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Now many of you no doubt have big plans to build a full-service remodeling company, and perhaps you’re already knee-deep in the process of learning how to become a general contractor, but I’d ask you to put on the brakes for one second and hear me out on this one. I would contend that for many people, a simpler, more streamlined service business might be the better way to go. Let me explain.
I’m always impressed by the speed and efficiency that characterize the most successful local carpet cleaning companies. They’ll arrive in a basic, lettered van, zip through a few rooms of carpet like it’s nobody’s business, and less than 30 minutes later be out the door with $100 in hand. Those that repeat the process an average of eight times a day have quite a cash machine working for them. Furthermore, those that can accumulate 5-10 vans and workers, each visiting eight homes per day, can start counting the days to early retirement and seven-figure wealth. They’ve figured out how to perfect a system that fulfills a very specific consumer need, and then expanded the business without straying from their specialty.
There are several factors that contribute to the success of this kind of service business:
- By specializing in one service, systems and procedures become easier to replicate and perform. You can hire less-skilled laborers (who therefore don’t expect to make a lot of money) because they don’t have to juggle varied tasks or responsibilities. Simply spend a few days training them on their main task (in this case carpet cleaning), and then with every carpet they clean thereafter they’ll become faster and more skilled, to the point that they hopefully need little or no oversight. By contrast, a more complex business that requires the laborer to have or accumulate a multitude of different skills will almost always struggle to find qualified personnel that will stick around for any period of time, and the ones that do are more likely to command a premium wage.
- Material and equipment costs are lower and more predictable with a niche business.
Businesses that try to do too much or provide too many services are often burdened with all sorts of equipment that may or may not be utilized on a consistent basis. That’s extra equipment that needs to be purchased, maintained, repaired, and stored. And all that upkeep means extra manpower, less productivity, and more money out of your pocket. Keeping your service and equipment setup as predictable and simple as possible will serve you well as you look to expand. - A one-service company can more easily claim to be an “authority” in their local market. Most quality-minded homeowners today want to know that they are hiring an “expert” in a specific trade or field, not a jack-of-all-trades or handyman type of service.
- Speed, and therefore profit, is more easily achieved with a single-service business because it often avoids the pitfalls of a more complicated, custom-design type of business. Ask any full-service remodeler what his pet peeves are, and one of them is sure to be customer indecision when it comes to design and color schemes. Enormous amounts of time are lost when a customer changes their mind on what type of cabinets should be installed, what color the walls should be, whether the tile should be in a subway or diagonal pattern, etc. Lost time equals lost profits. Pursuing a niche, non-custom service business like carpet cleaning or gutter-guard installation allows you to bypass these kinds of problems and focus more of your energies on perfecting your system and achieving speed and productivity.
Of course there are exceptions to every rule, and the multitudes of successful and wealthy full-service remodeling business owners in every American city would surely take offense to many of this post’s precepts. Just be aware that the more varied and complex your services, the more focused and organized you (and your employees) must be; the greater the number of moving parts, the higher the chance of a system breakdown. Full-service remodelers and builders also must be keenly aware of margins and cost projections, lest one bad job send your whole quarter down the tubes. The nice thing about something like carpet cleaning is that if you have one pain-in-the-butt job that you lose money on, it’s over in less than an hour and you can move on to the next one. Not so with a more complex service.
My personal preference is for a specialized company that is more able to focus on systems, speed, and productivity. A few add-on services could be justified from time to time, but only if they won’t interfere with your core business and its mechanisms. A good example would be the carpet cleaner that adds upholstery cleaning to his list of services because it often utilizes the same equipment and materials and only adds a small amount of time to the job. Just remember that simplicity is conducive to quickness which is conducive to profits.
My name is Jeff and I created this blog in 2007 to help and inspire contractors and home service providers. It’s come a long way since then.