Many "Geniuses" have tried to create a large company in the South Florida Market. All of them have failed, including myself.
The biggest problem with scalability is that there is a weekly deadline of servicing a pool on a weekly basis. The pools only receive enough Chlorine for a week to 10 day time frame based on an average use and NO equipment failures. So when an employee calls in sick, takes a vacation, cant keep up because of the heavy loads of summer or storms, or quits without a notice, pools start to turn green and customers start looking for other options.
The most profitable one of the 3 was a South Florida company which based their model on selling accounts before the customers reached their 24 month maturity date. Statistics say, the average account will stay with a pool company 2 years when using employees or sub contractors.
They cancel or get dropped by one of the following:
1. Don't pay their bill
2. Dont repair their pool
3. Sell their home
4. Find another "better" company.
5. Get into the business theirselves.
6. Employees dont show up or quit without a notice
7. Dont like your employee
8. Employee make a mistake
However they failed because of other internal issues, but in the process were able to acquire and sell over 1,000 pool accounts, per year, for over a 3 year period.
So in the big picture, the most profitable way to be in the pool service industry is to:
1. Focus on acquiring new accounts at as close to the average market price, or higher.
2. Hold them for 3-12 months to show a good payment history & earn the customers trust and loyalty thru great customer service.
3. Complete all of the repair and renovation income from the pool account
4. Sell routes of 30-80 accounts for 10 to 18 times the gross service amount before you lose the account. (price depends on location, proximity, and equipment included in the deal)
In this "system" you will work 1 year, and make 4 years profit. If you hire an employee or subcontract out the work, you typically only receive 30% net. When you sell for 12 times, you will receive 36 x 30%.
Customers with employees statistically only last 24 months as mentioned above.
Profitability on just service using the existing model:
$100 account x 30% = $30
$30 x 24 months = only $720 per 2 years
Now, using the system with 6 months of labor on account:
$100 account x 12 = $1,200.
$1,200 - 10% commission = $1,080 net
$30 x 36 = $1,080 net of sale
$30 x 36 = $1,080 net of sale + 6 months of 80% profit of service =
$1,080 + (6 x $80) = $1,560 in only 6 months on the same account !
this is 117% more money in 25% of the time.
So you can do this 4 times in the same 2 year period.
$1,560 x 4 = $6,240
So the 20 mins it takes you to drive to and service a pool for 2 years the "old fashioned way' is $80 per month x 24 months $1920
20 mins x 52 weeks = 1-40 minutes per year, multiplied by 2 years = 34.67 hours.
$1920 divided by 34.57 hours = $55.38 per hour
So the 20 mins it takes you to drive to and service a pool for 6 months using "The System" is $80 per month x 6 months = $480 + $1080 x 4 times per 2 years = $6,240
20 mins x 26 weeks = 1040 minutes per year, multiplied by 2 years = 2080 minutes or 34.67 hours.
$6,240 divided by 34.67 hours = $179.98 per hour
Now when you sell the accounts to the buyer, they will have no experience and you will train them and do their repairs. so you won't really be losing any money. only gain money because when their company grows, you will have more repairs to do.
PDF of the breakdown of net income for following "The System" listed below in the video