Unresolved Challenges Cause Homejoy To File For Bankruptcy

Homejoy Inc. Made the announcement on their website page that they will no longer be in business. The company, that started in 2013, was an online business which customers were able to book home cleaning and other services online to meet their needs. Even though Homejoy was able to raise $38 million in funding from investors such as Google, First Round Capitol, and a list of other investors, they were still not able to make it work.

There are a couple things to blame for the closing of Homejoy. One of those things was a problem regarding the challenges related to revenue. The other problem, which seems to be a big problem for these types of start-up businesses, are worker classification lawsuits. These lawsuits attempt to change contractors into employees, which is some cases can cause up to a 40% increase in labor cost.

However, not all startups in the home cleaning business are not closing their doors. Handy Technologies Inc, which was a competitor of Homejoy, continues to grow. Handy also offers home cleaning services as well as other handyman services such as furniture building. They have booked over 1 million appointments and have raised over $100 million dollars.

Handy services 33 locations in three countries which include the United States, Canada, and Great Britain. Not only can customers looking for cleaning services log into their website for help, but those who are looking for cleaning jobs can also be serviced through Handy. Roughly 80% of Handy’s business comes from repeat business. This plus money from investors will allow Handy to keep growing.

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