Why you should try launching a local business before a global SaaS business

with No Comments
Launch a local services business

Here’s something you probably haven’t considered as an aspiring tech entrepreneur. Why not test your grit by testing a simple business idea before tackling a complex one? What I mean is, try launching a local business that mows lawns or paints houses before you try going digital with a new techie SaaS venture.

It may seem boring or unaspiring, but many blue collar businesses are shutting down as baby boomer owners retire with disinterested or absent heirs. This by the way, is a great thing for opportunists. Although researchers at Ibis World have forecasted that plumbing has only grown at an annualized rate of 0.4% between 2016-2021, demand remains strong. There is a growing shortage of skilled tradespeople in the United States. The figures for the electricians industry paint a similar picture with annualized growth between 2016-2021 of 0.03%. You can see there is opportunity here for contractors not only in these two spaces, but across several others where industry growth may be considerably higher yet roles and demand for skilled tradespeople remain unfulfilled.

Low start-up costs

Years ago when I started my first lawn-mowing business, I borrowed my parents mower and bought my own gas to mow lawns. Nowadays, those basic operational costs may be higher, as well as with the additional marketing costs of launching a website and running pay-per-click campaigns on search engines and social media. However, these marketing tools make it much easier to find customers. Running other local businesses, such as a landscaping or painting company, have very low start-up costs. The basics include the following:

  • Materials – These include costs of your lawnmower, gas and oil if you were running a mowing business. Or your paint brushes, rollers, ladders, masking tape if you’re running a painting business. Much of these costs can be passed onto customers as and when needed. In total, you’ll be at a few thousands dollars tops here.
  • Website – You can launch a website with free hosting on a number of different platforms. Otherwise, hosting with a budget provider costs $2 per month.
  • Advertisements – You can resort to printing flyers from home, or you can use Google AdWords, Bing Ads, or FaceBook Ads to find your local audience. Google AdWords would likely work best when targeting potential local customers with at-need keywords such as “Lawn mowing service Los Angeles”. Social media ads help build company awareness for a local area. A budget of $10 a day should be more than enough to start.
  • Insurance – Just to cover yourself for liability sake, you may want to take out some insurance for the work you’re wanting to do. Depending on your trade, most policies for small businesses should be well under $100 per month.

How do the above costs vary from the typical SaaS start-up? Most will require a lot more in technology resources to run their applications or services. Free hosting and APIs go so far. Over the long-run, most will need bigger budgets in the hundreds of thousands or millions to reach the profitability of many regional or big city businesses with a substantial customer base. Marketing spend will feel like gambling money. It will likely take longer to find customers when you’re likely selling a product no one has seen before or know they need. Sales staff, without a good product or compensation package, will not sell well.

Plus, add the pressure of trying to raise money, pitch your vision, elude the aura of success or intellect, and bluff or boast along the way may not suit certain personality types. Keeping a SaaS product up and running 24/7 and continuously improving the product to ward off competitors and retain customers is also tricky.

A local painting or plumbing business most likely won’t make you a billionaire, but you’ll have a better chance of making a very good living out of it with a lot less hassle and stress. Plus, once you get the hang of running one successful business, your next venture, be in tech or another local offering, will probably be easier to run.

Ease of finding customers by targeting locally

Finding customers with a local business really is easy. You know the services people are looking for locally. Google and Facebook make it super simple to target these customers down to their postal/zip code, age, gender, interest and others criteria.

We all use these services to a varying degree. All it comes down to when it comes to running a local business is winning someone’s trust. Once you win their trust, you’ve essentially earned yourself a customer for life. Maintaining and delivering a great service each and every time may be difficult, but it’s the only way to ensure success with these types of businesses. My top 15 favorite local business services are as follows:

Auto maintenance and repair – Once you provide a great service here and gain people’s trust, they will come back for life.

Babysitting – Another business where trust is most important. Once people can rely on you, you’re won their business for years.

Car washing and detailing – Take care of someone’s pride and joy, and they become your pride and joy.

Dry cleaning – Just clean the clothes and get them back to the owner without ruining anything. How hard can it be?

Electrical services – There is no such thing as good value here. Fix the faults quickly with a period of guarantee and you’ll be deemed a reliable pro.

