Why I’m Bullish on Home Services⏐Ep. #121

Welcome to the Kerner office, everyone. So recently I polled my newsletter@tkopod.com on what types of businesses or what types of industries they want to learn about. Number one, AI, Number two, home services. And then there were like four other options, but it was AI and home services and nothing else was really close. So I'm going to keep talking about AI because I love it, I'm playing in it, and I love talking about it. So that comes naturally. Home services also comes naturally. So this episode is going to be all about home services. And I'll also touch a little bit on how you can use AI in home services as well. But I interviewed a guy named Doug who's here in Dallas Fort Worth, and he owns a power washing business that also does Christmas lights, gutter cleaning, soft washing, window washing and all that. But before I start this episode with Doug, I wanted to talk, just me, candidly, about why I love home services, what my thesis is for home services, and why you should love them too. So why do I love home services? Well, I've talked about this a bunch, so I won't go into it too deeply, but we launched a tree trimming business a year and a half ago. I helped a friend launch another tree trimming business four or five years ago. And it's just everything that I love about home services. I like starting businesses that have a binary outcome. I've talked about this a couple times, but not too in depth. So a binary outcome is a product or service where there's not a lot of complexity involved. Now, not all home service businesses enjoy binary outcomes, but tree trimming does. Cut down the tree, you remove the tree, you get a five star review. It just feels so refreshing to have a business that's straightforward, cut and dry. I think it's easier to find binary outcome businesses in the home service industry than it is in other industries, especially if you're not doing something very complex like custom home building or remodeling. So in home services you can enjoy high demand year round. If you have a seasonal business like Christmas lights, then you can offset it with another seasonal business like landscaping. Just like the book I read in high school entitled Things Fall Apart, Things fall Apart, Things are always breaking. Number two, recurring revenue potential. Now, some services are more recurring than others, such as lawn mowing. But any home service can be recurring because things continue to break, it might be less recurring than others. I like home services that are high ticket and high margin, 500 to $5,000 per ticket. Preferably they have a low barrier to entry which is a fancy way of saying you don't need a lot to get started. Which also means you usually have an above average number of competitors. But these are usually unsophisticated competitors that you can outrank online with a few creative tactics. There's a lot of room in home services for more tech, more efficiency, more optimization, some software. I know it seems on the surface like if you go Google pressure washing, you're going to see a bunch of people in your local area. And it seems overly sophisticated, but that's a selection bias. You're only seeing the guys that are sophisticated because they know how to rank on Google. You're not seeing all the other guys that have no website, that aren't answering their phones. My favorite experiment, and I talked about this over the summer with Stump grinding, is to call up 10 to 20 people per industry to gauge how hot the demand is for that industry in any given area. How many answer their phone? What are they quoting? How booked out are they? If you spend an hour doing that for five different industries, you'll know a lot about how competitive everything is in your area. Home services are recession resistant. You can upsell just about anything and everything and you can scale. Now here's the thing with AI. AI is unlike anything I've ever seen or experienced. It is arguably one of the greatest asymmetric bets this world has ever seen. And it's freely available to anyone with a brain and a pulse. What does that mean? I want you to picture a conference room full of entrepreneurs, enterprising, hungry, ready to go monetize the world. Okay, let's say you've got a hundred of them 50 years ago. What would those 100 entrepreneurs have started? Probably some sort of a service, a home service. Because there was no Internet 20 years ago. What would they have started? Something on the Internet, surely. But 20 years ago, there were a lot more homes than there were 50 years ago. Therefore much more demand for a home service business owner. But the Internet was the newest shiny object, so we all flocked there. What happens when the supply drops and the demand stays constant or increases? Price goes up. It's funny because I was watching an episode of Dirty Jobs the other day from season one. I've been watching it with my kids. This was like season one, episode two or three and they were doing septic tank pumping. Guess what they charged to pump out an entire septic tank? $70. It is literally 10 times that amount today. 10 times that amount at least depending on the area. There's just not enough supply to Fit the demand. So today you take a hundred entrepreneurs in a conference room. I don't know why they're in a conference room. I need to leave that out of my analogy. What business are they going to start? You've got AI, you got crypto, you got mobile SaaS, agency, home service. There's so many things to choose from nowadays. But guess what, there's more homes than there ever have been. 335 million Americans, 8 billion people, and these things are still falling apart. So AI is growing the pie for everyone. And you really can't go wrong either way. My guest Doug, he sold a hood cleaning business in Arizona about 12 years ago and he was kind of bored and he started pressure washing for people in his neighborhood. Then he started a pressure washing business. He only did that for a couple years and he started adding other services to it very slowly. Now he's got a thriving business with six figure profits. He's not doing anything super unique, super sexy. He's just doing what works over and over and over. Go ahead and give it a listen. How did you get your first customer?

