How to evaluate a home service business digital assets to buy

If you have a chat or a question, you can drop it in the chat. The way that I've been doing these is basically, I have a video that I'm going to be recording, and going through this one is a little bit different because this was really an actual conversation I just had yesterday. And I say I should make a video on this. So I'm going to kind of spitball this right off the top, but it should be really good. And then I'm going to go into the Q and A after the section. And so if you have questions, drop a comment in the chat and I will get to it. I literally have the chat pulled up right now. All right, sweet. So let me pull up my script, and then I'm going to actually share my screen and go through these things, but I'm going to pull up. I usually script out the beginning portions of these videos, so that way I have a good hook. So I'm going to go into that right now. So yesterday I was on a call with a $3 million home service business client of ours who was evaluating purchasing a $500,000 home service business to add onto his business. I went through this exact audit process with him as he's evaluating the purchase. The reason I'm making this video is because if you're thinking about acquiring a home service business or vaulting it into your company, these are the five questions that you should be asking from their digital perspective to make a good evaluation if this is a good fit or not. So yesterday I was on a call with a home service business client of ours. He's thinking about buying this company and bolting it on. And then that company was on the call as well. So the first thing that I asked him was, we need to look at your GA4, your Google Analytics for your website traffic. So I'm going to share my screen real quick and pull this up, and I'm going to walk you through exactly what you should be looking at with them. All right, I think if I do this, I do. I can do my window and I can share my window here. And then you. Okay, I get this thing, which that's frustrating. But let me just change my layout real quick to make sure this is good. All right, I'm on here. All right, so Google Analytics. All right, so this is Google Analytics. You can see this is a company, a carpet cleaning company. So these are the three things that you want to look at specifically when we're talking about Google Analytics. The first one is obviously you want to see website traffic, blah Blah, blah. But a lot of times companies will say, oh, I get 10,000 people to my website every single month, so it's worth so much money when you really peel back the onion. Not necessarily the case. And that's what we're going to do today. So if you go to reports, you can go to what's called your traffic acquisition report and you could run this like monthly or year to date. I just look at year to date and basically what we're looking at here is, okay, where did all this traffic come from? Is it coming from organic search? Is it coming from paid ads? Specifically yesterday, majority of their Traffic, probably about four 12,000 sessions, came from display ads. Display ads are pretty much like junk Google Ads that just get random clicks that are not actual customers coming to your website, but just clicks from all over the Internet. So ideally what we want to see is, you know, solid organic search traffic. Maybe they're running some paid ads and you see that, but we want to see really good organic search traffic. So in this instance, it's been 10 months, so they're getting like three or 400 people to their website organically, similar from direct traffic, people searching the name. So this is good. Now big point on this is that, okay, cool, you want to ask this question, is it local traffic? Because someone could have a blog post that gets thousands of views that is not your ideal customer. They're not in your local area. So you need to drill down a little bit more and you need to go back to the home screen and go and ask them, is this local traffic? And here's how we did it. So we went to the home screen. You can go down here to your country and you can click view countries and then you can drill down from country to state and then also to city. So I know this company in particular, they service three states because they're in like a tri state area. So if we did region, we'll be able to see that their traffic is coming from Maryland, which they're located in, and Then Virginia and D.C. these are the three states and district that they serve. So looking at this, I know that this is not traffic from China, for example, and it's specifically localized traffic. So this would be a good sign for me that says, okay, wow, they get good traffic here. And I can see that they get in Maryland, they have people that come from Maryland stay on their website for over a minute, which is good. This is good quality traffic that's coming to their site. This is all positive signs. So people cannot inflate their Google Analytics numbers. And you know, that's not necessarily facts. All right, so we looked at site traffic, we looked at location, we looked at the traffic by source. So the next thing that we want to look at is their actual ads. So they were running Google search ads. And specifically, I don't want to necessarily pull up someone's search ads and let me stop sharing. I don't want to just pull up someone's search ads and show you all their stuff. So I'll just talk through search ads in particular. And there's three main things from search ads that you want to look at. The first one is are they running campaigns? Different campaigns. There are several ways to kind of. Let's throw this thing together. The first one is smart campaigns, which is basically like the easiest campaign that anyone can run. Just set it up. The company I looked at yesterday, they had smart campaigns set up. What are smart campaigns? It's basically just like, hey, Google, here's my money. And