Choose a legal business format for the company. The simplest, fastest, and least expensive option is to form it as a sole-proprietor. Other options include various types of corporations, partnerships, and a limited partnership. Each form has advantages and disadvantages. An attorney or CPA can advise you if one of these other forms will better serve your needs.
The format of the business you choose affects how you file taxes and what business liabilities you are personally responsible for.
Determine your breakeven point. This is the amount of money the company must generate to pay both business and personal monthly bills. This is the most important goal for your company to achieve.
Falling short of this amount requires you to use savings or credit to make up the difference. You have only a limited amount of savings and credit available. When this is exhausted, your business will fail. When your company can achieve this amount of revenue consistently, you have succeeded.
Are there any expenses – personal or business – that you can lower or cut in order to bring down the breakeven point number?
Fill out the chart to set your monthly revenue goals. Be sure to make adjustments to account for the seasonal slow periods where you live.
*Monthly revenue chart
For most of the country, there is a seasonal slow period for residential cleaning. Typically this slow season begins about December 15th when holiday decorations go up and lasts through April 15th – tax day – when the weather starts to warm. For established companies, the average income during a slow season month is about half that of the average of the other months. The slow period might be the exact opposite for Florida or Arizona due to weather differences.
Ask your supplier and other cleaners to verify when this slowdown occurs in your area.
Fill out the Magic Numbers Form to determine critical numbers needed to measure growth and profitability and to establish goals.
At what date will savings and credit run out?