5 Common Mistakes When Starting a Home Service Business

Mistakes happen. What you do after those mistakes is what defines you as an owner. That said, there's a handful of common mistakes, errors, and problems that pop up when owners first get into the home service business space. Some are a natural occurrence--growing pains involved with any kind of new business venture.

HUB: The ULTIMATE Guide to Starting and Growing a Home Service Business

Meanwhile, there's the kind of mistakes that come from a lack of vision or experience. Sometimes they're unavoidable, but with any luck you can use my own experiences (and mistakes) as a learning tree.

Here's the top five most common mistakes owners make when starting a home service business.

1 - Failing to Research the Market

Mistake: Jumping into a business without understanding local demand and competition.
Solution: Conduct market research to identify service gaps in your area. Know your competition and target underserved niches to differentiate your business.

You absolutely have to know what is offered in your region and who you're working against. It's not as simple as starting (or buying) a home service business and expecting the calls to roll in.

Especially in the trades, there tends to be a lot of institutionalized businesses that have worked in a region for years, if not decades.

So, if you didn't buy one of those institutions it's your job to know what you're up against, make some educated guesses about how well those businesses are doing, and figure out where there's gaps in offerings.

2 - Undercutting Your Own Services

Mistake: Setting prices too low to attract customers, which can lead to unsustainable profits.
Solution: Ensure your rates cover all costs, including labor, materials, and overhead, while still delivering profit.

There's two levers you can pull when things get dire: Reduce labor or reduce prices. The labor one is tough because it involves a need to retrain employees or get them acclimated to your way of doing things.

On the other end, discounts and costs always feel like a natural place to save. However, that runs a risk of undercutting yourself and making it so quantity of jobs is the only way you dig your way out of the hole.

That probably means you're spending too much money in other areas or pumping more leads than you can handle.

Charge the actual worth of your products and services. That's far more important than reducing costs as an artificial way to pump leads.

3- Expanding Too Soon

Mistake: Expanding services or hiring staff too quickly without proper infrastructure.
Solution: Start small and scale gradually. Ensure your business processes are streamlined before adding more services or staff.

One of the biggest mistakes I ever made in business was going multi-location too soon. It made sense at the time and I thought we had our processes down.

Gentle reader, we did not.

if I would have just consolidated to one location, I think we would be about $10M ahead of where we are today. But that was then and this is now. All of this advice also goes for growing too big, too soon. The last thing you want is to run into days where you've got people sitting and an empty call board.

There's a delicate balance between lead generation and staffing. And it's different for every business. You won't know until you know.

4 - Inconsistent Customer Service

Mistake: Failing to maintain high standards of customer service, leading to negative reviews and lost customers.
Solution: Train employees to be professional and responsive, and ensure timely communication with clients.

In many ways, your call center (and the customer service provided both by CSRs and by service techs) are the beating heart of your business. You need a high standard of excellence when it comes to these customer interactions.

At one point I made the mistake of moving my call center overseas in a money-saving measure. It had the (in hindsight, expected) consequence of hurting that customer service expectation. It's hard to have outsourced workers handle business the way you want.

It all comes down to training. It's why we made the move to a hybrid call center, with our CSRs and techs now learning from every call thanks to AI coaching, among other training opportunities. Don't forget that it all comes down to that customer experience.

5 - Bad Hiring Practices

Mistake: Hiring unqualified or unreliable employees, leading to poor service quality.
Solution: Take your time in the hiring process. Provide ongoing training to maintain service quality.

Hiring is difficult, no matter the trade. This especially is true for hiring technicians, as each one requires a certain amount of resources and training hours in order to be "ready". Save yourself the habit of replacing people by having certain standards right from the start.

More to the point, having the right training processes is how you will improve and grow in revenue. Our technicians see 250 hours of training before ever getting their own truck, and weekly training across all departments helps keep everyone on top of their game.

Avoid the mistakes here that you can, and prepare for the ones you cannot. You don't want one mistake being the difference between being open for business and being done.

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