How To Start a Pest Control Business

How To Start a Pest Control Business

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Posted by Brad Smith

October 14, 2019

How To Start a Pest Control Business

Are you a pest control technician eager to start your own business?

If the answer is yes, then you're in the right place. As a pest control business owner, you'll be entering a recession-proof market with flexibility, freedom, and high income potential.

But starting a business is not easy. It's going to take a lot of commitment, perseverance, and dedication. You'll need to learn new skills quickly, (and pest control itself is only one of them).

That's why we've put together a comprehensive guide to help you understand how to start a successful pest control business. We'll go through all the basics and guide you through the tools that successful pest control business owners use to streamline their business.

Let's get started!

How To Start a Pest Control Business

Where Can You Get Help?

Pest Control Business Start-Up Costs

Pest Control Business Profit Margins

Overhead Costs

Break-Even Point Analysis

Numbers to Start Tracking

Pro Tip: Talk to Your Local Government

The Legal Stuff: Pest Control Business Requirements

Pest Control Franchise Opportunities

The Technical Stuff: Pest Control Scheduling, Invoicing, Payment & Quickbooks

Streamline Your Business As Much As Possible

The Supplies

Positioning Yourself in the Market

Choosing Your Market

Differentiating Yourself and Crafting Your Message

Specialization

Guarantees

Setting Your Rates

Should You Charge for an Inspection?

Pest Control Services

Create Recurring Service Plans

Pest Control Marketing

Do You Need To Pay for Advertising?

Prioritize Reviews and Referrals

Pest Control Promotional Ideas

Surprising Places To Get Leads

Customer Retention Ideas

Hiring: Your Path to Growth

Do You Need to Hire?

Are You Ready?

How do you know if you're financially capable?

Have Your Processes in Place

How to Hire, Train and Manage people

Conclusion

Where Can You Get Help?

When you're starting your business, you might need some extra support. Below is a list of helpful resources if you need assistance.

Associations and unions are great organizations that can help you further your training qualifications and connect you with other service professionals in your area.

As a small business owner, you can also join these business-related associations: 

For the full list of small business associations, have a look here

Pest Control Business Start-Up Costs

To start your pest control business, you'll need some initial investment to get going.

You'll need to first invest in:

  • Registering your business

  • Certificates/Permits/State Licenses

  • Pest Control Insurance

  • Pest Control Equipment and Products

  • A Truck or Van

We'll go into further detail regarding these start-up investments below.

Pest Control Business Profit Margins 

As an entrepreneur, you're responsible for the success of your business. That's why we want to introduce you to a few financial terms that are important when starting your company.

Overhead Costs

These are ongoing business expenses not related to labor or raw materials. Examples include rent, insurance, and utilities. These expenses remain the same every month regardless of the sales you make. They're also known as fixed or indirect costs.

Calculating Overhead Costs:

  • Add all the ongoing indirect business expenses that keep your business running. Don't include direct expenses like wages and raw materials as they belong to the Cost of Goods (COGS) category. You want to cover all your fixed costs. 

Once you know what your overhead costs are, you can begin to chart out your break-even point.

Break-Even Point Analysis

The Break-Even Point is a time in your business when your sales are covering all expenses. Break-Even is a significant milestone as it's the point when the business begins turning a profit. 

Calculating Your Break-Even Point:

There are four steps:

  1. Total your fixed costs

  2. Track the price of your services and products

  3. Identify variable costs 

  4. Input the numbers into your Break-Even Point Formula

If you have multiple services, you'll need to make sure the selling price and variable costs match up. For example, if your annual sales break down to 40% single-story homes ($180 per service) and 60% double-story homes ($220 per service), you'll need to find out the weighted selling price.

Let's go through an example together:

Say your fixed costs are $100,000 per year. To find out the weighted selling price, you can multiply the sales price of each service and their contribution to overall sales.

Weighted Selling Price:

= (Cost and percentage of a single-story home package) + (Cost and percentage of a double-story home package)

= ($180 x 40%) + ($220 x 60%)

= $72 + $132

= $204

Therefore, your overall weighted selling price is $204.

In this example, we've kept things simple by only calculating direct labor for our variable costs. You should also consider the costs of pest control products, fuel, and other variables.

