By Steven Knight, creator of solutions and opportunities at Mosaic Home Services Ltd. — building Canada’s largest home improvement franchise network.
In a previously published article, I wrote about one of the most challenging topics entrepreneurs in the home service industry will face: how and when you should diversify your revenue stream. I share my experience and framework, dubbed “the 4C model.” In this and subsequent posts, I will dive deeper into each of the C’s and give some examples and practical advice that can be applied by entrepreneurs who mean the best but oftentimes damage their businesses by overlooking the basics.
Looking at our first C — customer — I challenge readers to think about a tough question: “Who do you want your customer to be?” To any entrepreneur early in their business career, or to anyone who is thinking of starting their own business, this question may seem ridiculous. A customer is anyone who will pay you, right?
Wrong. In the home improvement industry, it’s incredibly common to see passionate entrepreneurs grow their businesses by taking on whatever comes their way, often resulting in the scope of the work creeping out of the business’s true area of expertise. The truth is that customers will bankrupt you with their wants, and if you want to grow your business, you have to get laser-focused on who you want your customer to be.
Let’s look at the hyper-competitive cleaning industry. Who hires residential cleaning companies? Buyers could be:
• Property managers
• Private investors in rental properties
On paper, four main customer segments doesn’t seem like a lot, and this is where most entrepreneurs will stop digging. Let’s look at Casey, a maid service operator. Casey started her business two years ago. She has 20 homes that she cleans once a week for homeowners, and she cleans condo buildings every day for two property managers. This summer she has decided that she wants to scale and grow her business.
Casey talks to a friend who’s a realtor about her desire to grow, and all of a sudden the realtor starts handing her move-out cleaning projects. The real estate market is booming and the realtor wants to set himself apart by offering a free move-in clean with every home he sells. This is great for Casey’s business and revenue starts to shoot up. Casey’s cleaning company does a fantastic job, homeowners are happy and some of them are even hiring her to come back week after week once they’ve moved in.
One hiccup, though: Casey has to do all of these cleans herself. She has staff to do the regular weekly and daily cleans she has under contract, but because this realtor only hires Casey when he has a family moving in, the work is unpredictable and usually stacks up at the end of each month.
One day, Casey’s phone rings. It’s her realtor friend who has a home he’s trying to list, but there’s some staining on the carpet; he’s wondering if Casey can clean it. Well, Casey doesn’t do carpet cleaning, but how hard could it be? They rent carpet cleaning machines at all the local hardware stores, so it should be easy enough to figure out. Now Casey is trying to learn a whole new skill set in a highly technical industry, and she could cause thousands of dollars’ worth of damage to the carpet if she’s not careful.
Casey shows up to do the carpet cleaning when the realtor tells her that he has three deals closing on the same day next week and all the houses need to get done the same day. Casey can’t be in three places at once, so she’ll need to move some of her regular clients around. They shouldn’t mind too much, right? Casey calls to try to make a move when she finds out that one of her property managers is livid with her. Cleaners haven’t shown up for three days to one of the condo buildings and Casey had no idea. Usually, she has time to check up on them, but she’s been busy with the move-in cleaning. Now she’s got a real problem: Her new customer has caused her to neglect her old ones.
Not all customers are cut from the same cloth. Had Casey spent more time talking to people in her industry or asking her new customers questions about their needs, she may have been able to better plan her entrance into a new service offering.
Casey made the same mistake many entrepreneurs with growing businesses make: She didn’t ask the questions that were second nature to her. She made assumptions, assuming that move-out cleaning would be consistent throughout the month, that her definition of “clean” matched the customer’s definition and that she would get paid on the same day she finished. Instead, she could have asked her customer, or similar service providers in a different geographic market, simple questions like:
• How many homes do you need cleaned on a regular basis?
• When do most move-ins/outs happen?
• Do you ever need specialized services such as window washing or carpet cleaning?
• Would you like us to move all the appliances and clean behind them?
• Who pays me? The realtor or the homeowners?
• Can I approach new homeowners for maid service?
Asking simple questions can help entrepreneurs better understand what changes they’ll need to make to their businesses, as well as uncover any extra value, such as new customers, that may come from new offerings. Ultimately, had Casey spent that time looking for more customers like the ones she already had, offering the same services that she knows inside and out, she could have avoided putting her company and customers in jeopardy.
Before you enter any new market, no matter how insignificant the shift may seem, ask yourself, “Who do I want my customer to be?”