📉 Sales Update

April was a fantastic month for business, no doubt. I onboarded a new commercial customer and had some big dollar cleanings.

It didn’t come without it’s challenges though.

We cleaned homes for 4 new customers with the potential of turning them into recurring customers. This is a number that stings. Out of those 4, thus far none of them have returned.

In that process, I also had to let go of one of my cleaning teams. They weren’t getting the job done. I saw the red flags from the very first cleaning, but I kept giving them a chance.

I kept them around because I saw volume start to tick up and I couldn’t afford to lose them. But in the process, they may have lost me some recurring customers.

In hindsight, I should have given those new customers to my most trusted crew.

Lesson learned: Fire fast and don’t stop hiring.

⏳️ Unexpected Challenges when starting a business

Today, I want to walk through the unexpected challenges when starting a business. This is about the minut things that as a new business owner you have to spend hours on, and yet, feel like they don’t move the needle forward.

None of the business gurus really talk about this stuff. Frankly, it’s boring.

But it makes a HUGE difference on your speed and execution as a business owner once you’re up and running. It can either let you run, or stand in the way. Let’s jump in.

🧾 Setting up your legal entity correctly

This keeps on coming back and biting me in the ass. When I first created my LLC via LegalZoom, I was so eager to start the business, that I named it something super ridiculous, AND with the incorrect business address.

One week after filing with the State of CA and IRS, Eli convinced me to change the name and to also fix the address.

This change has caused me hours of headaches when setting up accounts across government organizations, and even had my Google Business Profile suspended at one point due to mismatching records.

When setting up your name and address with the state, take your time and don’t rush this process. If done correctly, you’ll never have to come back to it again. If done incorrectly, it’ll keep stealing hours from you.

These are the big 6 entities that you need accounts with, and that you’ll need to start filing with consistent Name and Address:

Key Government Entities for California Businesses

1. California Secretary of State - For business registration

2. Internal Revenue Service (IRS) - For federal tax ID

3. California Department of Tax and Fee Administration (CDTFA) - For sales tax permits

4. Employment Development Department (EDD) - For employer accounts

5. Franchise Tax Board (FTB) - For state income taxes

6. City/County - For local business licenses

🔎 Not evaluating CRM’s (Software) more extensively

I went with the CRM that was targeted for home cleaners and settled on that one. Do your research before you start acquiring customers, take demos, and talk to the sales reps. The hours spent on this is VERY worth it.

I’m now fully onboarded to my CRM and can’t even begin to think about the headache it would be to migrate to another one.

The main pain point here has come from wanting to customize my website faster and more efficiently. My CRM handles my website as well, and they’re using an outdated template. With all the AI tools nowadays, making beautiful websites is super easy. Yet, I constantly have to whip up code in Chatgpt and send it to them to implement.

It’s taken me something close to ~100 hours to get my website to where it’s currently at. It still needs more optimization for it to be found more easily. But the friction has definitely held me back.

👷‍♂️ Public Works Projects

Know before you start. You can go broke.

Bidding on projects before knowing what’s required to be compliant with Public Works Projects can lose you thousands of dollars, if not break you.

Public works projects require you to pay prevailing wage to every employee. For a General Laborer, minimum wage is starting at $71.69 per hour, and goes up depending on the trade. If you don’t have these inputs in your bid correctly, you’ll absolutely lose money on the job.

Once you register and pay your $400 annual fee, you’ll be able to find the project that you’re working on and you’ll have to file certified payroll every two weeks with them.

Once you file that payroll certification with them, you show that form to the General Contractor to get paid. Otherwise the GC is in full power to NOT pay you.

You have two options:

Hire a third-party company to do it for you: $900/ month (no thanks).

OR

Spend hours figuring it out yourself. Which is very worth it. You’ll be ready to play with the big boys once you have this out of the way.

Note: There’s big fines $$$ if you don’t register and provide proof of Payroll within 30 days of completing the job. Don’t mess with the DIR.

🫰 The most sought out businesses

If you read my last newsletter, this isn’t surprising that home service businesses are highly sought after. HVAC takes the lead here. Let’s look at the traits that make HVAC highly sought after:

1. Recurring revenue model - HVAC businesses benefit from both emergency repairs and scheduled maintenance contracts

2. Essential and recession-resistant - Climate control is considered a necessity in the US.

3. High-margin upsells - HVAC businesses can boost profitability by offering services like indoor air quality solutions, duct cleaning, smart thermostats,

I think a natural play for Two Trees Cleaning would be to get into the HVAC business. We’re already in peoples homes. We’re already trusted inside. Why not have the HVAC portion added onto the Two Trees brand? I envision a company called Two Trees Home Services.

What do you think, should I look into bringing this service in-house? 📈 

🚪 How to enter a new market

Entering a new market may not be as difficult as you think it is. But you’ll want to start ranking on Google for that city when people look up [Service] in [City].

The best and fastest way to do that is to actually set up a physical office in that city and create a new Google Business Profile with your name and City.

Rather than setting up your profile as a Service Area business, you’ll want to show that you have an address pinned to it.

Businesses that have a public address available are something like 25% more likely to rank in the top 3 Google searches.

The reason you need a physical address is that you’ll need to send video verification to Google that you have a physical office. That video will need geolocation turned on. There’s really no way to lie to big brother Google.

That said, it can literally be the most rundown office space in town and you only have to sign a lease for a few months until Google knows you’re actually there.

Lookout for a Two Trees Cleaning office in the near future 😉 

Cheers,

Dave