In this episode, John and Jack interview Neel Parekh, the founder of MaidThis Franchise, a remote cleaning business. Neel shares his journey from leaving a 9-to-5 job in private equity to starting a cleaning company after being inspired by a Reddit post. With a passion for travel, Neel optimized his business for remote operations, allowing him to explore 50 countries over seven years. MaidThis Franchise has now expanded into the first and only Airbnb cleaning franchise, with about 23 locations across the U.S.
Discover more about Neel by tuning in to his podcast, The Freedom Formula. On the show, he engages in conversations with individuals who have achieved Time, Location, or Financial Freedom, exploring their stories in depth.
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Special thanks to our sponsor: Service Scalers: Looking to scale your home service business? Service Scalers is a digital marketing agency that drives success in PPC and LSA. Discover more growth strategies by visiting Service Scalers.
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In this episode, John and Jack interview Neel Parekh, the founder of MaidThis Franchise, a remote cleaning business. Neel shares his journey from leaving a 9-to-5 job in private equity to starting a cleaning company after being inspired by a Reddit post. With a passion for travel, Neel optimized his business for remote operations, allowing him to explore 50 countries over seven years. MaidThis Franchise has now expanded into the first and only Airbnb cleaning franchise, with about 23 locations across the U.S.
Discover more about Neel by tuning in to his podcast, The Freedom Formula. On the show, he engages in conversations with individuals who have achieved Time, Location, or Financial Freedom, exploring their stories in depth.
Episode Hosts:
Episode Guest:
Special thanks to our sponsor: Service Scalers: Looking to scale your home service business? Service Scalers is a digital marketing agency that drives success in PPC and LSA. Discover more growth strategies by visiting Service Scalers.
Check out Owned and Operated Weekly Insights: a newsletter where John discusses topics ranging from recruiting and marketing to the growth of your home service business. Subscribe to the newsletter here.
Contact us:
Youtube: @OwnedandOperatedPodcast
John Wilson: I'm John Wilson. Welcome to Owned and Operated. Twice a week, we talk about home service businesses, and if you're a home service entrepreneur, then this is going to be the show for you. We talk about our own business in residential, plumbing, HVAC, and electric, and we also talk about business models that we just find interesting.
Let's get into it.
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Welcome back to Owned and Operated. we've got Neil on with us. Welcome Neil.
Neel Parekh: What's going on fellas. Excited to be here.
John Wilson: Yeah, dude, this is going to be good. So we met Neil on Twitter and Neil's running a remote cleaning business he's been doing it for a while now.
So, Service business remote were excited to dive into this thing and understand this thing a little bit more. So before we get into the good part, give us a little one minute biography on yourself.
Neel Parekh: Sure. So I launched my company back in 2013.
So over a decade ago I was working a nine to five. I was in private equity, you know, in at 7:00 AM out at 7:00 PM type of deal. And I wanted to do something else. So I was on Reddit, found a post about a guy who started a cleaning company, thought, you know, I could do that too. And it started to work it started to scale and it finally said, you know what?
I'm gonna quit my job gonna travel. Cause that's the main reason I started it. And so I quit in 2015 and booked a one way flight down to South America and just started traveling. And when you do things remotely, you have to have your systems down pat to make sure things get covered on a local basis. So really dove into the systems and optimizing it, using a lot of automations really on a lot of tech I was supposed to travel for one year, ended up becoming seven years of travel across 50 countries.
Got back as COVID brought me back and now I'm posted in Los Angeles and now franchising the system of Made This. So we have about 23 total locations across the U. S. focused mostly on residential cleaning as well as Airbnb turnover cleanings and we're the first and only Airbnb cleaning franchise that exists.
John Wilson: Cool. 2013 to 2015 was like a funny time to me, because that's, to me, that's like peak Tim Ferris four hour work week.
Neel Parekh: Oh yeah.
John Wilson: Yeah. Like, Dude, you were living that dream. Like you were for sure living that moment. That's funny.
Neel Parekh: Yeah. like I read that book and literally everyone around me was like, we got to do micro blogs.
We got to do drop shipping. We got to do whatever Tim Ferris did. Like it was just the first wave or maybe the second wave of digital nomads that's what I wanted. You know, I was sitting in a cubicle at work and you see a photo of a guy on the beach with his laptop and you're like, I just want that.
How do I get that? And funny enough for me, it came through local businesses because that's what actually worked all this digital stuff I was doing. None of it worked. But yeah, I was finally able to achieve that for our work week dream.
John Wilson: So when you first launched it you said it took about two years, 2013 to 2015, like what was enough to quit a full time job? Like how big did the business get in 2015?
Neel Parekh: Not crazy big. I think by the time I quit, we were doing around like 30, 000 per month. Now I think the main number for me is what I call now the freedom number, which is at what point do you feel you're comfortable enough to quit? Now, like I talked to a lot of the franchisees and almost every single time people say, I want 10, 000 per month before I quit.
It's like, if you ask someone to pick a number between one and 10 and they say seven, of course they're going to say seven. Of course they're going to say 10 grand per month in revenue. For me though, I just wanted to cover my base level expenses. That way I knew I was safe. So I had, six to nine or 12 months actually of savings which is more than enough.
