There’s a formula to scaling your home service company that’s been proven thousands of times before and will be proven thousands of times again. Before diving in, it’s important to know one very important truth. Your business will inevitably hit a ceiling. According to Gino Wickman and the book Traction, there are three types of ceilings; Organizational, departmental, individual
Organizational:
The capacity of your business is limited to your service offering, service frequency, qualified customers and area you serve. Unless you expand one of these things, your organization will hit a ceiling.
Departmental:
If you haven’t started your business, I guarantee your lead generation, sales, operations and admin departments will all look different than they do today. If you’re a seasoned veteran, how many times have you had to make a change to a process because what once worked no longer works? The needs of your departments change over time, being aware of their limits, technology and your people’s capacity will help stay ahead of your inevitable ceiling.
Individual:
According to John Maxwell’s Law of the Lid, your ability to effectively lead is directly related to your abilities as a leader. As leaders, CEOs and executives, our job is to constantly raise our own lid to better lead those around us. Leadership is a practice just like law and medicine. Rational leaders don’t wake up and say to themselves, “today I’ve mastered leadership. I am the supreme leader.” Leadership is a lifelong process and something we all learn more from every day.
Over the past 11 years, I’ve worked with hundreds of home service companies ranging from day-zero and $0 in sales to 9-figure international brands. What I’ve learned is that regardless of your business structure (franchise or independent), you will hit a ceiling. Working with a franchise organization should, in theory, instantly raise the ceiling due to their proven process(organizational), community and internal leadership(departmental). Before you go all-in with the franchise model, know that not all franchises are created equal.
Spending 8 years in home service franchising taught me that franchises are perfect for some and terrible for others. Here’s a list of things to consider before purchasing the rights to a franchise, becoming a licensee of a brand or charting your own path as an independent / small business owner.
To Franchise, license or go independent: Written specifically for home service businesses.
Franchising PROs:
- A Franchise is a brand in a box: Franchises are turnkey, proven business models to help skip the learning curve and take the fasttrack to scale.
- Dedicated support system: Every professional franchise organization I’ve ever seen has dedicated support staff to help guide you through all aspects of your business.
- Be part of a community: Most franchise organizations offer protected or exclusive territories meaning
- Startup financing is more attainable: In the eyes of banks and lenders, franchises are safer than independent businesses due to their likelihood of success. To help offset the high cost of purchasing a franchise, it is relatively easy to secure low interest financing.
- I have to give a shout to my old home, Neighborly™. Most of what I know about franchising and home services came from my time with their brands. If you are seriously considering a franchise community, start here!
Franchising CONs:
- Limited flexibility: The pro of ‘brand in a box’ can be limiting at times especially when it comes to adding / removing services, doing things differently, choosing software, modifying messaging or servicing outside your protected or exclusive area.
- Lack of ownership: Although you do own the rights to your territory, you don’t own any of the franchisor’s intellectual property including logos, websites, photos, videos, etc. Most importantly, you do not own your customer list. When it comes time to sell your territory, the only option is to sell the rights to your territory.
- Royalties: I was torn on this one. I’ve talked to hundreds of franchisees who’ve said they gladly pay royalties. However, the overwhelming majority say that the royalties were 100% worth it during the first few years. Now they know exactly how to run the business and don’t really see a need to pay at or near 6-figures each year for the rights to use a brand name.
- High start-up cost: Another pro that can also be a con. Franchises are not cheap. For those who don’t have the desire to start something from scratch, and have the capital, the right franchise is always a frantasic option. However, be wary of franchise organizations that over promise and have a history or under delivering.
Independent PROs:
- Start & grow at your own pace: Most franchise organizations require a minimum marketing spend and performance to remain in good standing. As an independent business owner, the only limitations are your desire and ability to scale. Start small, be your own boss and stay small. Scale and create a lifestyle business or go all-in to create your own franchise brand. The limitations are seemingly endless.
- Flexibility: As an independent home service business owner, you are free to choose your service offering, service area, marketing message, offers, colors, culture and values. If and when you’re ever ready, you can also have the flexibility to scale through licensing your brand or hiring GMs to run new locations.
- Low start-up cost: Although start-up costs including tools, vehicles and materials, varies greatly by industry, the absence of a franchise fee will almost always free up capital to invest directly into your business when it matters most. Day ONE!
- Lower overhead: Royalties allow you to save generally 6% – 8% which flows straight through to the bottom-line. Having the ability to choose your own software, materials, chemicals and standards can also save you money. Be wary though. Making the wrong decision can also cost you.
Independent: CONs:
- Lack of community: Owning a home service business can seem lonely at times. The con of lack of community doesn’t have to be a negative. There are plenty of incredible and reputable online home service communities you can join to build your own tribe. Check out MAPS Mastery.
- Building a brand is hard work: The amount of time it takes to find a brand name, register its mark, create a logo, deploy that logo to your custom website, marketing materials, uniforms and launch cannot be overstated. Be ready to invest some service time and creative brain power when coming up with your memorable brand name.
- The inevitable learning curve: Whether you came from the field or are starting from scratch, there is a steep learning curve to managing all aspects of a business. Finding a community will help, but there will be a time when you hit a ceiling. It’s how you deal with it that will define your success as an independent business owner.
There is no magic solution when it comes to starting and scaling your home service business. Begin with the end in mind then reverse engineer your path looking at the pros and cons of both franchise and independent models. With as much education and information that exists in todays online world, there’s no reason you can’t be successful in any path you choose.
As a CONQUER coach, I’ve worked directly with dozens of independent home service business owners who have tripled their businesses in 3 years to become 7 figure entrepreneurs. As a consultant for Neighborly, I saw hundreds of franchisees follow a proven system to scale to impressive numbers just as fast and be just as happy.
“Everything works, nothing doesn’t” – Ray Burke
ClickCallSell is a digital marketing for the exceptional home service entrepreneur. We would love to be part of your journey scaling your home service brand. If you are interested in working together, book a Good Fit call here.
