Executive Summary
Cleaning companies in the US have focused primarily on corporate services. For years, these services were required in firms as opposed to homes. However, with a significant number of people looking for more than one job to enable them to pay for their needs, the pressure to get help at home has mounted. There is a great necessity for residential cleaning services that are trustworthy, professional, and affordable for a significant percentage of the population. It is important to note that currently, companies that offer office cleaning also deal in residential services. However, due to the fact that the latter is not the core business of the companies, it is often neglected and expensive. This gap has not been filled and creates an opportunity for smaller companies to offer much-needed services.
Business Details
Smooth Residential Cleaning Services Limited is a new business that will offer home cleaning services to its clients. It is important to note that the idea of the business arises from the fact that a significant number of companies that offer similar services have focused more on corporate clients. Despite the fact that the companies do offer residential services, they are often expensive due to the mentioned fact. Smooth Residential Cleaning Services Limited incorporates technology and innovation into the process, making it start out from the crowd. The company will develop an application that allows clients to go through and choose the exact person they want cleaning their homes. The selection will be based on years of experience and also expertise. Some of the services that will be offered include laundry services, carpet cleaning and vacuuming, house cleaning, and general home cleaning, which entails all the mentioned services combined. The company will also provide maid services and even lawn mowing as value addition services.
Company’s Mission and Vision
The company mission and vision are critical in determining the strategic direction the management wants to take.
Mission
Smooth Residential Cleaning Services Limited is keen on ensuring consumer satisfaction through the provision of quality and professional residential cleaning services offered in a timely manner.
Vision
To become the best, most professional, and most affordable residential cleaning service provider in the region.
Aims and Objectives
Below are aims and objectives that the management expects to achieve once the business is running:
- Ensure the company breaks even within the first year of operations.
- Provide frequent training and refresher courses to all staff to ensure they provide high-quality services as stipulated in the company’s mission statement
- Ensure the company is profitable within the second year of operations.
Industry and Market Analysis
Competitor Analysis
There is high competition in the industry, which is heavily divided between companies that also offer corporate cleaning services. This makes penetration into the market challenging. However, there are gaps that can be identified among the biggest competitors that make the market entrance difficult but possible.
Competitor Strengths
One strength the competitors have is that they have been in the industry longer. It is important to note that the cleaning service is highly dependent on the trust that clients have in a company. This is due to two main reasons. The first is that homes are considered private spaces; therefore, welcoming strangers into such spaces might require some level of trust. Second, the homes have valuable items that have to be kept safe. It is common to find that numerous people who use cleaning services either use ones that have been in the industry for a significant amount of time and have excellent reviews or those that have been recommended by other third parties. A second strength is that they have more staff compared to a start-up. This makes work easier for the staff, therefore, increasing chances of excellence.
Competitor Weaknesses
One of the weaknesses of the competitors is that they have not incorporated technology and innovation into their processes. Despite the fact that all major competitors have a digital footprint, they have not managed to also include the various available innovations to help with their consumer journeys. Smooth Residential Cleaning Services Limited aims to take advantage of this weakness to penetrate the market. A second weakness of the competitors is that a significant number of them have fully focused on corporate cleaning services and, to some extent, neglected residential cleaning. One reason why this was profitable initially is the fact that more multinational companies required outsourced cleaning services while people did not fully appreciate having their homes cleaned. However, with more people being busy, a significant number even working two or more jobs, residential cleaning needs have been increasing.
Consumer and Value Proposition
The primary target market for the business is young families of people aged approximately 25 to 45 years. It is assumed that these families have both spouses working and need extra help maintaining their homes. Critically, all other persons, especially those above the age of 45, are considered secondary target audience. A second reason why the target audience has been identified is the fact that they are able to pay extra for the additional services they require. For example, they can afford maid services, which are more frequent compared to cleaning services, and lawn mowing. It is important to note that the house cleaning services are purely on a day-to-day basis. However, as mentioned, the company has value-addition services, such as lawn mowing and maid services, which will be included in monthly packages.