Variable Costs for each service:

You'll need to calculate the variable costs (costs that change depending on the number of clients you have) using a similar formula. If a contractor's hourly rate of pest control costs you $30 per hour, and your single-story home package takes 2 hours, while your double-story home package takes 3 hours, your variable costs are:

= (Price per hour x hours of service x weighted percentage) + (Price per hour x hours of service x weighted percentage).

= ($30 x 2 x 40%) + ($30 x 3 x 60%)  

= $24 + $54

= $78

Therefore, your overall weighted variable costs are $78.

Break-Even Point Calculation:

= Fixed costs/ (Weighted Selling Price - Weighted Variables Cost)

= $100,000/ ($204 - $78) = 793.7 Pest Control Services

Services Breakdown

= 793.7 x 40% (Single-Story Home Package) = 317.5

= 793.7 x 60% (Double-Story Home Package) = 476.2

Therefore you need to sell 317.5 single-story home packages, and 476.2 double-story home packages to break even. 

Once you've calculated your break-even point, you can outline how long it will take to reach this goal. For example, if it'll take you 15 months to sell all these pest control home packages, you can make your Break-Even Point a goal in your second year of business.

For more examples, click here.

Numbers to Start Tracking 

Here are a few numbers you should also look out for:

  • Average Transaction Value (ATV) or Average Order Value (AOV): The average dollar amount that a consumer spends for your services for every transaction or order. It's not easy to attract customers. So increasing your ATV/AOV will give you a higher return on your investment when it comes to your marketing and sales.

  • Average Revenue Per Client (ARPC): The average dollar amount you can expect to generate from an individual customer. Unlike transaction value, it's not per job. If you can increase how much a client spends on every transaction, and how many occasions they come back to you, then the average revenue per client will be high, which are signs of a thriving business.

Pro Tip: Talk to Your Local Government

There are many ways you can leverage assistance from external organizations and the government:

  • Grants: There are thousands of grants available online. If you head to Grants.gov , you can filter the funding type, eligibility, and category to see if there are some grants available for you right now.

  • Tax Deductions: There are many tax benefits and deductions you can write-off for your business. These include salaries and wages, utilities, internet fees, rent, office supplies, legal fees, etc. For more information, check out this list .

  • Free Coaching: Many websites can help you find a small business mentor for free. If you need some assistance and business advice, then check out Micro Mentor. There's also free business counseling from partner organizations like SCORE mentor and small business development centers.

Pest Control Franchise Opportunities

Starting your own business can be very challenging.

That's why, if you want to run a pest control business with a lot of added support, you can consider opening a franchise. With a franchise, you're starting with an established brand and business model. Franchisees also receive training, marketing material, a national support network, and discounts on equipment.

But before you jump in, you need to consider both the advantages and disadvantages of being a franchisee.

If you're considering going down the franchise route, make sure you assess the different franchises available. Talk to existing and previous franchisees to understand what it's like to be a franchisee yourself.

The Technical Stuff: Pest Control Scheduling, Invoicing, Payment & Quickbooks

When you're running your business, you'll need to keep track of all the technical and administrative work. Admin can take up a lot of your time. 

So to help you out, we'll give you an overview of all the technical aspects you need to have ready, and which tools can help streamline your everyday activities.

These include:

  • Scheduling Appointments: You'll need to keep track of your business leads, prospects, customers, and appointments. There's a lot to schedule, so scroll down below to see what the professionals recommend.

  • Setting up an Email List: To continue the relationship after a service, we recommend you use follow-up marketing tools via email and postcard marketing (You'll need to build up an email list for this). You can simplify and automate these tasks with Housecall Pro's Automated Marketing feature.

  • Accounting (Quickbooks online): Make sure you keep track of your revenue and expenses. You'll also need to prep your books so you can be ready when tax time hits. Here are five useful accounting tips for small businesses.

If you want to understand how these different tools and responsibilities align, then look below. We've included a visual to help you understand what happens before, during, and after clients schedule a job, and how you can streamline these business activities with online tools. 

Customer LifecycleTech NeedsWork Order LifecycleOperations
Consumer searches for a service providerSocial media management
Online booking & schedulingNew job is created
Job management and dispatchJob assigned to technician and added to schedule
Customer is notified and reminded of upcoming appointmentEstimate ManagementTech prepares quote
Customer accepts estimateInvoicing & Payment ProcessingJob is completed and payment is taken or invoice is sent, then receipt is sent
Customer paysReview ManagerRequest for review is sent
Customer books another service or signs up for recurring servicesEmail marketingCustomer is sent a follow-up message
Bookkeeping Payroll

Streamline Your Business As Much As Possible

When you're a one-person team, you might not feel the need to streamline your business. There's a good chance that once you understand the business basics you might even be on top of your everyday tasks.