It was just someone in the neighborhood. I can't remember if she just came off the website or what, but.

And what was your first job? Was it just pressure washing the side of a house, driveway, all the above?

Yeah, it was like a front walk and around the front door and a back patio, pool deck kind of thing, so.

And how'd you know what to charge?

One man show at the time, it don't need much. Right. You can kind of be cheap and still make some money and get your name out there. But I kind of looked at it like, well, when you do have someone working for you, what are you going to need to charge? Yeah, well, back then we need to be around a hundred bucks an hour. So I just said, well, how long is it going to take? I think it'll take this much. A hundred bucks an hour. There's my price. Yeah, so.

So how long did you do only pressure washing or soft washing before you started taking on other types of jobs? And what did that process look like?

We didn't start cleaning windows until 2021.

So five years.

Yeah.

That was your second service line?

Yeah. I mean, we always did the gutters. There's not a huge demand for that, but we did that. The first real divergence from that is window cleaning. And that's just because, you know, you do a housewash, you get their windows all spotted. So finally the next year rolled around, you know, we got into the winter season things. So then I'm like, okay, I'm going to get trained and we're going to start doing it. So in 2021, I think we just, we added that.

What did your training look like? How did you get trained?

I went to a industry convention where someone was offering training on the water fed pole systems, you know, which are the pure water filters that you use a big pole with a brush to do the cleaning. And that's one aspect you need to know how to do the traditional style too. You know, with the squeegee, I had hired someone that had a lot of window cleaning experience and just got trained up.

So let me back up a little bit for those first five years. How were you finding customers? Did you really have to struggle or hustle to get them or did they just come organically through word of mouth?

Mainly word of mouth and the website.

Okay.

I emphasized reviews before reviews became super cool, you know, so we had a lot of reviews, we had a website, had to do very little marketing, to be honest.

What did your first few years of revenue and profit look like?

So we started in like September of 16, so I couldn't even tell you. I think the second year doing it just on the weekends, it was like maybe 75,000 or something. And then, and it just doubled every year for about four or five years. And then we added window cleaning and all that. It's slow, the growth has slowed. So we'll say the first year we did 75, then we'll go like 150, then 300 and then probably 450 and then 550 or so 600. And it's kind of level there a bit. We acquired another company this year, so we should do, you know, eight or nine hundred this year. Nice.

So window washing five years in, at what point did you start adding the other service lines and what were like the triggering events for even wanting to do that?

So really the pressure washing kind of encompassed a lot of things. You can do a lot with that. The window cleaning was the big ad, really the only other. Well, okay, so I guess, you know, if you want to add Christmas lights, that started two years ago.

What made you want to start that?

It was the same thing. It was like you guys do Christmas lights, you know, from the customers and that industry is kind of blown up too, the LED lights. So now you have easy to go find someone to train you, you know, get this, get the stuff from locally and, and just go do it. So same thing. It's like, all right, let's Start doing this. It's another revenue line. Keep the guys busy and you know, in January, take the lights down when we're, you know, it's too cold to wash and you know, just something new to figure out. So.

And how did you know what to charge for that and how to do it?

It got trained. We found a local company. Well, did they have a local presents and went and took some training. It was like in July, you know, so it's like 110 degrees. We're out there putting up Christmas lights at their training facility and they show you all that, how to do it, where to get the stuff, what to charge, what it costs, what the charge is like, okay, here's where you want to start. And then you have to kind of see what's competitive.

