Mike Bidwell lays out the benefits of owning a “recession-resistant” home service franchise during a time of widespread uncertainty.
As the business world struggles to cope with the new normal we’re now living in, certain industries have been hit harder than others. Among the businesses struggling most right now are bars and restaurants, hotels, gyms, and so many others that are dependent on a brick-and-mortar presence.
The home services industry, however, is holding up better than most. The nearly $300bn space has continued operations across most of its service verticals for almost the entire pandemic. Why? Because many of the services offered have been deemed essential even in the midst of a global health crisis.
For this reason, ‘recession-proof’ is a term I’ve heard a lot recently when asked about how Neighborly’s family of home service brands has managed during this economic downturn. It’s a term used loosely for all essential service providers these days, based on the assumption that any business that can survive this crisis is set for any other future crises.
As much as I wish this were the case, the thought that any business is entirely recession-proof is naive.
The more accurate term to define essential industries today would be ‘recession-resistant’. These are the businesses that may not necessarily be thriving in times of economic downtown per se, but they are able to stay afloat by providing products and services that people will continue to depend on regardless of their personal finances.
Take the home services industry for example: while there are a number of services that homeowners could simply not do without in recent months while they’ve been confined to their homes, such as plumbing, HVAC, and appliance repair, others might be deemed more discretionary by some homeowners who have found themselves in personal financial turmoil. And even essential services might be ignored for longer if a homeowner is trying to put off a major expense.
For these nuanced reasons, to say the entire home services industry – which is broad enough to include “everything from painting to plumbing,” as we say at Neighborly – was left completely unaffected by the current recession would be false.
What the industry has shown is an ability to rebound quickly after the initial dip in overall revenue due to the pandemic’s outbreak. This made it stronger in the long run, and therefore, recession-resistant.
The last major recession experienced in the U.S. occurred in 2008, as I’m sure we all remember far too well. While the home services industry survived and came out stronger from this period of economic crisis, I would argue that the 2008 recession was definitely a tougher time for our industry.
After all, the recession was caused by the crash of the housing market, making people’s homes the last thing they wanted to invest in with remodeling and maintenance projects offered by service providers as home values were falling rapidly.
This time around, we’re all using our homes more than ever due to shelter-in-place mandates. Our A/C is running on full-blast. We’re utilizing our home plumbing during times when we’d normally be at the office or in public. And, our appliances – dishwashers, microwaves, ovens – are being practically worn out by constant use. As we continue to rely on these essentials for the foreseeable future, it’s not an option to ignore their performance.
Of course, there’s still a reasonable concern among homeowners about having a stranger in their homes during this time. However, while I can only speak directly to what Neighborly has done in light of growing health concerns, halting our services was never an option.
Instead, we’ve adjusted our practices to account for the health and safety of all of our team members and customers, introducing new protocols like utilizing personal protective equipment, social distancing, elevated hygiene, and screening.
In response to our enhanced safety protocols combined with the relative necessity of the services we offer, we’re seeing that people are slowly but surely warming up to the idea of having service providers back to their home. This is causing the rebound we’re now seeing in revenue, even for more discretionary services like painting, cleaning, or landscaping.
A concept with proven value
Now you may be wondering, what will the impact be on the home services industry if and when the world starts returning to normal? The time homeowners have had to focus on their home improvement projects, the increased usage of the home, the increased availability of homeowners to have technicians come out to their homes since they’re not at work – won’t all these benefits to this industry go away?
Not necessarily. In fact, the lasting effects of this pandemic may include more time spent in the home regardless of social distancing, as our homes have proven themselves to be just as effective spaces for work as most offices would be.
“The lasting effects of this pandemic may include more time spent in the home regardless of social distancing”
With the advanced technology we have at our fingertips nowadays, it has been easier than we may have expected for a business to continue to operate remotely. For this reason, more and more companies are either prolonging the time before they return to their offices, or they’re doing away with office space entirely. The work-from-home population is likely to remain higher post-pandemic than it was before, meaning a continued emphasis on the value of having a comfortable, efficient home.
For this reason, the opportunity to invest in the home services industry is more attractive than ever. And, with many careers becoming uncertain, home service franchise owners can feel confident that their services will continue to be needed not just throughout the remainder of this pandemic, but for decades to come.
Of course, this is not to say that the industry is recession-proof; I think I’ve made myself clear that I don’t consider this term to be realistic. But this industry’s likelihood to fare better than most in a recession, or its recession- resistance, is higher than perhaps most other industries out there today. After all, even as technological advances and new innovations continue to render some industries obsolete, I find it hard to believe that humankind’s need for shelter will ever go away.
Right now, with the SBA offering more loan support than ever to keep small businesses on their feet during this recession, there’s never been a better time to invest in a home service franchise.
Mike Bidwell is the president and CEO of Neighborly, the parent company of several service-based franchise brands.