And on an ongoing basis, my profits were probably under, I wasn't running it officially. It was probably under 5, 000 per month. And, back then I just, I was going to backpack. I didn't need that much money to go. And so that was a good enough point for me to say, my expenses are fully covered. Let me go all in on this.
And when I decided to go all in the business doubled. Actually sorry, tripled in that first year that I decided to go full time on it. So I do think there's a heavy correlation between how quickly you go all in and how fast the business is going to grow.
Jack Carr: Yeah. What were some big challenges you ran into initially after you went abroad and now you're still running this business here back in the U S what did you have to do? What systems were the first ones to put in place to really help yourself out?
Neel Parekh: Yeah, at first I was doing a lot of the interviewing for cleaners in person. I'd go to like a Coffee Bean or Starbucks and meet them up. So the first thing was, how am I going to do this if I'm not actually there? So I found a cleaner who was local, who I thought would be really good at interviews, and she started to do the interviews for me.
Eventually, she grew and she became the Ops Manager, and now she's actually the General Manager of my LA company. But she started as a cleaner and just started doing interviews for me for the first step was whatever I'm doing locally I gotta stop doing that. That was actually only the cleaner side of it even from when we started just because of the nature of how I was operating it we didn't have an office space.
We didn't have vehicles We didn't have wraps because I was working a full time job. There's no way I could have done that. So the cleaners had to go straight from their home to the job site. So Nate and that means I don't need all this overhead. So the only thing which was tying me down, was that in person interview and once I figured out how to outsource that everything else was done fully remote.
Now, I think what's cool now is COVID has helped Accelerate. I'm sure you guys have seen it. Like, Blue Collar Labor knows what Zoom is. They know what Google Meet is. That wasn't the case pre 2020. Meaning now we don't have to do in person interviews at all. Everyone knows what zoom is. And so things have gotten even more virtual now.
John Wilson: And was zoom was that how you took it from a remote interview or were you making someone else do the interviews?
Neel Parekh: At the time from like 2015 to 2019, 2020, it was having someone go in person to do the interviews in a group interview setting with the cleaners.
John Wilson: So you straight up like outsourced interviews. Who'd you outsource it to?
Neel Parekh: It was a cleaner of mine who I thought could elevate. She was really sharp. So she started to do the interviews instead of me. And then she started vetting people and started to grow in her role that way.
John Wilson: Yeah. That's really interesting. I can see that being a big hurdle. How large was the team? I don't have a good idea of cleaning team size.
Neel Parekh: Yeah. You guys are also heavily focused on, bigger stuff like the trades business and things with the average tickets much higher with cleaning it's interesting because the average tickets much lower as you guys know everything in residential. Oftentimes is much lower ticket meaning higher volume, higher recurring but lower ticket meaning team sizes to hit a certain revenue point.
You're gonna need just more cleaners because they're not going to be able to do things which produce thousands of dollars in a day. They'll still do things that produce hundreds of dollars in a day. So at that time, I'm not even sure on the number of cleaners we have. Because the truth with cleaners, this probably goes for all kind of blue collar labor and technician jobs it's a flywheel, right?
Cleans come in, cleaners come out, cleaners come in, cleaners come out. Some do part time, some do full time. It just depends. That's the nature of it is with cleaning. It's a heavy flywheel type of industry. So because of that, all I knew is we had to just keep on hiring, keep on recruiting.
Cause even if we felt that we had enough, inevitably someone's going to call out or inevitably the quality of one person is going to go down and you have to swap them out. The product for us is delivering a service like an HVAC or an actual tangible product. It is the labor, right? The labor is the product.
So I can't even tell you back then what where we're at, what I could tell you right now for my LA location. And we're doing like, you know, 1. 2 to 1. 5 or so. I'm pretty automated at this point, we have around like 20 to 25 crews. Either one person teams for cleaners or two person teams for that, about a revenue size.
John Wilson: It was five years ago or six years ago, I met a cleaning company here in Cleveland. I don't think they identified as like the current remote. I think they were just a big cleaning company. Maybe a Jana pro franchise. But I remember he had just broken a million dollars for the first time.
And I was like, dude, heck yeah. That's so awesome. That's so cool. And he had 70 staff members and I was like, what? In the freaking world. Like that is insane. The idea of managing 70 people to get to a million in plumbing. That's literally three people. That's a full payroll person.
That's an HR, like you have all of my complexity at a million dollars of revenue. It was like absolutely wild.
Neel Parekh: It's so interesting to at least now that I've been in business for a while, learning the difference between trades or not trades, skilled labor, not skilled labor higher CapEx items versus not.
And just the quantity of people you need to get to a certain revenue size. And I think that's probably worth discussing when people try to get into business, what path are you going to choose? If you're going to get into plumbing, you're probably going to spend a lot of money to get that stuff set up, right?
You can't launch it with a thousand bucks. I launched my business with a thousand bucks. Now the downside is you're not going to be able to grow as fast as you would with the plumbing company, right? Because the average ticket is just so much lower because it's not skilled. It's not trades. You're not actually selling an actual tangible product.