Food preparation and delivery – There are countless options for ordering deliveries nowadays. If you can make even one popular dish well, you’ll earn a top-spot in stomachs for generations of hungry folks in your area.

Home & carpet cleaning – Hide away past sins and you’ll soon be famous as the godfather of dirty homes.

Landscaping – Mowing lawns, fertilizing properly and trimming hedges and trees is about 90% of maintaining a garden. Work your way around and with mother nature to please customers and you’ll end up making some serious green.

Masonry – I love skills that are declining in popularity and masonry is one of them. You can easily become the local sage in brick laying or rendering. Charge what you want, when you want and earn a little local fame. Perfect local business for gaining a quick monopoly.

Painting – Scaling a painting business can be tricky given the constant demand for painters that are good. Do this well and you’ll have a booming business making millions per year in profit in a mid-size city.

Plumbing – Another business where providers usually charge by the hour (or how much they like the customer). Justify your rates based on customer house prices and get satisfaction from people staring at your backside for hours. If that sounds pleasing then you’re already a perfect fit for running a local plumbing service.

Pest control – Instead of playing cat-and-mouse you get to play human-and-mouse-and-maybe-cat. Modern pest control combines more science and skill then it once did prior. Consumers want savvy and conscientious exterminators who also think ethically and ecologically. If you think that could be you then polish up on your trapping skills.

Roofing – If you don’t like people looking over your shoulder when you work, then running a roofing company may be for you. The work takes skill but once the work is done, you can expect to never hear from your customers again. Perfect business for skilled but socially reclusives who like big pay days and steady work.

Waste removal and recycling – Many have made billions in fortunes launching waste removal or recycling businesses. Local governments and people pay big money to make their garbage disappear. Great business for people who like to think logistics and don’t mind getting their hands dirty, literally.

Window cleaning – If you ever wanted to be a ninja, a window cleaner is probably the best job for you. You’re measured on your skill, but also on your ability to not be seen by people in the house. It won’t be easy, but if you can pull it off, you’ll be rewarded with steady and profitable recurring revenue.

Quickly measuring customer satisfaction

One of the reasons why I love running a service business is the instant feedback. You’ll know customers are happy if you get a thank you or a smile. If someone’s not happy, chances are your customer will contact you to express their disappointment with what went wrong. Preferably prior to going to review sites or complaining to everyone they know why you let them down.

Gaining word of mouth referrals

When I was running my first mowing business, I had to knock door to door to ask people if they were interested in hiring me to mow their lawns. If I did a good job, all I could expect was getting paid. A word-of-mouth referral would have been great but alas, I wasn’t that good at mowing lawns when I was 13. If you are good at delivering the services your business offers, then local people will tell their local friends, colleagues and contacts. This all obviously helps you grow quickly, especially if competition is low or isn’t up to your level.

Scaling out to more markets to replicate the successes

The beauty of a local services business is that once you’ve discovered a winning formula that works, you can roll it out to other markets. You would need to build up another team in the new territory. Otherwise you can try to stretch out your workforce to see if they could cover it. You may want to consider franchising as an option to growing the business beyond its base. Adhere to what made the business great in its initial market and the chances of succeeding will remain high.

(Maybe) having fun and becoming a local legend?

There is a level of satisfaction that’s earned by people who are appreciated for their contributions to their local village, town or city. There are obscure millionaires and billionaires all around us. Sure, being an anonymous philanthropist is satisfying to some degree, but that’s easy. You’re just dropping money on causes you care about. Not wanting to take credit for sake of modesty.

However, some people who get lots of local love and appreciation tend to be business owners, artists, activists and personalities who have improved life in their local communities through years of doing their thing. These people have rooted their their talents, voice or business in their communities. They’ve made the lives of locals better for being there. There’s something special about that which is hard to ignore. It’s not something to strive for on its own, but probably feels like a badge earned from extraordinary contributions; it wears better the older it gets.

Wrap up

It’s my hope this article has made you reconsider what type of business to launch next. If you’re stuck wanting to try and launch a tech business, go ahead, I hope no one or nothing stops you. However, if you appreciate the potential of having a great local business that can be successful and make you a good living, consider your options. There are plenty of offerings to choose from. You won’t have to fight or try too hard with finding a steady stream of customers who are looking for services just like yours.