Interview with an entrepreneur:
Creating a business in the field of public utilities
The site clogicsecure.com, as part of a joint project of the Community of Information Portals Promoting the Development of Small Businesses, continues a series of interviews with successful entrepreneurs who are ready to share their own experience in creating a business and help newcomers take their first steps in business.
"The return on investment is 8-12 months. The profitability of the business is high 100-150% per year ..."
Yaroslav Butenko, director of the Domovoi company, shared with us his own experience in creating a successful business in the field of domestic services.
Yaroslav, tell us what your company is doing
The service service Domovoi has been working in the field of domestic services since 2007.
For us, it is a matter of honor to do the job efficiently. This is what helps to fulfill orders on the recommendations of satisfied customers.
We provide the services of masters, sometimes called "husband for an hour":
services of a carpenter, a bear cub;
cleaning services (cleaning of apartments, houses, offices and cleaning of the territory);
services of loaders and general workers;
freight transportation, moving an apartment or office;
repair from repairing a room or bathroom to a turnkey repair;
repair and installation of household appliances;
computer setup and repair;
installation of alarm systems and intercoms.
The specialization of the service service Domovoi is small orders.
We help customers free up their precious time and energy. We arrive at a more convenient time for the customer. We work on an open price list and guarantee the quality of our work in writing!
Many people think about starting their own business, but not all of them eventually open it: they stop the fear of uncertainty, instability, high risks, etc. Have you easily made the decision to become an entrepreneur? How did you come up with the idea of starting this particular business? How was the idea of this business born?
From childhood, I did not understand why in order to drive a car, you must be able to repair it. Then every man could repair almost everything. Moreover, the quality of work has always been mediocre. Those days are long gone and now not many people decide to repair a washing machine with artificial intelligence or install a complex hydromassage system on their own.
In 1996, a computer appeared at our place, which we still could not use. He often stopped working. For hours, we tried unsuccessfully to solve the problem on our own. Then the masters were called and our insoluble problem was eliminated in a matter of minutes, and sometimes seconds. Then I realized that every business should be handled by professionals.
The soul lies in the service sector. Communal services have been especially neglected since Soviet times. The need for the services of craftsmen for minor household repairs was high and completely unsatisfied.
I started with the city of Cherkasy in Ukraine.
In September 2007, when I worked as a manager, I took a month off, rented an office, and began recruiting craftsmen and training dispatchers. We started advertising and in November we already completed the first orders.
We constantly worked to improve the quality of service, reduced the time of arrival of the master and, most importantly, we made an open price list for all services. Even now, many organizations will not give their prices, because they want to evaluate the client and take more from him. Also, our rule was the signing of an act of work performed and the provision of a written guarantee.
We are confident in the quality of our work, therefore we do not take an advance payment. A client pays money only when he is satisfied with a fully completed work.
How long did the implementation of the idea take from the initial concept to directly organizing the service of the Brownie?
For a whole year I was pondering the first step. I recruited employees for 2 months.
From the beginning of the recruitment process to the breakeven point, we came in 6 months. And he fully returned his investments within 9 months.
A lot of time and effort went into the selection of conscientious masters, the formation of an official price list, training dispatchers and determining by trial and error which particular advertisement works and which does not.
How much did its implementation cost you?
A significant part of the work was carried out on their own, which significantly lowered the starting investment.
I will give approximate investment amounts for a city with a population of about 300, 000 people.
Main expense items
Office rent for 2 months and 50% of the monthly cost for the services of a real estate agency. We independently found a small office (13 sq. M), on the outskirts of the city ($ 100 per month in 2007). A year and a half later they moved.
I took 2 computers at home. Enough of the simplest computers with good monitors. $ 1, 600
Laser printer. 120 $
Telephone numbers and devices (landline, mobile of the main operators). The simplicity of remembering the number is very important. The simplicity of reading the number and its perception by ear are important. I chose mobile numbers for almost a month reviewing the available options in stores, city numbers could be chosen by paying the operettor. 6 handsets with phone numbers cost about $ 400. Today this option is out of date for us, because you are working on creating a contact center.
Advertising (press, telephone information bureaus, souvenirs and printing). $ 5500 in the first year. This amount can be increased several times to accelerate the start.
Software for receiving orders and a computer network were organized on their own. Here the price can range from $ 500 to $ 20, 000.
Overalls can be made when you start to make a profit.
We also created a site on our own. When ordering, a normal website with information filling costs from $ 1000.
The upper bar practically does not exist.
Salary of dispatchers. Based on the average salary in your city. The number of dispatchers depends on the number of orders. In our case, there were 2 people.
The salary of an accountant should be one and a half to two times higher than the average in the city.
Telephone communications. 50 $, because most calls are incoming.
Masters work with their tool and get% of the cost of work performed, this reduces your initial investment and removes a lot of useless requests.
Ideally, you should be prepared to cover all current expenses from your own funds during the first 6 months to guarantee yourself getting nailed in the future.
According to your estimates, what is the minimum amount with which you can start this business today?
The cost of entry into the business depends on the starting position of the entrepreneur, competition and the population of the city in which the organization opens.
In a city with a population of 300 thousand people without strong competitors, you can start with 10 thousand dollars.
The lion's share of expenses falls precisely on the advertising budget, because it determines how soon potential customers find out about you.
How can you accelerate the start of a business to get the maximum return on investment?
