Commercial versus residential mix

Definition

Bid commercial contracts against smaller residential jobs the owner usually sells personally.

Why It Matters

Commercial work is contracted and scalable and won on price; residential is higher margin and usually sold by the owner in somebody's kitchen. The mix therefore shapes both the multiple and how much of the revenue is transferable, which are the two questions a buyer actually has. Ask who closes the residential work today, because if the answer is the seller, that half of the business needs a salesperson you have not hired.