Janitorial Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 57,000 janitorial service providers in the US clean building interiors, windows, and the interiors of transportation equipment, such as aircrafts. Specialized services include disaster recovery, medical cleaning, and mold clean up. Some companies provide outdoor services, such as snow removal and lawn maintenance. Non-residential customers, such as those in institutional, office, and commercial buildings, account for 80% of industry revenue.

Immigration Laws

Most janitorial jobs do not require workers with English-speaking skills, and tend to attract both legal and illegal immigrants.

Green Cleaning

Growing concern with the environment and sustainability issues has led to increased demand for the use of eco-friendly cleaning products and methods.

Industry size & Structure

The average janitorial services provider operates out of a single location, employs about 17-18 workers, and generates $1 million annually.

    • The janitorial services industry consists of about 57,000 companies that employ over 1 million workers and generate about $59 billion annually.
    • The industry is highly fragmented; the top 50 firms account for 28% of industry sales.
    • The industry includes national and regional companies, franchises, and independent operators.
    • Large companies include divisions of ABM and ServiceMaster (Merry Maids).
    • Non-residential customers, such as those in institutional, office, and commercial buildings, account for 80% of industry revenue.
                                Industry Forecast
                                Janitorial Services Industry Growth

                                Coronavirus Update

                                Nov 17, 2021 - More Offices Reopen
                                • Cleaning services providers saw continued growth in the third quarter 2021, according to the Home Service Economic Report released in November 2021 by Jobber, a job tracking and customer management software firm. New cleaning work scheduled was up in Q3 2021, led by a 21% year-over-year increase in contract jobs. One-off jobs were up 1%. Median revenue for cleaning firms in September 2021 was up substantially compared to the same month a year earlier, mostly driven by larger contract sizes.
                                • The pandemic raised awareness of cleaning budgets. Sanitizing surfaces became much more of a priority. However, additional guidance regarding COVID-19 issued in early April 2021 by the Centers for Disease Control and Prevention (CDC) suggests the virus primarily spreads through the air. The agency said, “It is possible for people to be infected through contact with contaminated surfaces or objects (fomites), but the risk is generally considered to be low.” If reopening offices and other business require additional cleaning tasks, more frequent cleaning, or sanitizing of surfaces, pricing adjustments will likely be necessary, according to the Building Service Contractors Association International (BSCAI). The BSCAI recommends cleaning firms be as specific as possible in contracts to describe services requirements and products used.
                                • As offices reopen, tech companies are introducing cleaning scheduling apps to help office managers gather bids from qualified cleaning firms. The Onedesk Office Cleaning Platform allows cleaning firms to do a virtual walkthrough of an office space and bid on the job without having to visit the location. Carpet and upholstery cleaning firms may seek to become pre-vetted vendors for such apps.
                                • Janitorial and restoration firms added disinfecting services. Some use disinfecting fogs and mists that can be efficiently applied with no wiping. Such services could become long-term revenue streams if consumers come to expect commercial spaces to be regularly disinfected. However, as part of the CDC’s updated surface disinfecting guidelines released in April 2021, The CDC concluded “some types of disinfection applications, particularly those including fogging or misting, are neither safe nor effective for inactivating the virus unless properly used.”
                                • Industry insiders suggest companies that offer coronavirus-related cleaning and disinfecting services check to ensure their insurance policies cover them in the event of a COVID-19-related claim by a customer or employee. Some cleaning and restoration companies that are performing COVID-19 decontamination services found their insurance doesn’t provide adequate coverage. Some insurance companies have created new biohazard coverage or added it to existing policies.
                                • Residential cleaning firms need to reassure customers that cleaning practices and equipment are safe to bring into their homes. Firms are encouraged to outline infection prevention in their proposals, assess their equipment performance, look professional, be transparent with clients, communicate cleaning protocols, and re-brand with language around infection prevention.
                                • Janitorial firms that saw business drop off during the pandemic may have sought relief via the reauthorization of the Paycheck Protection Program (PPP). The PPP was revived with the December passage of the $900 billion COVID-19 Economic Stimulus Relief Act. The legislation included $300 billion in funding for Small Business Administration (SBA) loans. The December round of PPP let eligible borrowers get a second draw loan. It also simplified loan forgiveness for loans under $150,000 and makes forgiven loans tax deductible. In March 2021, President Biden signed the $1.9 trillion American Rescue Plan Act which included an additional $7.25 billion for PPP. The PPP was set to wind down on May 31, but the program ran out of money on May 11, 2021 and stopped accepting most new applications, according to The New York Times. However, in September 2021, the SBA announced several modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program which could help janitorial firms that are still struggling. Changes to the EIDL include raising the loan cap from $500,000 to $2 million, and expanding eligible expenses to include any normal operating expense and working capital. EIDL loan payments originally had to begin being repaid 18 months after origination; the changes extend repayment requirements to 24 months.
                                • Industry insiders suggest prices for some types of cleaning products and equipment may be rising due to higher prices for plastic resins. Cleaning supplies and equipment that could be affected by resin shortages and higher prices include trash liners and trash cans, plastic spray bottles and other cleaning product containers, and cleaning equipment encased in plastic housings. US producer prices for plastics materials and resins in October were 40% higher than they were a year earlier. Inflation may also increase janitorial firms’ costs for other inputs; producer prices for soap and cleaning compounds rose 8.3% year-over-year in October.
                                • The rapid spread of the Delta variant of the coronavirus in the US during the summer complicated many firms’ plans to welcome workers back to offices and likely reduced demand for office janitorial work. However, infection rates began to slow in mid-September and more companies are bringing employees back, according to The New York Times. The share of employed people who worked from home at some point during the month hit a high in May at 35%, according to the Bureau of Labor Statistics. In October, the percentage fell to 11%, marking the lowest level since the pandemic began.
                                • The US labor shortage could be a demand driver for commercial cleaning services, including janitorial work. Industries that have been hard-hit by worker shortages – including accommodation and food services – may look to outsource cleaning duties that had previously been performed by in-house staff, according to some cleaning industry insiders. Economists suggest the labor shortage is due to a combination of factors including older workers opting for early retirement at the onset of the pandemic, high household savings rates, reduced immigration during the pandemic, and worker demands for more flexible working conditions. As of September 2021, there were 0.7 unemployed persons for every US job opening. In April 2020 there were five unemployed persons for every job opening.
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