Starting a Home Service Business From $0

I believe that 80 to 90% of home service business failures actually just stem from one core issue, and that is we add too many services to the business too soon. My name is Mike Andes. I'm the founder of Augusta Lawn Care. The franchise has over $75 million in revenue this year, and I make this mistake, and so many other home service business owners have too. And that is we look at the biggest businesses, the biggest competitors in our local market, and they offer a whole bunch of different services. They do everything. If you're in lawn care and landscaping, they mow grass, they install mulch, they do projects, they do bush trimming, they do treatments, they do grub control. They do everything. They do trees, they do Christmas lights, they do snow plowing. And because they do that, we think we need to offer all those services in order to be able to be successful. And what we fail to realize is they've been in business for 20 years. And if I could start again, if I could start my lawn care business from the get-go, I would do one service. And the only reason I would add any other service is for two other reasons. One is I need to recoup the customer acquisition cost faster, and two is if I need to fill in the off-season. In my opinion, those are the only two reasons to add more services to a home service business. And if you look in your market and there's a competitor that only does one service and they've built the business size that you want to have, it is proof and evidence that you do not need to add more services to build the business that you want to have. Check this out. This lawn needs to be mowed. It's overgrown. Mercy. However, I and so many other people, when we first get started, We start doing one thing and then customer Mr. Jones asks, hey, do you do this also? Like, my goodness, that's more revenue. Awesome. Let's go. I didn't have to spend money to go get this customer. I have to advertise to get another lead. This person just fell in my lap and wants more revenue coming to me. Awesome. But in my opinion, the only reason to ever add more services is to increase how fast I make up the customer acquisition or fill in the offseason. So for example, this coming winter I'll be in Dallas starting a location from scratch, and we're just doing mowing and lawn treatments. That's it. No bush trimming, no pulling weeds, no spraying beds, no mulch installation, no trimming bushes or hedges, nothing in the winter. Because I'm confident between those two services I can keep my crew busy during the winter and using annual treatment packages I can recoup the customer acquisition cost relatively quickly after I get a new customer. And I say this because every single time you add a new service to your business, you add all sorts of complexity. Let's talk about the technician for a moment. If you have someone doing one service, almost any home service that you perform, you can teach someone to do it within a matter of a few days. Even something that is on a complex system, let's say for example, like clearing out a drain. If all I'm training is how to clear a drain, I don't need a master plumber. But if I am also adding 20 other things I expect them to do and they only clean out drain once every 6 months, then the level of skill is required to hire someone to be a technician is much higher. Let's use lawn care for an example. If I'm just doing mowing— mowing is not like a simple service. There's a lot of things you're edging, blowing things off, trimming the lawn, mulching it, using a stand-on, push behind, walk behind, or push mower, sit-down, stand-on. And that in and of itself can take someone a week or two to really fully learn, probably a month or two to really master it and become super proficient. But if I'm also adding— well, now you need to learn how to mulch installation. Okay, that's easy. That's just labor. Great. And now I want to install rock too. Okay, great. Okay, well, now I want to also install some paver patios. I want to install some drains. I want to trim these trees. Well, these trees have fruit. Do these trees have deciduous leaves? Are they coniferous? Is there certain times of the year where I need to trim them? And so the level of skill that's required increases. And individually, each of the things you're adding, individual services aren't complex. They're no more complex than the first service you added. And that's why we make sense of it. It's like, well, is it really hard to trim the tree? Like, goodness, if they can mow the lawn and use a zero-turn that's $10,000, and can they just use a little handsaw from these bad boys, some loppers? Sure, in and of themselves, yes. However, when you start adding 10 different services, it takes 10 times as long to get to the level of proficiency that it previously took to get to that level with just one service. Because if I'm doing just mowing, for example, let's just say it takes a couple hundred lawns to get to a very high degree of efficiency and high quality standard. Well, that's great. I might be able to do that in, let's just call it, 3 to 4 weeks mowing lawns, depending on the size of your property. 