The Koerner Office - Business Ideas and Deep Dives with Chris Koerner - Why I’m Bullish on Home Services⏐Ep. #121

Episode Date: January 22, 2025

In this episode, I share my thoughts on why I love home service businesses, including their potential for binary outcomes, recurring revenue, and recession resistance. Then, I interview Doug Steel (parkcitiespowerwash.com), a home service business owner in the Dallas-Fort Worth area, about his journey building his power washing company and expanding into other services like Christmas lights and window washing. Doug shares advice on how to start a home service business, how to get your first customers and how to price jobs. This episode is a mix of a monologue and an interview.Timestamps below. Enjoy!---Watch this on YouTube instead here: tkopod.co/p-ytAsk me a question on or off the show here: http://tkopod.co/p-askLearn more about me: http://tkopod.co/p-cjkLearn about my company: http://tkopod.co/p-cofFollow me on Twitter here: http://tkopod.co/p-xFree weekly business ideas newsletter: http://tkopod.co/p-nlShare this podcast: http://tkopod.co/p-allScrape small business data: http://tkopod.co/p-os---00:00 Welcome and Introduction00:40 Why Home Services?01:14 The Binary Outcome Business Model01:50 High Demand and Recurring Revenue03:32 AI and Home Services05:19 Interview with Doug: Starting a Power Washing Business06:25 Expanding Service Lines11:32 Challenges and Advice for Home Service Businesses22:52 Conclusion and Contact Information

Welcome to the Kerner Office, everyone. So recently I polled my newsletter at tkopod.com on what types of businesses or what types of industries they want to learn about. Number one, AI. Number two, home services. And then there were like four other options. But it was AI and home services and nothing else was really close. So I'm going to keep talking about AI because I love it. I'm playing in it. And I love talking about it. So that comes naturally. Home services also comes naturally. So this episode is going to be all about home services. And I'll also touch a little bit on how you can use AI. in home services as well. But I interviewed a guy named Doug who's here in Dallas, Fort Worth, and he owns a power washing business that also does Christmas lights, gutter cleaning, soft washing, window washing, and all that. But before I start this episode with Doug, I wanted to talk just me, candidly, about why I love home services, what my thesis is for home services and why you should love them too. So why do I love home services? Well, I've talked about this a bunch, so I won't go into it too deeply, but we launched a tree trimming business a year and a half

ago. I helped a friend launch another tree trimming business four or five years ago, and it's just everything that I love about home services. I like starting businesses that have a binary outcome. I've talked about this a couple times, but not too in depth. So a binary outcome is a product or service where there's not a lot of complexity involved. Now, not all home service businesses enjoy binary outcomes, but tree trimming does. Cut down the tree, you remove the tree, you get a five-star review. It just feels so refreshing to have a business that's straightforward cut and dry. I think it's easier to find binary outcome businesses in the home service industry than it is in other industries, especially if you're not doing something very complex, like custom home building or remodeling.

So in home services, you can enjoy high demand year round. If you have a seasonal business like Christmas lights, then you can offset it with another seasonal business like landscaping. Just like the book I read in high school entitled, Things Fall Apart. Things Fall Apart. Things are always breaking. Number two, recurring revenue potential. Now, some services are more recurring than others, such as lawn mowing. But any home service can be recurring because things continue to break. It might be less recurring than others. I like home services that are high ticket and high margin, $500 to $5,000 per ticket, preferably. They have a low barrier to entry, which is a fancy way of saying you don't need a lot to get started, which also means you usually have an above-average number of

competitors, but these are usually unsophisticated competitors that you can outrank online with a few creative tactics. There's a lot of room and home services for more tech, more efficiency, more optimization, some software. I know it seems on the surface, like if you go Google pressure washing, you're going to see a bunch of people in your local area, and it seems overly sophisticated, but that's a selection bias. You're only seeing the guys that are sophisticated because they know how to rank on Google. You're not seeing all the other guys that have no website that aren't answering their phones. My favorite experiment, and I talked about this over the summer with stump grinding, is to call up 10 to 20 people per industry to gauge how hot the demand is

for that industry in any given area. How many answer their phone? What are they quoting? How booked out are they? If you spend an hour doing that for five different industries, you'll know a lot. about how competitive everything is in your area. Home services are recession-resistant. You can upsell just about anything and everything, and you can scale. Now, here's the thing with AI. AI is unlike anything I've ever seen or experienced. It is arguably one of the greatest asymmetric bets this world has ever seen.

