March, 2008
Feature
Inspection News and Views from the American Society of Home Inspectors



Consider Going Multi-Inspector

ARTHUR LAZEROW

Part 1 of 3

You gotta be crazy!  Expand into a MULTI-INSPECTOR HOME INSPECTION COMPANY? Next time you have that thought, go have a root canal instead. Actually, it is not that painful or difficult. Read on.

The majority of ASHI members are individual home inspectors operating single-employee businesses. Make no mistake about this, the sole practitioner is a businessperson, maybe unknowingly. Not only is he or she the chief inspector, but also head of the finance department, chief appointment scheduler, bookkeeper and accountant, communications director, advertising coordinator, director of procurement and product development, chief of the customer complaint department and head dishwasher. Hmmmm, when do you have time for lunch?

Seriously, any ASHI home inspector who in several years has built a full-time inspection schedule as a one-person operator has exercised talent in more areas than simply being a first-rate home inspector. If as a single home inspector your schedule is nearing the full point and you’re feeling that pang of frustration turning down an inspection or two because you could not be available for the client’s contingency date, the issue becomes whether or not to expand into a multi-inspector company.

Every inspector over several years develops his or her individual micro-brand. Do you feel comfortable predicting growth in the amount of work your particular brand attracts? Have you been unavailable to a potential client in the past? Do you have a repressed entrepreneurial drive that is yearning to be expressed? Do you enjoy working with colleagues and have a desire to duplicate in others your skills as a home inspector?

If an honest answer to more than one of the above questions is positive, give serious consideration to expanding your business. At the moment you decide to expand, you become a businessperson who performs home inspections rather than just a home inspector. How to build a multi-inspector firm is an extensive topic and exciting to explore. This article is the first of a series of three focused on how to expand your business. This will focus on the nuts and bolts of creating a company. Next month’s article will focus on how to make that business successful through hiring well and serving clients properly. Finally, creating a marketing plan for a multi-inspector firm will complete the discussion.

The story of my company is typical of what you can accomplish. Actually, what surprised me in 1994 was how difficult it was to break into the home inspection industry as a sole inspector. I formed Alban Home Inspection Service, Inc. as a “C” corporation for tax purposes (more about corporations and partnerships later), to provide protection from personal liability.

My company had one person, me, doing everything from inspecting to marketing. The first year was dreadful. The second year saw real growth in the number of inspections. When one week during late 2005 I performed 22 inspections, it was obvious I needed two of me. That is when Alban Home Inspection Service as a multi-inspector firm was born, and I hired and trained the first new Alban inspector. I had the advantage of graduating from both the U.S. Navy post-graduate business school and law school. I had operated a home building business for 20 years before converting from home building to home inspecting, so the business of business was second nature to me.

Alban became a company in my image and of my dreams. It reflected the micro-brand that I had developed over a three-year period and that I believed provided our clients with superior service and a satisfying product.  The start-up costs were reasonable. I was able to finance them with my home inspection income. There was no major initial investment. From 1996 to 1999, I added one inspector each year. Alban is now a boutique, privately-owned multi-inspector firm with six home inspectors and one full-time lead-based paint inspector.

Franchise considerations

There is a second approach to starting a multi-inspector business, which would be to purchase a home inspection franchise for your region. It is an excellent avenue for a single home inspector to expand into a multi-inspector situation. There are a large number of franchise companies available, such as Pillar to Post, HouseMaster, HomePro, Brickkicker, A-Pro, Amerispec, U.S. Inspect and National Housing Inspectors. Google “Home Inspection Franchises” for a complete list.

For a non-business-oriented home inspector, the franchise concept works. The immediate downside is twofold. There is a significant up-front investment, which may be prohibitive for many members of ASHI. Marc Meilleur, a new ASHI Associate and MAC-ASHI member, recently purchased a Brickkicker franchise for two local Maryland counties, Frederick and Washington, with about 300,000 in population. Marc told me that he wanted to make an investment in a home inspection business and has four part-time inspectors in training.

He purchased his franchise for about $30,000, but the price can range from $30,000 to $60,000 depending on population coverage and the franchise. Three sets of inspection equipment, including computers, printers and a report-generation system, cost another $30,000.

The second concern with purchasing “World’s Best Franchise Company” is that by definition, it is new to your area. The franchise provides a macro-brand, perhaps known widely in other areas. Although it provides marketing materials, brochures and business card designs, business and inspection skill training and everything else to be in business, “World’s Best” has no presence in your area. Accordingly, the franchise owner must establish the new company as a brand in competition with entrenched home inspectors and other franchises, which may be a step backwards for you as a sole inspector.

Legal considerations

Once the decision is made regarding how to create your multi-inspector company, there are numerous other considerations. Each of these items would need an article of its own, so here is a list to think about. The very first step in either case is to discuss your plans with an experienced business lawyer and accountant. There are serious liability issues regarding client relations, non-compete agreements with your associate home inspectors, general liability and Errors and Omissions insurance, a client pre-inspection agreement with a limit of liability clause, depending on the law in your state regarding limits of liability. Should inspectors be employees or independent contractors? What about workmen’s compensation insurance? 

You will have to decide what form your business entity will take. Avoid personal liability by either incorporating your company or creating a limited liability limited partnership, or using a limited partnership with a corporate general partner of which you are president. Your lawyer and accountant will explain the differences and the tax ramifications of each business entity.

Whether you opt for a private boutique, multi-inspector company such as Alban or purchase a franchise, you need to think broadly in terms of the entire range of corporate functions and how you are going to satisfy each of these. Every small business or major corporation must have financial management, scheduling, product development and training, one or more products (only home inspecting or include radon, lead-based paint, mold, water or septic testing as environmental offerings to diversify your company’s income potential), company and product marketing, administration and communications.

On day one, you may perform all of the above, while five years later you may have an office manager  (administrator), bookkeeper (financial manager) and scheduling secretary supporting five home inspectors who are performing 3,000 inspections a year.

Where to look for information

For reference materials, Walt Stoeppelwerth’s book (HomeTech Information Systems) on multi-inspector companies was my bible. Unfortunately, it is currently out of print, but if you can find a copy, it will help you avoid mistakes. How to Make Money in the Home Inspection Business, by Walter Stoeppelwerth and Larry Vickers (HomeTech Information Systems), is in print and would be useful. Another excellent book is Building Your Home Inspection Business, by Carson Dunlop & Associates, which is available from the ASHI online store.

Furthermore, seminars at ASHI InspectionWorld are given by the brightest business and marketing minds in ASHI. Obtain the proceedings manuals from colleagues and use these for guidance. Mike Crow’s seminar on multi-inspector firms during InspectionWorld 2004 was particularly insightful and helped me raise my business to the next level from where it then was. You also can find a mentor who has operated the type of business you want in another market area and ask for advice.

The decision to expand requires serious contemplation. Liability and the unrelenting pressure of operating a business can be infuriating. On the positive side, having associate inspectors who you train in your ways and in your image is satisfying. Finally, a multi-inspector firm can be financially productive in ways beyond what is possible as a sole inspector. If you have the drive, do not be afraid to expand. Operating a multi-inspector company is a fabulous experience!

Next month, we will focus on the three keys to creating a successful multi-inspector company. This is the art of business, as opposed to the nuts and bolts of business discussed above.



Resources
1. Other ASHI multi-inspector firms with members in your chapter willing to give advice or firms outside your market area.
2. Publications: Walt Stoeppelwerth at HomeTech
3. Marketing and business seminars atInspectionWorld.
4. Marketing books from Dearborn, ASHIAffiliates.

 

 










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