Build a million-dollar business from the beach, mountains, or anywhere else you feel like doing it.
Welcome to your January 2022 playbook.
Episode 12 - Acquiring service businesses and scaling to 6 or 7 figures, from anywhere.
Buy once for $1k and scale to 100s of k’s? While that EXACT example will not always be possible, variations will absolutely. Perhaps the best thing about this approach of remote service business creation is, it can be done from anywhere.
Freedom is the keyword in “financial freedom.” Johnny Robinson, (a.k.a. @SqueegeeGod on Twitter), and his partner Sergio Silesky, have mastered the strategy of building a business from parts unknown after remotely scaling a window cleaning business (Orange Window Cleaning) and recently launching (Dec 2021) a house cleaning business (Mary and A Mop) which is on track to do 6 figures this year. You can read more introduction about it here. They also happen to be still in college, which is immediately giving us all anxiety about how we passed time when we were in school.
Summary
Here's the formula:
- increasing shortage of labor + increasing demand for in-home services + people needing work done around the home = a massive opportunity for remote home service companies
What is a remote home service company? It’s exactly what it sounds like.
You own and operate a local home service business such as house cleaning, window cleaning, painting, or junk removal without actually doing the labor. You are the value-add service between the customers and the subcontractors. You pair subcontractors who need more work and don't know how to market themselves digitally, with customers who need their service.
How is that possible, you might be wondering?
Let’s use cleaning as an example. You would position yourself on the internet as what looks like a cleaning company. In reality, the back end of the business is a mini Uber for maids. You use local marketing tactics like obtaining reviews, running Google or Yelp ads, and cold emailing property managers to attract leads. Then, you use SUBCONTRACTORS to fulfill the work.
Johnny and Sergio run this model in both their window cleaning business and house cleaning business.
“We started the house cleaning business at the end of December 2021,” Johnny said. “Since then, we are already on a six-figure run rate. We will exceed $10,000 in top-line revenue in our first calendar month of business (January). We are building this company in public through Twitter and have publicly stated that our goal is to be at $50,000 top line by March.”
This idea has been seen across numerous service industries but with automation the game gets infinitely more efficient. We'll get into that.
Interview
Our team sat down with Johnny to get an overview of his first acquisition that eventually became Orange Window cleaning, and his plan to start and scale more remote serviced businesses in other niches, here.
Playbook
In the January Playbook, Johnny details his simple (yet definitely not work free) step-by-step strategy to build a remote service business of your own. He says you can execute on whether you are bundled up in front of a fire at your favorite ski lodge or while your toes are buried in the white sand at a tropical beach in the Caribbean. Now we think to begin you'll probably have to get your own hands dirty, that's always been the case with us, but where you start does not have to be where you end.
So, whether you buy a biz, already own a biz, or are looking to start one of your own, this is one way to work ON the biz, not IN it.
Step 1 - Review of Business Acquisition
Because we’re all about alternative cash-flowing investments, we’re going to start off with a quick business acquisition review. If you want more on acquiring small businesses you can also check out Unconventional Acquisitions. For this playbook purposes, we’re doing a quick dive into Johnny’s first acquisition.
His own window cleaning biz was already doing close to $100k when he found a seller, who was a competitor, wanting to retire.
Through ample research, cultivating a relationship with this person, and negotiation Johnny bought his business.
- Topline revenue: $250k
- Capital down: $1k
- Doubled his current business
- Scaled to $700k
He used a Seller financing structure to purchase, that would require you to negotiate well with the seller and is definitely not typical. He was able to get the business for an extremely low price by promising 10% in perpetuity of residential business clients who converted and 25% of commercial. That means he gave the owner an annuity that would keep paying and the owner trusted him as he had his own cleaning company. There was also a buyback option that allowed the owner to take the business back if Johnny failed. That is smart structuring.
Now, you could use the following method to vertically scale across geographies if you already own a service business (which he did with OWC) or are looking to acquire one (BizBuySell or Loopnet).
Or use the method to start from scratch in another industry, aka horizontal acquisition, (which he did with Mary & A Mop Cleaning).
