Just as making investments in your 401k, you should always diversify. You should not have all of your business in one basket, whether it's residential or commercial. My mix is @ 65% commercial, 35% residential (revenue); and 70%/30% residential/commercial (profit). Why do the commercial work when the profits are better in residential? Because I generate much more revenue, with fewer people on the commercial side. I place my experienced, quality guys on the residential properties and my less experienced newbies on the commercial side. During the past 3 years, when other people were going out of business because the residential (especially projects) business fell hard, I was still generating business and growing on the commercial side. When the economy turns around and the high $ projects become more plentiful, I'll probably go back to a more 50/50 split.