Business Loans for Commerical Cleaning Services
Starting a commercial cleaning business and running it successfully takes a lot of hard work. It isn’t just about grabbing your vacuum cleaner, a mop and some cleaning supplies from the local supermarket. The required equipment is pricier than internal gear, and you’ll need insurance, a reliable vehicle to carry everything as well as staff to help you.
Equipment like floor waxing machines, floor washers, commercial mops and cleaning buckets, and vans can bump your set up costs significantly. And ongoing costs such as insurance, fuel, equipment maintenance and salaries can make it challenging to manage your cash flow, especially in the early days as you establish your clientele. While it may be tempting to cut costs by buying internal gear, the price of a breakdown can be high – not just when it comes to repairs but also from lost business or overtime paid to staff when you have to catch up after a breakdown.
Financing your business establishment
Once you’ve made a list of all the items you’ll need to start your business and worked out how much money you’ll require, you can start thinking about how to finance everything. But you’ll also want to ensure you have some cash on hand. Your initial expenses will likely be higher than your income. That’s because you’ll be working with customers and they’ll most likely pay after the work is completed. You’ll be spending money on the expectation that payments will be made on time.
The reality of business is that some customers are slower than others to pay. That means there is likely to be a lag between when you start spending money and when you’ll be receiving payment.
Although it’s likely you’ll have some cash reserves to start your business; you don’t want to drain your bank accounts. That will mean taking a quick look at financing your startup with a plan for your first year of operation. While the finance market may look like a sea of different loan types, the reality is that they all fall into two major types.
Secured loans use an existing asset as collateral against the loan. For the lender, this means they can sell that asset if a loan remains unpaid. This reduces the risk for the lender, which means the borrower can enjoy a lower interest rate and potentially borrow a more substantial sum of money. An example of a secured loan is a home loan. A mortgage uses the value of the house as the asset against the loan.
Alternately, there are unsecured loans where the borrower does not provide collateral. As this changes the risk for the lender, interest rates tend to be higher, and the amounts that are lent are often smaller. A typical example of an unsecured loan is a credit card.
Neither type of loan is inherently better or worse than the other. Each has a place in a well planned and managed business finance plan.
You are using your finances wisely.
If you own a property or some other asset of value, then a secured loan from a respected lender like Capify can help with the purchase of big-ticket items such as vehicles and equipment. As you’ll be using that gear over several years, the lending costs can be amortised over a long period and built into your pricing models.
But there may be times when a short-term lull in cash flow needs to be addressed. That’s where an unsecured loan can be useful. For example, if an essential piece of equipment requires a repair or replacement, you can borrow enough to cover that loss.
Once you’ve survived and started to thrive in your post-establishment phase, you’ll want to think about how to expand your business. Undertaking a marketing campaign is a great idea. Still, it will require some investment so you can purchase ads, either online or in specific publications, focused on industries or markets you’re trying to penetrate. You may even choose to print leaflets or pay salespeople to call potential customers.
Choosing the right finance partner
Business finance can be complicated. That’s why you’ll want to find a finance partner that understands business and doesn’t tie you up with complex forms that take ages to fill in and require you to dig out old documents and provide piles of paperwork. You’ll also want a partner that understands that when you are looking for finance that you want it sooner rather than later.
Traditional lenders, like the big banks, don’t work like this. You’ll want a lender than understands business. Capify has helped thousands of business find the right finance options to help them start, grow and thrive.
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