While that may be true, if you're keen to grow your pest control business, you'll need to make sure you have systems and procedures ready. The smallest inefficiencies can quickly snowball into significant problems. 

That's why we recommend pest control business owners begin streamlining their systems from the very start. 

Create standard operating procedures for routine tasks (hiring, training, actual pest control work, etc.) If you need assistance, look to Housecall Pro. Its online software can help you automate a lot of your everyday tasks like scheduling online bookings, sending invoices, and email marketing activities.

This way, you can work on your business, instead of always working in it!

The Supplies

While pest control equipment and supplies vary according to your chosen niche, here are a few essential items you should consider if you're looking to enter the residential pest extermination market.

  • Handheld canned sprayers

  • Electric or hand-controlled dusters

  • Foggers and Foamers

  • Pest Control Chemicals

  • Safety Equipment

If you're going to specialize in other services like termite control services or mosquito eradication, you'll need extra equipment, skills, and training. There are all additional costs you need to factor into account.

As a pest control professional, you're probably aware of how expensive chemicals and chemical sprayers can be. That's why we recommend exploring packages, wholesale, or used models.

  • Wholesale or Used Models: If you're on a budget, but you need a variety of pest control tools, you can consider purchasing them at wholesale prices. You can also find used models online, which can go at significantly cheaper rates.

On top of operational equipment, you can also explore uniforms. Being lax with your uniform is not a good idea when you're handling chemicals. While the substances you work with may not all be toxic, continuous exposure can still be dangerous. Make sure you wear personal protective equipment like masks and gloves when you're handling chemicals. These include long pants, long shirt, chemical resistant gloves, chemical resistant footwear, a respirator, shield, or google, and apron or smock. You might feel as though you're going overboard with the protection, but you're better off being safe than sorry. 

Having a uniform for your business can also make you appear more professional and trustworthy. If you're a one-person shop, you can even order one with your logo. It'snot too expensive and can add a lot of value to your brand!

You will also need a service truck or van to carry your equipment. 

Positioning Yourself in the Market 

You don't want to start by selling generalized pest control services. It's too broad, and you could be stretching yourself thin by offering too many services to different people. Also, people like to know they're hiring a specialist.

That's why you should consider specializing in a specific segment within the pest control industry.

Choosing Your Market 

Here are a few common markets you can explore:

  • Residential Pest Control Services: Here, you will work with homes. Homeowners tend to seek pest control services because they have an existing pest problem needing immediate care.

  • Commercial Pest Control Services: Here you will work with buildings, offices, shopping centers, and even schools. Services vary significantly. While businesses may call you to resolve an existing pest problem, many industries are required to have an ongoing pest control program. 

Differentiating Yourself and Crafting Your Message

When it comes to standing out, price, customer service, and quality are not (in fact) the best ways to differentiate yourself from competitors.

  1. Price: If you provide a cheap option, your prospective customers may think you're compromising on quality, professionalism, and customer care. If you're not careful, you might also be losing money. You might even attract customers that complain and bargain about prices or expect additional services to be thrown in for free. 

  2. Customer Service: Every business claims to care about their customers. Excellent customer service is no longer a unique selling point, but an expectation from every client.

  3. Quality: If you're paying for any job, you'll expect a quality result. 

So how do you differentiate?

Specialization

Customers prefer to go to a specialist than a generalist. To start, pick a specific specialty within pest control. Specialization can help you earn more (as you're an expert in your field) and help you target the right people. 

While you can specialize in a specific trade, industry, and target audience, you can even specialize in certain pest control chemicals. For example, you can be a pest extermination company that uses eco-friendly, organic, and natural pest control products instead of synthetic chemicals.

Guarantees

If your business provides guarantees, it communicates your brand's commitment to back its quality services. It gives customers added comfort in using your services. 

For example, you can offer an up to six months warranty (no rats, mice, rodents, crawling pests, and flying pests for six months) or your customers can have their money back. Guarantees are a great way to quickly differentiate amongst the competition and gain the customers' trust.