3 or 4 weeks, someone can do a couple hundred lawns and get to a very high degree of efficiency and proficiency in your systems. But that's assuming they just do lawns. What if out of the 5 days in a work week, 1 day is installing mulch, 1 day is doing some treatments, 1 day is doing some bush trimming, 1 day is pulling weeds, and another day they're mowing lawns? Now all of a sudden, instead of it taking 3 or 4 weeks to get 200 lawns done, it's gonna take about 18 to 20 weeks to get the same number of lawns done to get to that same degree of efficiency by getting the 200 lawns completed. Not to mention that all those other services I mentioned will also require their own level and time and reps to actually get proficient at them. And so when it comes to technicians, having more services massively increases how long it takes for them to get up to speed and be efficient. It also increases the amount of training that I have to give them for them to even be able to do the job. If someone's just doing mowing, within 2 weeks I can get them trained up even if they have no idea what they're doing when it comes to lawn care. I can get from, from completely green to solo ops, being able to be in this truck solo. If I can just teach them how to edge, blow, mow, rock and roll. Now, when it comes to training, if I have a whole bunch of other services, I've got to be on a couple jobs at least when they're doing mulch install. Make sure the mulch isn't around the base of the trees, make sure it's evenly distributed, make sure that the edges of the lawn— that mulch isn't falling on top of the lawn. Teach them how to carve out the edges so that the mulch sits in nicely. All these other little tiny things but I've got to be on a few jobs with each of those crew members to make sure that they're doing the mulch installs correctly. Same thing is true with bush trimming, hedge trimming, installing plants, all these little things. Now all of a sudden it is taking— instead of just 2 weeks for me to get them trained up, it's taking me a month, 2 months, 3 months to get them trained up into a certain level where they can actually be efficient and to have a high quality standard without me being there. And so we start putting these golden handcuffs on ourselves to the business, which is the business requires us to be there longer. It requires us to spend more and more time training our technicians, and it becomes harder and harder to let go of daily operations simply due to the fact that it takes so long to train new technicians. And if you have the average technician taking 3, 4, 5 months to be proficient in all the different services that we're expecting them to do, it can very well feel like you just constantly have a new, new team members all the time. You can never have a team that's confident, reliable. They constantly show up. It feels like your team is experienced because even if you have 10 technicians and the average tenure is 1 year, that means every month approximately there's at least 1 person churning. People move, people go back to school, people move to different industry. Specifically if you are in an entry-level industry. They get other skills, they want to move on, etc. That means every month you have a new technician. If it's taking you 2 or 3 months to get each technician up to a level of, of service where they can work by themselves, you, you're going to on average have 3 to 4 of your technicians always be newbies, always need training, and you're never going to get to the place where you feel like your technicians can take ownership of their job. They can do their route without you. They can take care of problems on specific jobs without your oversight because they've just done it so many times before. So from a training and technician perspective, that's why less services is easier. All right. From an admin perspective, if you have someone answering phone calls, doing emails, doing texts, and you just do one service, they can actually understand elements of the job and elements of the service that you provide without you have— without them having the skills. For example, someone answers the phone and all you do is mowing. I'm just using an example. I'm not saying you should just do mowing, but if you just offer one service, I don't care if it's something super complex like I'm only installing paver patios— complex, difficult— but if you're just doing that thing, I believe that a matter of a few weeks, you're the person on the phone, your admin person will probably have a pretty good understanding of what the designs for the different pavers are, what colors are, what the warranty is, what the, the method is for your installation process, what drainage looks like, what the poly sand is, what the tumbled look of the pavers means, what means have plate compaction, the sand, the base layer below. Those are little very fine details that I can expect someone to learn if that's the only thing I do when it comes to admin. And now I have less on my plate as the owner because I'm just doing that one thing. And my admin person can answer those questions about the sand and the plate compactor and the type of block and why the crew is out on someone's property doing the process a certain way. They can answer those questions. It's when you compile 10 other services. Now, instead of it taking 2 or 3 weeks, it can take very easily 6 to 12 months for someone on the phone to actually get proficient at their job. So from a technician perspective, easier to have 1, 2, 3. The less is more when it comes to number of services. Same thing with admin. Now, in my opinion, when you look at the biggest, biggest businesses, the reason they have 5, 10 services is because they've been in business so long and they started with a couple core services. Everyone theoretically can make sense of adding more services because we always serve our existing customers more. And because you can always make sense of saying we want to be a one-stop shop. A one-stop shop needs to be big enough to where there are individual technicians that focus on individual services. And so if you think your one, two technicians that you hire are gonna be able to do 20 different things, you will probably think it's hard to scale versus saying I'm going to take my first couple employees, we're just going to focus on one or two services. I'm gonna become super good at it. I'm gonna make it where I have systems in place for new trainees to be able to get up to speed very quickly and be really profitable really fast. And