Value Proposition
Currently, it costs between $25 and $90 to get residential cleaning services. The exact amount depends on the neighborhood and size of the house. One of the factors that will be considered as value addition is the lower amount of money people will pay to get services from Smooth Residential Cleaning Services Limited. Second, the company will enhance its value proposition by creating monthly packages that include such services as maid facilities and lawn mowing alongside the primary cleaning work. There are significantly few cleaning companies that have such services included in their packages, making this the company’s competitive edge. Further, the use of current technology and innovation can also be described as a value proposition. This is especially in line with the enhancing of consumer journeys by removing some of the current pain points.
Marketing Strategy
P’s of Marketing
Product
The primary service offered is residential cleaning. This service will be offered to individuals or families at a daily rate. However, as part of the value proposition, the company will also have monthly packages that will include maid services and lawn mowing. The stated categories will be mainly for families that need extra help with other chores in the house. It should be noted that the company will not offer any corporate services in an attempt to cut out a specific niche.
Price
The price of the services will vary depending on various factors such as the neighborhood and the size of the house. It is important to note that the range will be from $10 to $50 per hour. This is the daily rate for laundry cleaning, carpet cleaning, and general house cleaning. On the other hand, the monthly rate will range from $1000 to $3000 inclusive of maid services or lawn mowing services. Families that require both services will part with an average of $2000 per month.
Place
The business will be situated in New York City. However, the office space will not be within the central business district. This is due to the fact that the rent in this region is expensive and in an attempt to cut down costs, the management has to consider acquiring more affordable office space. It is important to note that clients do not have to go to the physical office in order to get services. The company will have an active website and, as mentioned earlier, a mobile application.
Promotion
The company will use both traditional and digital approaches to promote the business. Traditional promotion will entail television and radio spots with newspaper advertisements as well. Billboards will also be used to target the mass market. Nevertheless, digital advertising will be the main approach to promotion that will be used.
Growth and Expansion Potential
Currently, the company will operate primarily from one place. It is expected that the firm will be able to expand within two years with current projections. There are two main reasons for this assumption. The first is that the corporation is expected to start earning profit in the second year of operation. This means that the company will have enough money to expand only after the second year. It is critical that the management not take any loans for expansion until the money that was acquired for starting the corporation has either been finalized or are near completion. A full second year of profits will ensure this is possible. Second, fast expansion before fully understanding the business can be disastrous. It is expected that within two years, the management will have had ample time to market their brand and create a demand of the same within the target audience. This will make penetrating other regions that much easier.
Operations Plan
Suppliers
Smooth Residential Cleaning Services Limited will have several suppliers, including detergent and machine contractors. These will be the main dealers of the firm as their equipment and products are used daily. It is essential that the company work with the suppliers that are not only reliable but also offer quality products and services. Critically, the detergents that will be used by the company are environmentally friendly. There are two elements that have to be considered when thinking about the environment and the soaps that will be used. The first is the process in which the detergents are made. Suppliers will have to agree to use methods that do not lead to degradation of the environment to manufacture detergents. This is critical as it synchronizes well with the values that the company holds. Second, the firm itself will train the staff to ensure that they protect the environment even as they use these detergents. This means that both the cleaning processes and the disposal methods have to be environmentally friendly.
Resources
The physical store will be one of the resources that the company will have. It is expected that the store will not only be at a valuable spot in regards to real estate but will also be affordable. Further, a critical resource for the business will be the staff. There are two main elements that will make the workers more appreciated. The first is that all identified employees will be qualified for their jobs. Second, they will be trained on a frequent basis on how to enhance quality and also enhance consumer experiences. It is important to note that the staff will be the direct link between the clients and the company; therefore, they have to act as ambassadors of the firm (Mahroum & Al-Saleh, 2016). It is prudent to note that they are the most important resource the company will have. Other assets include equipment that will be bought.