Setting Your Rates

Understanding how much to charge the client requires in-depth knowledge of your costs.

You need to understand your: 

  • Variable costs: These include labor costs (hourly wage and time it takes for you/your employee to complete the job) and chemicals, baits, and traps used on site. 

  • Overhead costs: These include rent, business taxes, insurance, etc. Many businesses tend to forget their overheads, so make sure you include them in your expenses.

When you total your costs, add all variable costs and a percentage of your overhead costs together. Then determine your profit margin. According to BizFluent profit margins in the pest control industry range from eight to ten percent. 

Once you know how to base your prices, you can consider a few different ways to charge:

  1. Per Job: Here, you'll charge according to each job you finish. For example, if a residential home wants a general pest control treatment, you can offer them the residential home package.

  2. Per Type of Service: Here, if clients want to tackle a specific problem like terminates or spiders, you can charge a customizable rate to control these pests. 

Make sure you also take into account the frequency of your services. 

  • If your customer wants a one-time visit, it typically costs $300 to $550, as you need extra time to assess the problem. 

  • If the customer wants an ongoing contract, then an initial visit costs approximately $180. The initial appointment is the first visit in an ongoing service contract.

  • There are also periodic visits. Here, you will be visiting the customer once within a set period. Home Guide averages these visits at: 

  • Every month: $40 - $45

  • Every two months: $50 - $60

  • Every three months: $100 - $300

Here are other pricing factors you should consider:

  • The size of the property (the bigger the property, the more product is required)

  • Type of pest control products and chemicals used

On average, some pest control professionals charge an extra $25 for every 1,000 square feet that exceed 1,500.

If you're still unsure of how to set your rates, we suggest looking up the national and regional average price for a service or job. According to Homeguide , the average cost for pest control as of January 2018 was $170. It ranged from $100 to $270.

Here's a list of the national average prices. If you want to know more, click here

When you're calculating prices, make sure your total price will not only cover your expenses (both overheads and variable costs) but also give you a profit. 

Here's an example of a simple accounting method you can use to calculate your earnings.

Should You Charge for an Inspection?

While you can charge for a pest control inspection (pest inspections average around $100), many pest control companies offer them for free every year. There are, however, conditions attached to the free service. Free inspections tend to be for all current customers or those with regular service agreements. Some businesses, however, use the free inspection as a generous lead magnet to on-sell ongoing pest control packages. 

Pest Control Services

After choosing a pest control niche and planning your rates, it's time to look at your service offerings. A common approach is to offer packages.

Here's an example of a general residential pest control company's package for single and double story homes.

Pest control businesses can also offer packages that target specific animals or insects and sometimes do both. Below is an example of a Termite Inspection Package.

When it comes to putting together packages, general packages, and specialty treatments can vary significantly. For example, if your client is dealing with a spider infestation, you may need to visit the home and inspect the situation. In this circumstance, a packaged deal may not cover the labor and costs required to absolve the spider infestation.

Create Recurring Service Plans

Recurring service plans, also known as a service maintenance agreement, is a document or contract that provides an ongoing arrangement between the business and customer.

These agreements are great when it comes to boosting average revenue per customer. Even in off-peak seasons, your business can be thriving, and you can expect consistent cash flow with recurring service plans.

If you're keen on adopting recurring service plans, make sure you:

  1. Tailor the plan to the individual client's requirements

  2. Protect you and your customer by guaranteeing the quality of your service 

  3. Outline your clients' financial obligations

If you want to find out more, click here.

Pest Control Marketing

Do You Need To Pay for Advertising? 

When it comes to getting leads, while you can pay for ads, here are a few free approaches that can help you get started.

Prioritize Reviews and Referrals

  • Online reviews are essential for every business. Did you know that 91% of people regularly read online reviews? But that's not all. 68% form an opinion after reading only one to six reviews. Reviews represent social proof, and if you're not prioritizing your reviews, then a bad review can quickly hurt your reputation. Make sure you follow up with reviews and enquire further if the customer isn't completely happy with the experience.

  • When it comes to service recommendations, nothing beats a referral from a trusted friend or family member. That's why you should also prioritize referrals. Referrals are one of the best free ways to market your business. If you're not sure where to start, you can begin by providing every customer with a fantastic and memorable experience. 