So power washing, window washing, Christmas lights, solar panel cleaning. Did I miss anything?

There's all the little stuff. I mean, there's gutter cleaning, there's graffiti removal, all the stuff that goes with pressure washing.

And which of those do you love and which do you hate and why?

They're all good. I mean the pressure washing is great. There's so many aspects to it. I mean, you can do roof cleaning where you might have to bring in a lift to do that.

If someone were to come to you and say, doug, I want to take one of your service lines in my market and just go all in on that one thing, what would you advise them to do and why?

Depends on the area. So like roof cleaning and all that is much bigger near the coast. So Florida is huge with roof washing. Houston is much bigger with watching because they have a bigger problem with algae growth in those areas. So if you're there, I mean there's companies that build big businesses based on just, you know, these people get it done every year. So almost automatic window cleaning, I think you can't go wrong with. Especially if you can try to build like, say you want to do like I'm going to do storefronts, you know, and I want just to build a book of storefronts that get it done every month. That's probably a good line. It probably takes some time to get set up. Holiday lights, same thing depending on your area. I mean here it's pretty saturated like most things, but you know, there's folks that just do that three months a year and you know, they're good.

Yeah. If someone were to do storefront window washing only, what's the best way to get customers?

Maybe the cold emailing, cold texting.

What about solar panel cleaning? If someone wanted to go all in on that.

Yeah, I think the same thing. And, you know, we. We do that, but it's, like, rare. I mean, it's a very low percentage of people that actually have solar panels to begin with. Right. So you have to find them in.

Our area, at least.

Yeah, yeah, exactly. So. And then of those folks, I mean, they have to really understand that, you know, these things do need to be clean once in a while. And I've talked to folks that I know personally, you know, through. Through kids, sports and stuff, you know, other parents, and it's like, oh, yeah, you guys clean solar panels. Wow. We have these solar panels and the efficiency has gone down to, you know, whatever. And I talked to Tesla and like, yeah, they probably just need to be cleaned and we should. We need to get you guys out there to clean them. And then they did. They never do it. Yeah, so it's like, you know, you're just leaving. You have the things. We'll keep them clean so they're efficient. Yeah, that's a tough one. In this area, we do very little of it, but it's. It's easy to do. You know, it's easier than doing windows. They don't have to be perfect. You just have to clean them. You know, use the same brush and everything that you use on the windows. So I think if you can find a list somehow of owners of people that have solar panels, you know, you email them and maybe even direct mail to get them to think about, you know, with some kind of offer.

Yeah. I think they even have, like, AI products now that will use Google Earth to identify which houses have it.

There you go.

They'll just pinpoint them out for you.

Yeah, I mean, something like that. I think that's, you know, otherwise you're just passing this huge net. You definitely don't want to send direct mail out to everybody in a zip code because five of them have solar panels, you know.

Yeah. Which of your service lines have the biggest margins, margin wise?

Probably window cleaning. You can get away with charging a little less. It can be a little more competitive, but your costs are less because it's really just labor. So probably that the pressure washing is already good.

All right, if you are watching this clip right now, you are watching this on YouTube. And if you are a fan of podcasts, please check out my podcast while you're at it. Because sometimes I have podcasts that aren't on YouTube and so sometimes I have YouTubes that aren't on podcasts. So check out the kerner office on any podcast platform. Or you can go to tkopod.com also. My newsletter will throw that in there. There are no ads. It's weekly. It's different content than my podcast and YouTube newsletter.chrisjkerner.com you'll see the link and we'll see you there. How do you quote all these different jobs? Do you quote everything yourself or have you trained your guys to quote for you combination?

I've trained guys. We have an office manager that can quote. We can do a lot of stuff over the phone with pictures or Google Maps, Google Earth. I have real competent guys that just have. They worked in the field and they know how long stuff takes. So they can go out there and look at like, yeah, it's going to take. This is a big job. It's going to take three guys two days. We need this much per day per guy, plus materials, you know, needs to be around this.

Okay. Just kind of a gut call.

