CHAPTER 5-: This is the fifth chapter of “The Complete Guide to Starting a Cleaning Business.” Your job as the proud owner of a cleaning service company is to ensure that the homes and workplaces of your clients are kept clean, neat and tidy at all times so that living and working conditions are not compromised in any manner, shape or form.
However, did you every stop to think about how you are going to ensure the continued existence and success of your precious cleaning business when faced with unexpected and unwelcome calamity? If a cat has 9 lives, then a business built on the sweat, tears and blood of hard working entrepreneur like yourself deserves to have a few at least.
After you get your business legalized and have its finances taken care of through a dedicated bank account, it is time for you to contemplate ways of dealing with inconvenient circumstances that you are likely to face once your business is up and running. It is at this junction in time that you need to seriously consider the option of acquiring some much needed insurance for your business, before it’s a little too late.
Before you can start devising plans to hire competent staff or prepare a marketing agenda for your cleaning services or establish a “fan following” of sorts, you need to focus on getting the insurance part of your business done and dusted. Insuring your company is one of the most important aspects of running a successful business. Insurance may not seem all that significant in the eyes of a novice entrepreneur such as yourself, who may be more interested in finding new ways to maximize revenue and earn a bigger chunk of the profit. However, if you ask any smart and successful businessperson about the importance of insurance, they will tell you that a business without insurance is destined for failure.
As an entrepreneur, your attention should not only be concentrated on techniques and strategies to enhance the reputation, the revenue and the repertoire of your company. Sometimes, planning to ensure the continued existence of your company, or in other words, planning to ensure the survival of your business in the incredibly competitive cleaning industry is the key to the development of your business. Insurance is not merely a formality, but rather a necessity that you simply cannot do without.
Why You Need Insurance Coverage for your Cleaning Business?
The number of business insurances and forms of coverage is nearly uncountable for the common man. However, all the various kinds of insurance and coverage policies have one common agenda, and that is to protect the business from harm. This includes protecting the cash flow and its intrinsic value from unforeseen disastrous losses. What exactly do these losses refer to?
Most beginner entrepreneurs make the mistake of assuming that insurance is only needed when the business is at risk of being exposed to natural or man-made disasters or accidents that can reduce the estate of the business into ruins. To be absolutely clear, the concept of disastrous losses mentioned above is far broader than accidents and “natural” disasters, and can refer to a number of things that have the potential to obstruct the fluidity of your business operations.
These losses that are being talked about could be anything from physical damage to legal liability to employee theft to intellectual property theft. You can insure your business to protect your company unlike interruptions to your regular operations resulting from Government or third party interventions. As you can quite clearly see, a fire breaking out in your office premises is not the only time that you need to ring your insurance manager.
The diverse nature of these losses may compel you to think that insurance policies are complicated and difficult to comprehend, but it does not take a rocket scientist to know the ins and outs of insurance and how to make the best use of coverage policies that are made available to you as the entrepreneur of a cleaning service business. The basic idea behind insuring your business is to ensure the long term stability of your company and reduce the risk of bankruptcy which is the nightmare of any entrepreneur, let alone one who is involved in the cleaning service business.
Does business insurance only help to prepare you for the worst case scenarios? That is not always the case. One of the other major reasons why entrepreneurs feel the need to have their businesses insured is to protect the company’s positive assets. This can include pivotal employees within your business without whom the operations will fall apart. In certain cases, entrepreneurs resort to insurance plans in order to execute their exit or succession strategies. It is quite clear that the possibilities with insurance are quite literally endless. Once again, it is important to understand that no matter what your intention is behind getting the insurance, the policy is most likely to benefit your business rather than cause it to decline.
What Type of Insurance Policy Do You Need for Your Cleaning Business?
