1.1         Industry

1.1.1        Industry Description

The categories of businesses under the cleaning industry include commercial janitorial services, dry cleaning services, residential services and specialty cleaning. The 2015 statistics showed that approximately 875,000 companies were operating in this industry (Bureau of Labor Statistics, n.d.). Besides, more than 3.5 million people are employed in the cleaning industry. The industry is vulnerable to economic downturns, and during the 2008 great recession, the industry experienced a decline in revenue. Precisely, in 2008, the revenue decreased to 5.3% while in 2009 it fell to 6.1% (Helleiner, 2011). Research shows that when a country is experiencing an economic recession, residential services are always considered unnecessary.

After the financial crisis of 2007 and 2008, the years of economic strength that followed brought the industry back to life. The 2015 report indicated that the industry generated approximately $51 billion in revenue. The factors that led to growth in the economy included a decline in office vacancy rates and unemployment as well as an increase in activities involving nonresidential construction. The Bureau of Labor Statistics (n.d.), is forecasting a strong economic growth in the next five years. Similarly, employment growth is expected to rise by 6.5 % between 2014 and 2024 (Bureau of Labor Statistics, n.d.). Lastly, service-providing sectors are projected to take 94.6% of all jobs added between 2014 and 2024 (Bureau of Labor Statistics, n.d.).

Regarding governmental regulations, Resource Conservation and Recovery Act (RCRA) requires that the companies should provide safe treatment, storage, and disposal of dangerous wastes. Similarly, the Toxic Substance Act deals with the production, use, and disposal of chemicals (SBA, n.d.). Therefore, companies in a cleaning business need to ensure that the chemicals they use comply with the TSCA.

1.1.2        Resources Used

Cleaning industry rely on output from employees; therefore, hiring professionals with experience in cleaning plays a significant role in ensuring that the company achieves its mission and goals. Businesses in this industry usually allocate a significant amount of resources on hiring staff. With financial resources, businesses can get funding from financial institutions, private investors and friends. Lastly, physical resource is also important since every organization must have a proper workspace, marketing materials, communication systems to survive in the industry.

1.2         Customers

Riviera Cleaners will focus on an affluent elderly market, couples with young children and professionals with limited time. The first target group is the affluent elderly market where both spouses do not work. This group of customers resides in attractive market towns across the United States. They have money, and they would prefer to pay someone to clean their house. Besides, the typical age for these households is 65 and above. These customers like to shop in higher end convenient stores and local independent shops; there, it would not be hard for them to pay a premium price for the service the company will deliver. The annual income of these families is over $100,000. In Los Angeles, CA, approximately 6,000 households fall under this category, and all of them prefer to use residential cleaning services.

Second, the company will target couples with young children and professionals with limited time. These families are always busy, and due to their strict schedules, they do not have time to clean their houses; thus giving us the opportunity to deliver our services. They can comfortably afford to pay a premium price for services since their annual income is over $150,000. Our target customers are aged 30-55 years and live in expensive houses. Besides, approximately 12,000 families fall under this category.

Since our target is affluent families and professionals who can afford premium prices, growth in income will signal higher consumer spending, and this will have a positive impact on our business. This means that more consumers will request for our services. Conversely, during economic downturns, customers demand will decline slightly. Customers will stop asking for frequent cleaning services thus reducing the revenue of the company.

Our company is expected to earn a total revenue of $50 million over one fiscal year. With a total revenue of $5 million, we can gain approximately 10 % of the market share. The logic behind the calculation is to determine the period I would like to examine the company’s market share. Next, I will compute the total sales of the company over that period. Lastly, I will have to divide the total revenue by the total sales. The affluent market is expected to increase by 8% in the next five.

References

Bureau of Labor Statistics. Retrieved on 18 July 2017 from https://www.bls.gov/iag/tgs/iag51.htm

Cooper, C., Sedgwick, S., & Mitra, S. (2013). Industry and labor market intelligence for Los Angeles County. Economic and Policy Analysis Group. Retrieved on 18 July 2017 from http://laedc.org/wp-content/uploads/2013/06/Industry-and-Labor-Market-Intelligence_LAC_FINAL.pdf

Helleiner, E. (2011). Understanding the 2007–2008 global financial crisis: Lessons for scholars of international political economy. Annual Review of Political Science, 14, 67-87.

SBA. (n.d.). Business Guides by Industry. Retrieved on 18 July 2017 from https://www.sba.gov/managing-business/business-guides-industry

 
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