Benefits of Starting Your Own Home Services Business

One of the most enticing advantage of owning your own business is the potential to earn a higher income than an employee of a company. As an employee, your earnings are limited by a salary ceiling imposed by the company. In contrast, if you own your own company, there is virtually no salary ceiling as you can dictate the growth of your company. However, as we all know, the success of businesses varies widely. Some do extremely well, some are barely treading above waters and some businesses can go bankrupt if they are badly mismanaged. Potential business owners are naturally curious about how much a typical business make and how it compares to the salary of an employee in the same field. 

The United States Census Bureau, a division of the U.S. Department of Commerce, gathers statistics of small businesses in the United States (the actual program that gathers the small business statistics is called the Statistics of U.S. Small Businesses, or SUSB). I dug into the SUSB data of several home services sectors to reveal the revenues of small businesses and salaries paid to the employees. The revenues and salaries tabulated below are taken from the 2012 SUSB annual report: 

 

 

NAICS CODE	TYPE OF BUSINESS	COMPANY REVENUE RANGE ($)	NUMBER OF COMPANIES	AVG REVENUE PER COMPANY   (MINUS SALARIES PAID)	AVG SALARIES PAID PER COMPANY
238350	Finish Carpentry Contractors	<100,000  100,000-499,999	6,684  11,744	$38,649  $190,026	NA  $26,463
236118	Residential Remodelers	<100,000  100,000-499,999	23,924  41,217	$38,051  $199,174	NA  $25,925
23822	Plumbing, Heating,  Air-Conditioning Contractors	<100,000  100,000-499,999	12,932  39,412	$37,638  $196,410	NA  $29,848
238160	Roofing Contractors	<100,000  100,000-499,999	2,530  6,337	$35,087  $214,171	$11,384  $22,322
238330	Flooring Contractors	<100,000  100,000-499,999	3,563  6,117	$40,779  $182,667	NA  $24,845
561720	Janitorial Services	<100,000  100,000-499,999	22,438  18,603	$24,686  $135,200	$9,480  $14,157
238320	Painting and Wall Covering Contractors	<100,000  100,000-499,999	9,744  14,616	$35,437  $165,734	NA  $27,303
238210	Electrical Contractors, Other Wiring Installation Contractors	<100,000  100,000-499,999	11,942  29,438	$35,867  $184,744	NA  $30,278

*Source: 2012 SUSB Annual Data Set (with receipts) 

**Note: Although SUSB data is available annually, data with receipts are only available for years ending 2 and 7 (the above is the most recent data with receipts available)  

***Revenue range higher than $499,999 are not included in the table 

 

 

Keep in mind that only revenue of the companies are reported in the table and not the net profit. Nevertheless, the 2012 data seems to suggest that business owners likely enjoyed higher earnings than employees did working for a company. How much more business owners made would depend on the companies’ expenses deducted from the reported revenue and the number of shareholders in the company. To illustrate an example, in 2012 employees of carpentry companies (with revenues between $100,000 - $499,999) were paid $26,463 on average. Carpentry companies with less than $100,000 in revenue averaged $38,649 in revenue, while carpentry companies with revenue between $100,000 - $499,999 averaged $190,026 in revenue. 

Although knowing the income potential of owning your own business is important, other benefits of starting your own home services company should be noted as well, such as: 

1) Control of Your Destiny.  

You have direct control of your company’s success. As an employee of a company, you do not have direct control of the company’s decisions (i.e. layoffs). 

2) Control of the Work Environment.  

You control various aspects of the work environment, such as work hours, who you want to work with and company culture. 

3) Satisfaction of Ownership.  

You get the gratification of starting your own business and building its success. 

4) Corporate Tax Benefits.  

You get to enjoy the many tax advantages of owning a business. 

5) Giving Back.  

You can create jobs by hiring people. You also have the ability to influence your community through the services you provide and by your company’s philosophy.

 

Ultimately , your decision on whether to start your own home services company should be based on weighing these benefits against the disadvantages of business ownership, such as financial risk, time investment, financial instability and lack of employee benefits (if working for a company).