brand awareness. Clients may choose to
go with a franchise, simply because they
are part of a bigger franchise network and
not a fly-by-night operation.
What it takes to get ahead
Quality workmanship. The quality of your
workmanship will set you apart in this
sector. Badly finished buildings, poor
paint jobs and ill-fitting units will detract
from the value of a home, and won't be
accepted by homeowners – and word can
travel fast. Cutting corners is not the way
to build your business, so make sure you
have what it takes to be detail-orientated
and committed to quality workmanship.
Superior service. Service levels play a very
important role. This starts with the ability
to work alongside your clients and listen
to their needs. And, then translate this
into a finished product.
This is often where the benefit of being
an owner-managed operation or having a
strong owner/manager influence can be
a key point of difference. When money
is tight, consumers look for even more
value for their money and companies this
makes it essential that you deliver what
you promise. Followups and keeping the
customer informed about the progress of
the project is crucial. Being on time for
meetings and delivering the job on time
is also critical. As you will be working in
people's homes – often when they are
there – you should focus on causing as
little disruption to the homeowners as
possible. If you can, do the bulk of the
work off site and then come in to fit.
A sound reputation. Remember that
"word-of-mouth" and referrals are still
the most powerful tools for a home
improvement business to build a solid
reputation. And, a happy customer is the
best advert you will ever have for your
business.
The right pricing structure. One of the
greatest challenges for the home services
industry as a whole is the pricing model.
There is no standard pricing for home
services. A lot of research and planning
needs to go into understanding the
prevailing trends and fixing a price for
your particular home service. Again, this is
where operating as a franchisee can have
its advantages. Margins can be fairly low,
depending on the business, because of
very strong price competition. So keep a
close eye on your overheads and labour
components, which can escalate if you
don't monitor them.Planning for the off-season. Seasonality
impacts many opportunities with the
home services sector. Landscaping
services are probably the hardest hit
with demand from residential clients
greatest during the spring and summer
months. If you cater to commercial client
and body corporates, you will, however,
most likely be paid on a monthly basis.
Other building projects also fall off during
the rainy season, and home service
contractors need to plan carefully to
ensure that they stay afloat during the
leaner months. Weather volatility in
general is a key challenge in the sector.Whichever end of the market you choose
to target, there's clearly money to be
made by offering a service that will
help with the building, renovating or
maintenance of people's homes. And the
advantage of starting up or buying into
a business in this industry is that initial
costs are relatively low. If you possess
the necessary skills it is simple to start
and you can operate from home, given
that you will be on site most of the time.As with any business opportunity, it's
important to understand exactly what
the prospect entails, and to research the
company's background and track record.
Analyse the franchising agreement
in great detail, and be sure to run
everything by your lawyer before you
sign any contracts.PRIVATE SECTOR BUILDING
ACTIVITY STATS
▪ Building activity in the South African
market for new private sector-financed
showed some marginal improvement
on a year-on-year basis in both the
planning and construction phases in the
first seven months of 2017, based on
data released by Statistics South Africa.▪ The number of building plans
approved for new housing increased by
1,8% year-on-year (y/y), or 594 plans,
to a total of 32 857 plans over the
7-month period up to July 2017.▪^ Plans approved for new houses
smaller than 80m² increased by
11,2% y/y since January, but the
number of plans approved for
houses equal to or larger than 80m²
dropped by 7,3% y/y, whereas the
flat and townhouse segment showed
negligible growth of only 0,8% y/y
since the start of the year.▪ In the construction phase the
number of new housing units reported
as being completed showed little
growth of only 1,2% y/y, or just 261
units, in January to July this year.
The segment for houses of 80m² and
larger showed a contraction of almost
19% y/y, or 1 305 units, to 5 667 units
over this period. Both the segments
for houses less than 80m² and flats
and townhouses recorded growth of
around 10% y/y in the seven months
up to July.▪^ The average building cost of new
housing increased by 9,2% y/y to an
average of R7 040 per square meter
in the first seven months of
2017 compared with R6
449 per square meter
in the corresponding
period the year before.
In real terms, i.e. after
adjustment for inflation,
building costs increased
by 3,5% y/y, based on consumer
price inflation that averaged
5,5% y/y over the
7- month period.Source: Absa report compiled by Property
Analyst Jacques du Toit, September 2017.continued from page 40