People always ask me what I should get into. And I think that's worth discussing of like, it depends your risk tolerance, what you want out of the business, how much overhead you want, are you cool with that risk or not? And I think that factors a lot into it. Some people like the guy you met in Cleveland, he might really hate the idea of a ton of overheading equipment and storing stuff.
And he likes the people management part. I would never like 70 people sounds like a nightmare to me, to be honest, but I think some people like their risk tolerance and the way they think about it is just a little bit different.
Jack Carr: Yeah, definitely can see that. And we're talking, I mean, a huge part of the business is going to be the actual recruitment side.
And then from my view, the framework, the second side of the business is leads, right? Those are really the two big juggling acts. What was your initial back in that 2015 era? What were you using to generate leads back then? And then how has that changed to today?
Neel Parekh: What a great question because I feel like it changes every quarter, it's frustrating it's so frustrating but that's the nature of it whoever keep up is going to win. Back then what was working for me Adwords and Yelp. Yelp is a very west coast type of thing and back then. You know, you still have to pay the piper, but it was fine.
Now it sucks. And you have to overpay for Yelp and they kind of bully you on top of that. So Yelp, I haven't used it in years, but back then AdWords was still working and Yelp was working. And that was really how we got started at the beginning.
John Wilson: How do leads work now? Are you still able to drive leads through LSA? Because it seems like a lot of the remote cleaning boom came from ease of LSA.
Neel Parekh: I have a hypothesis that a lot of those remote cleaning companies that started in the last couple of years are going to go bust. Because they were 100 percent dependent on one marketing lever, which is LSA. Now, I'll tell you data I have from my LA location. We started on LSA 25 bucks a lead we were closing at 50 percent rate, like 50 bucks for closing a sale.
That's incredible ROI, crapped 35, that's okay, 40, 45, that's okay. Last week was 70 a lead, 7 0 per lead. Now, I think markets like LA, it's more of a mature market, meaning. We probably hit the peak faster. I think other markets are going to slowly start to see an increase in the LSA costs, and that's what we're seeing with our franchises.
So then the question becomes, cool, if LSA is too expensive to have a positive ROI, what are you going to do? At least on our business model, there's two aspects because it's a heavy recurring model, meaning as long as you know your LTV, you can spend whatever amount of money you want on that lead gen.
And it's cool because the LTV is so high. That's how it is on the Airbnb side, not quite on the residential side. So what's working for us right now and what's working for cleaning companies, you'll still do the basics. You'll do LSA and market dependent. You'll do ThumbDak, Angie's List, Bark, CraftJack, the kind of normal quoting engines.
But you have to do the stuff which people are not willing to do, which is what I call community marketing, the scrappy stuff, neighborhood blitzing, meaning, you're going to do a combo of EDDM, yard signs, could be door knocking, it could be hosting a meetup and actually running meetups. This is the kind of stuff where like, candidly, a lot of remote companies are not willing to do because they signed up because they want to be behind a computer just like me.
At the beginning, like I can't go out in the field, I have a nine to five. But that's honestly the stuff which is going to work now is the scrappy offline stuff, which you have no competition, right? Cause no one else is doing that.
John Wilson: Yeah.
That is what we're seeing in our industry as well. And it's funny to watch. So we'll do about 26 million this year and our strategy is the same that you just described. LSA doesn't work. So now we have to do the scrappy stuff that nobody else is going to do, which is funny.
Neel Parekh: I'm curious guys, what's working for you right now on the digital spectrum.
Our LSA cost going through the roof and you're moving towards GMB AdWords. I'm just curious what your guys funnel looks like.
John Wilson: Yeah. So for us, and I know Jack will have his thoughts here too. Like we still run LSAs. Everyone's dealing with what you described now across every industry.
And I even think it probably hits sooner in plumbing and HVAC because that's already such a competitive there's real goliaths in each industry or in each market for those trades. So we hit really high lead costs a little over a year ago Where it tripled in the course of seven months went from 25 bucks a lead to you know Some markets is like 150.
I don't know what jacks are but for us, it's about 80 90 bucks so that was a big deal. We still use it. We still spend a lot of money there. We added PPC back. That used to be like you mentioned a huge lead engine back in like 2017, 2018. So we added that back. We're big enough that mass media is a big part of our overall strategy.
And we are doing canvassing exactly like what you're describing.
I mean, we got scrappy with it. We have people doing door hangers. We have people doing yard signs. The downside is it just takes more people with like, if I need a 140 jobs booked a day so that it just takes like more input than one person going to do it.
So we have to set up, door hanger campaigns and teams to do that. So we're in the middle of building out a community marketing team to basically drive all that forward in a processed way.
Jack Carr: Yeah we're the same. We actually did an episode uh, had to like last week that I don't know if it's dropped yet, it was literally talking about this exact conversation that we're having right now, almost to the T and it's just the way that we're moving in oversaturated markets.
The only space that I'll keep harping on that's outside of what John said. And I think you could actually do it really well in house cleaning is Tik Tok especially since there's such a high demand.
John Wilson: Oh, that's the easiest before afters.
Jack Carr: Yeah, exactly.
John Wilson: Yeah. That would be easiest before afters.