just like, show me wherever you want to show me. This is why they had a bunch of display ads. So are you running smart campaigns? If they're running smart campaigns, they don't know what they're doing. Okay. Because in the smart campaign, the next question that we asked them was, what is your conversions? If you have a conversion set up on your Google Ads, then you should know. I spent $1,000 and I got this many conversions, which would be calls, form fills, that kind of stuff. So with this company, it was all messed up. But we're going to talk about smart campaigns. So that is just like fluff. The second one is when you have Google Ads, you can do custom campaigns, which custom campaigns is ideally what you want because you can drill down everything. And then there's other campaigns that you can run, which is like an AI campaign with Google, which they'll basically take your campaign and run whatever they want with it as well, with some guardrails around it. But essentially you want to drill down on the different campaigns that they're running, and are they running campaigns on the services that they offer, or are they running brand campaigns or what that looks like? We had another company that we were evaluating to work with and there's, you know, a $10 million business and they had all this brand campaign running and they had just no service specific campaigns running and doesn't make sense because then you can't target specific services that you want to target from campaigns with the company yesterday that we're evaluating, we asked them about conversions and this is where it gets kind of Squirrely. Because people can inflate these numbers if you don't pull them out. This is why I want to make hit this point home. They spent twelve hundred dollars on this smart campaign and they had four hundred conversions, okay? That means that they have four hundred leads. They spent twelve hundred dollars, got four hundred leads. So I called it out. I said, hey, so this says that you spent twelve hundred dollars, you got four hundred leads. Okay, does that sound accurate to you? You're spending $3 a lead on Google. Sounds crazy. So the business owner of that other company was on there. I said, hey, are you getting like 400 leads from Google Ads or like 40 leads maybe, or even less than that? He's like 40 or less. So this is a way that people can inflate their numbers because of the data when it's not actual facts because they have their conversion numbers set up incorrectly. But like this business exactly had. So a good rule of thumb is that if someone's spending search money on Google Ads, Google search ads, they're probably spending around 100 to $200 a lead. That's what it costs for a home service business. Nine times out of 10, whether it's H vac or it's gutter cleaning, it's going to be around there somewhere. So that's a good barometer for you when you think about ad spend. All right, the next one. So this is Google LSAs. Google LSAs, I can show you. And it's much easier to evaluate that process specifically because there's only like two or three things that you want to look at. So let me hop in here and I'm going to share my screen again and we're going to look at Google LSAs. So when you look at Google LSA, Google LSA is the top section that's like the Google guaranteed on Google search engine results page. It's different than Google search ads because it's what's called pay per lead. So you set up a Google LSA account, then if they call you or message you, then you pay for the lead. Google search ads is pay per click. What that means is that you get clicks to your website, but it's not actual leads. Alright? So going into their Google LSA account, these are the main things you want to look at is what's your budget. So like this company, their average weekly budget is $200. In the past seven days they got five leads. So that would tell me that their average cost per lead here is 40 bucks a lead. So this is good. Now here's the really important thing. Okay, they're spending $200 a week. So when you go over here, you can go to reports, $200 a week. So over a month time frame, they should probably be spending about $1,000 or $900 if it's fulfilling all the way through. So in this example, this company spent $900. They got 14 leads, and you can see that they're showing up in the top impression share and then they're. They're basically 50% here. Here's what I want to call out. The company that we looked at yesterday, they had a budget of $400 a week and they were maxing it out here, $1,800 they had spent. So looking at this as a valuation, I said, okay, well, why don't we budget. Get rid of the search ads budget. And you basically have unlimited warm leads coming into your business that are the cheapest leads that are the warmest. Very important. Any of you own a business. This is very important to look at because it's like, hey, you could increase this in your business. And you should start with Google LSA and then work to Google search ads. Because if you're fulfilling your full budget, ramp this up first, for sure. All right, we got a question. We have a question in between here. Live stream question. Hey, thanks, man. All right, cool. So the next thing is we want to look at is we looked at. So we looked at website traffic, we looked at Google Ads. Now we got Google LSAs. Then the question that we want to ask is any other ad channels? Do you have any other ad platforms that you're running on Yelp, YouTube, Meta, Facebook, Instagram? Because you want to figure out, right, we looked at Google Analytics. We can see the traffic coming to the site. But is there any other random places that you're running ads that are working or not working that we should know about? They did not have any. But same thing, ask the question of, like, how do you get most of your customers? It's just organic. People hear about you, they go to your website. Cool. Or do you have specific B2B partners