By Steven Knight, Creator of Solutions and Opportunities at Mosaic Home Services Ltd. — building Canada’s largest home improvement franchise network.
In a previously published article, I wrote about one of the most challenging topics entrepreneurs in the home service industry will face: how and when you should diversify your revenue stream. I shared my experience and framework, dubbed the 4C model. In this and subsequent posts, I will dive deeper into each of the C’s and give some examples and practical advice that can be applied by entrepreneurs who mean the best, but oftentimes damage their business by overlooking the basics.
So far, we’ve looked at customer and cash flow. Looking at a third C — convenience — I challenge you to dive deeper into any new product or service that you’re considering adding to your revenue mix, asking yourself, “How convenient is it for me to add this new stream of revenue to my business?”
Now, to be clear, anything worth doing will require effort, energy and resources. Adding a new source of revenue to your business shouldn’t be a cakewalk. But you should absolutely consider what resources you already have that can be repurposed, as well as investigate all of the ins and outs of the industry you’re about to enter.
Let’s look at Sally the roofer. Sally owns her business headquartered in Edmonton Alberta, Canada. It’s cold in Edmonton in the winter, and no one wants to do residential roofing in -30 Celcius. Usually, she pushes hard all year to make sure she can take the winter off, but she’s so bored during that time. Entrepreneurs are wired to look for the next bright shiny thing, and she can’t sit on her couch for another winter watching TikTok; it’s just not in her DNA. So this year she says, “Let’s hang Christmas lights!” How hard can it be? She has trucks, ladders, people and customers; it would be a great way to repurpose the assets she already has.
This is an incredibly common practice in professions that have a low barrier to entry. Sally secret shops some competitors, calls some suppliers and starts bringing in products. She goes out to her client base of people whom she’s done roofing for and picks up a few jobs. It’s not big money — a few hundred dollars here and there — but it keeps people busy and it’s a low-cost endeavor. All of the sudden, Sally is making money twelve months a year.
She does her first few days of installations when customers start calling back. All the bulbs are burning out and breakers are blowing everywhere! One customer’s complaining that the tree they installed lights on yesterday looks terrible (it was their first tree, after all), and the big estate home she landed, where she promised to have a cutout of the Grinch on the lawn, is on the phone screaming. They have to get there today or Christmas is absolutely ruined!
The lift she rented won’t run because it’s too cold, which has never been a problem as she’s rented it hundreds of times each summer. Sally’s on the phone with the manufacturer, who can’t help because it’s December 1; the time for troubleshooting is long gone. She bought some second-rate product that no one uses because it was a little less expensive but looked just as good. The bulbs are drawing too much power, the wire is failing, none of it is rated to last a Canadian winter. The Grinch isn’t done at the printer, the sun is already going down for the day and this is the most stressful week she’s ever had in business. What’s worse is she has to find room to store all this stuff all summer long — she’s going to have to rent a place and replace all the broken products. This is going to cost thousands of dollars.
Sally is trusted with thousands of dollars in roof replacements a day, but she can’t handle a few hundred dollars of Christmas lights. Why? She’s an expert in roofing, and just because you need a ladder to do it doesn’t mean you are an expert in Christmas lights. It seemed convenient on paper, but it wasn’t. Sally didn’t bother to get any training, and while the investment in product didn’t seem like much — two roofs in comparison — Sally’s never had to stockpile or store anything. She never considered how much room it would take up.
If you’re looking to diversify your revenue, always leverage the assets you already have. Vehicles are a big one, but customer data is even bigger. The more you can leverage, the easier it will be. Talk to people in the industry in other cities; find out what you really need to be successful. Don’t assume anything.