Is it Worth Investing in a UK Cleaning Enterprise in 2023?
The pandemic had a devastating effect on the majority of businesses and continues to cause many companies problems today. Investment during the two initial years of Covid saw extremes in how individuals invested. Certain trends leading up to 2020 saw rapid acceleration, while others slowed considerably.
Of course, a select few companies grew even bigger during the pandemic; the so-called Mega 25 for instance. This group of 25 of the world’s biggest companies saw their collective value grow by £4.8 trillion in the first 12 months of the pandemic.
The companies in the Mega 25 include Amazon, Tencent, PayPal, and Zoom. As remote working kicked in, and lockdowns began, businesses such as these saw increased growth. For example, Zoom added £77 billion to its value in the first year of Covid, largely due to remote business meetings.
Another industry that became in demand was the cleaning and hygiene sector. But, as the pandemic dies away, and normality returns, will cleaning services be in high demand, and do they warrant a look by investors?
Who uses cleaning services in the UK today?
The cleaning industry in the UK is broad and covers a wide area. The sector covers commercial cleaning, general building cleaning, and residential cleaners used for homes. Cleaners working in hospitals require different training to deal with hazardous waste and may specialise in specific departments.
Landlords and tenants
Residential or house cleaning itself is broken down into many services. A landlord or an occupier may use end of tenancy cleaners, or they might use a service to clean carpets or upholstery.
Business owners
Business owners need cleaners for warehouses, factories, and offices. All of these areas require different kinds of cleaning, so the services are often outsourced to experienced firms.
Homeowners
A one-off clean is another popular service that individuals can use. Private cleaning services can be used to perform a spring clean, or a one-off deep clean in a home.
How big is the UK cleaning sector?
To understand whether a cleaning business could be successful and grow, a look at the current state of this market is necessary.
Around 2016, the cleaning industry was looking strong and growing, however, Brexit dealt the market a blow. Investors became wary as uncertainty crept in over how Brexit would affect revenues, and then the pandemic started.
In terms of size, nearly 1 million people are working in the cleaning industry. This figure rises to about 1.5 million once other cleaning-related roles are included. A common statistic reported by the industry is that 5% of the UK workforce comes directly from this industry.
Should you invest in a cleaning business today?
Any investment comes with a risk, but the growth in 2022 is a serious factor to weigh up. During 2022, general building cleaning growth was 7.5%. As the UK returned to normal, the cleaning industry started to grow strongly once more.
Businesses and individuals are far more aware now of the importance of hygiene in the workplace since Covid, and more resources may be getting directed toward this area.
If you were to invest in a cleaning business, you may want to seriously look at the location you want to be based in. London and the South East of England make up a considerable amount of the cleaning market.
35 percent of the individuals who work in the cleaning sector do so in these areas. Some research would be vital to establish whether this area of the market is saturated or has room for more players.
Another factor to consider is if you wish to work in the commercial cleaning sector or the residential. There are already 450,000 people working in commercial cleaning, and an astonishing 50% of them work for just the top 1 percent of cleaning companies.
How can you invest in a cleaning enterprise?
The nature of cleaning businesses means that there are a number of ways to get involved with investing.
The easiest way is to start cleaning on your own or with another individual. The cleaning company, Mrs. Bucket, was started by an 18-year-old female with just a mop and bucket. It is now a multi-million-pound business.
Your options to get into the cleaning business include the following:
- Start as an individual
- Obtain a franchise
- Establish your own business
- Go into partnership
- Invest in an existing business
Owners always appreciate ways to save money in business growth and may welcome a partnership or an angel investor even. You could try to establish yourself with a new enterprise, or look at possible franchise options.
With the top 1% of cleaning companies being so dominant, franchising could make an attractive investment opportunity. Instead of having to establish yourself, you would have a strong brand behind you that lets you compete with bigger firms.
What kind of investment is needed to build a successful cleaning enterprise?
As you read above, one successful cleaning business was started with minimal investment, just the willingness to graft. However, most small businesses will require some form of cash investment.
Starting a small business in the UK
The majority of small businesses in the United Kingdom see an investment of £1,000 to £10,000, with many starting with much less than the upper level.
Franchising a cleaning business
Becoming involved in an existing franchise can lead to a bigger investment. Perhaps £10,000 to £35,000 will be needed to acquire a cleaning franchise today. But, many advantages come from franchising including reputation, training, equipment, and business advice.
It is vital that investment advice for entrepreneurs is sought out. Even the most experienced investors get burned, and the current economic climate is difficult.
Partnering or investing in an existing cleaning service
There is an extremely broad ballpark to cover for this type of investment. It will normally come down to how much you wish to invest against the possible ROI. Due diligence should be performed on the company’s past and projected performance, and business expansion plans.
Do you need prior experience in the cleaning industry?
When you use an established business such as Cleaner Cleaner you could reasonably expect that there will be experienced employees providing the services requested. Trying to establish a cleaning business with no understanding of the market could be foolhardy.
Hiring a talented team and manager should be a priority. But, if you have no experience at all in cleaning services, then becoming a partner or investing in an existing business may be a better option. You could bring other skills to an established firm that helps them to expand and increase profits.
The global cleaning industry is predicted to have a CAGR of over 6% up to 2030. This makes investment an interesting proposition. And if your skills lie in areas of marketing, for instance, setting up with a partner who knows the cleaning market could see a good ROI.
Summary
The cleaning industry has suffered some setbacks due to the exit from the European Union, and then Covid. However, it bounced back solidly in 2022, and now the future looks bright not just in the UK, but globally.
Homeowners and business owners use cleaners. For the latter, it is an essential service and one that very often requires outsourcing. This could make these kinds of services a worthy investment in 2023.