ground up, you have a less than fifty- percent chance of success, if you try to do it without help from industry experts.  If you purchase a franchise from one of the successful janitorial franchisers, you have a greater chance of success, but you will be sharing the profit with the franchiser.

An Option to Franchising

What is the best option when deciding not to invest in a franchise?  The best option is to get all the information you can about the industry.  Purchase books and courses that provide solid business information, preferably ones written by authors who have been in the business for decades.  Circumspectly consider books written by professional writers with little or no experience in the industry; otherwise, you will be purchasing books of theory or books that have borrowed ideas from those in the business. 

To get on the right track with your business, you will need books with substance—books that will really help you organize and grow your business.

For a list of books available for janitorial service business go to JanitorialBooks.

For a list of business development courses go to Business Courses.

For consulting services for new and established buinesses go to Consulting Services.

If you have questions or comments concerning this or any other topic, contact me by e-mail or fax.
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Forrest L. Farmer
Publisher and Consultant
CPI Business Development Corp.
Division of Clean-Pro Industries

websites:  cpibusiness.com    and     clean-pro-industries.com
e-mail:  newsletter@cpibusiness.com
Tel:  (503) 289-0063
Fax:  (503) 289-0055