And it's freely available to anyone with a brain and a pulse. What does that mean? I want you to picture a conference room full of entrepreneurs, enterprising, hungry, ready to go monetize the world. Okay? let's say you've got 100 of them. 50 years ago, what would those 100 entrepreneurs have started? Probably some sort of a service, a home service, because there was no internet.

20 years ago, what would they have started? Something on the internet, surely. But 20 years ago, there were a lot more homes than there were 50 years ago. Therefore, much more demand for a home service business owner. But the internet was the newest shiny object. So we all flocked there. What happens when the supply drops and the demand stays constant or increase? increases, price goes up. It's funny because I was watching an episode of dirty jobs the other day

from season one. I've been watching it with my kids. This was like season one, episode two or three, and they were doing septic tank pumping. Guess what they charged to pump out an entire septic tank? $70. It is literally 10 times that amount today. 10 times that amount. At least, depending on the area, there's just not enough to supply to fit the demand. So today, you take 100 entrepreneurs in a conference room. I don't know why they're in a conference room. I need to leave that out of my analogy. What business are they going to start? You've got AI, you got crypto, you got mobile, SaaS, agency, home service.

There's so many things to choose from nowadays. But guess what? There's more homes than there ever have been. 335 million Americans, 8 billion people. And these things are still falling apart. So AI is growing the pie for everyone. And you really can't go wrong either way. My guest, Doug, he sold a hood cleaning business in Arizona, about $2,000.

12 years ago, and he was kind of bored. And he started pressure washing for people in his neighborhood. Then he started a pressure washing business. He only did that for a couple years. Then he started adding other services. Took it very slowly. Now he's got a thriving business with six figure profits. He's not doing anything super unique, super sexy. You're just doing what works over and over and over. Go ahead and give it a listen. How did you get your first customer? It was just someone in the neighborhood. I can't remember if she just came off the website or what. And what was your first Was it just pressure washing the side of a house, driveway, all the above? Yeah, it was like a front walk and around the front door and a back patio pool deck kind of thing.

And how'd you know what to charge? One man show at the time. They don't need much, right? You can kind of be cheap and still make some money and get your name out there. But I kind of looked at it like, well, you do have someone working for you. What are you going to need to charge? Yeah. Well, it's back then.

We need to be around $100 an hour. So I just said, well, how long is it going to take? I think it'll take this much. 100 bucks an hour. There's my price. Yeah. So how long did you do only pressure washing or soft washing before you started taking on other types of jobs? And what did that process look like? We didn't start cleaning windows until 20, 20. So five years? Yeah. And that was your second service line? Yeah. I mean, we always did the gutters. There's not a huge demand for that. But we did that. The first real divergence from that is window cleaning. And that's just because, you know, you do a house wash, you get their windows all spotted.

So finally, the next year rolled around, you know, we got into the winter season thing. So I'm like, okay, I'm going to get trained and we're going to start doing it. So in 2021, I think we just added that. What did your training look like? How did you get trained? I went to an industry convention where someone was offering training on the water-fed pole systems, you know, which are the pure water filters that you use a big pole with a brush to do the cleaning. And that's one aspect.

You need to know how to do the traditional style too, you know, with the squeegee. I had hired someone that had a lot of wind of the experience and just got trained up. So let me back up a little bit. For those first five years, how were you finding customers? Did you really have to struggle or hustle to get them or did they just come organically through word of mouth? Mainly, word of mouth and the website. Okay. I emphasize reviews before reviews became super cool, you know, so we had a lot of

reviews. We had a website. I had to do very little marketing, to be honest. What did your first few years of revenue and profit look like? So we started like September of 16th, so I couldn't even tell you. I think the second year doing it just on the weekends, it was like maybe 75,000 or something. And then it just doubled every year for about four or five years. And then we had a window cleaning and all that. It's slowed. The growth is slowed. So we'll say the first year we did 75, then we'll go like 150, then 300, and then probably 450, and then 550 or so, 600. And it's kind of leveled there a bit. We acquired another company this year. So we should do, you know, eight or 900 this year. Nice. So window washing five years in,

at what point did you start adding the other service lines and what were like the triggering events for even wanting to do that. So really the pressure washing kind of encompasses a lot of things. You can do a lot with that. The window cleaning was the big ad. Really the only other, well, okay, so I guess, you know, if you want to add Christmas lights, that started two years ago.

