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Key Takeaways
- The initial fixed monthly overhead required to sustain a cleaning company operation in 2026 begins near $29,700, excluding variable expenditures.
- Variable costs are exceptionally high, totaling 255% of revenue in the first year, driven heavily by cleaning supplies (70%) and customer acquisition (100%).
- Payroll stands out as the largest single recurring expense, consuming approximately $25,000 of the initial monthly budget and demanding close utilization management.
- Given the projected Year 1 EBITDA loss of $234,000, the business requires a 22-month operational runway to achieve breakeven, projected for October 2027.
Running Cost 1 : Payroll and Staff Wages
Initial Payroll Load
Your initial 2026 payroll commitment is fixed around $25,000 monthly, supporting 65 FTEs comprising both cleaning crews and necessary overhead management. This represents your largest fixed operating expense right out of the gate, so scaling revenue must outpace this baseline quickly.
Staffing Cost Basis
This $25,000 estimate sets the baseline for 2026 staffing, covering both the boots-on-the-ground cleaning personnel and the administrative/supervisory roles needed to manage 65 full-time equivalents (FTEs). To validate this, you need firm quotes on average blended hourly rates for cleaners versus salaried rates for managers, plus the employer burden rate (taxes, benefits). This cost anchors your entire operational runway.
- Inputs: FTE headcount, blended hourly wage.
- Budget Fit: Largest fixed operating cost.
- Risk: Underestimating employer payroll taxes.
Controlling Staff Spend
Managing 65 roles means scheduling efficiency is paramount; every idle hour costs you real money. Focus on keeping the ratio of cleaning staff to management lean, as management salaries inflate fixed costs quickly. Avoid offering premium benefits too early, which can push the actual loaded cost per FTE above initial estimates.
- Track utilization rates daily.
- Standardize management tiers.
- Control overtime authorization strictly.
Role Mix Impact
The mix between lower-paid cleaning staff and higher-paid management dictates your true cost of service delivery. If management is too heavy, your gross margin shrinks before supplies are even factored in. Defintely map out the 65 FTEs into roles now to understand the true average loaded wage.
Running Cost 2 : Cleaning Supplies & Equipment
COGS Dominance
Your supplies and maintenance costs are currently projected to consume 90% of revenue in 2026. This high Cost of Goods Sold (COGS) means profitability hinges entirely on negotiating better supplier rates or significantly increasing average service value fast. This initial margin structure is very tight.
Inputs for Supply Cost
This 90% COGS figure covers all consumable cleaning products and necessary equipment maintenance. To estimate this accurately, you need firm quotes for bulk purchase agreements and a clear schedule for replacing high-wear items like floor buffers. This cost eats up nearly all gross profit before fixed overhead hits.
- Units of supplies used per job
- Bulk purchase discounts secured
- Scheduled equipment replacement cycle
Cutting Supply Spend
Reducing 90% COGS requires aggressive procurement strategy, not just minor tweaks. Focus on switching from retail-priced products to commercial-grade bulk sourcing immediately upon launch. If you can cut this to 75% by year-end, that 15 point swing dramatically improves cash flow.
- Negotiate 30-day payment terms
- Centralize purchasing volume now
- Audit chemical dilution ratios
Operational Risk
Since supplies are 90% of revenue, every missed service call or inefficient route planning directly impacts your bottom line severely. With payroll at $25,000/month in 2026, you need near-perfect utilization to cover variable supply costs and fixed payroll simultaneously. That’s a defintely tight operational window.
Running Cost 3 : Customer Acquisition Cost (CAC)
CAC Burn Rate
Acquiring customers costs 100% of revenue right now, which is unsustainable for growth. The goal is to get the Customer Acquisition Cost (CAC) down to $150 quickly. This means every dollar earned in Year 1 is immediately spent marketing to secure that new client.
Estimating Customer Cost
CAC is total marketing spend divided by new customers gained. For this cleaning service, it includes digital ads and local outreach needed to secure one recurring client. If you spend $15,000 marketing and get 100 new clients, your CAC is $150. That’s the target for Year 1.
- Spend divided by new clients
- Target is $150 first year
- Includes all marketing channels
Managing Acquisition Spend
Burning 100% of revenue on marketing means you have zero gross margin to cover fixed costs like payroll. Focus on increasing customer lifetime value (LTV) defintely. Ask existing happy clients for referrals; this lowers the marginal CAC significantly, which is critical for profitability.
- Prioritize LTV over quick sales
- Referrals lower marginal CAC
- Avoid overspending on untested channels
Margin Reality Check
Since payroll alone is $25,000/month for 65 staff, spending 100% of revenue on acquisition guarantees immediate operating losses. You must prove the $150 CAC target is achievable before scaling marketing spend beyond initial small tests.
Running Cost 4 : Administrative Office Rent
Fixed Rent Baseline
This fixed cost is $1,500 per month, essential for administrative work and storing cleaning equipment. It sits outside variable costs like supplies and payroll, meaning it must be covered regardless of monthly revenue volume. This is pure overhead you pay even if you land zero jobs.
Rent Inputs Defined
The $1,500 monthly rent is a necessary fixed overhead for administrative functions and equipment storage. This cost is separate from the $25,000 starting payroll budget for 65 FTEs. To budget this accurately, you need a signed lease agreement detailing the monthly rate and terms, ensuring it covers necessary operational space.
