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Carpet and Upholstery Cleaning Services

Market Analysis Summary

The U.S. carpet and upholstery cleaning service sector was estimated at $5.3 billion in 2006 by Marketdata Enterprises. The market is broken into residential and commercial services. While only moderate growth is estimated for the next five years, the national market is highly competitive.

The initial market for Like New Carpet Cleaners is residential services in Fairfield County, CT, beginning with a five-mile radius of Danbury, CT. The population of Fairfield County is approximately 895,000 with 225,000 owner-occupied condos and homes. It is estimated that 40,000 of these owner-occupied homes and condos are within that five-mile radius. These 40,000 owners spend an estimated $4 million per year on carpet, upholstery, and other floor-cleaning services. For that reason, we have chosen this as our initial market.

Market Segmentation

Customers for this industry are broken into the following targets:
  • Residences (including individuals, families, and landlords)
  • Businesses (including small businesses, larger businesses, insurance companies, and commercial landlords)

Residences require a higher level of customer support, pay higher rates on average, and often include additional opportunities to sell related services to homeowners.

Businesses require less customer support and service, pay lower rates on average, and generally seek ongoing services which can repeat the same tasks without much room for upselling.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Large Homes 25% 10,000 12,500 15,625 19,531 24,414 25.00%
Medium Homes 25% 20,000 25,000 31,250 39,063 48,829 25.00%
Condos and Small Homes 25% 10,000 12,500 15,625 19,531 24,414 25.00%
Total 25.00% 40,000 50,000 62,500 78,125 97,657 25.00%

Target Market Segment Strategy

Like New Carpet Cleaners will focus on residential cleaning services, rather than businesses, because it believes this market is more likely to accept technological advances and Internet customer service. Like New has divided the market into these segments:

  • Large homes (over 5,000 square feet) - Generally have many rooms needing regular service as well as the need for upholstery and spot treatments. Service may require a full day of cleaning.
  • Medium homes (2000 to 5000 square feet) - Generally have a couple of rooms needing regular service and may require service as often or more often than large homes as each room is given more wear and tear by families. Service may require half a day (four hours) of cleaning.
  • Small homes and condos (under 2000 square feet) - Generally have at least one carpeted room requiring regular service. Service may often be completed in two hours or less.

Service Business Analysis

The carpet-cleaning business is characterized by multiple local businesses serving a town or a few towns, and some national franchises. Each town can have from ten to twenty businesses.

Cleaning services are generally managed out of a central office. Delivery vans are used to transport equipment and cleaning crews from the central office to customer homes.

Services are generally ordered by phone. For large homes, on-site consultations are given to develop a more accurate quote for cleaning service, rather than quoting a price site unseen. Some online ordering is done, but most small businesses rely on phone conversations to gather the information needed to quote a price to customers.

Competition and Buying Patterns

Marketdata Enterprises reports that the carpet and upholstery industry for the U.S. is comprised of 40,000 mostly small companies and that the industry is relatively mature. Although some large franchised organizations exist, the top ten franchises make up only 22% of the market. These top competitors include Sears, Stanley Steemer, Chem-Dry, ServiceMaster Clean, ServPro, Duraclean, Heaven’s Best, Rainbow Intl., MilliCare Commercial Carpet Care, and Professional Carpet Systems.

Customers choose between these competitors based on brand name, positive references from trusted sources (friends, family and colleagues, and customer-review websites, such as www.yelp.com), and price. Most cleaning services do not compete specifically on price, although franchises sometimes use this lever. While brand name is important for some customers, many realize that small businesses use the same equipment and hire the same basic labor as the known brands and, therefore, that positive word-of-mouth is more important.