Paradis Home Services seeks a $160,000 loan to open two territories with a new cleaning and property restoration franchise. Although a loan is preferable, investment opportunities will be entertained.
Executive Summary
Voda Cleaning and Restoration is a new franchise that provides anything from water damage to mold remediation and hardwood floor resurfacing. There is a persistent market need for cleaning and restoration services. Restoration work provides high-ticket jobs that produce significant revenue, and cleaning provides predictable and consistent work with a high profit margin. Voda has a proprietary van design that enables both cleaning and restoration jobs to take place within a single mobile unit. Voda uses the most advanced equipment available to the cleaning and restoration industry, eco-friendly cleaning materials that are healthier for residential spaces, and modern software to produce quick and accurate quotes for insurance companies. The customer-centric vision, attractive modern branding, and level of professionalism aim to supply customers with a brand they can trust in a heavily fragmented market.
Voda’s mission is to make life easier for those responsible for creating inviting, healthy spaces where people live, work, and do business. Our vision is to elevate standards of cleaning and restoration across the nation. We embody the values of excellence, integrity, teamwork, accountability, and community.
Market Analysis
Restoration is a growing industry with a fragmented market dominated by mom-and-pop shops. Privately owned businesses often do not have the funding and business systems in place to fulfill basic customer needs like answering the phone in a timely and professional manner or using the appropriate equipment for the job, let alone the means to provide outstanding service.
With that in mind, Voda Cleaning and Restoration’s target market is middle to high-end customers that seek excellent service. Although competitors such as ServPro exist, our initial goal is to compete directly with mom-and-pop shops that are unable to match Voda’s service standard.
The following is a list of competitive advantages that will enable Voda to acquire market share.
Proprietary van design: Enables an efficient dual-business model without the cost of an additional van or truck.
State of the art equipment: The correct equipment significantly improves job quality and decreases the amount of time necessary to complete a job. This improves the customer experience and allows Voda to service more customers, thereby increasing revenue.
24/7 call center: The first business that picks up the phone often earns the job. Thus, a 24/7 call center is a tremendous advantage over small businesses that don’t pick up the phone in a timely manner.
Custom marketing strategy: The award-winning CMO designs a custom marketing strategy for each territory, which employs multiple social media platforms and search engine optimization. Each strategy is developed after conducting market research, which improves the efficacy of marketing dollars. Most restoration businesses lack a marketing strategy.
Sophisticated lead generation: The CEO sold his lead generation company before founding Voda Cleaning and Restoration. He refers to Voda as a lead generation company that sells cleaning and restoration. Software and data-driven lead generation helps franchisees build a local network of mutually beneficial business relationships and proactively procure a customer base.
Customer experience: Dragan, the founder of the flagship store, accrued an average 5-star rating across every single review platform. Most cleaning and restoration companies do not exercise basic customer service skills. Dragan trains franchisees directly on customer service skills specific to the restoration space.
Success coach: In addition to direct training and support from the executive management team, I’m assigned a success coach that will help me develop skills as a business owner and improve my business. My specific coach worked in the Denver restoration market for 15 years. Mentorship is key to success in business, especially at an early stage.
Cutting-edge technology:
- Software that produces quick and accurate quotes decreases back and forth with insurance companies and prevents lost revenue from inaccurate estimates.
- AI and data analytics are utilized as part of the marketing and lead generation strategies.
- Scoreboard is a software Voda is working to develop with a former Google executive. The software tracks business performance and generates data-driven recommendations. For example, Scoreboard will estimate when I need to purchase a second van or hire a new employee.
- The executive team is committed to implementing new technologies as they develop.
Business Plan
Location
Paradis Home Services will operate out of two protected territories, each with 85,000 owner occupied housing units. The first territory is Castle Pines, Parker, Castle Rock, and Highlands Ranch. The second territory is Centennial, Greenwood Village, and Littleton. Location is critical for success and the first two territories are prime locations. According to Redfin, a home brokerage site, Denver’s average home value is 35% higher than the national average, and the median household income is higher than the national average. Each territory is saturated with Voda’s target market, and I could not be in a more ideal location to start this business.
Timeline
The first territory is projected to open in February of 2023 after I (the owner of Paradis Home Services) undergo three months of training and earn the industry certifications necessary to be in business. Voda provides a clear system and timeline for this process.
During that three-month period, I will reach out to a list of predetermined vendors provided by the franchise to order the van, equipment, and other supplies. Then I will hire an experienced lead technician and find a suitable office space. A month prior to launch the CMO will execute our grand opening marketing strategy.
Once the business is in operation, I will utilize Scoreboard (mentioned above) and the advice of the executive management team to establish a timeline for opening the second territory. The process for opening the second territory will resemble the timeline for the first territory, minus the three-month training and certification process.
Ownership Role
My job as the owner is to lead a successful team and provide the vision and means necessary to expand the business. This is how I plan on fulfilling my role.
1) A strong team is critical to the success of this business. Employee turnover wastes time and money, and subpar employees compromise the customer experience and push good employees out. I will exercise a rigorous hiring process that includes a background check and follow up on references. Labor is a challenge after the great resignation and lack of competitive wages within the restoration space. I plan to meet this challenge with modern hiring practices and a performance-based pay structure that incentivizes hard work and long-term commitment to the company. High-performing employees will have the opportunity for career advancement.
2) Company culture helps a business succeed. My job is to lay the cultural foundation by enforcing clear expectations for how employees interact with customers and fellow coworkers.
3) Proactive customer service prevents bad reviews and promotes higher ratings. In addition to the mandatory use of an online reputation management company, I will provide a performance survey to every customer after their service is complete and personally follow up on poor feedback.
