Businesses and franchises in the home services space involve general repairs and improvement in residential homes. This includes but is not limited to moving, painting, fixing windows, plumbing, pest control, restoration, and renovation.
Many of these businesses provide on-site services and can be run from home offices, but will require staff that have experience or skill in that specific area. This industry is non-traditional as the services will usually be provided in people’s homes. A similar industry is the Cleaning and Maintenance space, as they also restore homes and businesses. However it is specifically within the realm of cleaning, while Home Services focuses on services outside of cleaning for the home.
Currently, the majority of customers seeking home improvement services are baby boomers adapting their homes to changes over time. However it is expected in several years the shift of homeowners will go from baby boomers to millennials, who will then make up the majority of the market for home improvement. Rather than building a new home, they are more likely to purchase older and more affordable housing that will require different home improvements.
With buying a business in the home services space, it is likely you will also need to buy professional equipment specific to your service, and potentially liability insurance or permits depending on what you type of home service business you choose to do.
Trends in Home Services Space
More homeowners are becoming environmentally conscious, and would want the services provided to be eco-friendly. The cleaning and maintenance industry is also impacted by this similar trend so its learning how to reach that niche market in the future using products that are eco-friendly and non-toxic.
Additionally, more people are now working from home either part or full-time, and will spend even more time at home than previously. Therefore, it is worthwhile for these people to invest in home services to improve and renovate the space they will spend most of their time in.
How much can home services businesses cost?
At Vetted Biz, we have reviewed over 2,900 businesses and franchises for our online business platforms. For the businesses we have reviewed and analyzed in the Home Services space, we have seen a range of investment amounts start at $49,000 all the way up to $730,000. These businesses do not need to have such a high capital as offices can be based in the home. The cleaning and maintenance industry which also has a similar business model also has a similar higher investment amount of $768,000. Based on our research, the average royalty fee is 6.9%, and the average marketing fee makes up 2.8% of the gross revenue. In the SBA analysis for the 7(a) loans disbursed from 1991-2019, franchises in home services had a paid in full rate of 29.14% and a charged off rate of 6.37%.