Neel Parekh: Wait. So talk to me how that works on a local level. I'm not a Tik Tok user. I'm on Twitter. That's kind of it. Talk to me about that work on the local level and how people would find me from there
Jack Carr: It works just like old school Facebook marketing to some extent is you put in your location, you can put some very basic.
Are you a homeowner which I guess you don't have to do for you, but for like us, if you're going to replacing an HVAC system, you need to be the homeowner so we can ask it. We can double check that their homeowners. There's some demographic information we can add into there and then just send it running.
You have to do your own creative, your own little videos, but we see the lowest cost per conversion on Tik Tok over any other digital source.
Neel Parekh: Do you mean paid Tik Tok or do you mean organic content?
Jack Carr: Yeah, yeah. Paid Tik Tok. I'm sure you could do an organic thing, but the paid allows you to get in front of, every customer in that area.
And it's fairly cheap.
John Wilson: We're thinking about using it for general branding as a replacement to mass media. So we dropped a, we're not a replacement, but an add on, we dropped a promotion through Tik Tok three weeks ago or something. And it was like 50 bucks a day.
It was a very lean marketing budget. And I think like within the third or fourth day, most of Northeast Ohio, like our target market had seen the ad. Like we were getting a lot of feedback on it from people that we knew. So we think yes for lead gen, but definitely for branding.
So we're going to be driving the heck out of it for branding.
Jack Carr: Yeah. And I think for lower ticket items too, it tends to do much better. So higher ticket it's, a harder sell and you get a lot less um, conversion, but for our low ticket items, like water heater flushes and stuff like that, it is pennies, man.
It's really cheap.
Neel Parekh: What's your creative that you used for the ads?
Jack Carr: John loved my creative man. I made it.
John Wilson: It's so annoying how good it is. As in how good it works. It's so annoying
Jack Carr: John hates it because it's just me being super scrappy. Creating it and it's a really easy to follow template.
it's TikTok, man. It's all built in, like, all the transitions and everything is there. You and then eventually your franchisees, could really run with this thing. And I think you could have a good, lever on the market.
John Wilson: Yeah, you guys would kill them.
Neel Parekh: I actually love that tip. We haven't even considered TikTok at all, just because sometimes if you know a platform, you know how it works. And because I'm not a TikTok user, I can't even imagine how this would work, but it's one of those blue ocean type of things. So it's like John did, we're trying 50 bucks a day.
Why not? It's all upside at that point.
John Wilson: Yeah, our success has not been as good Jack's, but we're also a lot less deliberate about it still. So it's something that we're like actively dialing in. And slower than Jack is, but yeah, we found the same thing. Like lower ticket does do a lot better.
So like we had a promo going for a week and it was, I think by to get one outlet swap which is 200 bucks or 300, not a lot of money and that was our most successful one. It blew up and it generated like 15 or 20 grand in sales over the course of a week with a couple hundred bucks of ad spend.
It was like ridiculous. Every chance Jack gets he turns this shit to tick tock and it drives. I know..
Jack Carr: Dude, it annoys me. We're tripling down on it and trying a bunch of different like low ticket items now because we found that's the new key to it is like these high ticket you get a ton of calls in, but super low conversion, right? It's one out of every 10. But the lower ticket items are like three or four out of every 10.
John Wilson: Cleaning would clean up, honestly on TikTok. would do well. I think I've seen that TikTok, or at least a bunch of organic stuff.
Because people love like the gross, oddly satisfying. So can you show cleaning a drain or can you show pumping a septic? Like people are really into that. I don't know why, I know that people would be into like, here's a dirty floor.
Here's a clean floor type of thing. I would watch that.
Neel Parekh: Yeah, definitely give them a shot right after.
Jack Carr: This episode is sponsored by home service engine. So this is a company that I would highly recommend if you are thinking about getting onto the service Titan, or if you're like me and you have to rebuild your service Titan every few months because you set it up incorrectly. So this is my go to team for any service Titan needs.
And I really wish I had them from the start, give them a call today and start utilizing service Titan to its fullest potential.
I think that's hilarious that like we're on the same page. And since we're on the same page, I wonder like what it'll be next quarter. I think I've talked to a lot of people now and community engagement may obviously not in cleaning, but like in plumbing HVC community engagement is like the next big thing that everyone's trying to pile into to understand how to drive, continue to drive leads.
John Wilson: So it'll be interesting to see what happens at the end of summer.
Neel Parekh: Yeah, we're trying that with Facebook groups right now. I think that's where most people are transitioning to posting on Facebook groups and posting on there because it's scalable because it's digital. I think the truth is that's going to get saturated way too quickly, very soon.
Like even now, if someone says, Hey, I need to clean her. On our end, like 50 replies saying, Hey we'll clean your place. We'll clean your place. So yeah, I'm super curious what happens next. I do think it's exactly what you guys said. It's going to be a cold winter where a lot of these guys are not having success on digital and it has to be offline.
And the truth is one out of 10 new businesses are willing to do that kind of stuff offline. It's just facts, right? So in my opinion, you have to get super highly targeted. For example, we do airbnbs. Guess what? If I own a meetup group saying vacation rental hosts sponsored by made this and I host a meetup twice a month.