Step 2 – Pick an Industry, Location & Services
The more research you do about which service industry you want to pursue, the better your chances are of becoming a success. Obviously. But one of the beautiful parts of this program is that you don’t necessarily need hard skills in the industry you choose since you are simply acting as a go-between. Think of how many private equity guys own plumbing companies but couldn't tell you the difference between a ratchet and a wrench. However, at least a general understanding and some technology and marketing skills will make some of the steps listed below easier to execute. Then again, for maximum efficiency, OWC outsources as much work as possible. Especially by finding go to deep experienced operators.
Example industries to go remote:
- House Cleaning
- Window Cleaning
- Junk Removal
- Landscaping
- Painting
If you have a contractor’s license or a specialty license, it'll work in literally any home service niche.
Next, choose your operating location and offered services. For context here is a list of the cleaning services offered by Mary and A Mop.
Step 3 – Establish Your Entity and Digital Footprint
Set up a simple website that has online booking capabilities with a third-party company such as Booking Koala, Maidily, Skedulo . Outsource this if you don’t know how here's an example of one built by a third party.
Blue Collar Builds is an outsourced website creator Johnny recommends.
Next, create a Google my Business page, Yelp Page, and Facebook page. Get some initial reputation by asking friends and family for reviews. He has an entire thread on twitter about how to get reviews and the crucial nature of them.
Grab your business name, buy the domain and incorporate your business. All pretty business 101.
Step 4 – Start Marketing
Now we’re going to start marketing your business with a focus on local PPC ads. Johnny says to keep your ad spend between 5-15% of projected revenue after your first month, which should be 20%. Focus hard now on customer acquisition with a goal of getting the reviews, then you can lower your ad spend when your local organic presence kicks up, which is going to be key.
For your first few jobs, use:
Google ads
Consider this bottom of the funnel, because it’s a search engine and the audience is hot, meaning they’re already looking for what you offer.
Drive traffic to a WELL converting landing page that grabs customers’ information, not your website (test different offers and spend). Bonus tip, offer a first-timer’s discount on your landing page in exchange for their information.
Google LSA
- Google LSAs or local service ads allow you to advertise with a unique phone number to track conversions. They show on top of the page like this. Expect $100 or so monthly for your dedicated phone line.
Yelp ads
Consider these also bottom of funnel because the audience is hot traffic
Very high conversion but needs ample tests to see if works in your area
Facebook ads
FB ads are tricky especially with the new privacy laws, but you can have great CAC if you get your offer and creative right.
Some other options you might consider
- Angie’s List/HomeAdvisor/Thumbtack
- Radio, Print, & TV
- Door Hangers
- Direct Mail
- Yard Signs
- Door-to-Door
- Networking Groups
- Cold Email
- Vehicle Wraps/ "Parketing"
Basically, if you're good at creative marketing you’ll win this game. Not? Find a partner who is and do a profit share deal.
Step 6 – Schedule Your First Jobs
Scheduling your jobs will come before finding someone to service them. With all the advertising you’re doing, you will start to get incoming requests whether they call through your LSA or they book directly on your lead page. You’ll be more attractive to potential subcontractors if you can tell them you already have jobs in the queue.
Eventually, when you scale, you hire a VA to field all incoming calls and booking requests and assign the subcontractors.
Step 7 – Hire Your Subcontractors
Now you have the business to pass off, you need to go find subcontractors in the area to fulfill it. OWC used to operate using all W2 employees but once they discovered that hiring subcontractors is easier upfront and significantly lowers their cap-ex (because subs have their own equipment) they’ve been operating completely remotely using subs. This gives them time to focus on growth and operations. Eventually, you’ll add VAs to do bookings, appointments, and scheduling the jobs, but at first, you’re running lean.
Where do you find them?
Reach out to equipment suppliers in the area and see if they’ll give/sell you their list. Or infiltrate local Facebook groups/trade groups to get in touch aka search in Facebook for home cleaners, house cleaners, cleaning crew, etc you'll be surprised how many you find.
Another way is to go back to the Google search and go to pages 3, 4, 5 plus. These owners probably could do more work if they show up deep in the local search.
Call them up, say you’re a broker and you have work available for them, and negotiate a split. Johnny and OWC do 50/50 and most of their subs are making $2k+ per week because all they’re doing is fulfilling.