that you work with? You want to uncover where they're getting most of their customers from. All right, next question is website stuff. So when we're evaluating a company. Let me go back over here and share my screen again. We're going to go to the window. We want to look at a couple things. We want to look and see that the services pages are built out. So if you have a company, you have services built out, the company we Looked at yesterday, they just have a services page, but they don't have individual services built out. So you want to make sure this is built out. Then you want to look and see if they have an area served section or even if they don't have an area served section, you want to look at service page, service area pages. So, like, you want to see if they have pages built specifically for the cities around them, and then you can go to them. And you want to look for the big three. The big three are your title tag, your meta description, and your H1. And what you want to see here is gutter cleaning in Scottsville, Virginia. Meta description. Something about gutter cleaning, Scottsville, Virginia. And then H1. Gutter cleaning, Scottsville, VA. Now, if you go to their actual services pages, it's the same thing. You want their main service area in the title tag, meta description, and also the H1. This is how you know that they have good SEO being done and that they're actually building out service area pages so that they have a good grasp on the, the local map area. Now, the company that we were talking with yesterday, they had none of these things. So it's a very easy sign for us to say, hey, we buy this company, we plug them, we plug in a good marketing game plan that's evaluating return on ad spend, that's building out SEO stuff, that is running good Google Ads, that's tracking your Google Analytics to make sure that you're converting the right people coming through your funnel. Everything is set up for this company to be successful, because this company that we valued yesterday, they actually dominate the number of reviews in their local area. So they have the best Google business profile and they rank in their area. They just don't capitalize on anything else. And there's a lot of opportunity for them. All right? And then the last thing that we want to ask when you're evaluating a company to purchase, to bring them into your business or to take over this company and run it, is about the customer list. So this is a question that we asked them, which was, how many people would you say you have in your database? Like a couple hundred, couple thousand? Some people, again, they inflate this number and they say, we have thousands of people in our database and you're going to have so many customers that are calling you to work with you. Okay, cool. How many people do we have in our database? Then we ask them a very subtle, easy question, which is, do you ever text these people or email them? And the guy yesterday said, yeah, we email them like every couple months, which he kind of gave me a softball. He didn't say, like, yeah, we have a monthly newsletter that we send out every single month cross selling different services. So you want to evaluate and say they have 4,000 people in their database. They've never sent them a text or an email or promo offer to bring them back into the funnel. Let's set that up. And now we have opportunity to grow the business. The last thing about customer list, I'll say is asking about any memberships or just one time things. So even if it's, you know, gutter cleaning, duct cleaning, electrical, what Any, any service, like, do you have any memberships or any ongoing services that you provide for these people? Because that will make a company a lot more valuable. And they might say like, hey, we tried something and it didn't work out. They might say that, no, but we've been wanting to do that. Whatever it is, if they have memberships, it's a lot more valuable because you have this repeat business if you're in H vac, plumbing, electrical, and you have memberships. I interviewed Patrick Lang on the podcast. He's one of the top people that sells H vac companies in the entire country. He said that a good barometer is for every million dollars in revenue, you should have 500 service contracts. So if you're evaluating a company that's $2 million, they should have a thousand service contracts. If they don't, then that's something to work towards because that's how you get the most valuation and a good benchmark number. All right? And then once we got through this conversation, we went through and analyzed all the stuff, looked at the areas of opportunity. I didn't obviously want to call it out on the call with the other company. So afterwards we debriefed and the company question was, should we roll this up into our business or have it as a standalone entity? So should we have our mothership, you know, which is a $3 million business, and roll this $500,000 into it, or keep it standalone and have it run as its own thing? What do you think? Here's my recommendation that I gave to him and that I'd recommend to you. The company that we evaluated had nothing built out, right? They had no services pages on their website. They had no SEO stuff built out on their website. They weren't doing Google search ads correctly. They had no idea what LSAs. They weren't maxing out their stuff. They probably weren't tracking it. They had no pictures on the Google lsa. I forgot to even mention that their Google Analytics, they were running random display ads. So they had nothing that was concrete. That was like, wow, this business has invested in all this stuff and done this. They kind of just like patched it and piecemealed it together. So I told them if you were to take over this company, put a new name on the Google Biz profile, take the customer list and send an email out that we've rebranded, you're not going to lose anything that they've built that is going to