What made you want to start that? It was the same thing. It was like, hey do you guys do Christmas lights, you know, from the customers. And that industry is kind of blown up to the LED lights. So now you have easy to go find someone to train you, you know, get the stuff from locally and just go do it. So the same thing. It's like, all right, let's start doing this. It's another revenue line. Keep the guys busy.

And, you know, in January, take the lights down when we're, you know, it's too cold to wash and, you know, just something new to figure out. And how did you know what to charge for that and how to do it? It got trained. We found a local company. Well, they have a local presence and went, took some training. it was like in July, you know, so it's like 110 degrees. We're out there putting up Christmas lights at their training facility. And they show you all that, how to do it, where to get the stuff, what to charge, what it costs. What the charge is like, okay, here's where you want to start. And you have to kind of see what's competitive.

So power washing, window washing, Christmas lights, solar panel cleaning. Did I miss anything? There's all the little stuff. I mean, there's gutter cleaning. There's graffiti removal, all the stuff that goes with pressure washing. And which of those do you love and which do you hate and why? They're all good. I mean, the pressure wash is great.

There's so many aspects. I mean, you can do roof cleaning where you might have to bring in a lift to do that. If someone were to come to you and say, Doug, I want to take one of your service lines in my market and just go all in on that one thing. What would you advise them to do? And why? Depends on the area. So like roof cleaning and all that is much bigger near the coast. So Florida is huge with food.

washing. Houston is much bigger with watching because they have a bigger problem with algae growth in those areas. So if you're through there, I mean, there's companies that build big businesses based on just, you know, these people get it done every year. It's almost automatic. In window cleaning, I think, you can't go wrong with, especially if you can try to build like, say you want to do, like, I'm going to do storefronts, you know, and I want just to build a book of storefronts that get it done every month. That's probably a good line. it takes some time to get set up. Holiday lights, same thing, depending on your area.

I mean, here it's pretty saturated like most things, but there's folks that just do that three months a year and they're good. Yeah. If someone were to do storefront window washing only, what's the best way to get customers? Maybe the cold emailing, cold texting. What about solar panel cleaning? Someone wanted to go all in on that?

I think the same thing. And, you know, we do that, but it's like rare. I mean, it's a very low percentage of people that actually have solar panels to begin with. So you have to find them in our area, at least. Yeah, yeah, exactly. So, and then of those folks, I mean, they have to really understand that, you know, these things do need to be clean once in a while. And I've talked to folks that I know personally, you know, through kids sports and stuff,

you know, other parents. And it's like, oh, yeah, you guys clean solar panels. Wow, we have these solar panels. And the efficiency has gone down to, you know, whatever. And I talked to Tesla and like, yeah, they probably just need to be cleaned. And we need to get you guys out there to clean them. And then they never do it. Yeah.

So it's like, you know, you're just leaving, get out the things. So keep them clean so they're efficient. Yeah. So that's a tough one in this area. We do very little of it. But it's easy to do. You know, it's easier than doing windows. They don't have to be perfect.

You just have to clean them, you know, use the same brush and everything that you use on the windows. I think if you can find a list somehow of owners of people that have solar panels, email them and maybe even direct mail to get them to think about, you know, with some kind of offer. Yeah. I think they even have like AI products now that will use Google Earth to identify which houses have it. There you go. They'll just pinpoint them out for you.

Yeah. I mean, something like that. I think that's, you know, otherwise you're just casting this huge net. You definitely don't want to send direct mail out to everybody in a zip code because five of them have solar panels, you know. Yeah. Which of your service lines have the biggest margins? Margin-wise, probably window cleaning.

You can get away with charging a little less. It can be a little more competitive, but your costs are less because it's really just labor. So probably that. The pressure washing is already good. All right. If you are watching this clip right now, you are watching this on YouTube.

