Handy Home Cleaning is a home cleaning and handyman service that was founded in 2012 by two Harvard Business students, Oisin Hanrahan and Umang Dua. Handy utilizes a similar business model as does the popular driving service Ubur. Handy vets and retains the services of people who work as independent contractors. These independent contractors gain access to jobs through a mobile app. Handy has been growing like crazy and that is the problem.
Venture capitalists are investing massive amounts of money in companies like Handy. Unfortunately for Handy, these investors are now looking for a return on their money. The problem is that Handy.com has been concentrating its spending on growth and expanding into new territories. This spending on growth results in severely diminished profits. Handy is in a tough position. The investors are demanding profits. But Handy has to cut back on the money spent on growth in order to increase profits for the investors.
Handy faces a conflict. If it slows down growth it faces the possibility of forever losing new territories to other startup companies that will capture the market in those unconquered areas. On the other hand, venture capitalists have invested $110 million in Handy. If Handy doesn’t show a profit, future investor funding will be cut off. Handy needs a dependable source of investment capital to carry it through the later phases of its business development.
Handy has implemented changes to cut costs and show an increases profit margin to satisfy the investors. First, Handy has implemented a company wide online onboarding process for its contractors. This will save the company millions of dollars each year from the elimination of the costs associated with in person interviewing and hiring. Handy is also concentrating its efforts and increasing its customer density within existing market sectors. This will greatly increase its profit margin and satisfy the investors.