hurt the company going and switching over to another brand. So if it was me, I would roll it up into it. The reason that they were acquiring this company is because it's a whole nother area of the state that they want to target. So they have two other locations and they want this one. So roll it up into the master brand and then roll it up into good SEO on your website and then you're good to go. So if you're evaluating a company to purchase or you're thinking about these roll ups and you want to get some eyes on it from a professional, happy to hop on a call and walk through exactly what to look for when you're acquiring another company, we don't even have to go into their backend stuff. I could actually go through and look at their website, evaluate it, their Google Biz profile in their local market and also say, hey, this is probably what you should do, what you shouldn't do. It's the same exact thing when you talk with a company that is a home service business and you evaluate and say, hey, here's what you should do to grow. Here's what you shouldn't do to grow, which is our normal thing that we do. So I'll put a link down below. If you'd like content like this, be sure to hit like and subscribe and I'll see you in the next video. All right guys, so that was a quick recording of the video that we're going to do. Now I'm going to open it up for Q and A. So if you have any questions, you can drop it in the chat here. I also have a couple questions that have been submitted that I'm going to go through as well. So I'm live. So if you have questions, drop them in the chat. All right, so the first question that we have here is we are a $2 million exterior lighting company. How should I set return on ad spend targets across paid channels so I know what to scale or to cut? Great question. First thing is obviously you got to get your return on ad spend dialed in. You have to know that you spent $2,000 on Google search ads and you made 10,000. And I spent 2,000 on Yelp and I made 5,000. You have to know these numbers every single month so that you can make decisions for your business. If you don't know these numbers, you're just going off gut feeling and flying blind. All right, so once you know that, here's the threshold, it's 3x5x and 10x3x is like, okay, you know, this is not great. But I also, maybe there's some opportunity to get this better. So you spend a thousand dollars, you made $3,000. Not terrible, but not great. 5x is the standard. I would say 5x means you spend a thousand, you made 5,000. So, like, this is pretty good. I think that you should continue to do this. If it's around 5x return, continue to do that ad channel. Now, if you're getting 10x, then this would tell me that you need to kill the other things and put more money on 10x. Because 10x means that there's an anomaly. There's an opportunity in your market to capitalize on this ad channel and get an outsized return from what would normally happen. Which would be a 5x would be pretty standard for most home service businesses. So that's how I would evaluate it. If you're like 1x2x and you run it for a couple months and you can't seem to get the ad channel working for your business, it's not necessarily your marketing channel. Your marketing company sucks. It's not necessarily that you can't close the deals. It could just be in your market specifically on this ad channel. This didn't work for us. And maybe it's the creative, maybe it's the timing of things. There's a million different things. But if you have something that's producing 5 to 10x, take the money and do that. They also ask for brand search. Do we really need to pay for a campaign if not many people know our name? Okay, great question. So here's my two cents on this. You can actually run these conquesting campaigns and you can see if people are running ads on your name, what this looks like. And when I tell people this, it usually shocks them is if you search for Pepsi, then Coca Cola can show up on that search because on Google, it's just a keyword. So someone types in McDonald's and you can show Burger King. That is what happens when there's a Lot of dominant players in the area is that people try to steal your searches. They try to say, oh, well, this person gets a lot of brand searches, so let me hop in under them and say, we're better than this company. And instead of searching for them, you should click on my stuff. That's how this works. So in your market, if there is some competition or you can, because actually if you run conquesting campaigns, you can see if people are bidding on your name. So you can see that this person is bidding on my name. So I need to protect my name. So you should run brand ads on your company. If there's no competition and no one is running ads on your name and you're just like, hey, I'm just hanging out out here, then don't run any brand campaigns. Focus on getting the people that don't know your name because they already know your name. They're going to find your Google biz profile anyways. But there's a way of protecting your brand name by running brand search campaigns. All right, next. I own a $2 million gutter cleaning company. What's the right split between Google search ads and Google LSAs if I'm chasing near term ROI? All right, so when we talk about what is a good budget, we get this question a lot. Like, should I spend how much should I be spending on Google search ads? Is a common question people ask me all the time. So here's my common answer is you need to have a marketing budget and it needs to be 3 to 10% of your revenue. So you make a million dollars. Your marketing budget needs to be 30,000 to $100,000 dedicated to marketing. Then you hire a marketing company that fits in between those thresholds and you have money to spend on ads. That is your marketing budget. And that's how you should make decisions. Once you have that budget in place, then you can deploy the funds, get the return on ad, spend