My customers are coming to me. I know my LTV for that customer. It's way better right now If i'm trying to like canvas homes and like do all that kind of stuff It's going to take a lot longer The question in my opinion in my mind is how niche can you get with who you're targeting? And then can you do that offline on a way where it actually makes a lot more sense for you?
And I think a lot of guys just are not going to be able to do that because they're a little bit at least on the Cleaning side. They're too general. They're going after everyone. They only want to do digital. It's going to take a long time for that to actually pick up steam
John Wilson: Well, and it's time, so community engagement is a moat.
That's how we think about it and the only people that can do community engagement is either you're very small and the owner's doing it personally or like his spouse or something, or you're very large and you have a team doing it, but nobody in between is doing community engagement in our space.
So for us, that's like you're under 2 million or you're over 20 million. And everyone in between that, no one's touching community engagement because it takes people, it takes time. Everybody likes to think of guerrilla marketing as like free or easy, but it's the most expensive thing there is, it's time and people.
Neel Parekh: Yeah. Extremely hard, it's not scalable it's a tough one. And I don't see a clear winner of what's coming out of the digital marketing landscape later. Like, we kind of all saw LSA coming up and you're like, okay, that's gonna crush. And I have no clue what's after this. It used to be Yelp, used to be AdWords, used to be Thumbtack.
And it's just, I feel like it cycles. And yeah I'm super curious what comes next. Cause I don't even see in the horizon something else that could be better.
John Wilson: Yeah, we have a few things that we're working on that nobody else is working on. So that's going to be interesting. I think what ends up happening is captive lead gen.
I'm probably not going to break into mine cause most of my competitors listen to this.
Neel Parekh: Can you explain what that term means? Like. Yeah, what does captive legion mean?
John Wilson: You have a customer list, let's say it's 1000 people.
Those are the people that you've actually served and you have a tam. So let's say you've served 1000 people and there's 100000 people that you could serve in your community. How do you get a bulk of those prospects into a funnel that you own? That you can directly lead gen to, but they aren't yet your customers.
So I think there's a lot of different ways that can look, but that's how I see the problem of how do we fully remove ourselves from Google within the next couple of years. And if you think of Google as if I'm an influencer and Google is my Instagram and I have platform risk. Then how do you reduce platform risk?
You get them off the platform. You find another way to engage with those prospects in some type of medium that you either own or can manipulate in some way.
Neel Parekh: Yeah, that makes sense. I'm curious if you guys have cracked the code on AI recommending you and trying to figure that out. And I don't even know if it's that big of a deal, like how many people are actually going to chat GPT or Google Gemini and saying, what's the best plumbing company near me?
I want to make sure we pop up at the top. I'm curious. Have you guys looked into that?
John Wilson: I haven't looked into it yet. It's on our radar of, Hey, this is going to be a thing in the next couple months. I didn't think they were actually fulfilling the recommendation yet last I checked.
Neel Parekh: Google is right now. That's only one because of course it links to maps.
John Wilson: That makes sense.
Neel Parekh: So that's the only one at the moment.
John Wilson: And is that using the Gemini product?
Neel Parekh: Yeah.
John Wilson: Okay. Yeah. See, I haven't even tried Gemini Now I'm going to look. Yeah. I'm doing this right now, by the way. Okay.
Jack Carr: John's doing this Neil, how do you view, I mean, so it's almost like you're running two separate businesses, right? You're running a B2C cleaning company, and then you're also running that B2B Airbnb business. How are you looking at your Airbnb customers. How are you going and finding those people?
Neel Parekh: Yeah. That one is a little bit more of a slow burn, but when we do get a customer, it's worth a lot more, right? A regular residential customer. Most of them just want a one time cleaning. Some of them are once a month, twice a month, maybe every week. If you're lucky Airbnb, one turnover could be 10 times in a month for one property.
And that customer might have three properties, five properties, 20 properties, right? So you don't need as many AirBNB customers to scale really fast. The downside is the tan is less right in Los Angeles, millions of people in LA, but there's about 10, 000 Airbnb is only right. And not all of them are going to be a fit for us.
So they told addressable markets much less. But in short, what that means is you don't really need that many of the 10, 000 or the 2000, which are addressable in order to have a pretty sizable business. A lot of it's going to be inbound. Our website's going to be most cleaning companies for Airbnb cleaning near me, just cause it's a franchise website.
Now it's way more powerful. It's such a specific keyword. So most of the leads right now are SEO based Airbnb cleaning company, big age, run the cleaning company, things like that. Besides that, especially for like earlier stage franchises, it's going to be a lot of community stuff, like we talked about hosting meetup groups, doing outbound to property managers, building relationships getting involved in the Facebook groups, more scrappy stuff. And honestly, it's a little bit more rewarding to do that for Airbnb's than residential, because at least if you get an Airbnb customer, it's a good chunk of money coming in.
On the community marketing, if you're going out to residential, you're like, great, I made 200 bucks. This isn't really moving the needle that much for me, unless it's a heavy recurring. But yeah I would say just mostly scrappy stuff on the vacation rental side. And at least for us, it's more worth it for doing that one.
John Wilson: What are the rough economics on a cleaning business?
Neel Parekh: Yeah, so generally how it works, the first time cleaning is going to be higher cost because it's the first time deep cleaning. After that, the price for recurring is probably around like 180 to 200 bucks per turnover. I think it depends if you're in a city that's mostly apartments or mostly houses because of the size, let's say 200 bucks a cleaning.
