Apr 6, 2022
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 min read

6 Life Lessons from Starting & Selling a Home Services Business

2021. What a year!  I got married for the second time thanks to a COVID-delayed wedding, WeHero continued to grow, and I started and sold a home-cleaning business.

Selling the home cleaning business was a minor win; once the documents were signed and the transition complete, I spent a weekend thinking about what broader learnings I could take from this experience. What important lessons could I take into my existing projects and new adventures? What did I discover in this experiment that I will carry with me for the rest of my life?

Never underestimate what you can do in a year:

  • If you're reading this because you want to start (or buy) a business, stop reading and start doing. If you don’t know all the answers to everything, that’s okay — in fact, that’s entirely the point. Figuring out how to make things work is how you build enterprise value. Fast action compounds over time, and the most successful people I know make things happen not in weeks, but hours.
  • Ignoring the small amount of success that I had in this specific example, even if the business had been a massive failure it would still have been a major win. In the first 3 months, I learned how to launch, market, and manage a home services business. I learned about new technology vendors, met great people, and discovered a completely different world than the one I was already operating in.
  • After years of researching and investing in businesses, I finally started one from scratch. Let me tell you, it’s a completely different skillset and it’s exciting to start building that muscle.
  • As I look back on the year, I’m motivated to use the get shit done attitude on higher-leverage projects.

Build before you buy:

  • With the current market environment, I’m a believer of building vs. buying when you’re looking at low-capex intensive businesses. Purchase multiples are high right now in the SMB world and for businesses requiring low start-up capital, the potential return on starting a business can be significant. Not to mention, it’s a lower risk way to test whether you want to run this business for the foreseeable future. How many people sign personal guarantees and get SBA loans only to realize they don’t love the business, but have to be involved for 5+ years?
  • If you’re searching for a business in a certain industry, why not start something in that space. You’ll get a better sense for the business and become better at diligence, buying and operating that business. Most importantly, sellers will look favorably on a buyer who is willing to roll up their sleeves in the industry! Not to mention, there’s a chance if you build something with enough scale, you won’t need to buy a business.  

Recurring revenue is holy grail:

  • One of the goals of launching this business was to learn localized marketing and I enjoyed that part of the process, but the best decision I made was to exclusively focus on recurring cleans. Because of this decision, I could afford to have a higher acquisition cost because my lifetime value of each customer was high. Instead of continually marketing to keep revenues flat, I could focus on growth marketing instead.
  • It’s a great feeling knowing that I could forecast my business. If we treat customers well, the churn should be relatively low. This reduces the stress on all parts of the business.  

The customer isn’t always right, but don't tell them:

  • Home services businesses are dependent on happy, local customers. These services are highly susceptible to inconsistencies and product quality issues. In home cleaning, that’s exacerbated by the fact that the product we deliver is a clean house. When our cleaners showed up, the houses were in a variety of different conditions. Buy me a beer and I’ll be happy to tell you a few stories.
  • No matter how good our cleaners were, we got the occasional complaint. Some of these were fair complaints, while some were a bit questionable. Either way, I learned quickly while taking phone calls that every complaint is valid — even if it’s not. Even after I hired a manager for the business, I tended to get referred to the biggest complainers. People love talking to owners and I became the de-facto therapist for clients. I’d always respond by giving them their clean for free. This shocked everyone. But for me, the logic was clear. Most of my clients were returning time and again, and if I gave them a free clean, they’d typically stick around. We treated our customers like royalty and benefited because of it.
  • There’s something inherently personal about cleaning a home and I want to take the same personal approach in all of my endeavors. By listening to customers, you make them feel heard. More importantly, you learn about your own business. This whole exercise builds deeper overall customer relationships.

Do good by your team:

  • Hiring and retaining employees is hard in today’s market. One of my proudest accomplishments for this business was that the same cleaning staff I started with, I finished with. Paying well and treating people well works and because of that, I didn’t have to spend precious time hiring new cleaners.
  • Our cleaners are some of the hardest working people I’ve ever met. The fact they could deliver such high-quality service while doing back-breaking work at 3-5 houses a day was impressive. I can barely clean my own bathroom!
  • As I got to know the various cleaning teams that worked for us, I heard countless stories about how bad they had been treated over the years. Due to their background and education, they had been taken advantage of. Coming from a more traditional background, I couldn’t imagine that owners would do such reprehensible things. I took a different approach:
  • 100% transparency
  • Key terms were agreed upon at fair levels, then I did what I said I was going to do. Follow-through builds trust.
  • Admitted when we messed up.
  • Provide incentives for going above and beyond. I provided a mix of cash and gifts. Any extra cash would probably have been saved by them, so I occasionally provided massages, restaurant gift cards, etc.

Managing a knowledge-based business is very different, but the exact same factors go into treating employees well. Be transparent and follow through on what you say. Talk isn’t enough. Employees want to see action.

Spend your time wisely:

  • Everyone’s time is limited. We’re forced to balance family, health, work, and relaxation. There’s never enough time to squeeze everything in and it always seems like we’re playing from behind. I do my best to avoid sacrificing family, health, and relaxation so I’m stuck with a fixed amount of work time. How I spend this time is essential.
  • As I work to meet my goals and ultimately build some form of legacy and comfort for my family, I need to choose my allocation of this time well. I’m still in the early part of my career and I need to prioritize learning and long-term potential.
  • The projects I prioritize over the long term need to have two key properties:
    Meaningful long-term potential in terms of enterprise value growth or cash flow generation.
    Long term interest, learning, and intellectual stimulation.
  • Even after fully outsourcing the day to day management of the business, I was still mentally engaged and would have been responsible for driving the majority of future growth in the business. Unfortunately, due to the margins of the business, the true cash flow potential  wasn’t going to help me meet the goals I had set over the long-term.
  • After the initial launch and running the business for 3-4 months, I had largely stopped learning. Sure, there were incremental learnings, but not nearly significant enough to justify my ownership. Not to mention, I wasn’t intellectually stimulated by the cleaning business.

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