4) Mutually beneficial business relationships help build a system of referrals that increase the customer base and generate additional revenue. My job is to foster these relationships. For example, I will establish relationships with companies that rebuild after restoration work is complete. They would provide the business with a share of their profit upon completion of the job I referred to them. I will meet with plumbers, property managers, and real estate agents because they produce the highest number of leads. The simple act of following up in person after they refer a job with a check and box of cookies will encourage them to continue referring customers to Voda.
5) Expansion and market penetration are integral to capitalizing on territory and generating more profit. I will strategically invest funds in marketing, sponsoring local events, and other strategies to improve brand awareness. I will proactively reinvest funds and secure capital to expand into new territory, purchase additional vans, and hire more employees to meet the demand.
There may be a period where I need to focus on back-end office work in addition to the tasks outlined above. The 24/7 call center, QuickBooks accounting tool, and other systems in place will significantly reduce that load until the company can afford to hire a director of operations.
Value Proposition
Voda solves the timely and professional communication problem with a 24/7 call center. It’s common practice for companies to turn off the phones when they’re overwhelmed with business. This practice is explicitly banned, and any leads we can’t service will be followed up with by myself or the call center. Our website is modern and easy to use, whereas other companies don’t have a website, or their site is outdated and difficult to navigate. Voda’s equipment, hoses that extend from the truck into the residential or commercial space, provide a better customer experience than the clunky machines that cause damage when used carelessly. The modern payment system and software that produces quotes eases the process of dealing with insurance companies. A customer-centric vision with rigorous customer service training, enforceable standards, and ability to work with insurance companies helps customers feel comfortable and taken care of during a stressful event in their life.
Budget and Revenue Model
The flagship store achieved $1,748,877.09 in revenue with an EBITDA of $559,755.90 or 32.01% of revenue. The projected EBITDA after the 7% royalty fee and 2% brand fund contribution are paid to the franchise is 23% or $402,376.96. Anything above 10% is considered a healthy margin for a business. There is also a strong likelihood the percentage will increase given the redundancies between operating expenses for the flagship store and the franchise model. For example, the flagship store spent over $120,000 to hire people to answer customer phone calls. This cost is replaced by the 24/7 call center, which is significantly less expensive with a monthly fee of $850 and success fee of $20 per appointment. The total monthly cost will amount to less than $3,000 per month, versus $10,000 per month. The near $100,000 in Google ads will be replaced by a sophisticated marketing strategy that costs less and produces better results. Dragan, the owner of the flagship store, was unable to penetrate deep into his territory due to a lack of attractive branding, lead generation, and marketing. His vans worked 60% of the days out of the year but maintained a full-time staff. The business systems within the franchise can bridge those gaps to generate more revenue with the same number of resources. Keep in mind that I am opening in an ideal location with more profit potential than the areas the flagship store operated from.
According to franchisees that I spoke to in different parts of the country, Voda anticipates each territory will reach $500,000 revenue in the first year. This is close to the average $600,000 per territory accomplished by the flagship store. Voda projects franchisees will hit $600,000 revenue at a minimum by the second year in business.
Most of the flagship store revenue was generated by residential cleaning jobs. Voda plans to target residential neighborhoods and complete commercial work as it presents itself. Cleaning jobs will help build brand awareness and segue Voda into higher-ticket restoration work. The branding and marketing strategy will push Voda further into the restoration space. Restoration work often fluctuates, but revenue remains consistent with profitable cleaning jobs.
The total cost to start the business is $235,000. Paradis Home Services currently has $75,000 in funding available and needs the remaining $160,000. The following list is a breakdown of how the $235,000 will be allocated.
Budget
Initial Franchise Fee $99,500
Travel & Living while training $2,500
Rent $3,500
Utilities & Security Deposits $1,500
Tech & Equipment Package $3,500
Office Supplies & Furniture $1,000
Quickbooks $150
Playbook-Keeping $1,300
In-Bound Call Center $850
IT Stack $1,725
Marketing Tech Stack $975
Industry Related-Technology $3,600
Startup Package $2,000
Grand Opening Advertising $12,000
Local Advertising $7,500
Initial Brand Fund Contribution $5,000
Upfitted Van $10,500
Tools, Equipment, Supplies $25,000
Business Licenses, Certificates $2,000
Industry Certifications $6,000
Insurance $4,000
Professional Fees $3,000
Networking Expenses $1,000
Additional Funds $39,150
Total $237,500
* The initial franchise fee is $99,500 for two territories.
* The category labeled “Additional Funds” will be used to hire an experienced lead technician for the first three months, and leftover expenses will be put toward opening the second territory.
Portfolio
The executive management team has over a century of collective experience in different realms of business including franchising, lead generation, marketing, and cleaning and restoration. Dan Claps, the CEO, sold his lead generation company and is using the multimillion-dollar payout to start Voda Cleaning and Restoration. Zach Nolte, the COO, served as the COO of a prominent kitchen franchise and built a successful sister-franchise from the ground up. Christian Belancourt, the CMO, has won award-winning marketing campaigns across a wide range of industries. Arthur Sturgis, the VP of operations, has executive level experience in restoration franchises including ServiceMaster and AdvantaClean. Their impressive track record is a competitive advantage against other franchise brands. Keep in mind that most franchises are not developed by seasoned business professionals, especially new franchises. They tend to develop business systems as they go instead of launching from a foundation for success.
I, the owner of Paradis Home Services, am a young entrepreneur with a B.S. in Cybersecurity and several industry-related certifications. I completed an apprenticeship in cybersecurity architecture post-graduation that integrated my college education with the business world. My current role as a cybersecurity architect is to develop zero-trust security infrastructure to meet the security and compliance needs of various businesses within the confines of their budgets. This requires coordinating the skillsets and preferences of multiple departments, staying up to date on the latest security threats and technology, and educating clients with minimal security knowledge so they can make informed decisions for their company.