How I Built a Home Services Company

Home Service companies might be unsexy but they are recession-proof and can be engines for creating wealth.

How I Built a Home Services Company webinar explored how two savvy operators, an ex-government employee and a hedge fund associate, have built successful Neighborly franchises.

Here is the step by step process Chevonne Woodard & Neil Finneran used to identify the right business opportunity, finance the startup costs, get their first customers and hire the right early employees.

How to Get Started?

Chevonne’s background at an appliances company earlier in her career led her to choose Mr. Appliances. After the business where Neil worked as a CFO was sold, he had several franchise deals run by him. An underperforming Mosquito Joe location checked all the boxes for Neil.

• Utilize the franchisee network both before and after you start. The validation process within Neighborly helps aspiring franchisees to talk to the existing ones.
• How to make the leap? The question of stability is relative. Although there is “instability” in owning a franchise, you have agency over your income.
• That being said, prepare for the cyclical nature of home services by having contingency funds. Especially when starting out, have funds ready to sustain yourself for the first few months.

Financing & Profitability

• Both Neil & Chevonne financed their franchise with a combination of savings and an SBA loan.
• Make sure to have startup and working capital for the first 6 months. Cash flow is not as straightforward in the beginning, so you want to set yourself up for success.
• ProTradeNet from Neighborly provides options for various SBA lending vendors.
• How to build a Financial Model: talk to franchisees, understand the local market, understand fixed expenses, and customer acquisition costs
• Consider “Roll over 401k” option or a home equity line of credit if it’s an option
• Find brand’s revenue from the FDD’s Item 19.
• When talking to franchisees, differentiate the revenue that they make without paying themselves salary. Different owners pay themselves differently.

First 90 Days: How to Launch?

• For you’re buying a resale location, try not to screw up what already works.
• Although it’s a franchise, you still have to be entrepreneurial.
• For de-novo franchises, in the first 3 months, you’ll be hiring, networking, looking for partners to find staff, vendors, trucks, uniforms, compliance, etc.
• What to do in the first 90 days? Block & tackle. Talk to neighboring franchisees to determine what to do.
• Pay attention to customer lifetime value and marketing cost of acquisition tp determine the margins on each customer

Being a Franchisee: Expectations vs. Reality

• Being a business owner can be lonely. You’ll be the main driver of agency.
• Battling customer complaints can be emotionally challenging. Focus on the 95% of customers who are happy.
• Network of franchisees is a unique difference within the franchise system. Other business owners don’t have the benefit of consulting with their “competition”.

What’s Next for Neil & Chevonne?

• Acquire neighboring territories
• Add complimentary brands to the portfolio

Advice for Aspiring Franchisees

• Understand what you want. Do your research. What brand makes sense for you?
• Understand what you are ready to temporarily give up to build the company

See all clips here.

Get more info on Neighborly brands here.