Outlook for Commercial Cleaning Services
As one of Australia's largest industries in terms of number of businesses, recent revenue performance has been strong meeting growing demand. We examine the outlook for firms providing cleaning for specialised commercial and industrial buildings together with general offices, factories and homes.
Commercial Cleaning Services have been been booming. Over 30,000 enterprises offer a range of services. Interior building cleaning makes up nearly 40% of the industry, with washroom services a further 17%. Other segments include exterior cleaning, industrial cleaning, roads and residential.
Business demand for cleaning has been supported by both strong business confidence and the trend of outsourcing services. Companies have also expanded beyond traditional offices and factories into cleaning domestic homes and also providing a wider range of services such as catering, maintenance and security. Smaller specialist companies have also evolved for niche markets such as medical or child care premises.
With low barriers to entry and an unskilled labour force, competition has increased driving down costs and margins. Despite this profit is expected to be around 13% for this 2019/20 tax year. The increased use of casual and part-time staff has created challenges with high turnover. The chance to obtain a long term contract attracts companies to the Government segment. Growth here includes education, prison and health care. The trend is, however, to reduce contracts elsewhere to annual negotiations.
How can Commercial Cleaning Services continue to thrive going forward?
- Showing excellent tendering skills with the right costs and service standards
- Great client liaison with communication of service levels and the ability to negotiate
- Expansion of services offering a choice of more expensive, value-added services, such as major annual cleans, or from partnerships with other providers
Business skills for the self-employed to maximise time and business opportunities
- Relationship building with property managers, developers and real estate agents to gain more business
- Becoming bigger to create economies of scale. This can reduce marginal costs and increase revenue and profit
The outlook is forecast to be good with growth expected for revenue, employment and the number of businesses. Overall there is a predicted 2.6% annual increase through to 2025. With such a positive outlook, now is a good time to review your business finances.
* Source: IBISworld Commercial Cleaning Services
How can Classic Funding Group help?
Delivery of some specialist services requires specific cleaning equipment such as road sweepers or safety hoists for outside cleaning. Ensuring these are in good condition and the most efficient helps offset any downtime. Increasingly robotic equipment will start to appear which will further enable labour costs to be reduced.
For many businesses some commercial vehicles may be required. A simple van for the mobile self employed to larger operators with a range of garbage or other specialist vehicles.