Mother's House Cleaning Service
Executive Summary
Opportunity
Problem
The wealthy single income families, and affluent double income families of Cleanly,Wa are in need are a house cleaning service that is professional, trustworthy, and highly effective. Our services are well worth our fees.
Solution
Mother’s House Cleaning Service’s mission is to provide the customer with all residential cleaning services in an environmentally sound, completely trustworthy, and professional manner. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
Market
Mother’s House Cleaning Service will be focusing on two upper socio/economic groups. The first is the affluent where only one spouse works. Although the other spouse is at home and has time to clean, he/she chooses not to.
Our second segment of the market that we are targeting is the two income family. Both spouses work long hours and have no time to clean or do laundry. Further it is essential that we are trustworthy and professional. We will be given a key to gain entry to a empty house. We take that trust very seriously.
Competition
The residential house cleaning niche is a subset of the larger cleaning business.. The residential house cleaning market is serviced predominately by independent companies. There are however, a few large franchises. Residential services are divided into a couple of different categories, maid or house cleaners, carpet cleaners, window cleaners, and a variety of other services that are required on a less frequent basis. They are far more restricted in their range of offered services relative to the commercial janitorial services.
Why Us?
We are a high end house cleaning service that can be completely trusted in client’s home. MHCS will offer a wide range of services to the residential client, from general room cleaning, to laundry, to child/pet disasters.
Expectations
Forecast
We will have over 200,000 of sales our first year. We will be making a net profit by year 3. We are investing in training our employees which will pay off later when they develop great word of mouth and clients that trust implicitly.
Financial Highlights by Year
Financing Needed
Sarah will be investing $15,000 of her own money and her family and friends will invest the additional $60,000. They understand that it will take about 5 years but Sarah plans on paying back her friends and family
Opportunity
Problem & Solution
Problem Worth Solving
The wealthy single income families, and affluent double income families of Cleanly,Wa are in need are a house cleaning service that is professional, trustworthy, and highly effective. Our services are well worth our fees.
Our Solution
Mother’s House Cleaning Service’s mission is to provide the customer with all residential cleaning services in an environmentally sound, completely trustworthy, and professional manner. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.
Target Market
Market Size & Segments
Mother’s House Cleaning Service will be focusing on two upper socio/economic groups. The first is the affluent where only one spouse works. Although the other spouse is at home and has time to clean, he/she chooses not to. This spouse would rather volunteer for a public interest organization, play tennis and golf, or just spend time how he/she chooses to. They have no desire to clean the house. To them that is not enjoyable and they have the money to pay someone to do that kind of work. This market has annual incomes over $200,000 and live in expensive houses. While Cleanly, WA only has 650 families that fall into this category, this group reliably uses cleaning services.
Our second segment of the market that we are targeting is the two income family. Over the last couple of decades, the number of two-income households have increased, to a point where in parts of the country they exceed one income families. Our target customer is two income families whose combined annual income is over $125,000. These families don’t really have the time to clean, can afford a cleaning service, and choose to hire a service because the opportunity costs are too high to waste time cleaning their house. These households are typically age 32-55 and live in houses valued over $250,000. Cleanly has approximately 10,000 families that fall into this demographic. It is this segment which has tremendous potential for us. Nearly 80% of dual income households use an outside cleaning service for some of their house cleaning according to the U.S. Department of Commerce.
Additionally, there are some potential customers that MHCS has labeled as assorted "well-off" households. These are families that have the money for our services that do not fit neatly into the two previous categories.
Competition
Current Alternatives
Although there are lots of competitors in the cleaning service space, there is good reason for this competition, demand is high. Plenty of maid/janitorial services have waiting lists, they are unable to meet demand. Additionally, many of the maid and janitorial services are "mom and pop" operations without enough employees. Cleaning service customers want quality, and not everyone in the cleaning service space offers quality. How often when you ask one of your friends for a referral do they tell you they have been using a bunch of different companies and they have yet to find one that they are truly happy with.
Our Advantages
Our competitive advantage will be based on our large investment in human capital. MHCS begins with a rigorous training program for new employees. At the outset, employees with be trained on how to clean. Granted everyone has some idea on how to clean, but we will show them a methodical way producing a far cleaner home more efficiently. We will then be training employees to work effectively on teams. While there are some households that prefer individual cleaners instead of a team, a request that we are more then happy to oblige, we generally work in teams as they are more efficient. Working efficiently on a team takes training, and through this team training, we are able to make significant gains in efficiency.
The next topic of training involves professionalism. We provide our employees the tools necessary to impress our most affluent clients. Professionalism is a skill that is used throughout the service call, from the way the employee greets and interacts with the client, to the way they clean, to the way they act when they break that priceless vase (which in the inevitable case that we do break something, we have specific guidelines for the employee to follow to resolve the conflict).
We finally train our employees to know what the expectations of our clients are. We will provide them the tools needed to exceed these expectations.