Now, most companies are around 50 percent or less cost of labor. So 45 to 50 percent is where I recommend. Some companies are a lot less than that where they're paying out to labor, 35 percent and then, supplies and stuff on top of that. So it varies depending if you have employees, contractors, whatever, but typically I say 45 to 50 percent goes straight out to the cleaner.
After that, you have normal marketing costs and OPEX and then office staff overhead. And that's kind of it. So most cleaning companies end up around 20 percent profit margin at scale. First year, of course, it's going to be less because you're reinvesting in the business and all that kind of good stuff.
But most of them, I see between 18 to 25 percent profit margins at the day.
John Wilson: What's a big cleaning company? What's the biggest one you've seen?
Neel Parekh: There's one in your neck of the woods. I think it's called castle keepers. I don't know if that's the one you spoke to John. They're probably like at 5 million in revenue.
I want to divide up the cleaning company in two aspects. There's commercial and there's residential commercial. You can get really fricking big. 10 million, 20 million. Like you can have a really sizable commercial cleaning company because those contracts are bigger. I have rarely seen residential cleaning companies break 3 million.
I can count on one hand, how many I know who broken 3 million on a residential cleaning site. It's just harder, right? Because at that size of scale, you need a lot more labor. You need a lot of recurring customers. It's just easier to go after bigger contracts. Which don't happen to be on the residential side at that scale.
So I'd probably say the upside I've seen is around 3 million, but I have seen a company around 5 million in revenue.
John Wilson: You brought this up earlier. But like just total opportunity and this isn't meant to belittle the cleaning industry, but like obviously plumbing and HVAC are so different where two or 3 million for our industry is like.
You're just getting started like you're still early stages of the business. But also in our industry you can hit two or 300 million in one city, which is wild. What's the usual person that gets into this and like, what are they looking for out of this?
In my mind like, I want a business that goes to a hundred million and cleaning doesn't seem like it does that. I'm trying to envision like the, who's the person that is like, hell yeah, let's do this.
Neel Parekh: Yeah, it's a good question. I do think it's closer to the newer entrepreneurs or who are doing this right?
Look, if you're going to start a plumbing company and you're going to try to scale it to have the opportunity to go to 100 million, John, what's the amount you would have to invest up front to get that set up underground on the low end, right to underground? It's a lot, right?
Most times new entrepreneurs don't have that amount of cash. They're coming out of a nine to five. They have savings for six months of their normal health expenses. And that's kind of it. So if you want to get an entrepreneurship in a de risked way, we're not putting a ton of money up front and it's your first time doing it.
I do think cleaning industry is a fantastic way because you're not going to lose your shirt. You're just not right? Worst case job to go down. You downsize your cleaners, your marketing costs are relatively low. If you're running remote model like me, no office, no overhead, you could withstand any types of economic situations.
Now it's goes back to risk tolerance, right? Like john, you've been an entrepreneur since like day one when you were coming out of the womb, you're an entrepreneur, right? I think the way you think about business And your risk tolerance and how big you think it's probably not normal for an entrepreneur, especially not normal for a new entrepreneur and someone who's been working a nine to five and transitioning into entrepreneurship.
So I think the majority of the population probably fit the bill for someone who would want to start a residential cleaning company. I don't think it's as normal for seasoned entrepreneurs, because I don't think the opportunity to get to a hundred millions there, unless you're going to go on the commercial side.
John Wilson: It'd be interesting to know. And you're like a perfect example of like, you entered it as a, dip your toe into entrepreneurship. And obviously it's turned into something different. You're now a franchise with 22, 23 locations. That's a totally different thing. I wonder what the tenure is of people like inside that industry before they transition on to the next thing before they mature, like what percentage keeps it forever.
Cause I know a few people that have cleaning companies and even a few remote cleaning companies and almost all of them. It's like a lot of them still have it. It's like they're consistent cashflow and they use that to just do the rest of their life. But then they figure out other businesses on top of it.
Neel Parekh: Yeah so, here's the truth. I think this type of business model is a fantastic stepping stone. Yeah. If you want to be wealthy, you won't do it just by doing this, but you will learn everything you need to start even a larger scale business by doing this type of business model. . If your mentality is, I want to make 10 grand per month and work five hours per week. You absolutely can hit it in this business model. You don't need to invest a ton of capital into a higher risk business model if that's your goal. And most people want to do that. And Hey, that's what I've achieved.
I run my normal LA operation with, probably under five hours per week at this point. It's been like that for years and I could probably, I could do what I want. But now if you said, Hey Neil, take that business to a hundred grand per month in cashflow, I would say I need to go to a different model.
That's not going to be as possible with residential cleaning. I need to do something which is higher ticket. So I do think that's the differences and the people who get into this model, hopefully know that what they're getting into this is like, I don't want to call it the beginner model, but this is not a model where seasoned entrepreneurs are constantly getting into because the scale might not be what she's entrepreneurs are looking for.
But if you're trying to make 10, 20 grand a month. Yeah, I think it's a fantastic model for that.
John Wilson: That makes sense.