- Lease agreement term length.
- Square footage required for admin staff.
- Storage capacity for inventory/tools.
Cutting Overhead
Managing this fixed cost means challenging the need for dedicated physical space early on. Many service businesses delay renting until they hit a critical mass of 15+ field staff. If admin work is remote, you might defintely eliminate this cost entirely until growth demands it.
- Consider shared or co-working spaces.
- Delay signing a lease past month 6.
- Use home offices for initial management team.
Overhead Breakeven Impact
Fixed rent of $1,500 must be covered before variable costs like supplies (90% of revenue) or high CAC (100% of revenue initially) become sustainable. This rent, plus the $500 insurance and $1,050 tech fees, forms your baseline monthly burn before paying staff wages.
Running Cost 5 : Insurance and Bonding
Insurance Necessity
Insurance and bonding is a mandatory fixed operating expense designed to shield the business from high-cost operational failures. Expect to budget exactly $500 per month for this coverage. This cost is essential for client trust and compliance before servicing the first residential or commercial job.
Fixed Cost Breakdown
This $500 monthly spend covers general liability and bonding, protecting against property damage or employee mistakes on client sites. Since it's fixed, it must be covered regardless of revenue volume. Here’s the quick math: this is $6,000 annually, which must be factored into your initial cash reserves.
- Covers property damage claims.
- Required for commercial contracts.
- Fixed cost, not tied to revenue.
Managing Insurance Spend
Don't just accept the first quote; shop around aggressively for equivalent coverage limits. A common mistake is underinsuring to save a few dollars monthly, which invites catastrophic risk. If you use independent contractors instead of FTEs, your required coverage structure changes significantly.
- Get three competitive quotes.
- Review deductibles carefully.
- Bundle policies if possible.
Risk Mitigation
Without proof of coverage, you cannot secure contracts with professional offices or larger residential management groups. This $500 fixed cost is effectively a prerequisite for market entry, not an optional budget line item. It directly reduces your exposure to uninsured losses, which can bankrupt a new operation fast.
Running Cost 6 : Technology and Professional Fees
Fixed Tech & Legal Spend
You've got $1,050 locked in monthly for essential tech and compliance overhead. This fixed spend covers necessary software subscriptions, outsourced accounting, and legal services, defintely ensuring you stay operational and compliant. It's the baseline cost required to run a professional service organization without immediate regulatory risk.
Cost Inputs
This $1,050 covers core operational stability. It includes software for scheduling/CRM, monthly bookkeeping fees, and access to legal counsel for contract reviews. To budget this accurately, you need quotes for the chosen accounting software package and the retainer amount for your corporate lawyer, not just estimates. If you skip this, compliance risk skyrockets.
- CRM/Scheduling software tier cost.
- Monthly accountant retainer fee.
- Annual legal review allocation.
Managing Fees
You can't skimp on legal or accounting, but software sprawl is common. Audit your tech stack every six months. Are you using all features of that $150/month scheduling platform? Downgrade tiers if usage drops below 75% capacity. Consolidate services where possible; sometimes a bundled service is cheaper than three separate subscriptions.
- Audit software usage quarterly.
- Negotiate annual software renewals.
- Bundle accounting and payroll services.
Overhead Priority
Treat this $1,050 as foundational fixed overhead, similar to your $1,500 office rent. It needs to be covered before payroll expenses hit. If your gross margin is tight, every dollar spent here must directly enable revenue capture or prevent costly regulatory fines. This is the cost of being professional.
Running Cost 7 : Vehicle and Travel Expenses
Vehicle Cost Drag
Vehicle costs hit hard because travel and fuel are a 40% variable cost against revenue. You also carry a fixed $800 monthly lease payment for the administrative car, regardless of how much work you do. This means every dollar earned must cover a significant operational drag before hitting gross profit.
Estimating Travel Spend
This category covers getting staff to jobs and the overhead for the admin vehicle. You need monthly revenue projections to estimate the 40% variable portion. The $800 lease is a fixed overhead cost that must be covered every month alongside rent and insurance. Here’s the quick math: if revenue hits $50k, travel is $20k.
- Need monthly revenue forecast.
- Track fuel receipts closely.
- Lease payment is fixed at $800.
Controlling Mileage Burn
Since fuel is 40% variable, route density is your biggest lever; inefficient routes burn cash fast. Avoid letting the administrative vehicle sit idle, as the $800 lease accrues anyway. Optimize scheduling software to cut drive time between jobs, which directly lowers that 40% spend. What this estimate hides is the cost of underutilized staff waiting for transport.
- Maximize jobs per service zip code.
- Use efficient routing software.
- Negotiate fleet fuel cards rates.
Benchmark Check
That 40% variable expense is extremely high; most service businesses aim for direct costs (labor plus COGS) to be under 65% of revenue. If you can't reduce that travel percentage through better geo-targeting, your pricing structure is defintely too low to support the required margin.
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Frequently Asked Questions
Initial monthly fixed costs are roughly $29,700, plus variable costs totaling 255% of revenue The business requires 22 months to reach breakeven (Oct-27);