This extensive training, both up front, as well as continuously (called our continuous learning system) builds a trust relationship between our company and the client. It is the bond of trust that will not only earn MHCS the loyalty of that customer but also the referral of several more of their friends. Satisfied customers like to tell their friends about service providers that they are happy with, people like to "spread the wealth" with their friends.
Lastly we will emphasize our use of environmentally sound chemicals. Other companies also use environmentally sound chemicals so this is not a huge differentiation, but it is something that we are proud of, and will be mentioned.
We will also be creating the appearance of professionalism through the use of uniforms and large magnetic sign affixed to the side of the vehicles we use.
Keys to Success
Keys to Success
Keys to success are:
- To create a service based company whose #1 goal is exceeding customer’s expectations.
- To increase our number of clients served by 20% per year through superior service.
- To develop a sustainable home-based business, living off its own cash flow.
- The utilization of Mother’s House Cleaning Service on a regular basis by at least 30% of the leads that contact us for more information.
Execution
Marketing & Sales.
Marketing Plan
We will market our company through a three pronged approach. One prong is the distribution of a color brochure detailing our services. The distribution of this document will be targeted to hit our chosen segment. This will be done by setting up strategic relationships with organizations or clubs whose members fits our targeted customer profile. Examples of this would be higher-end athletic clubs, country clubs, wine connoisseur clubs, etc. We will gain access to these clubs membership through deals where the club owners will receive our services for themselves to test the quality so they then feel comfortable with helping us by being a "cheerleader" for our service.
The second prong of our approach will be through word of mouth referrals. We will offer an economic incentive (such as a free visit) to our customers if they bring in new business for us. We believe this will be effective because the financial incentive will motivate their behavior, and people naturally like to share good things with their friends.
Our third and final prong is our Social Media Strategy. We will be on Twitter, listening to our customers as well as letting them know about our promotions. We will be on Facebook and Linked in with reviews and some environmentally safe "do it yourself" home cleaning remedies. This will let our customers get to know our employees in other circumstances than trying to get their business.
Sales Plan
The sales process will begin through the qualification of leads generated from our marketing campaign. The marketing campaign will primarily generate leads through interest sparked from our brochures. Someone will call to receive more information about our service, while we will be able to give them an estimate over the phone, we would prefer to be able to get into their home and speak with them. On one hand we would be able to offer them a more accurate estimate. More importantly however, it provides us an opportunity to impress them with our company. We feel confident that since we are dealing with the affluent, who for many services are less price sensitive, are more likely to be impressed with our professionalism, "feel" an immediate trust bond forming, and sign up for the service.
For those clients whom we are only able to speak with over the phone, we will initially quote them a price. Because they are less price sensitive then the general population, we will then detail why our service is priced a bit higher than most. Mother’s House Cleaning Service will explain all of the different training systems and methodologies that each employee goes through, and what expectations are reasonable for the customer to form about our superior service. This conversation will leave the prospective customer the impression that MHCS is indeed different from the run of the mill residential cleaning services and that the price differential is justified.
Lastly, we will be qualifying the leads by explaining up front that our service is more expensive. This is not a fact that we are trying to hide. We are setting up an expectation for the customer that they can indeed expect more with our service. This "angle" is based on the assumption that many people are not thrilled with their current cleaning service. Sure they clean adequately, but there is not a trust bond formed as if you had the same house cleaner for 20 years who helped raise your children. This is how we will differentiate ourselves and ultimately win over new customers.
Milestones & Metrics
Milestones Table
| Milestone | Due Date | |
|---|---|---|
|
Business Plan Completion
|
Oct 10, 2020 | |
|
Office Setup
|
Nov 01, 2020 | |
|
Set up Supply room
|
Nov 21, 2020 | |
|
Training Program
|
Dec 12, 2020 |
Key Metrics
- Clients served. Watch for increases in clients served, as per keys to success.
- Cash flow.
- Leads and closes per lead
- Close rate: leads to closes (goal is 30%)
- New business and repeat business.
- Clients leaving
Company
Overview
Ownership & Structure
Mother’s House Cleaning Service will be a sole proprietorship, owned by Sarah Tookleen.
Team
Management Team
Mother’s House Cleaning Service is owned and operated by Sarah Tookleen. It will be formed as a sole proprietorship. There is no compelling need to incorporate. The advantage of incorporation, limited liability, can be offset by good insurance.
Sarah Tookleen, founder and owner, has a degree in History from Alfred University. Sarah spent three of her four years in college working for a Sanitation Management cleaning service. Sanitation Management was both a residential and commercial cleaning service. Sarah worked on a cleaning crew with two other individuals. By the end of Sarah’s third year she was promoted to crew manager and was responsible for coordinating the jobs for that crew, as well as all customer interactions. After college, Sarah moved from New York to Seattle where she was employed as a Manager of Immaculate Cleanception, a residential house cleaning service. Sarah managed the 23 person organization for two years. Her responsibilities included all facets of management including, hiring, training, customer service, inventory control, and purchasing. It was her experience at Immaculate Cleanception that provided Sarah with the skills and confidence to open up her own company. She decided to move Cleanly, an upscale suburb of Seattle with her husband and start her own company.
