What Is the Handyman Business?

For 20 years HomeTech has been telling contractors that it is almost impossible to make money in small jobs. The reason for this was quite simple. It took almost as much time to sell the small job as the big job; almost as much time to set it up for production, and if you made one glitch or mistake, all of your profit flew out the window. Even if the markup was increased to 100% as recommended, there were still very few companies able to make money handling smaller jobs.

It was not uncommon for successful remodeling contractors to set a minimum on the jobs they would go after, something like $5,000-10,000. Other companies continued to take smaller jobs believing it would lead to bigger projects and was good advertising. Unfortunately, oftentimes they did not give small jobs the same attention as larger jobs, did relatively poor work and the customers were unhappy. It turned out to be a negative rather than a positive from an advertising standpoint.

But as the decade of the 1980s came to a close, it became apparent that the whole concept of small jobs, repair, and maintenance was dramatically changing and that there was a need for a segment of the remodeling industry to focus on this part of the business.

Let's look at the factors affecting the handyman business in earlier decades, and why there was no demand for a handyman service, then look at the same factors as they are now and are going to be in the 1990s, and why there is such a tremendous market beckoning the remodeling contractor.

1. In the past, people did not feel the need to hire a handyman for small jobs. A large percentage of the population was blue collar; many people were hands-on and were able to do many of the small jobs themselves. They did not feel the need for calling in a professional to do maintenance work.

2. People had more time to spend doing it themselves. Often, the commute to work was short, only the husband worked, so the wife could take on many of the mundane household chores and leave the husband free to do the maintenance around the house.

3. House prices were relatively low and people did not look on their house as a major part of their financial future. Homeowners did not see any negative financial impact on the outcome of undertaking a do-it-yourself project. If it wasn't done in a totally professional manner, it didn't make much difference because the house was not worth much anyway.

4. Houses were simpler and easier to repair. We had single pane glass, wood doors, no-setback thermostats and so on, and it was easier for non-professionals to fix things around the house.

5. There was usually a neighborhood "Joe" who did handyman work, particularly in middle and upper income neighborhoods. This might be a retired carpenter or someone with a blue collar job who liked to do things on the side. These handymen were willing to work for little more than wages and could usually handle all the work around the house.

6. The cost of reconstruction and repair was low, particularly if you could get a handyman to work by the hour, and people could usually pay cash or write a check for the job. There was no need for a credit card option to pay for "small" jobs.

7. Few women worked, so they were home all day and had more time to find handymen, call them for work, wait around if they were late, and not be upset if they did not show up one day but came the next. This was considered to be part and parcel of running a household in the old days. Thus, they were much more tolerant of untimely performance.

8. People did not live as long, and the average age of the population was much lower. By the year 2000, one out of every 6 persons in America will be over 65, and one out of 6 will be handicapped.

As we go through the 1990s, this whole scenario is dramatically changed. There are factors now which almost mandate the creation of a delivery system for small jobs and handyman services.

1. The do-it-yourself market is plummeting. The average American family has only 16 hours a week of leisure time, so they don't have time for such work. In any case, with husband and wife working, trying to handle household duties and child care, there is just no time for minor repairs, much less for larger remodeling projects. The American family's time is almost more important than money.

2. About 75% or more of Americans are white-collar, information type workers. They not only does not have the time, but do not have the skills to do remodeling projects. The baby boomers can barely change a light bulb. If you have not been brought up working with your hands, and you don't have time to learn the skills, it is very difficult to undertake a project.

The do-it-yourself market has probably been overstated in the past, because most lumberyards have included all cash sales as do-it-yourself, rather than recognizing that 90% of contractors cannot qualify for credit and are forced to pay cash.

It has only been very recently that lumberyards and home centers have become sophisticated enough to understand that very few Americans, particularly under the age of 45, (the baby boomers), have any chance of installing a lock, building a porch, or hanging a light fixture, much less undertaking roof repairs, etc. There is a tremendous need for a delivery service to meet this need.

3. In the 1980s, housing prices skyrocketed and houses became the most important part of the financial future for most Americans. If a homeowner undertakes a handyman project and does it badly, there is a negative effect on the equity in the house; not only is there no savings on the project, there might be a disaster. Therefore, homeowners are more willing to pay a professional.

4. Houses are much more complicated than they were. We have solid state thermostats, high efficiency furnaces, insulated windows with Argon gas, steel entry doors, and so on. It makes it more difficult to learn how to do the work even if you have the time and the basic skills that would have worked in the past.