back, and then make decisions of does this work or does this not? I know it sounds very simple when I explain it to you. It's kind of crazy to me that more people don't do this, but a lot of times just a shotgun approach to like, let me throw 3,000 at this and see how this goes. Let me spend 5,000 over here and see how it goes, and then I'll get a gut feeling if this works or not. Okay. If you want to professionalize your business, it's what I just told you, 3 to 10%. Build out your return on that spend, get that dialed in, make decisions and then you're going to grow your business. There's no way that you can't because you're going to have the data. So what is a good split at the beginning of this? I was walking through Google LSAs, Google search ads and I looked and said this company is maxed out on Google LSAs so they could increase their budget. My recommendation is if you are maxing out your Google LSAs, you need to put all the money that you can on that. The reason is, is because Google LSA is the number one spot on Google and it's the cheapest leads. Usually it's usually a fraction of what your Google search ads is. Maybe half, maybe 75%, three fourths, but as much money as you can on Google LSAs and then work down Google LSA, Google search ads, Yelp Meta, YouTube mailers, home shows, giveaways, those types of things. Work down like that. This is going to give you a good benchmark. So what's a good split? Start with Google LSAs, max it out, then go to Google search ads and evaluate it every single month. Maybe Google LSA opens up a little bit more so you can increase your budget. Take some from your Google search ads, put it over there. Pretty simple as that. The biggest thing is if you want near term ROI is what his. The second part of his question says focus on LSAs. Because LSAs, if you're not maxed out, it's going to be the warmest leads that you can get. Quick, quickly. All right, next question. We have here. I run a four million dollar window and door company. Are newsletters worth doing for homeowners and contractors since it's a one time thing. All right, great question, great question. Hey, I'm a remodeling company. I go out to their house and I do this big project. Why should I be emailing them every single month? Like that's annoying. They're not going to buy another bathroom or another kitchen today or next month. They just got a kitchen. Okay, I get it. Two questions, two parts to this. First, do you offer other services? So for example, we have a custom closet coming that we work with that they build custom closets. Okay, how many times do I need to get a custom closet ever? You know, once. Okay, maybe twice. But what we did was the first month they do custom closets, but they also do custom office closets, right? Like office build outs behind them like custom cabinetry and that kind of stuff. So we said, okay, well let's just cross sell some other things. So the first month we send out an email about their custom office and it says, are you planning a custom office in the new year? Then we want to help you. And then showed some like nice gifts before and afters. Here's our process for offices. All that nice looking email with a customer testimonial inside of the newsletter about an office that they did. Someone emailed back right away. She said, I wish I would have gone for you for my custom closet that I did six months ago. I want to do my office now and I'm going to work with you guys. Okay? Lo and behold, email marketing works and you can cross sell services because some people don't work with you and they wish that they did. That's one example. Second example, this same company, six months later, we've been sending out an email every single month. They had a ghost, a friendly ghost, call her Casper. Friendly ghost. Casper came around and said, hey, it's been six months. Is my estimate still good that you gave me six months ago? I'm ready to work now I'm ready to work with you. She responded to an email newsletter about the process that they use when they do this work in someone's home. So what I'm telling you is that it's a catch all for all your prospects, all your customers, everyone that comes to your funnel and you should send it out every single month to everyone. If it's like we build custom homes and that's all we do, okay, custom homes or like really, really narrow, narrow one time things, then it's not. But usually you have some other cross sells. You do windows and doors, you do windows, doors and also sliding doors. Like there's a bunch of different layers to this that you could go through and talk about. The other piece I'll say to this is the question was are newsletters worth doing for homeowners and contractors? Yes. And you can split them out. So let's say you have contractors, let's say you're a remodeling company. Then you might have realtors that refer you, you might have interior designers that refer you. If you run a B2B game plan which we talk about and you want to put these people into a newsletter. So that way you're top of mind with them because they might not be doing the service with you directly, but they're having conversations every single day with people that they could refer to you. And especially if they could pull up a newsletter and show them before and after pictures, you give them some ammo of things to talk about are changing in the market and you stay top of mind in their brain, they are going to refer you business. I guarantee it because I've seen it done time and time again. So I run a $4 million window and door company. Are newsletters we're doing for homeowners and contractors. Since it's a one time thing. Yes, yes do do email newsletters please. All right. That was a fun live session. I appreciate the people that hopped on. If you have questions, you can always go to flashconsulting.com? and submit them there. We're on live streams usually every Friday we hop on live streams and happy to be a resource.