There are numerous kinds of business insurances that you can consider for your cleaning business. Given the gigantic variety in the field of insurance, it is of utmost importance that you sit down with your business partners (if there are any) and discuss the potential risks of your cleaning service business. This discussion should be similar to an assessment session where you pin point the chinks in your business armour. If you believe that a particular area of your business is vulnerable to catastrophic losses, then it is wise to subscribe to an insurance policy for that area. The onus is on you to find out which insurance coverage serves you and your business the best.
Property & Equipment Insurance
When thinking about the kind of insurance coverage you should be applying for, the first thing that you need to take into account is the security of your company property. Since you will be starting a cleaning service business, your property will include a wide selection of equipments, tools and products that are built for the exclusive purpose of indoor and outdoor estate maintenance. Insuring your property and equipment is not just a recommendation, but rather a business commandment.
It is also important to note that the insurance of property and equipment must always be done at replacement cost. Property and equipment can together be labelled as inventory. Insuring against inventory loss or damage is obligatory for entrepreneurs involved in the cleaning industry simply because of the vast variety of inventory in concern and the frequency with which they are used.
For example, if you are contracted to clean an enormous commercial complex, then you can imagine the number of bottles of stain remover that you will need on a daily basis. In other words, you will need a certain place to store this incredible amount of stain removers. Assuming that stain remover plastic bottles are inflammable, what would be your course of action if a fire broke out and reduced these precious plastic bottles to ashes? If you had an insurance coverage on stain removers, then you could quite easily reverse the incurred loss and prevent your business from tripping over a stumbling block caused by the shortage of stain removers.
Liability insurance is another coverage that you should be well informed about. Getting this insurance could turn out to be a game changer for your business in the long run. The purpose of this insurance coverage is to protect you from litigation that can be based on a number of different issues.
General Liability Insurance
Standard liability insurance for example is particularly indispensable for a cleaning service business like that one that you are about to initiate. In a cleaning business, your clients entrust you with their property. You will be sending out your employees to the homes and workplaces of your clients in order to have those places cleaned up as per the expectations of your customers. In the process of meeting the high expectations set by your clients, your employees may accidentally cause damage to property belonging to your client. In certain cases, exposed cleaning chemicals that have been mistakenly left behind after a session of cleaning can turn out to be a health hazard for the people inside the offices or homes that you have been assigned to clean. When you acquire standard liability insurance, you are protected from any damage or injuries sustained by others, who may go on to point the finger of blame towards your business.
Once again, it is important to remember that you do not necessarily have to cause intentional harm in order to be legally held responsible for the damages or injuries sustained. To prevent such accidents from turning into bitter confrontations between the client and the service provider, it is imperative that you consider getting standard liability insurance for your cleaning company.
Product Liability Insurance
A product liability insurance coverage is a more specific version of the standard liability insurance that has been discussed above. As the name suggests, product liability insurance comes into play when a particular product from your company’s portfolio causes harm, damage or injury to the client or anyone else in the vicinity of the products. Another insurance coverage that is quite similar to product liability insurance is errors and omissions insurance. This insurance coverage is tailor made for any service-based business such as the cleaning business that you hope to form in the days to come.
The reason for that is because the insurance provides your business protection from liability that stems from your business activities. A very simple example of why you may need this insurance would be a janitor, under your payroll, unintentionally injuring a staff member of the office that your company is responsible for cleaning. Often times, janitors can leave the floor wet without notifying the passersby, which ends up badly for the first person to step foot on the wet floor. If the unfortunate victim of the accident breaks a hip bone or two, then he or she will not be able to sue your company for hundreds and thousands of dollars if you have errors and omissions insurance in place.
Crime & Fidelity Insurance
Crime and fidelity insurance coverage is something worth considering since you will be involved in the cleaning business. This kind of insurance concerns most businesses that are service based. This is to say that service based business rely more on the performance of their employees rather than the performance of their equipments in the inventory.
As an entrepreneur, you have to place a great amount of faith in each and every single one of your employee, especially those who are working in the field i.e. inside the homes and offices of your clients. There could always be a case of you ending up with a bad apple in your service team, which leads to an unexpected and unfortunate case of theft.
