Over the last decade, one of the biggest areas of growth in franchising has come in the number of home service franchises. These are businesses that bring their services directly to the customer and perform a unique and valuable function that saves time and money for busy homeowners.
There are a wide range of home service franchises that cater to a diverse set of needs for a homeowner. Some examples include maid services, lawn care, pool cleaning, pest control, air conditioning maintenance and garage door repair. Most homes will require regular maintenance in or around the house over the years and this work is often too time consuming or requires specialized tools or training. It is a great market for home service franchises to capitalize on the demand for this work.
With home service businesses, operators don’t need a retail storefront. Instead of spending $250,000 or $500,000 to secure a lease for a certain location, build it out and put the infrastructure into it, they can open the business either from their home or a small office. Initial expenses to start the business are much lower due to a lack of a brick-and-mortar location since these owners are taking their services to the customer.
While not having a storefront location and all the expenses that come with it is a nice financial benefit for many owners, it can also present some challenges. Businesses that have a store, which often includes a sign advertising the company in an area with potential customers, helps drive visitors into the location. That is not the case with home service franchises. Nobody is coming through the door and people do not know the company exists.
For that reason, home service franchise owners need to be willing to proactively advertise their business and network in their community so that people know what the company can do for them. In order to grow the business, these owners will not need to add more locations. They will need to promote their services, hire employees and attract customers for their business to be successful.
One of the most appealing aspects about home service franchises is their organic growth approach. By investing in marketing and hiring talented employees, franchise owners can scale their business upward. People can start out with a business with no customers on day one, but through continual reinvestment in things such as marketing, service vehicles, technology and retaining a good staff, they can grow the business to bring in millions of dollars per year. It sounds dramatic but I have seen it happen.
Like most business owners, home service franchisees need to be well-organized and have good customer service skills. The goal is to attract customers and the right employees to the business and make sure they are satisfied with its services. However, I would say the top skill owners of home service companies need to possess is the ability to manage employees.
Finding good employees is important for any business, and even more so with home service franchises because the staff is often the ones going out and doing the work. For these franchise owners, it is crucial to be able to identify, motivate and retain productive employees.
With a low-cost entry, large customer base and scalable business model, the number of home service franchises have grown exponentially over the last decade. Why have these concepts grown so quickly in recent years? I really believe a lot of it has to do with the evolution of technology.
If you go back 20 years, there really wasn’t a lot of technological advantages a home service franchise had versus the mom and pop businesses. Everyone had the same kind of bookkeeping systems, advertising and other business methods. Today, the technology advantages a home service franchise can deliver are rather substantial. It is much easier for customers to find service-based businesses through internet searches and SEO techniques.
Another powerful tool that has been created over the last two decades is a CRM (Customer Relationship Management) system. It is an expensive endeavor to build a comprehensive CRM system. Once it is in place, however, it allows business owners to manage scale in a very effective way. All home service franchises provide comprehensive CRM systems to help people run their business. The systems include portals for scheduling, routing technology and automatic billing for the customer.
CRM systems are a tremendous resource for home service franchises in many ways. With a click of a button, owners can find out the exact location of their company vehicles. They can also run P&L’s based on service teams or service routes and can examine their profitability based on a variety of factors. With this technology, franchise owners can also compare their sales, retention rates and efficiency versus others in the system to evaluate their relative performance.
The technology platforms developed in recent years are quite extensive and give home service franchises a major strategic advantage in the marketplace. That is something that didn’t exist in the past and that is one reason we are seeing such and explosion of growth in this area. To that end, there are many franchisors currently building platforms that allow for them to run multiple home service franchises under one umbrella. I expect to see this trend continue.
For those people who have a significant amount of money, opening a storefront business might be the right way to go. But if the individual is short on capital and willing to put a lot of sweat equity into the business, then a home service franchise could be a very attractive option.
Rick Bisio is a leading franchise coach with FranChoice, the creator of the FDD Exchange and the Franchise Glossary and the co-host of Rick Bisio’s Franchise Focus. Since becoming a franchise coach in 2002, Bisio has assisted thousands of aspiring entrepreneurs nationwide explore the dream of business ownership.