Why Over 50% of New Pressure Washing Companies Fail Early OnDec 26, 2023
Launching a new pressure washing startup can be an extremely exciting and rewarding endeavor - when done correctly. However, the harsh reality is that over 50% of fresh pressure washing businesses end up failing within just their first few years.
But why? What critically injures these beginner pressure washing companies even when consumer demand and industry growth are absolutely booming?
Buying Needlessly Expensive Equipment Too Soon
A major downfall we see again and again with rogue pressure washing entrepreneurs is getting carried away buying fancy gear and rigs before they have clients to support the purchases. It goes like this:
You get overeager about perceived potential so you take out massive small business loans or wipe personal savings to build out a $50K+ trailer set up with the works - huge tank, giant pressure washer, multiple reel setups, and lots of accessories.
The issue? All that glamorous gear is utterly useless if you have no recurring clientele locked down to actually utilize it daily. And those expensive loan payments and drain on savings to originally buy it can put you out of business pretty fast.
If you’re just starting out, go mobile first. Use cheaper pressure washers and supplies you can transport in a basic trailer or truck bed. Get clients booked consistently, then reinvest revenue into better tools as the business grows. Don’t make the mistake of letting the equipment come before real customers.
Operating Without Adequate Insurance
Another early dagger we see stabbed into countless young pressure washing companies is failing to get properly insured right out the gates.
Hopefully it’s obvious you need basic general liability coverage from day one to protect from third party bodily injury and property damage claims. Otherwise, you’re exposing yourself to unlimited personal liability. One slip and fall accident at a client’s home can ultimately shut down your pressure washing dreams with a lawsuit.
But make sure bonding insurance is accounted for too. This protects against employee theft and fraud. Just look at one horror story from a Texas based pressure washing business owner:
“I hired a guy I used to work construction with to help me handle some bigger commercial jobs I had booked. After about 3 weeks, I showed up to the shop one morning and all the equipment was gone. So were the company card and about $5k in cash I kept on hand for materials. Found out later he had a bad gambling problem. Had no insurance to cover this at the time so I was toast.”
Don’t become another painful statistic that loses everything over lack of insurance! Get fully protected.
Thinking You Can Skimp On Marketing
With more consumer choice than ever across virtually all industries, properly marketing your pressure washing company in a digital age and crowded field is an absolute must.
Yet we constantly see owners who think creating a basic website, printing some flyers, or relying solely on word of mouth advertising will be enough to gain significant market share right from the starting gates.
That couldn’t be further from reality.
The truth is you need to set aside serious ad budgets for digital channels like Google and Facebook while also hitting the streets hard with flyers, yard signs, vehicle wraps, intro offers, and really selling the premium experience you offer louder than competitors.
This simply isn’t an industry you can quietly sneak into and expect customers to come flooding in. When done right however, aggressive marketing pays massive dividends scaling a local pressure washing business.
Scaling Too Quickly Before Systems Are Ready
Perhaps the most frequent and fatal error we witness from eager new pressure washing business owners is wanting badly to go from 0-100 overnight.
We totally understand the excitement when leads start trickling in faster than expected or your first few months revenue numbers blow past projections. However, prematurely pushing hard for swift and aggressive expansion before your operations and money management systems are firmly in place is a recipe for failure.
Here are two prime examples of what this runway looks like when poorly managed:
- You start closing bigger contracts than you can realistically handle in house so quality, profit margins, and reputation take a nose dive.
- You start hiring employees before you’ve created a clear onboarding/training program leading to bad hires and service inconsistencies.
Essentially, rapid scaling with no infrastructure to support growth is like building the top two floors of a skyscraper before the foundation is set. Before you know it, the entire structure comes crashing down.
Be patient in the startup phase. Nail down all processes, policies, quality controls, and projections first so that when when you’re setup does start naturally picking up speed, you’ll maintain control and profitability.
Poor Financial Planning and Cash Flow Management
Similar to the point above, far too many energetic new pressure washing business owners also seem to overlook the danger of bleeding out financially in the early days while struggling to properly budget, control costs, and manage cash flow speed bumps.
It’s not just expensive gear purchases that quickly creates a hole. High paid advertising channels like Google ads can also become cash flow killers real fast if you scale spend too liberally before revenue and margins totally justify it.
Additionally, pressure washing companies see wild revenue swings between peak seasons and winter months when business goes mostly dormant. So what we often see happen is overly ambitious companies overspend during hot seasons then run completely out of working capital once winter hits and income declines while fixed costs remain.
Moral of the story? Make sure you accurately budget out all projections for monthly and yearly income as well as business costs well in advance. Keep an emergency operating expense fund equal to at least 6 months of costs so you can dip into savings if needed.
Constantly monitor cash flow, margins, and costs like a hawk using organized accounting software. Financial disorganization ruins countless startups.
Lacking Core Business Operations Knowledge
Finally, we have to point out the obvious operational knowledge gaps crippling so many beginner pressure washing companies. Fact is, most new business owners come into the industry with little formal background actually running a real company.
And subsequently, they don’t properly understand cash flows, income statements, tax laws, human resource regulations, or general business finance/projections in the beginning.
Therefore as young companies without mentorship grow and inevitably face their first obstacles like equipment breakdowns, employee issues, site accidents, or tax audits for example, they're completely overwhelmed and unequipped to bounce back.
Listen, with some hustle and work ethic, anyone can handle the operational cleaning work of pressure washing. But to scale a truly thriving BUSINESS long term, you must make increasing your general business acumen a top priority early on.
To summarize, be extremely mindful to avoid the following profit-killing mistakes we outlined above that prematurely sink over 50% of new pressure washing startup companies:
- Buying needlessly expensive equipment too soon
- Lacking adequate general and bonding insurance
- Thinking you can skimp on marketing efforts and costs
- Scaling too quickly operationally before systems are proven
- Failing at proper financial planning and cash flow management
- Lacking broader core business operations education
Steer clear of these common mishaps, take very calculated and strategic steps forward operationally, financially, and educationally - and your odds of building a thriving pressure washing empire stand to improve dramatically!
What percentage of new pressure washing companies fail early on?
Over 50% of fresh pressure washing startups end up failing within their first few years.
What's the #1 equipment mistake new pressure washers make?
Investing too fast in expensive gear and rigs before having the recurring clientele and revenue to support the purchases long-term. Go mobile first.
Do I really need more than just general liability insurance?
Yes, also get bonded insurance to protect from employee theft, fraud, and other sources of financial loss from staff incidents.
Can't I just build a website and rely on word-of-mouth as marketing?
No way. In this digital era you need serious ad budgets pushing online and offline campaigns to compete.
Is rapid expansion right away a good thing?
Absolutely not. Perfect operations and money management systems need to be in place first before swift scaling or quality and profits will suffer from growing pains. Take it slow.
What's a major source of financial issues for new pressure washing companies?
Poor cash flow planning and management. Failing to budget properly for slower winter revenue dips that still maintain high fixed costs.
If I'm good at the operational cleaning work, I'll be set right?
Wrong. Lacking broader business finance, projections, taxes, and general operations education is why many beginners struggle with growth.
Does prior professional business experience matter before starting a pressure washing company?
Extremely. Most new owners come from no actual business management background so the learning curve derails them. Get mentorship.
What's the biggest overhead cost danger I should prepare for?
Expensive forms of marketing killing cash flows if spending scales too fast before revenue and margins totally justify it.