Personnel Table
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Employees (3.67) | $100,800 | $134,400 | $134,400 |
| Owner | $43,200 | $43,200 | $43,200 |
| Totals | $144,000 | $177,600 | $177,600 |
Financial Plan
Forecast
Key Assumptions
The sales forecast is based on the assumption that increased demand will occur at a steady pace. This is based on the assumption that a large part for our new clients after month two will be from word of mouth referrals. The logic is that we will incrementally gain customers as we continue to serve current customers. We will need a couple of visits before we can turn a new client into a referral service. All this will happen steadily and incrementally. This forecast is on the conservative side, it is possible that because we are superior to competing services that things really take off, however, it would not be prudent to take that aggressive of a forecast. It is always better to err on the side of caution.
Revenue by Month
Expenses by Month
Net Profit (or Loss) by Year
Financing
Use of Funds
Our start-up costs include equipment needed for a home-based business (to be detailed below), initial legal fees, marketing fees, cleaning equipment and supplies, uniforms, and signs for employee vehicles.
Sources of Funds
Sarah plans on investing 75000 at the start of business
Statements
Projected Profit & Loss
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Revenue | $269,950 | $332,000 | $386,000 |
| Direct Costs | $89,084 | $109,560 | $127,380 |
| Gross Margin | $180,867 | $222,440 | $258,620 |
| Gross Margin % | 67% | 67% | 67% |
| Operating Expenses | |||
| Salaries & Wages | $144,000 | $177,600 | $177,600 |
| Employee Related Expenses | $28,800 | $35,520 | $35,520 |
| Sales and Marketing | $7,200 | $7,200 | $7,200 |
| Utilities | $1,800 | $1,800 | $1,800 |
| Insurance | $2,400 | $2,400 | $2,400 |
| Startup Expense – Listed in Use of Funds | $4,000 | ||
| Total Operating Expenses | $188,200 | $224,520 | $224,520 |
| Operating Income | ($7,334) | ($2,080) | $34,101 |
| Interest Incurred | |||
| Depreciation and Amortization | |||
| Gain or Loss from Sale of Assets | |||
| Income Taxes | $0 | $0 | $1,234 |
| Total Expenses | $277,284 | $334,080 | $353,134 |
| Net Profit | ($7,334) | ($2,080) | $32,867 |
| Net Profit/Sales | (3%) | (1%) | 9% |
Projected Balance Sheet
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Cash | $31,558 | $25,988 | $61,074 |
| Accounts Receivable | $0 | $0 | $0 |
| Inventory | |||
| Other Current Assets | |||
| Total Current Assets | $31,558 | $25,988 | $61,074 |
| Long-Term Assets | |||
| Accumulated Depreciation | |||
| Total Long-Term Assets | |||
| Total Assets | $31,558 | $25,988 | $61,074 |
| Accounts Payable | $5,261 | $3,931 | $4,510 |
| Income Taxes Payable | $0 | $0 | $426 |
| Sales Taxes Payable | $9,630 | $7,470 | $8,685 |
| Short-Term Debt | |||
| Prepaid Revenue | |||
| Total Current Liabilities | $14,891 | $11,401 | $13,621 |
| Long-Term Debt | |||
| Long-Term Liabilities | |||
| Total Liabilities | $14,891 | $11,401 | $13,621 |
| Paid-In Capital | $24,000 | $24,000 | $24,000 |
| Retained Earnings | ($7,334) | ($9,414) | |
| Earnings | ($7,334) | ($2,080) | $32,866 |
| Total Owner’s Equity | $16,667 | $14,587 | $47,453 |
| Total Liabilities & Equity | $31,558 | $25,988 | $61,074 |
Projected Cash Flow Statement
| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Net Cash Flow from Operations | |||
| Net Profit | ($7,334) | ($2,080) | $32,867 |
| Depreciation & Amortization | |||
| Change in Accounts Receivable | $0 | $0 | $0 |
| Change in Inventory | |||
| Change in Accounts Payable | $5,261 | ($1,330) | $579 |
| Change in Income Tax Payable | $0 | $0 | $426 |
| Change in Sales Tax Payable | $9,630 | ($2,160) | $1,215 |
| Change in Prepaid Revenue | |||
| Net Cash Flow from Operations | $7,558 | ($5,570) | $35,086 |
| Investing & Financing | |||
| Assets Purchased or Sold | |||
| Net Cash from Investing | |||
| Investments Received | $24,000 | ||
| Dividends & Distributions | |||
| Change in Short-Term Debt | |||
| Change in Long-Term Debt | |||
| Net Cash from Financing | $24,000 | ||
| Cash at Beginning of Period | $0 | $31,558 | $25,988 |
| Net Change in Cash | $31,558 | ($5,570) | $35,086 |
| Cash at End of Period | $31,558 | $25,988 | $61,074 |
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