Originally published in August 2020. Last updated on December 24, 2024.
Numbers may not be your favorite part of owning a service business, but understanding your finances is key to turning a profit and growing your company.
From pricing and expenses to profit margins and revenue, they’re what fuel your business’s success—or failure.
Follow this expert-backed financial advice for business owners from successful service providers to learn how they use numbers to inform their strategies and scale.
14 expert financial tips from home service providers:
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Know your numbers
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Make a budget
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Price for profit
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Learn accounting terms
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Prioritize recurring revenue
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Increase the value of each job
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Scale slowly
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Be open to advice
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Get out of the field
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Fire bad clients
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Save money for a rainy day
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Consider your business structure
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Set a healthy profit margin
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Use field service management software
1. Know your numbers
If you haven’t paid much attention to your business finances in the past, it shouldn’t stop you from getting started today.
The first step is to find a platform that can help you start tracking, managing, and reporting financial data, like a CRM or accounting software.
It’s OK and fairly normal to be lost or overwhelmed by ‘knowing your numbers’—the real key is doing something about it before it ruins all the hard work you’ve put into your business.
Then, with the support of a bookkeeper or accountant, analyze your numbers on a regular basis to:
- Prevent cost increases from negatively impacting profit
- Identify your most and least profitable jobs
- How much your profit margin is
- What you need to make in the busy season to cover the off-season
- Reduce expenses
- Keep an eye on your cash flow
If you review financial reports consistently, you can get ahead of small problems before they become major issues. For example, if the price of materials goes up or labor costs increase, you’ll be able to adjust your budget ahead of time.
If you are not on top of your numbers, everyone in your company will get paid except for YOU the business owner.
2. Make a budget
You don’t have to be a finance expert to make a basic budget. Simply add up all your monthly bills, like operating expenses and overhead costs, as well as all the money you make from clients.
This will give you a simple overview of your business’s profitability, and how much you need to charge to break even.
You can also take it a step further by calculating how much money you make or lose on individual service calls through job costing, which can whittle down your labor and material costs as well as overhead rates per job.
We track our crew productivity, we track our employee productivity, so we know what we need to make per day, which means we know what we need to make per person, which is what we need to make per hour.
Budgeting in this way ensures you make enough to cover your expenses and still turn a profit.
3. Price for profit
Your pricing strategy is one of the most important factors in whether or not your service business is successful.
I actually think a big mistake that cascades into operations is you don’t get the right price for the initial project and your whole house of operations is built on sand before it starts.
When you first start out, base your service prices on:
- The services you offer and the industry you’re in
- What your competitors are charging
- Whether you offer a standard or premium service
- How much you need to make to cover costs
- What your markup needs to be to turn a profit
If you think you aren’t charging enough for your services, don’t be afraid to increase prices.
If I can move the pricing up that I’m charging the customer that 30% of the job just lets everyone breathe a little bit more.
And that has helped my business tremendously. And in the last five years, we have done six price raises.
Pay attention to things like material cost increases, the labor market, inflation, and any other factors that can eat into your profit. If they start to reduce your profit margin, consider raising prices so you don’t end up in the red.
FREE TOOL: Profit margin calculator
4. Learn accounting terms
You can read all the resources you want on gross profit, revenue, and accounts receivable, but if you don’t know what the terms mean, it won’t be much help.
The best advice I have ever received is that the language of business is accounting. If you can’t read the scoreboard, you can’t know the score. And if you don’t know the score, you can’t tell the winners from the losers.
That way, when your account or bookkeeper sends you a report, you’ll understand what it means. Then, you can use it to set goals, adjust strategies, and get a feel for your business’s overall health.
5. Prioritize recurring revenue
One-off jobs are great, but recurring revenue is what can drive success in a big way.
Recurring revenue is like the diamond. You can start the month with $30,000 of guaranteed revenue that’s going to roll in for that month.
Not only does it offer more financial security and stability, but recurring revenue also:
- Costs less to market to existing customers
- Boosts the value of your business
- Leverages client retention through repeat customers
- Allows you to plan for and cover costs during your off-season
We run seasonal businesses, so we know there’ll be peak months that we are just busting at the seams with work. So it’s a perfect time to put a little more meat on the bone.
While not all businesses can offer recurring services, some examples include:
- Weekly and biweekly cleaning services
- Lawn mowing and yard care
- HVAC maintenance
- Pool cleaning
- Car detailing
- Snow removal
6. Increase the value of each job
If you’re at full capacity schedule-wise but still want to grow revenue, increasing the value of each job is an effective strategy. Offering service packages is an easy way to get more profit from each job without adding significant costs.
Plus, you can try them out with a small number of customers before making them available to everyone to work out any kinks.
Tyler Martin, CFO at Made Easy & Think Business with Tyler approaches new packages like this:
“Let’s take this out to 20 customers and just test it or this particular area and see how it works. What do our margins look like? Are they what we thought they would be? Are we seeing some things not working? Is travel taking more time than we thought it would be?”