And if you are a fan of podcasts, please check on my podcast while you're at it because sometimes I have podcasts that aren't on YouTube and sometimes I have YouTube that aren't on podcasts. So check out the Kerner office on any podcast platform or you can go to tkotod.com. Also my newsletter will throw that in there. There are no ads. It's weekly. It's different content than my podcast and YouTube. Newsletter.com. You'll see the link and we'll see you there. How do you quote all these different jobs? Do you quote everything yourself or have you trained your guys to quote for you? Combination. I've trained guys. We have an office manager that can quote,

We can do a lot of stuff over the phone with pictures or Google Maps, Google Earth. I have confident guys that just have, they worked in the field, and they know how long stuff takes. So they can go out there and look at it's going to take, yeah, it's going to take, this big job, it's going to take three guys, two days. We need this much per day per guy, plus materials, you know, needs to be around this. Okay. Just kind of a gut call? Yeah, I mean, from experience, in a lot of companies, they look at square footage. It's a square footage of the driveway.

What's the square footage of the house to get for a house watch? And I just, I never did it that way. It doesn't seem to make sense to me. I mean, some of these houses, they have issues. Like, you know, you have some big fancy house that has brand new copper gutters. Yeah, I like interviewing people that are different from me because like if I were you and I launched this in 2016, the first person that says, can you wash my windows? I'm like, yep.

Don't you know how? I know how. I'll watch YouTube video. You're like, I'm the opposite of you. And like we talked about before this for this podcast, like it's good and bad, right? There are tradeoffs. I find myself in a lot of sticky situations a lot of times because I'm underprepared on the other side of that. And clearly you don't have this problem.

A lot of times people tend to overanalyze and overthink. And that means that they never launch because momentum kills all deals. Right. So you really have to find that balance between the two. Yeah, I agree. Of all the service lines you do, there's probably a bunch that you could be doing that you're not doing. There's probably still a lot that you're turning down. What do you think is the pressure washing of today like pressure washing was in 2016?

What is the next frontier for home services? We're looking at a few things that it's kind of add in there like real cleaning, you know, because nobody wants to do anything anymore. Yeah. If they can get someone to do it professionally, it's reasonably priced. You know, I mean, I've seen a lot. Well, I can give you one. So the kind of the big thing that's getting the push now is the permanent lighting.

Mm-hmm. They're like a jellyfish? Isn't that the name of a company? Jellyfish type stuff, yeah. So anybody that's into Christmas lighting, you know, the same distributors are selling that stuff and everybody's... Because, again, anybody can do it. Like, the landscapers can do it. I mean, you know, when it comes to Christmas lights, the bug people do it.

Everybody's Christmas lights. Roofers do it, bug people, fire them, you know, all that. It's the same with the jencers. jellyfish type permanent lighting. Yeah. So that's kind of a, and there's now there's all kinds of companies selling that. So that's probably one thing.

What about if someone were to like become a jellyfish distributor or even use like a Chinese aftermarket version of jellyfish. And for those that aren't listening, jellyfish is permanent lighting like Christmas lighting, but permanent LEDs. You can change the colors to, it can be patterns. It could flash. It could be solid purple or whatever from your phone. What about the idea to just go door to door in November and December?

only to the houses that have Christmas lights. And they're not your customers. They're just strangers and saying, hey, you clearly value having lights on your house two months out of the year. How about these permanent lights? I can install them. I can sell them to you. That can be pretty high ticket, right?

Yeah, it's a high ticket item. It's not recurring like the Christmas lights are. Yeah, for sure. I mean, you can, I mean, if you're going to try to get people to switch over that year instead of doing temporary Christmas lights, you want to start for November. But you can also go out after they're installed. I guess and say, hey, next year, when these come down, you could put these permanent ones up because, you know, you can make them pink for Valentine's Day, well, and whatever for Easter,

you name it. And then every, the other days of the year, you know, they're up in the soap, it's up in the eaves, you can just make them warm white. You have like this indirect kind of lighting in your house, which looks nice too. So, so yeah, you can definitely try to switch people over. What do those costs? Is it like by the foot? What, is the install cost and the hard cost. I don't know that much about it. I'm pretty sure it's by the linear foot, you know, and there's probably some, probably depends on stories up it is and there's probably some stuff there too. There's, there must be some wiring involved. I don't think they just plug in. I think you kind of get them, well, you could probably plug them in, but I think

you get them, probably get an electrician in there that wires them in somewhere, you know, just some permanent power. If you were to give someone advice, it's about to start a home service business, what could you tell them that might save them a world of hurt? Any in any niche, any home service niche. You want to do some homework. There's a lot of gurus out there. I can specifically speak to pressure washing that charge you a lot of money to get some training,