There are always several options: start from scratch and step on the standard rake yourself or buy a franchise.
If you purchase a franchise, you:
Avoid investing money and time in creating a contact center, training dispatchers, developing software, developing a site, filling it with information;
Do not pay salaries to dispatchers, accountants, advertising designers, system administrators;
save on office rental;
speed up the process of recruiting masters;
avoid a lot of conflicts in cases of poor-quality work of the masters;
optimize your investment in advertising, because You don’t have to experience what works and what doesn’t;
Get a proven business system
get the necessary commercial documentation (contracts, price lists, powers of attorney, reports, technologies, commercial offers, etc.);
simplify the process of signing contracts for servicing corporate clients (banks, restaurants, shops).
What difficulties did you encounter in the initial stages of doing business?
Too many masters love to drink. At the stage of the initial recruitment of masters, the problem of alcoholism was very acute. Thanks to simple know-how and a strict contract, we avoid this problem in 99% of cases.
For the masters it is very important not only to perform the work in a quality manner, but to correctly explain the essence of the problem to the client and what exactly he pays the money for.
Most masters are used to stealing. Therefore, it is necessary to make it impossible. We solved this problem with the help of software and a principled accountant.
Cleanliness, courtesy, punctuality and the quality of the work of the masters is evaluated when all customers are called after the work is completed by the master. The best craftsmen get the job first and earn the most. The rest are simply screened out.
Several times there were emergencies, such as flooding. Now we stop emergency situations very quickly. We also created a special insurance fund.
Well established mechanism for performing warranty work.
How and where did you look for employees? Do you have special requirements for employees? What payment scheme do you practice?
Initially, they recruited masters from those who came for interviews on advertising in the press. The work with recruitment agencies turned out to be completely ineffective.
Special requirements for the masters: honesty, decency, professionalism, work experience and the desire to make good money.
Now new masters come to us according to the recommendations of our employees. Wishing to work with us is enough to be able to choose.
How long have you paid back your initial investment? What can you say about the profitability of this business?
The return on investment is 8-12 months. Business profitability is high 100-150% per year.
What can you say about competition in your business?
When we started, our competitors were ZHEKI, emergency service, repair companies and co-workers. Later, many companies appeared that tried to copy us. They did not understand our philosophy, therefore they disappeared as quickly as they appeared.
Now dispatchers ZHEKOV and emergency services most often redirect clients to us, because the masters of these organizations are interested in working as little as possible.
Does seasonality exist in your business? How do you solve the problem of low seasons?
Seasonality in our business is not very significant. It consists in the fact that in summer people massively prefer to make repairs. Therefore, in the summer we do many repairs of apartments and houses. During this period, some of the masters have to transfer from small orders to repairs, but this does not fundamentally affect the work of the Domovoi service department.
The bulk of orders are focused on customer service (plumbing, electrician, carpenter, welder, movers, transportation, repair and installation of household appliances, cleaning, etc.) services relatively uniformly. Chato peaks occur on pre-holiday days when people are preparing to meet guests and on days after the holidays, when it is time to correct the results of stormy fun. At such moments, some lines may appear, sometimes the working day of the masters is extended.
There is some seasonality for certain types of work. For example, people prefer to actively wash windows in spring, and general cleaning of apartments is especially popular before the New Year.
How has the economic crisis affected your business? (It's no secret that today people are starting to save on everything, which means we can assume that the number of customers may decrease). What would you advise to undertake for the successful functioning of a business in adverse conditions?
The period from October 2008 to May 2009 was quite complicated. But we did not reduce the volume of advertising and did not fire employees. I had to compensate for expenses from personal savings.
Then banks and many organizations began to switch to a saving mode. This has opened for us an amazing resource for development. We have signed many agreements for the maintenance of organizations, cleaning of premises and territories.
Therefore, for the service Domovoy in the crisis there were many positive aspects. A crisis can create difficulties, or it can provide tremendous opportunities. It all depends on the point of view.
What other "pitfalls does this business have"?
You can’t focus on the mediocre quality of order fulfillment. Only the strongest survive, because either you will be the best or you will have to leave the market.
How do you promote your services? What are the main promotion channels? How many customers does the website bring to you?
At the moment, we receive a third of our orders from those clients to whom we have already performed certain work and they were satisfied, another third - we receive according to their recommendations to our friends.
The remaining orders we receive through advertising in the press and the periodic distribution of print advertising.
The site was created in late 2009. At the moment, he plays an informational role and saves us the substantial amounts that we spent on printing and distributing advertising booklets. However, the number of orders due to the site is still small, about 2% of the total.
How do you see the prospects for the further development of your business? Do you plan to expand by opening new directions or increasing the range of services offered? Do you plan to create a franchise that will allow you to go beyond the local market and cover other regions?
Now we are working on the creation of a contact center capable of processing a huge number of calls.
We are working on the opening of a branch in Kiev. We started a set of masters.
In the process of opening a branch, we will complete the description of all business processes. The franchise package is almost ready.
The plans for the next 2 years to open units in all major cities of Ukraine, partly on their own, partly due to the franchise network.
Then we will go beyond the borders of the country.
If you are interested in this type of business, let us know.
What advice could you give to entrepreneurs who are just thinking about starting a business?
A journey of 1000 miles begins with the first step. It is worth starting to move forward, and then correct the route. It makes no sense to linger and tune in for years, if you still do not take the first step!