Once you find a package that works, add it as an upsell in your quotes. Using quoting software like Jobber you can include optional add-ons, packages, and pricing tiers right in your quotes, allowing customers to choose the option that works best for their needs and budget.
7. Scale slowly
Slow, consistent growth is key to a successful service business. It takes time to generate leads, hire team members, and grow your reputation as a high-quality and trustworthy service provider.
It took me 10, 15 years to get to that million bucks.
Look at growing your service business as a marathon, not a sprint. That way, you have a better chance of withstanding challenges and maintaining a steady pace. Rushing growth can cause burnout, poor quality work, and financial issues that are hard to recover from, like debt.
To scale slowly, focus on:
- Increasing customer retention to secure consistent, long-term cash flow
- Attracting high-quality hires who want to grow with your company
- Using SOPs to enhance job quality and make training easier and more consistent
- Expanding your service offering through tiered pricing and price bundling
- Monitoring and managing cash flow
This will help you plan for strategic growth so you can reach bigger milestones in a more sustainable and stable way.
8. Be open to advice
Taking time to learn from others who have more experience or knowledge than you do can have a big impact on your business.
That moment that I started becoming receptive to actually surround myself with people a little bit more successful is when I went from a six-figure business to having six figures in the bank account.
Whether you’re learning from a mentor, or peer, or by leveraging connections in your professional network, pay attention to:
- Others’ mistakes and how you can avoid them
- Proven methods or strategies you can use in your business
- Fresh perspectives that challenge you
The insights you gain from being receptive to advice could be the key to taking your business to the next level.
9. Get out of the field
As your business grows, your role will probably change from spending your time out in the field on job sites to managing staff and overseeing operations.
It’s a natural progression that most business owners experience, but handing over the reins can be hard. Still, you need to free up your time to focus on running your business, and you can make the transition easier by providing clear instructions to your staff.
In my company, we’ve got a 10-step process that we follow from initial client greeting to our client exit meeting.
It is printed, it is a one-sheeter, it is laminated, it is in every truck.
It’s a way for you to delegate work to others while still maintaining high-quality standards and a great customer experience.
10. Fire bad clients
Some clients just aren’t worth working with. Either because they don’t pay on time, refuse to pay altogether, or the job they need done is too complicated or risky.
When that happens, consider going your separate ways. Otherwise, you risk building a business model based on work that you’d prefer not to do or clients you’d rather not work with.
We’ve went out, we’ve done that [sketchy] $2,000 job. What happens, Fred Smith tells Barry Jones, tells Catherine Smith, and you start getting word-of-mouth referrals on the sketchy jobs.
And again, like I said, off the top, you end up with this kind of flawed business model that’s full of complexities.
When that happens, you may need to fire a client or turn away a job. And even though it might feel uncomfortable to refuse money, chances are it’ll be a better financial decision long term.
11. Save money for a rainy day
Don’t save up ‘6-months of living costs’…save at least double that.
I do landscaping and tree work— if I have a pine knock me in the head tomorrow…that 6-months of living might not seem me through to when I can work again. I try to keep more like 18 months of living costs saved in the bank.
Extra savings don’t just cover you in emergency situations, they also give you a safety net to fall back on if you have unexpected costs, like having to replace broken equipment or repair a work vehicle.
12. Consider your business structure
How you structure your business impacts your taxes, liability, and overall operations.
You may have started your business as a sole proprietor, but you’ve now started to build a pretty solid client base, and the company itself is growing financially.
It’s times like these when you need to assess your business’s structure for tax implications and to protect your personal assets.
For example, if you have an employee who wants to become a partner, or you want to incorporate your business to reduce your personal liability.
13. Set a healthy profit margin
Your profit margin is what gives you room to grow and expand. If it’s too low, you may not make enough to cover costs, let alone scale.
Set a healthy profit margin from day one and use it to inform your pricing to set your business on the right track. Outside of costs, you want to make enough to invest in your business by hiring new team members, offering new services, or trying out new marketing strategies.
Aim for 15-25%.
If you’re leasing an office, if you’re storing your Christmas lights, if you’re paying for Jobber, these are all things that recur regardless if you do a $10,000 month or a hundred thousand dollars month. And so we whittle it all down, I want my company making 20% net profit.
14. Use field service management software
Software reduces human error, automates manual processes, and improves workflows. It’s also an effective way to save time and spend fewer resources on administrative tasks.
I want technology to take over and we are able to do that with our quoting software and the integration with Jobber.
Field service management software like Jobber can handle everything from online booking and quoting to expense tracking, invoicing, and credit card processing. And it can provide you with financial reports, marketing support, and data analysis to make sure your finances are on the right track.
The more you can use software to handle manual tasks, the more time you have to focus on growth.