Jack Carr: Yeah, great lifestyle business too. I mean 10, 000 a month, 15, 000 a month, 5 hours, 10 hours a week. It's not bad, especially remotely.
Neel Parekh: Going back to the 4 hour workweek lifestyle. That's the reason I started and why I try to put it this way. Bring it back to Tim Ferriss.
John Wilson: Do you have an idea of what most people end up doing after? Like what their next thing is or what their additional thing is. What's the vertical that people are like, Oh yeah, I got cleaning. I'm going to go do this.
Neel Parekh: It's so funny. Cause I feel like I see this and I don't know have you heard the adage? We're like, try to be an entrepreneur. And if you fail, just be a consultant. Yeah it's like that. I see a lot of people get into services with service, local markets, like digital marketing agencies.
They get into a lot of things were tangential to local businesses, but it's servicing. It's like more of a B2B type of service for them. I see that often, like building websites, all that kind of stuff. If I'm thinking about what home service people get into, I do think the person who starts a company like a remote cleaning company is not a person who gets into the trades.
It's a very different mentality of a person. I've rarely seen anyone make that transition from like a cleaning company over to the trades. Because I think the reasons they got into this type of business model are the stuff that they don't want out of the trades business, right? So I think they start getting into more digital type stuff, more maybe B2B services, maybe agencies, things like that is what I see a lot of people transition to.
Jack Carr: That makes sense. Cause I mean, you wouldn't expect to get into a plumbing or HVAC or electrical and expect five hours a week and being a hundred percent remote. It's just not, I can tell you right now, not going to happen as much as, but an agency or something like that is that same kind of train of thought.
So that makes, logical sense.
Neel Parekh: Yeah, I think as we're talking it through the best way to think about it is like there's some dudes who are just like empire builder dudes. Hey, I want to get to a hundred million. I want to scale and be the biggest company I can be. Truthfully, I don't like, I have no intention of doing that.
I don't really care. That's not what I want to do. And I think a lot of people are probably maybe like me where they say I want a great lifestyle business I wanted to print cash. I want to work less and I want to do multiple things and that's okay I think it's just a different mentality. Both are great.
Both are good it's just a very different person which is funny enough because both of them are local services, it's just It's a different mindset. Yeah.
John Wilson: I just have a loaded question. Like how's remote cleaning as easy as like everyone makes it sound to start.
Jack Carr: That's a good starter for AskMine.
Neel Parekh: Yeah to start, it's easy to start. To scale, it's not easy to scale. You know, If you're like, hey, I want to get in and I want to get to 10 grand per month in revenue, yeah, that's like simple enough to do. You do the basics. But the problem is how do you actually get this to be a sustainable business?
A lot of people make themselves work themselves into a job in this model. So is it easy to start? It's easy to start. Is it easy to be successful? Absolutely not. It's not easy to be successful in it, unless you do the right things for a long enough period of time. I feel like it's gone in a rap of make a quick bug out of this.
This is the new dropshipping. You can make easy money by doing X, Y, and Z. And it's almost like, look, if you're going to deal with people, and trying to build a business around people, it better be a sustainable business, because if you're trying to make quick cash, that's a very hard way of making quick cash.
But I think it could be a fantastic, sustainable business long term, right? If you're willing to play that game because it's recurring revenue, this isn't like a hunting type of business. When you have a customer, that customer could be a customer for five years, six years. You can get one Airbnb manager and they bring a ton of business to you and it's more automated, right?
So you have to wait to build the equity though. That doesn't happen quick. And I think a lot of people get into this thinking I'm going to make quick cash. I do. The cash comes when you compound, the cash doesn't come up front and people don't quite know that.
John, are you looking at me?
John Wilson: That you, but I'm also like, that does make sense. What scale? You've used that word a few times. Is scale a million?
Neel Parekh: Scale would probably be like I guess it depends on your goal, but probably let's say a million. I was thinking like 80 to 100, 000 per month. Look, you can have a fantastic lifestyle if your business even does 50 grand a month in revenue. You could have that baby automated, cranking out 10 grand per month in cash.
Totally possible. So it just depends where you're looking for.
John Wilson: It's the same thing in plumbing and HV owners make the most amount of money when they're under a million and a half. There's no overhead.
Neel Parekh: Wow.
John Wilson: Like most of what you've described is the same exact thing here. But it's the reinvestment.
One, there's an ability to reinvest and get huge. Cause the Tam is big. And, like you have to add an infrastructure, call takers, managers, all those people right at that million and a half mark.
Neel Parekh: That's that inflection point for the next level. And it seems like most people want to make that investment who get into that industry.
John Wilson: It depends. I think most people we interact with on Twitter do most people in real life don't like most people in real life try to stay small. The only reason that most people grow beyond it is staffing. It's just very hard to compete on staffing. And again, with a million bucks in our industry or 2 million bucks, that might only be four or five people.
That's not like 10 or 20 or 50 or whatever it is. So like all that to say, having more people protects you in cleaning in a way that having less people exposes you in the trades because losing one person is losing 30 percent of your revenue overnight, whereas like losing one person in cleaning, is a much smaller percentage that you're able to backflow a little bit easier. That's why I found most people have moved, tried to move beyond it or start looking to move beyond it. Is because a guy leaves, they end up back in the field. They get frustrated. They're like, how do I solve this?