sell you a rig, a lot of stuff you probably don't. Starting out, I would focus more on getting a brand, getting it out there, maybe not taking on every single huge project. In other words, you don't need to spend 60 grand. Get started. it. If they were to go to Home Depot and buy a power washing machine, which model is a good one to start? I don't recommend. So maybe my answer falls somewhere in between, like, you don't necessarily

need to go to the big gurus and spend a ton of money on something that's super fancy. You also don't want to go on the cheap. You can easily, with a little bit of research, fall right in the middle, you get a nice commercial unit, you know, and spend a few thousand bucks in your own truck or something, build your own trailer. If they were to spend $3,000 on just the washer, Or is there a make or a model or a brand that you'd recommend? At that price range, you're going to get something portable, which is fine, you know, to throw out a back-up pickup truck or whatever. And you can run around and do driveways with that.

What about the mixture, just like a bleach to water ratio? You know, again, starting out, you can just have a two-gallon sprayer and you can get some, you can buy pool chlorine at lows. You know, it's more expensive. I mean, we get it delivered by the truck load now and into big tanks, but, you know, a lot of the real severe stuff, 50-50 is going to get you get that done on flat stuff. Be careful with houses, much less,

you know, you know, a half a gallon of bleach to a gallon of half of water, you know, so. Two gallon. Okay. Is there an insurance company you'd recommend?

Another good question. So for years, there was a company, J.D. Walters, that everybody got their insurance from. They went through kind of an ownership change and they kind of went and audit all their policies.

They hadn't raised prices in years. And companies went from one guy to five guys and they didn't audit it. And then when they did, they realized, you know, either they had to raise the rates a lot or they just couldn't insure you anymore. So you can get in a lot of places. If you go on some of the Facebook groups, you can just search and people have recommendations on brokers. It's pretty fairly inexpensive. Start now, you know. Okay. Are there any specific numbers that you track on a regular basis that you'd advise others to track? Like, yeah. So we do job costing, which means, you know, every job,

You get 20 hours. The tech was there. She's getting an hour, the burden and all that taxes and all that stuff. Chemicals used and then the amount of hours put on the machine, which is fuel, you know, basically. It just converts the fuel. That gives us our gross. So, you know, we want a certain number. We want typically under 30% of the cost of the job in labor. And what net margin are you shooting for? Net's another moving target. So, you know, that's going to be based on. while you're other overhead, right? So, you know, starting out when you're like a solar operator, like your gross is like your net. I mean, you have insurance, you know, and that kind of thing. But as you get bigger and you have to have a shop and you have four or five trucks and, you know, bleach deliveries and marketing and all that. So it's a whole other, you know, then you have an admin cost.

You have an office manager. You have a production manager. All those things are kind of, they fall into your fixed overhead. So it's going to make your net, you know, that's not really. answer, but starting out, it's like the same. Like net and gross are almost the same. You look at these big HBAC companies and stuff that do plumbing and electrical and they have 100 trucks. So their net margins are like 5%. Yeah. Except they're just doing millions of dollars. So it's a pretty high margin biz. If you can hit a 20% net that the owner can take home, that's a pretty good number. We were fortunate

that we had a good customer base before the kind of big boom hit. COVID, I think, is where it really took off. You know, COVID was a great, COVID was great for us because people were home, home service industry, construction, all that kind of stuff. They were, you know, at first, the beginning of the whole craze, like, they were the only people allowed to be out there working, right? It was like anybody out and on houses and that kind of thing. So the only cars on the road, trucks on the road are work trucks. So our business blew up from that. The industry also blew up. So we were fortunate we had a nice customer base, a lot of repeat business. So every time we added a new line like we're getting ready to add and striping. You know, we had a base to go to

and very little digital marketing ads, that kind of thing. So these days, I'm sure it's different just because of the competition. Okay. Well, thanks, Doug. Where can people find you if they have any questions? Our websites, Park Cities, and that's spelled, you know, in the plural CITI-I-S, powerwash. They can check that out. They can email me anytime, Doug, at Park Cities Powerwash. If anybody has questions, they're getting started. I'm happy to help them out. You can go to the website, get the phone number, give us a call. So, happy to help.

Okay, thank you. Okay, what did you think of this episode style? Half monologue, half interview. Let me know what you're thinking in the comments. And Deb, maybe we'll do it again. See you next time on the Kerner office.