New ServiceTitan Survey Data Reveals Commercial Contractors Remain Resilient Despite Economic Headwinds

LOS ANGELES, CA — ServiceTitan, a leading skilled trades software platform, has released its second annual Commercial Service Report, highlighting current trends and market sentiment for the commercial industry in 2024.

The report surveyed over 1,000 commercial contractors across various trades and found that in the face of economic challenges, contractors remain resilient and are doubling down on sales and marketing while adopting new technology to help drive customer and business growth. 

"Commercial contractors are essential to building and maintaining our critical infrastructure across North America—they keep our businesses, schools, hospitals and more up and running at all times," said Alex Kablanian, General Manager of Commercial & Construction at ServiceTitan. “These contractors have displayed incredible resiliency, navigating formidable economic challenges in recent years. Adopting new technology has played a significant role in empowering them to accelerate and achieve profitable growth in their industry. The commercial contractors who are harnessing the power of software and innovation now have the tools they need to reach new heights and greater potential than ever before.” 

ServiceTitan’s findings provide a unique perspective on the industry’s performance while highlighting key developments shaping the path forward.

Focus on New Growth in 2024 

Despite market uncertainties and macroeconomic challenges, 39% of commercial contractors expressed optimism for 2024—a 17% increase compared to last year’s study, when only 22% of contractors had a positive outlook for 2023.  

While commercial contractors remained resilient despite economic challenges in recent years, a significant majority of contractors' revenue (71%) either decreased or stayed the same in 2023. In light of this, two-thirds (67%) of commercial contractors are focused on growing revenue in 2024, followed by improving cash flow (30%), optimizing processes (33%), and retaining customers (26%). 

Supply Chain Disruptions

For most contractors, ongoing supply chain challenges make sourcing parts (53%) and equipment (34%) difficult. The report also highlights how the effects of supply chain disruptions extend to project timelines—only 14% of commercial contractors delivered more than 90% of their projects on time. Material lead time also increased for 52% of commercial contractors; in comparison, equipment lead time increased for 62% of commercial contractors. 

In assessing how contractors navigate these challenges, the results indicate that nearly two-thirds of contractors (63%) keep inventory on hand, and roughly a third of businesses (37%) order supplies as needed. Further assessment of supply chain management reveals that 50% of commercial contractors order directly from the supply house, with the rest split evenly between vendor and manufacturer purchases.

Tight Labor Market

Labor shortages (53%) and overhead costs (50%) are cited as the primary risks to achieving contractors’ 2024 goals, with economic recession (49%), increase in material prices (35%), and access to working capital (26%) rounding out the top five risks. 

Just as ongoing labor shortages make it challenging for contracting businesses to find skilled workers, the shortage of talent and the increased cost of living make salaries a determining factor in attracting and retaining technicians. In response to these trends, 73% of respondents still plan to increase technician salaries this year. 

Software Adoption 

Current trends and market sentiment point toward software as a leading solution to streamline commercial contractor operations and improve efficiencies without increasing overhead. In fact, the average commercial trade business uses 4-6 software providers, with a high adoption rate (70%) of Field Service Management software. Correspondingly, a significant 43% of businesses plan to increase their investment in sales and marketing activities in 2024. 

With technology becoming increasingly essential for contracting businesses, it is key to take full advantage of the capabilities and innovate accordingly. Based on the survey, there is room for improvement—while 30% of survey respondents identified improved cash flow as their top goal, 20% of contractors still take more than a week to send invoices, and 33% of customer payments are more than one week late.

To review the full findings and key takeaways, download ServiceTitan’s Commercial Markets Report at www.servicetitan.com/guides/commercial-service-report-2024. 

Methodology

This research was conducted by Thrive Analytics on behalf of ServiceTitan, polling more than 1,000 commercial service contractors representing a variety of geographical regions, business growth stages, and revenue levels. This research is for informational purposes only and ServiceTitan provides no assurances (express or implied) with respect to the accuracy of the survey data.