When should I stop doing residential work and go commercial?
Short answer
When commercial accounts are already a meaningful share of revenue and asking for more, not as an escape from residential headaches. Commercial has its own brutal payment terms and expectations.
Don't run to commercial because residential is annoying
Every owner has a week where residential customers feel exhausting: rescheduling, price shopping, angry reviews over a $200 job. That week is not the signal to chase commercial. Commercial work has its own version of exhausting: 30 to 60 day payment terms, property managers who want everything documented, and after-hours service expectations written into the contract, not negotiated call by call.
The real signal is that you already have commercial relationships pulling you in that direction: a property manager or facilities contact who keeps asking if you do more of that work, or a few commercial jobs that were more profitable and less painful than your average residential ticket.
The cash flow shift is the part owners underestimate
Residential customers largely pay on completion. Commercial accounts often pay net 30 or net 60, sometimes longer, and getting on a property management company's vendor list can itself take months. If you shift your crew's time toward commercial before your cash reserve can absorb a 30 to 60 day payment lag on a larger share of revenue, you can go from profitable to cash-poor even while sales look strong on paper.
Readiness signals for shifting toward commercial
- 1.You already have at least one or two commercial or property management relationships generating repeat work.
- 2.You've priced a few commercial jobs and confirmed the margin holds up against your loaded labor rate, not just the top-line number.
- 3.You have at least 60 to 90 days of operating cash on hand to absorb net-30 or net-60 payment terms.
- 4.You have someone who can handle the extra paperwork commercial accounts require, insurance certificates, vendor forms, compliance documentation.
- 5.Your team has techs who can work in commercial settings, different licensing or certification requirements sometimes apply, check your state's rules.
Where owners get this wrong
- Chasing commercial purely to escape residential customer complaints.
- Underestimating the cash flow lag from net-30/60 payment terms.
- Taking on a big commercial contract without pricing in the paperwork and compliance overhead it requires.
Worth knowing: Licensing, insurance, and bonding requirements for commercial work vary by state and by the type of property, check your state's rules and the specific property manager's vendor requirements before bidding.
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