Management Team
The management team will be made of the two founders of the company and four directors. The four directors will handle finance, operations, human resources, and marketing. Finance, human resources, and marketing are critical support services that have to be aligned to the core business of the company. Further, the company will also have a board that will guide the founders in order to make accountable, transparent, and profitable decisions. There will also be an external auditor who will be contracted quarterly.
Staff Roles
The bulk percentage of the staff population will be cleaners. They will be hired on merit, with all being on a contractual full-time basis. It is important to note that there will be a gender balance in the staff population with both men and women. Critically, babysitters and maids will be engaged on a part-time basis due to the fact that these services are not core to the firm.
Feedback and Complaint Policy
The company will have comprehensive feedback and complaint policy. There are numerous companies that do not take feedback seriously. This is often not discouraged due to the fact that the clients often feel ignored when their views are not appreciated. The scholars explain that consumer feedback does not have to be incorporated fully but should be considered, especially in regards to enhancing consumer journeys.
Legal Form and Company Structure
Smooth Residential Cleaning Services Limited will employ the use of a legal form of a partnership trader. This ensures that all the organizational liabilities and responsibilities are determined by the two founders. Agreeably, start-ups are often encouraged to get a sole trader license. However, due to the magnitude of the business, a partnership is best suited for the company. The fact that the two founders share liability also makes it easier and more secure to get funding and loans for the business. The company will be considered a small to medium firm. Due to the strict nature of the hierarchical structure, the firm will have a flexible organizational structure that allows full interaction between all staff members. The process of decision-making will also be decentralized in order to reduce the amount of time needed for the same.
Finance
Costs
The company will need start-up capital of $30,000. The money will be used for attaining licenses, getting office space, creating a website and mobile application, and initial marketing. It is important to note that the office space will be leased per annum in order to save on costs. A significant amount of the proposed start-up capital will be taken as a loan from the bank. This will amount to $20,000. The rest of the money will be contributed by the two founding partners equally at $5000 each.
Financial Projections: Balance Sheet
Appendix 1 indicates the total assets and liabilities vis-à-vis the company’s worth. It is important to note that the company will have more in terms of assets by the end of year two due to the offsetting of loans within the same year. Critically, the company will also grow its assets within the second year due to an expected increase in clients.
Risk
The main risk the company will face is high staff turnover. This is due to the fact that a significant number of the staff will use the opportunity as a stepping stone for their eventual careers. It is also expected that a significant percentage will be youth who will either be between jobs or in college continuing with their studies. One of the ways to mitigate the risk is to ensure the personnel is well compensated for their efforts. Additionally, as mentioned previously, the staff have to be well trained so that they provide quality work, which will lead to good feedback. Further, the risk can be mitigated by having a positive and enabling work environment that supports the goals of the staff.
Exit Strategy
Despite the fact that the management expects the business to perform well and to be profitable by year two, there is a possibility that this might not be the case. In the unfortunate instance that the company fails to record profit, the partnership will be abandoned. To recoup the money used and repay back the loan, the management will sell the company to a willing partner. If this is not tenable, the firm will sell all its assets in order to pay back the loan. It is important to note that there is also an exit strategy for the two founding partners. This will happen after the company has become profitable. A new CEO will be appointed, with the founding partners joining the board of directors. However, it is important to note that the founders will not have monotony of power due to the fact that this can lead to biasness, which can affect the company’s bottom line.
Key Milestones
- The first key milestone is the running operation of the business, including setting up the office, launching the website and the mobile application
- The company’s first client per every category of service offered will be perceived as the second milestone achieved.
- The third milestone will be breaking even, which is expected to happen by the end of year one.
- Last but not least, the fourth milestone will be the recording of profit by the end of year two.
Reference
Mahroum, S. & Al-Saleh, Y. (2016). Economic diversification policies in natural resource rich economies. Routledge.
Appendix
Table 1: Balance Sheet