Pest Control Promotional Ideas 

Surprising Places To Get Leads

  1. Chamber of Commerce: It's a business network like a local organization of businesses. We highly encourage you to network with other small business owners. Many pest control professionals received work by engaging with other service professionals in their area.

  2. Facebook Groups: You can network and join Facebook Groups, engage and add value to the groups, and offer promotional discounts for group members.

Customer Retention Ideas

To retain customers, we recommend you provide:

  1. Helpful Reminders: You can offer customers fridge magnets with useful information like emergency phone numbers, or a yearly calendar, with your business name and logo. That way, if they need a pest control professional, they'll know who to call.

  2. Incentives for service agreements: You can provide discounts, additional perks, and guarantees, to convince your existing clients to enter a recurring service agreement. 

  3. Clear service list offerings for potential partners: You can target real estate agents, property managers, or builders with a specific service list. If they like your service, there's a good chance they'll be back for more (especially since they have a high volume of homes and buildings that require pest control and maintenance).

Hiring: Your Path to Growth

Do You Need to Hire?

You'll most likely start as a one-person pest control business. Many pest control businesses stay as a one or two-person team. But if you're keen to grow your business, you'll need to hire a few extra pairs of hands.

Are You Ready?

How do you know if you're financially capable?

Here's a general rule of thumb. 

You should only consider hiring an additional employee if:

  1. They will make money for your business

  2. They will save money for your business

If you're at the early stage of business ownership, you need to assess whether the employee will make money for your business. 

Questions you can ask include:

  • Do I have overflowing work that I can't handle myself?

  • Am I working too much in the business, that I have no time to work on the business?

If you answered yes to any of these questions, then you may need to consider hiring. 

When it comes to financial capability, we recommend having extra cash flow. You will not be able to make a profit from the first employee right away as they need time to learn your business' systems and procedures. 

  • If you're still undecided, you can hire a contractor instead. While you're paying more per hour, you're not locked into paying a salary. If your business grows and the contractor does well, you can transition the contract into a full-time hire.

Have Your Processes in Place

Before you bring someone on board, make sure you have the right systems and procedures. The last thing you should do is pay someone to sit and wait while you find tasks to assign them.

How do you get processes in order?

  1. Standardize the work: Make sure you're efficient at what you do so you can teach someone else how to deliver that service in the same way.

  2. Document all procedures: Get all repeatable and routine processes out of your head and onto an online document.

  3. List out key tasks before hiring anyone:  You want to ensure that you have a decent workload for your employee. You can keep track of their tasks and organize them according to daily, weekly, monthly, and urgent tasks. We recommend using a

    Trello

    board to stay organized. 

How to Hire, Train and Manage people

  • When to hire: Only hire if it's a must! Hiring can be an expensive process. If you're looking to fill an administrative role, there may be a CRM technology that can help. If it's an accounting problem, then can you use a payment and invoicing app instead to streamline existing procedures.

Don't make the mistake of providing a vague job description, or hiring someone because they're family. If you want to learn more about how to avoid hiring mistakes, click here.

When it comes to training and managing people, we recommend you:

  1. Create a Plan

  2. Create Regular Training Sessions

  3. Set Training Goals

Conclusion

Starting your pest control business is an exciting challenge that can change your life.

While employment offers predictability, a stable income, and clear work hours, you have less flexibility and independence. You're also stuck with a salary ceiling when you're an employee.

Creating your pest control company can give you all these additional freedoms. It, however, requires a lot of effort and hard work. That's why it'll probably take you three to four years to establish your company, build a reputation, and gain a customer base.

It's not uncommon to lose money in your first year once you factor in capital costs.

This is okay.

For many businesses, breaking even doesn't happen until the third or fourth year.

But if you're willing to persist, you can create a successful pest control business that can return a tidy profit every year.

Download the 'How to Start a Pest Control Business Checklist' now, if you're keen to get started!

Housecall Pro is rated the #1 software to run your HVAC, Plumbing, Electrical, Carpet Cleaning and other home service businesses. Our features allow you to schedule and dispatch jobs, get booked online, send invoice and receive payment within minutes whether if you are in the office or out in the field. This comprehensive software can help you grow revenue by 30% in one year and save up to 500 hours a year. Join all the other successful home service businesses who have already started and try Housecall Pro for 14 days free today.

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