then, and only then, will I go out and hire other technicians and add more services to be able to sell to my existing customers and increase the annual customer value. Awesome, all very good things. But now I'm going to get this new crew to only be doing those tasks, those services. So they too can become efficient and proficient. But what most of us do is we just hire generalists and then we add more services. I'm a fan of generalists as long as you have a couple services, but when you start adding 10, 15, 20 different services— and I see this all the time with home services— and that is, well, we do gutters, we do pressure washing, we do Christmas lights, we also trim your bushes, uh, we will also clean your chimney, we will also do soft washing on your house, We will also make sure that we walk your dog. We will— like, you— every single one of those is a completely different home service, and each and every one of them by themselves is a great business. But when you combine them all together, it's likely the only person that can do the job at the admin level or the technician level is you. And that's why so many people will say you can't scale XYZ Home Service business should never get employees. And when I look at their business, I go to their website, they have 20 services they offer. They're expecting people to be able to know how to do snow plowing when it snows like 3 or 4 times a year in their market. And they're expecting all their new team members they got throughout the year to be able to learn this brand new skill and do it without a whole bunch of damage cases, without a whole bunch of liability insurance and extra costs that come with it. And so this is why in Dallas, when I'm starting this new location out in Texas, we're just doing those two things. Now, when should you start adding more services? One, you have completely dominated your local market. I mean, you have a huge share of the market. Ideally, we're talking about a very small population. I'm talking 10,000 to 50,000, 50,000 people or less. If you have a small population, you're probably not going to build a $10 million service line with just one service. And so there are times you have to add services because you are in a small market. But realistically, if you're not getting a massive business, almost every home service business, if with just one service, can build a million-dollar business if they just do one thing really good. But a lot of times, because we all get in a rush— I include myself in this— we add so many different services, we never get to a million because the complexity that comes with managing 10 different businesses inside of the one, and we can never scale it past that million or allow the business to run without us in daily operations because again, we're running 10 businesses in one. We have a million-dollar business, but $120,000 of it is one service. $50,000 of it is another service. $200,000 is a different service. And theoretically, all those are technically different businesses just smashed into one entity that we call our, our entity, our LLC. And so if I could restart, I would take one service, dominate it, and I would only add to it if I was in a very constricted population size, if I was wanting to recoup customer acquisition costs faster. For example, if I'm mowing a lawn for $50 per week, but it takes me $100 to acquire a new customer on Facebook Ads or Google Ads. By the time I take out all my costs, let's just say I'm 20% profitable, I'm gonna make— have to make $500 in revenue to earn $100 of profit. And if I'm only charging $50 per cut, that's gonna take me 10 weeks. If I'm biweekly, that could take me 20 weeks, it could take me months to recoup the customer acquisition cost. So if I can add another service, let's just say it's treatments and I'm able to get $500 in the first month and sell an annual package. Now I don't have to cash flow my growth because I can recoup the customer acquisition cost I had to spend on Facebook or Google much faster. Now, the third reason that I would add another service is for the off-season. This is the biggest one in my opinion, why you should add other services, why I like having other offers besides just being a one-trick pony.. And that is I don't want you to have to have 4, 5 months during some period of the year where leads drop off a cliff, revenue drops by 70, 80, 90%. And so that's the only other time I would recommend adding another service. Now, if you're going to be in business for 10, 15, 20 years and you know you're not going anywhere, there's a really good argument to add more services, be a one-stop shop, vertically integrate across all of your customers, to be able to serve them in various ways. And just know it's going to be more complex. There's— it's going to be harder to scale at the beginning. You're going to have some complexity you have to work through, finding managers, and you're going to kind of get ahead of your skis a little bit. But you know you're going to be in business for 15 or 20 years, I'd probably also give you a pass there. But the thing is, just statistically speaking, most people will not be in business in home services for over 10 years.. And so if you're trying to maximize the next 10 years in your business, just focus on one thing. If you're going to be in this industry for the next 30, 40, then yes, go ahead and offer a one-stop shop, offer more services, add more lines of business to your current entity. But if you're going to be in this business the next 5, 10 years, and statistically speaking, that's the majority of people, I just focus on one thing. Get really good at it. Only add to it because of population, because off-season, fill in the off-season, and third, to recoup customer acquisition costs sooner and faster if you have a very small ticket item that is a recurring service. That's it.