For example, an employee of yours could steal any property from inside the homes and offices of your clients. Under such dire circumstances, it becomes a necessity for you to have crime and fidelity insurance coverage to ensure that your business does not go bankrupt if your client or the victim of the crime decides to sue your company for every penny that it is worth.
There are more ways to incur the wrath of the client than simply damaging and stealing their property or leaving their staff or family injured. Sometimes, an act as simple as misplacing the keys of your client can turn out to be a threatening situation for your company. In that case, you can always resort to lost key insurance coverage to protect yourself from the resentment of the client.
Getting Bonded for a Cleaning Business
It is now becoming a norm that before large corporations contract their cleaning tasks to your cleaning company, they would want to know if your cleaning business is bonded. It is part of the requirements that you must meet if you want to do cleaning business on a higher level that will fetch you pretty good cash.
Bonding your cleaning business is a way of protecting the business against loss which may result in the process of carrying out your job for a client. The fact that sometimes you are expected to clean an office facility before employees resume in an organization or after closing hours, makes it wise to bond your cleaning business.
Bonding is just like insurance but you may be required to pay little higher that the premium are supposed to in a normal insurance cover. Simply put, bonding is a way of gaining credibility for your cleaning business; it is a way to show your clients that you are truly ready to business on a larger scale. Now let us quickly consider the steps to follow if you want to get bonded for a cleaning business;
a. Make Sure Your Cleaning Business is Registered
Now, you might want to ask if registering your cleaning business is part of the process of getting it bonded. Yes you can not proceed to discuss about getting your cleaning business bonded if it is not registered. No insurance company would take you seriously if you visit them to inform them that you want to get your cleaning business bonded by their organization if the company is no registered in the first place. So, what is expected of you to do if you want to get your cleaning business bonded is to first register it with the corporate affairs commissions of your country.
b. Obtain the Required Business License
In some states in the US or some countries of the world, you would require a special business license before you can be allowed to legally run a commercial cleaning business. You can visit your local authority to know the business license that you need and how you can obtain it. The truth is that, no insurance company would want to bond your business once they know that you don’t even have the business license to practice in the jurisdiction your business is located.
c. Search Online for Insurance Companies that Sells Bonds
There are various insurance companies that offer this extra service to their clients especially cleaning businesses because of the risk involved when handling a job for a client that will required them working in odd hours. When you search online, you will find loads of insurance company that offer this service. What is expected of you to do is to make a list of the ones that are close to you including their contact address and number.
d. Compare Contrast and Make Your Choice
Once you are able to make a list of the insurance companies that offer this service, what is expected of you to do is to compare and contrast their prices and services in order for you to be able to make a wise business decision that will be to your favor. No doubt when you study the various options you have in front of you, it will give you the opportunity to choose the right company and package for your cleaning business.
e. Pay for Your Bond and Obtain Your Certificate
The amount that you are expected to pay as premium for your bond is between 0.75% and 3% of the face value of the bond. For example, if you buy a bond worth 50,000 USD for your cleaning company, it means that you will pay an annual premium of 150 USD. So once you have made up your mind on the insurance company to do business with and the amount of bond to purchase for your cleaning company, then you should go ahead to complete all the paper work, make your payment and then wait till your certificate is issued.
Once you receive your certificate, it means that you are ready to do cleaning business with larger corporations and you can favorably compete with established corporate cleaning companies in the cleaning industry of your country.
By now you may have realized that a ton of things can and will go wrong when you are running a cleaning service business. As mentioned before, getting your cleaning business insured is not some sort of a professional obligation that will help your business come off as more professional. It is instead a way of securing lifelines for your thriving business when catastrophe strikes.
No matter how much you try, you can never quite prepare for oncoming disasters. Therefore, instead of embracing these calamities with open hands and letting the success of your business slip through the fingers of your hands, get insurance coverage on your business. Acquiring insurance can be deemed as a sure fire way to ensuring the survival of your cleaning company in the industry, if not ensuring its success.