Yeah. I mean, from experience, in a lot of companies, they look at square footage. What's the square footage of the driveway? What's the square footage of the house to get for a house watch? And I just, I never did it that way. It doesn't seem to make sense to me. I mean, some of these houses, they have issues like, you know, you have some big fancy house that has brand new copper gutters.

Yeah. I like interviewing people that are different from me because, like, if I were you and I launched this in 2016, the first person that says, can you wash my windows? I'm like, yep. Don't you need to know how my know how I'll watch a YouTube video? You're like, I'm, I'm the opposite of you. And like we talked about before this, before this podcast, like, it's good and bad. Right. There are trade offs. I find myself in a lot of sticky situations a lot of times because I'm under prepared on the other side of that. And clearly you don't have this problem. A lot of times people tend to overanalyze and overthink and that means that they never launch because momentum kills all deals. Right. So you, you really have to find that balance between the two.

Yeah, I agree.

Of all the service lines you do, there's probably a bunch that you could be doing that you're not doing. There's probably still a lot that you're turning down. What do you think is the pressure washing of today? Like, pressure washing was in 2016. What is the next frontier for home services?

We're looking At a few things that kind of add in there, like real cleaning, you know, because nobody wants to do anything anymore.

Yeah.

If they can get someone to do it professionally, it's reasonably priced, you know, I mean, I've seen a lot. Well, I can give you one. So the kind of. The big thing that's getting the push now is the permanent lighting houses.

They're like a jellyfish. Isn't that the name of a company?

Jellyfish type stuff? Yeah. So anybody that's into Christmas lighting, you know, the same distributors are selling that stuff and everybody's. Because again, anybody can do it. Like the landscapers can do it. I mean, you know, when it comes to Christmas lights, the bug people do it.

Everybody.

Yeah, Christmas lights, roofers do bug people, firemen, you know, all that. It's the same with the jellyfish type permanent lighting. Yeah. So that's kind of a. And there's. Now there's all kinds of companies selling that. So that's probably one thing.

What about if someone were to like become a jellyfish distributor or even use like a Chinese aftermarket version of Jellyfish? And for those that aren't listening, Jellyfish is permanent lighting, like Christmas lighting, but permanent LEDs, you can change the colors to. It can be patterns, it could flash, it could be solid purple or whatever from your phone. What about the idea to just go door to door in November and December only to the houses that have Christmas lights and they're not your customers, they're just strangers and saying, hey, you clearly value having lights on your house two months out of the year. How about these permanent lights? I can install them, I can sell them to you. That can be pretty high ticket, right?

Yeah, it's a high ticket item. It's not recurring like the Christmas lights are, but yeah, for sure. I mean, you can. I mean, you know, if you're going to try to get people to switch over that year, instead of doing temporary Christmas lights, you want to start before November, but you can also go out after they're installed, I guess and say, hey, next year. Or hey, when these come down, could put these permanent ones up because, you know, you can make them pink for Valentine's Day and whatever for Easter, you know, you name it. And then, and then every the other days of the year, you know, they're up in the soffits, up in the eaves. You can just make them warm white. You have like this indirect kind of lighting your house, which looks nice too. So. So yeah, you can, you can definitely try to switch people over.

What do Those cost. Is it like by. By the foot? What is the install cost and the hard cost?

I don't know that much about it. I'm pretty sure it's by the linear foot, you know, and there's probably some. Probably depends on stories up. It is. And there's probably some stuff there too. There's. There must be some wiring involved. I don't think they just plug in. I think you kind of get them. Well, you could probably plug them in, but I think you get them probably get an electrician in there that wires them in somewhere, you know, just some permanent power.

And then if you were to give someone advice, it's about to start a home service business. What could you tell them that might save them a world of hurt? Any in any niche, any home service niche.

You want to do some homework. There's a lot of gurus out there. I can, you know, specifically speak to pressure washing. That charge you a lot of money to get some training, sell you a rig. A lot of stuff you probably don't. Starting out, I would focus more on getting a brand, getting it out there, maybe not taking on every single huge project. In other words, you don't need to spend 60 grand. It started.

If they were to go to Home Depot and buy a power washing machine, which model is a good one to start?

