COVID-19 impact on home service businesses

The last few months have brought doubt, uncertainty, and above all, confusion, to home service businesses.

Over a period of two weeks, consumers and businesses were mandated to completely change their behaviors. For e-commerce businesses, this time has provided a tailwind, whereas other businesses, such as sit-in restaurants, have seen sharp declines.

But where do home service businesses fit into the equation?

To get a clearer picture of how the COVID-19 pandemic has impacted the home service category and what may be coming next, we reviewed data from tens of thousands of home service professionals across 50+ different industries in the U.S.

While no single chart can tell the whole story, this data can help you understand where the trends are headed, so you can make more informed decisions for the health of your business.

Here’s what we’re seeing:

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1. Home Service Businesses are Growing Faster than Average U.S. Businesses

The home service category as a whole, which includes businesses in lawn care, residential cleaning, plumbing, and other home contractors, has seen consistent positive growth over the past few years.

On an annual basis, the typical home service business grew 12% in 2018 and 11% in 2019. By comparison, the overall US GDP grew 2.9% in 2018 and 2.3% in 2019.

Growth in Median Revenue

Covid-19 impact on home service: year over year growth in U.S.

The GDP, or Gross Domestic Product, represents the total monetary value of all goods and services produced within the country, and acts as a kind of ‘scorecard’ of the country’s economic health.

The significantly higher growth of the home service category speaks to the health and necessity of these businesses to the nation’s economy.

In 2020, home service businesses began on the same positive growth trend. Up until March 22, the industry was growing an average of 13% compared to the same period in 2019.

However, as the COVID-19 pandemic spread to the U.S., that growth saw a steep decline.

2. Home service revenue dropped 30% in Aprilbut the rebound is already underway

By the end of March, 30 states had enacted stay-at-home orders and all non-essential services ordered to shut down physical operations.

As a result, revenues for home service businesses fell around 30% compared to earlier in the year.

Mid-April proved to be the lowest point in terms of revenue loss. However, our data shows a clear rebound starting in the first week of May.

New Work Scheduled

COVID-19 home service impact: new work scheduled YoY

Median Revenue 

COVID-19 home service impact: median revenue YoY

So, while it’s too early to be overly optimistic, we’re seeing strong signs of economic recovery for home service businesses.

3. Some industries have been impacted more than others

The economic effects of COVID-19 haven’t been the same for everyone.

We broke down the data into three segments to better understand the impact of the pandemic on different kinds of businesses.

The segments are cleaning, contracting, and green businesses.

Cleaning: Strategic pivots and procedures help cleaners get back on their feet

The cleaning segment includes businesses in residential and commercial cleaning, carpet installation and cleaning, window washing, and pressure washing.

Without a clear consensus on which services are essential, or how to operate safely within customer’s homes, many cleaning businesses saw increased cancellations of both regular recurring work and newly scheduled work.

Cleaning Businesses: New Work Scheduled

COVID-19 impact on cleaning businesses: new work scheduled YoY

Cleaning Businesses: Median Revenue

COVID-19 impact on cleaning businesses: median revenue YoY

In terms of revenue, cleaning businesses were seeing stronger than average revenue growth at the start of the year. But since mid-March, revenues have fallen by nearly 35% compared to the same time in 2019. From where these businesses were earlier in the year, revenue has declined more than 45%, with residential cleaning being the hit the hardest.

In the recent weeks, however, there has been an improvement in new work being scheduled and new revenue generated.

Anecdotally, we’ve seen many cleaning businesses pivot their services and marketing to emphasize sanitation and disinfecting services. 

Many cleaning businesses also rapidly adopted new procedures to keep employees and customers safe while working. For example, scheduling specific time slots to clean while homeowners were out, and donning full PPE while inside customer’s homes.

The data trends, as well as strategic shifts within cleaning businesses, paints a promising picture for recovery towards the end of May.

Contracting: Essential businesses adapting quickly

The contracting segment includes construction, electrical, plumbing, and HVAC businesses.

In general, these businesses were deemed essential in almost every state, and were able to continue operations.

Additionally, many businesses were able to quickly adapt their procedures to meet social distancing requirements without significantly affecting their workflow.

Contracting Businesses: New Work Scheduled

COVID-19 impact on contracting businesses: new work scheduled YoY

Contracting Businesses: Median Revenue

COVID-19 impact on contracting businesses: median revenue YoY

Despite these relative advantages, contracting businesses saw revenue decline close to 15% as a result of COVID-19, compared to the same period last year.

After a dip that lasted three weeks, there has been a relatively quick recovery towards the end of April and into May. 

Green: Mother nature hasn’t slowed down

Finally, the green segment includes lawn care, landscaping, tree care, and other related outdoor services.

Although green businesses did see a drop in new work scheduled and median revenue from mid-March onwards, they’ve fared well compared to other home service sectors.

Spring is the busiest season for these businesses. And while the world has slowed down these past weeks, mother nature hasn’t. In addition to the seasonal need for these services, green businesses generally work outdoors, where social distancing rules are easier to follow.

Green Businesses: New Work Scheduled

COVID-19 impact on green businesses: new work scheduled YoY

Green Businesses: Median Revenue

COVID-19 impact on green businesses: median revenue YoY

Reading between the data, however, we can see the missed opportunity caused by the COVID-19 pandemic.

Spring is when green businesses generate most of their revenue. Without that seasonal bump,  green industry businesses may need to branch into new services or secure year-round work to make up for the economic loss long-term.

What comes next?

Our data shows positive signs of recovery already. But the long-term effects of the COVID-19 pandemic on home service businessesand on the U.S. economy as a wholehave yet to be seen.

What we do know is that the home service category is built on the backs of hard working entrepreneurs, whose work is often essential to keeping our homes and businesses safe, comfortable, and functional.

Many of these entrepreneurs continued to do their duties, even when the conditions were unsure. Many more continued to support their employees and communities, going above and beyond for those in need.

So, what comes next? From what we can see, more hard work, more thoughtful and strategic procedures, and more community building to keep our entrepreneurial community strong.

We’ll continue to monitor and update the data as the situation evolves. In the meantime, we’re here for you.

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