I considering starting a new branch of my buisness. My idea is for a flat fee say$400.00/ year a service tech would come to a home every 4 months and inspect and clean those systems homeowners neglect. For instance:
change furnace filter, check window operation, check and clean dryer vent, check sump pump, clean refrigerator coils, replace ice maker filter, inspect for under counter leaks, winterize hose bibs.
Basically providing a service to homeowners like a real estate management co does for rental properties.
Anyone out there who does this? What are pros and cons. My thinking is this would be an inroad to larger jobs with a cutomer you already know and trusts you.
Replies
There are a number of these small operations in our "cottage country". One I know also provides cleaning and gardening services. They have a number of flat-fee services, a few custom fee services, and do additional jobs on individual contracts. Once they get rolling, they are like juggernots; however, I've been told they are very difficult to administer (schedule, bill, staff, ...) as soon as they grow beyond a handful of workers.
Phill Giles
The Unionville Woodwright
Unionville, Ontario
Phil- I agree this could potential turn into a bad service buisness. My initial plans call for about 20 customers with homes older then 7 years, prefferable in the same neighborhood. What I'm hoping to get is small profitable jobs customers tend to neglect for lack of having relashionship with a contractor. Like pointing a chimney,door replacement,rotten ext.trim and the likes.
I'm hoping I can fill down time (like today) doing the home maint. jobs.
I dont know if you can access Sonny,s posts in the archives or not , but it was pretty impressive to a country boy like me. I think the calling would be strong for a whole lot more. Sonny started out in a handy man system and now its pro solutions or something like that. Keeping tools and the business organized by the number of jobs and customers , along with keeping supplies on board are the main three things I see. Of course charges have to be higher than a carpenter. Add floor care to that and you wouldnt get a weekend off. I think comercial and industrial has a demand also. They dont have carpenters , painters , repair artists , and floor care people on staff . No job slot I was once told . I once went calling on managers asking if they needed such a thing. I filled up quickly. One plant gave me 40 hrs a week during off peak hours. Ask and you shall recieve. Of course weekends are gone as I said before.
Tim Mooney
GEOB21 I to have been working on setting up a Home maintenance program just
like you're describing (with a fixed fee program) as an adjunct to my business
too. However what Phill says about "Once they get
rolling, they are like juggernots; however, I've been told they are very difficult
to administer (schedule, bill, staff, ...) as soon as they grow beyond a handful
of workers" is very true and is just what I have read and heard
from others as part of my business planning research. Everyone has cautioned
me that they can grow to be a logistical nightmare if you aren't careful and
prepared and ready for it.
The way I am dealing with that is that I will only develop that as part of
my business when I can get a key employee to develop it around. In other words
my thinking is it really has to be run like a separate business. Yeah it can
be part of you existing corporate umbrella but for it not to turn in to a potential
boondoggle it needs to run as a standalone or it will eat you up. Make it a
separate division with it own set of books and numbers or you will have a real
mess trying to evaluate it's Return on Investment and Profitability.
I do think it's a potential solid consistent money earner however so that why
I am remaining interested in it an still actively looking for a new associate
to develop it with. And there are are a lot of other potential upsides to it
that could make it a goldmine too.
Sonny has been extremely successful doing what he calls "Preventative
Home Maintenance" but the last I knew he had hadn't explored the "flat
fee say$400.00/ year a service" idea like were talking about here.
The other question that remains unanswered (at least for me) is can the business
model be expanded into a multi-person operation? Sonny's operation last I knew
was back to just a solo operation. So the question is what are the obstacles
to growth in terms of growing and expanding the business? Phill's caution above
and what other people with more experience in it than I have told me is that
that it's setting up the systems and the logistics. However since Sonny has
always been such a big proponent of setting up those systems ( "a la Gerber"
as he often refers to it) maybe the obstacle is recruiting the right personnel
to work in the business. I know that has been a real tough part for me so far.
I don't know what the real answer is yet but I think those are questions we
have to ask.
The "flat fee say$400.00/ year a service"
which I really like as an idea and what I been thinking about too also has it's
problems and some of them relate to what were talking about in the Pricing for
‘perceived value’ topic. In fact I think that has a lot to do
with it. We really need to understand just what will the customer expectations
be for that $400 per year service? Is $400 enough? Enough for what?
A year ago at this time Sonny posted a message on the JLC site where he said
"Target Costing" ...And yet another view at
this aspect of our businesses, especially those of us wo do Cost Plus or T &
M." and then provided a link to a paper on Target Costing. I waited
for a while to see if anyone would ever question him on it or say anything about
it and call him on the issue because Target Costing has absolutely nothing at
all to do with Time & Materials work. No one ever did ask him for clarification
or ask what he was talking about . It fact Target Costing is about exactly the
opposite.
Target Costing is however very much about the "flat
fee say$400.00/ year a service" idea. Target Costing according the
the paper Sonny had cited means:
I think a simple and less obscure explanation of Target Costing might be:
It's working backwards. Sort of reverse engineering the price to determine
the cost of producing it. It's just what I brought up too in my post where I
was asking about how
Philip Sicola prices the work his company does in the "Pricing for
‘perceived value’" topic . In other words it's like saying "we
can sell a Preventive Home Maintenance Service Contract for $400 let now figure
out if we can do it for $400 and still return a nice profit."
Using that Target Cost thinking I think the $400 per year figure is low (at
least it is for me here in the Westchester NY Fairfield CT region). $400 a Quarter
however sounds like a better number to me. The question is can it be sold at
the price of $400 a Quarter or maybe at a discounted of price of $1350 for a
year contract (%10 off)?
I got some other questions and ideas on it too. One idea came watching the
guys who mow my lawn as they came-and-went today. Good idea I think, talk to
ya later...