For QA, you might want to go through a vetting process including researching their own reviews and having videos calls if needed.
This is a copy of Mary & A Mop Referral Agency subcontractor agreement they give to all new subs.
Step 8 - Do The Job, Get Reviews, Repeat
Once the subcontractor is dispatched and the job is done, there’s one last step, and it’s the key to your organic success.
In order to lower your ad spend and CAC and increase your margins, you need to show up in the first 3 results from a local Google search. Johnny’s OWC shows up first when you search ‘window cleaners Orange County’.
To get here, you need tons of reviews…they have almost triple the following 3 combined.
OWC and Mary & A Mop automate the collection of reviews using a service called Nice Job. Nice Job integrates with your CRM (they use Housecall Pro) and asks for reviews from your customers via a drip campaign after the job is marked as complete.
More customers, more reviews, more business, hire more subcontractors… rinse and repeat.
Step 9 - Finances
How much does it cost you?
Let’s project $10k/month revenue. Remember, 20% first-month ad spend.
Salaries are capped at 50% because that’s the sub deal.
Eventually, hire in the VA to take the calls and service the jobs (assumed $6hr for 5 hrs/week) along with a dedicated phone line at $100. (Do it yourself first so you know how to train them, but this efficiency will help you scale).
Profit Margin: 26% pre-tax.
How much can you make?
Johnny has used this process with OWC and scaled it to $700k. With newly formed Mary & A Mop, they’re already pushing towards a 6-figure run rate. That’s only accomplished with a well-established idea of the services offered, and what to charge for them. They built their pricing on local market rates, bundling them into tiers with an MRR price (more on that below).
Want a TLDR?
Here’s a simple checklist from Johnny on getting your remote business started.
Tips & Tricks
1 - Start With One Service, then start value-adding. AKA if you’re a window cleaner, can you also add pressure washing? Gutter cleaning?
2 - Scale by acquisitions both horizontally and vertically: After set up, add more services or scale vertically, acquire the ecosystem. AKA buy more cleaning businesses, roll them up. What’s your biggest expense? Equipment? Can you buy the supplier? Here’s an example of what I mean.
3 - Learn your industry. This might sound obvious but the most difficult yet most important part of this process is the pricing. To do this well, to match your competition, to not underprice jobs, you need to know the industry.
How much should you charge per window? (per service) What all is included? Are any materials used? This all needs to be factored in. Not underpricing jobs keeps you in the green, and your subs happy.
At one point OWC wasn’t charging a minimum job rate and ended up driving far for $40 jobs. Now their minimum is $263 but it is loaded with value ads.
Here’s a look at their flat rate system.
The best way to get this info? Call other local businesses in your area and niche. Ask them what their prices are and what’s included. Then develop your prices and value ads.
The ‘flat rate’ system allows easy and streamlined purchasing, pricing, and scheduling on your website so no in-person bids are needed. For custom jobs, using this spreadsheet, a bid can be generated by your VA in minutes.
Johnny and Sergio host a podcast, The Home Detailer, with loads of helpful information to help you build and scale your remote biz.
BONUS
Cleaning not your thing? That’s fine because this model can be replicated in other industries. The CT team also sat down with the founder of Braid Babes, a clever mobile, remote business using this idea to scale their team all over the country.
The Braid Babes are all over. Their service? Well, braiding. Think wedding parties, bridal parties, bachelorette parties, sports teams, girl birthday parties…they’re there.
Their founder Emmily, took $15k from her 401k to start her dream biz and now they’re on track to do $2.2mil this year with only a $500k Angel injection. Noted, she spends a lot more time in the biz.
You can watch our conversation with her here.
Their model:
Expanding through subcontractors in other locations and passing them business for an hourly wage. The subs find the business? They get a higher %.
Marketing: free braid bars at events and partnering with local Airbnb hosts.
Ancillary revenue lines: online courses and boot camps.
AMA Meeting
Johnny did us a solid and jumped on for the Cashflow crew to ask questions. He joined us on our weekly call, Tuesday, February 1st, 2022 at 3pm CST.
Stack cash and grow remote,
Codie