You solve it by growing.
Jack Carr: Neil, what are the next steps for you? I know, like you said, you have this business, you're going to keep running it kind of status quo, but you're also doing this franchise franchising of the business out, like what's your goals there? What are you looking, how big are you looking to blow this thing up to?
Neel Parekh: So my original goal when starting franchising was to get to 20 franchisees, which now seems like very small. If I see a lot of other franchises, you're hitting like a hundred in year one, slow and steady has been my mantra for the whole time. So I think the next milestones get to 50. Get to 75, get to 100, and 100 seems like a nice number.
Now I just want Mavis to be the most unfair competitive advantage, is the honest truth. Everything we get from franchises, in terms of initial fee, it goes back to saying, how do we make this stupidly unfair? For example, Jack, you told me about this TikTok thing, which, you love TikTok, we get it, Jack.
But I'm immediately going to take that and say, Hey, let's crowdsource content. Let's make a Tik Tok. Let's roll it out to one location, see if it works now, immediately roll it out to 20. Stuff like that, in my opinion, so fricking fun. It's just unfair. If we could just roll it out to everyone immediately.
And I just love building that system. So I'm hyper focused on how do I make the franchise system the best? How do we get it to the next milestones 50? And I'll see if I'm still having fun. Then if I'm like, dude, I absolutely hate this. This is awful. At that point, I'll figure out what I want to do next.
We have 20 right now. We're super picky with who actually comes in to make sure they fit the culture. So far it's been really fun. So yeah, my next step is just continuing down the process.
John Wilson: Every time I talk to somebody in franchising, all I want to do is launch a franchise. Like I have to stop. I have to stop. Yeah.
Neel Parekh: John, why didn't you?
Jack Carr: There's still time really yet.
John Wilson: No, there is literally no good reason. Like I've said this before and I'll say it until the day that I die.
But like, Twitter is good for two things, and it's raising a fund and starting a franchise. Anybody that does it nailed it. I probably should have done one of those two things, and I didn't.
Neel Parekh: John, I have a significantly smaller following than you. Almost all of my franchises have come through Twitter.
Twitter and like a couple of YouTube things, but almost all of Twitter. Yeah, I feel like you'd crush it, man.
John Wilson: I think it's inevitable. I think we're going to do something. Like right now, we're obviously doing owned and operated. We have a newsletter, we have events. I think it's inevitable that we launch something.
Jack Carr: Stool bus septic.
John Wilson: Yeah, I don't think it's gonna be septic. Hey, you want a million dollar buy in?
Jack Carr: Buy in's a million dollars. And it doesn't come with any real estate, so. actually, McDonald's doesn't either, but not for me.
John Wilson: It comes with one poop pumping truck. It's gonna be great.
Jack Carr: Your life will change, you can drive it around all you want.
John Wilson: Yeah, I do think inevitably, I think we end up doing something just cause I think it makes sense.
Neel Parekh: Yeah it's a good model. I think you have to get to scale to the point where economics makes sense and it takes time is the truth.
This is not a heavy cash flow business at all. I understand that. I'm only going to make money when royalties start hitting and that's when franchisees get to a certain size fast enough. Now, the truth with your guys business and where you'd start is cleaning takes a while to scale, right? It's a compound type of thing.
It takes a while to scale. I've seen franchises launched and their franchisees are doing. 500 million in their first year, just because of the type of model it is. The franchisee, franchisor is already making a lot of royalty money from that, right? That's the downside of what I'm doing is the cleaning business just, it doesn't have high enough tickets, but that's okay.
So it's a long game, but I do think like for what you would do, John, potentially high ticket is the key to scaling fast in the franchise world.
John Wilson: Yeah, cause I think in plumbing, it would not be overly challenging to get to a million or 2 million in the first 12 months. I think that's like a possible number. Like when we think about greenfielding into a location, we're expecting three to 4 million in the first 12 months. So I think it's possible because that only takes 15 people. So a lot of hiring and just a lot of ad spend.
Yeah. One day. In the meantime, I have to stop talking to guys doing franchises because like,
Jack Carr: Yeah, Rolling suds, Johnny. Neil, that's all you bring on John.
John Wilson: It's like a fatal attraction situation. Yeah, it really is.
Jack Carr: Sweet. Neil. We appreciate you coming on. Where can people find you or hear more about this franchise opportunity and kind of read your content?
Neel Parekh: Absolutely. So, If you're going to made this franchise and may I D T H I S franchise. com, that's probably the best place. If you're interested. I also host a podcast is called the freedom formula. So feel free to check that out wherever you do your podcast listening as well.
Jack Carr: Oh, that's awesome.
John Wilson: Yeah. Cool. And we'll have a link for that in the show notes.
Neel Parekh: That was good. Thanks for having me fellas.
John Wilson: Thanks for tuning in to Owned and Operated, the podcast for home service entrepreneurs. If you enjoyed today's episode, please hit the like button and subscribe to the podcast. If you have any questions or topics you'd like us to cover, feel free to reach out. You can find me on Twitter at at Wilson companies.
I'll see you next time.