Forum hint:
"Architecture is the
handwriting of Man." - Bernard
Maybeck.
I got a little off track, but I will close back in . Both of you are thinking about this at the same time . Why? A successful business is a profitable enterprize that operates with out you. If you are sick on monday , money is comming in. Jerald you touched on hiring help. Good idea. My question has always been this ; Do you furnish them a comany truck with tools ??? Insurance ? What were yall thinking there ? I know many contractors who would get burned by their help with out liability. Just rambleing ..........
I know an oil change garage here that had a helper working his first day. changed the oil on a brand new Lexus. He screwed the nut in a little , some one hollered at him, and she drove off with the car, didnt make it home before the engine blew. Pretty simple !!!!
Tim Mooney
Presently My interest is only on a small scale. I've gone the employee route and really don't like it. If this were to grow I have a network of self employeed contractors I would feel very comfortable subing out to.
My original thinking is providing only basic services covered under the flat fee, like furnace filters,cleaning the fridge coils, outside dryervent etc. Not all services would be provided at each visit.I think me and a helper could get at least 4 inspections done in 1 day. Not a real money maker of a day but it's the addons I'm looking for.The money making part that I invision is inspecting other items for repair. Like if a window doesn't work or the sump pump is broken, report it and the customer has the option to repair at additional cost. It's like getting paid to give the customer a quote.
And speaking of the Lexus story People are willing to spend over $400.00/year on maintaining a car that they may keep 5 years A house is a much bigger investment so I'm betting they'd pay.
Checking through some of my notes here I just pulled this stuff up regarding
Target Costing which might also work to help determine whether the fixed price
service idea will work.
From the book Target Costing by Shahid L. Ansari
The whole book can get sort of dry and more technical than we would ever need
for what we are talking about here but there is a real good summary of the book
on the MeansBusiness
web site that can be purchased for just $9.00 as opposed to the $60 plus that
the book really costs.
MeansBusiness is
web site that has (their text about themselves):
I think MeansBusiness
is one of the best resources I ever discovered on the web and I use it all the
time. I subscribe to it by the year and have used it read summaries of countless
books and topics. For anyone who is seriously working on growing and developing
their business but doesn't have all the time they would need to read all the
good books on business they would like this is the answer. You really should
check it out. (Listening to tapes of business books while I travel around in
my truck is great too although at the end of this month I am switching tapes
to the forthcoming new Bruce Springsteen album!)
GEOB21 I also just got to wondering what is you do? And what inspired this
idea? Your "My thinking is this would be an inroad
to larger jobs with a cutomer you already know and trusts you."
is what got me thinking about it. The problems getting it going while not ignoring
the core competencies of the operation I already have is what has stalled me
so far. We're primarily interior finish contractors and fabricators.
Forum hint:
"Architecture is the
handwriting of Man." - Bernard
Maybeck.
What is it I do?..... The joking answer is little as possible and still get paid. ;-)
The truth is just about anything. Build a house, garage, a deck, replace sliders, new construction interior trim, kitchens, window repairs. Cripes my head feels like it's gonna buss open and all this information will pour out.
I'm looking into this as a means of filling in the dead spots for now.
I found a nice little filler for dead time. 2-3 months ago I contacted an established, successful realtor who lives in my neighborhood, and said that I would be available to make minor repairs for buyers and sellers. Took him a couple of weeks, but now I get 2-3 calls a week, usually when they list a house. When the realtor meets with the seller, he looks around and points out a couple of things that obviously needd attention, and gives them my name with no strings attached. They call, I visit, and so far have always got the work. Usually it only takes a day, sometimes less, occassionally day and a half. They pay on the spot, no waiting. Usually the materials only cost $40-$50 and I try to get $300/day for my time. So far it has kept me busy. The only catch is that there is frequently a time issue, because they want to get the work done before the house goes on the market, so I have to be able to juggle the bigger jobs to fit these in. So far my bigger clients have been very understanding ( I tell them what's happening) and on rainy days when I can't work outside the little jobs fit in perfectly. One lady said she was glad it was raining, because she knew that's how I was able to get to her so fast. So far I have only had a problem with one person paying slow...I contacted the agent, and he paid from his personal account and said he would collect from them at closing.
Edited 7/18/2002 9:04:25 PM ET by ELCID72
Ecid- I do this also and agree the money ain't bad but as you mentioned the time issue, this can be a pain.I have had agents call less then 24 hrs before closing looking for a quote on a job that will never happen. Say no to one and the agent is unhappy say no to 2 and the agent is looking for someone else.
I'm looking to build a long term relationship with the homeowner. If this works when they go to sell nothing needs to be done. (hopefully)
Anyone else have ideas on often overlooked maintainence items?
So far almost all of my calls have come when the HO meets with the agent for the first time, and the house is not yet on the market, so I usually have 2-3 days before it's listed and then an unknown time before it's sold. The only time I deal directly with the agent is when they are listing a house that is already vacant. Almost always I am dealing directly with the HO. I have declined to do work, sometimes the entire list and sometimes one or two items (like cleaning out second story gutters). So far the agent has not said anything; I think he knows what it would take to do the work, and he wouldn't want to do it either. Sometimes the work is very easy: one lady had me take down a crystal chandelier that they put up in the living room when they moved in, and they wanted to rehang the original plain-jane fixture. Wasn't a hard job, but she was unable to climb on the ladder and take down about 60 individual strands of glass beads. That's the jobs that are fun. The house is usually in good condition, well kept, etc. Anyway, they're nice fill-in jobs, and they pay the bills.
Now that I think about it, I only work for one realtor, not the whole office. So I don't get flooded by calls, and we have developed an understanding of each other.
Edited 7/19/2002 8:38:23 PM ET by ELCID72