I don't recommend. So it kind of. Maybe my answer falls somewhere in between. Like you don't necessarily need to go to the big gurus and spend a ton of money on something super fancy, but you also don't want to go on the cheap. You can easily with a little bit of research while right in the middle you get a nice commercial unit, you know, and spend a few thousand bucks and your own truck or something, build your own trailer.

If they were to spend 3,000 on just the washer, what is there a make or a model or a brand that you'd recommend at that price range?

You're going to get something portable, which is fine, you know, to throw in the back of a pickup truck or whatever and you can run around, do driveways with that.

What about the mixture? Just like a bleach to water ratio.

Or you know, again starting out you can just have a two gallon sprayer and you can get some. You can buy pool chlorine at Lowe's. You know, it's more expensive. I mean we get it delivered by the truckload now and into big tanks. But you know, a lot of the real severe stuff, 50, 50 is going to get, you get that done on flat Stuff you be careful with houses. Much less, you know, you know, a quarter, half a gallon of bleach to a gallon, half of water, you know, so two gallon.

Okay. Is there an insurance company you'd recommend?

Another good question. So for years there was a company, JD JD Walters, that everybody got their insurance from. They went through kind of an ownership change and they kind of went and audited all their policies and they hadn't raised prices in years. And companies went from one guy to five guys and they didn't audit it. And then when they did, they realized, you know, either they had to raise the rates a lot or they just couldn't insure you anymore. So you can get it a lot of places. If you go on some of the Facebook groups, you can just search and people have recommendations on brokers. It's pretty fairly inexpensive. Starting out, you know.

Okay, are there any specific numbers that you track on a regular basis that you'd advise others to track?

Like, yeah, so we do job costing, which means, you know, every job get the hours, the tech was there, she's getting an hour, the burden and all that, taxes and all that kind of stuff. Chemicals used and then the amount of hours put on the machine, which is fuel, basically. It just converts the fuel that gives us our gross. So we want a certain number. We want typically under 30% of the cost of the job in labor.

And what net margin are you shooting for?

Net's another moving target. So that's going to be based on all your other overhead. Right. So starting out, when you're like a solar operator, like your gross is like your net. I mean, you have insurance, you know, and that kind of thing. But as you get bigger and you have to have a shop and you have four or five trucks and, you know, bleach deliveries and marketing and all that, it's a whole nother, you know, then you have an admin cost, you have an office manager, you have a production manager. All those things are kind of. They fall into your fixed overhead. So it's going to make your net. You know, that's. That's not really an answer. But starting out, it's like the same. Like net and gross are almost the same. You look at these big H Vac companies and stuff that do plumbing and electric, and they have a hundred trucks. Well, their net margins are like 5%, except they're just doing millions of dollars.

So it's a pretty high margin biz.

If you can hit a 20% net that the owner can take home, that's a pretty Good number. We were fortunate that we had a good customer base before the kind of big boom hit. Covid, I think, is where it really took off. You know, Covid was a great. Covid was great for us because people were home. A lot of the home service industry, construction, all that kind of stuff. They were, you know, at first, the beginning of the whole craze, like, they were the only people allowed to be out there working, right? Was like, anybody out and on houses and that kind of thing. So the only cars on the road, trucks on the road, were work trucks. So our business blew up from that. The industry also blew up. So we were fortunate. We had a nice customer base. A lot of repeat business. So every time we added a new line, like we're getting ready to add line striping, you know, we had a base to go to and very little digital marketing ads, that kind of thing. So these days, I'm sure it's different just because of the competition.

Okay, well, thanks, Doug. Where can people find you if they have any questions?

Our websites, park cities. And that's spelled, you know, in the plural, C I, t, I s.powerwash.com. they can check that out. They can email me anytime, Doug, at parkcities, powerwash. If anybody has questions or getting started, I'm happy to help them out. You can go to the website, get the phone number, give us a call. So happy to help.

Okay, thank you. Okay, what do you think of this episode? Style. Half monologue, half interview. Let me know what you think in the comments and maybe we'll do it again. See you next time on the Kerner Office.