5. We are now going from the baby boom to the baby bust and there is a labor shortage in all American industries, particularly in the remodeling and construction field. The "Joe Handyman" in the neighborhood is no more, and it is almost impossible to find someone who is able and willing to do small jobs. They are just not in the neighborhood.

6. It does not take very much of a handyman project to rise above $500 nowadays. Also, people often do not have money in their checking accounts to pay a handyman. We have become a credit card, plastic society and this is not something the Joe Handyman is able to provide.

7. Over 60% of American women work outside the home. There are very few homes with someone home all day to wait around for a handyman. There must be a handyman delivery service that is reliable, accountable, and on time.

8. In addition to the baby boomers who do not know how to change a light bulb, we have increasing number of handicapped and aging homeowners who must pay for services because they are unable to do it themselves.

9. Americans have become a brand name society. One franchise consultant says that no one under the age of 29 will buy anything but a brand name. If you don't believe that, try to buy your kids athletic shoes. They want Nike or L.A. Gear; if you buy them jeans they want Guess. In the 1990s, there are brand names, locally as well as regionally and nationally, for handyman services.

Over 50% of the remodeling dollar, or $50 billion taken on a very conservative basis, and it may far surpass that number, is an opportunity for the retailing of services in a handyman business.

HomeTech's Concept

Repair and maintenance, as well as major replacement, have been given short shrift by the professional element of the remodeling contractor universe.

What this means is that over half of the total remodeling business has been left to the small, non-professional contractor or, in fact, the handyman. What was not done by the handyman in the past was accomplished by the do-it-yourself market.

In order for repair and maintenance to gain the attention and respect of professional remodelers, a new approach must be taken to the business. Here are some basic principles of the proper approach to a professional handyman business.

1. Like general remodeling, the handyman business is not one business but many: a multiple product and service business. A typical business must handle many different products and services, but not necessarily all. The advantage of this is that it provides tremendous diversification and provides many ways to service existing customers.

2. Because of the great variety in products and services sold, the handyman business will be built on repeat business and referral. Ideally, customers will be customers for life. Obviously, this depends on complete customer satisfaction and a professional approach.

3. The handyman business is not a contracting business, but a management, marketing and scheduling business. You do not go out and bid or sell jobs on a competitive basis with a closing ratio of one in four or one in five. Because of the small job size (typically less than $500), having a salesperson go to estimate and sell the job will not work.

The thing to do is follow the example of the appliance service business and charge a minimum fee or trip charge to send somebody out to the house to do the job. While this may cut down the percentage of leads that turn into jobs, it does eliminate the cost of sending a salesperson.

4. The handyman business is not an hourly business, but is based on unit costs. Today's customers have been conditioned by automobile repair other service businesses to pay flat fees. Handyman customers must be sold on the fact that they are dealing with a total organization, not an individual handyman, and that the unit costs of the job reflect advertising and marketing, administration, sales, training, equipment, research, etc., as well as the individual handyman's time.

5. The handyman business will require the use of a computerized price list or database. Here again, as in the automobile repair business, people will accept unit prices for services if they believe that the prices have been systematically developed and are not attempts to take advantage.

6. The handyman business is a cash flow business with payments made at the time of service by check, cash or credit card. There are no accounts receivable or bills except in commercial work.

7. The handyman business requires bottom-up management. The individual handyman is responsible for sales, estimating costs, writing the contract, production management in a pre-construction conference, and collection of money when the job is completed. The business must include generous payment to the tradesman for performing this multitude of services.

The handyman business simply cannot be done with top-down management, hourly employees and low paid, marginally trained individuals. The mammoth task of supervising individuals on a scattered basis, in peoples' homes for only a few hours doing a variety of jobs, is simply impossible without using top quality, highly trained and highly motivated tradesmen.

This means that just as you cannot charge the customer hourly, you cannot pay the tradesmen hourly. They must work on a fixed labor rate with a percentage of the profit.

8. The emphasis on marketing, advertising and management means that skilled office staff answering the phone, taking calls, "selling the company", giving price ranges and scheduling the appropriate handyman for the appropriate customer, are vitally important. It also means, however, that it takes a number of handymen to pay this office overhead. Therefore, there must be a system for the office and field so that everybody is working on the same concept and according to the same requirements. In effect, this eliminates the custom, one-of-a-kind aspects of remodeling as much as possible.

Everything possible about the business must be standardized and systematized. This starts with dress code, advertising and signage, continues through unit cost estimating, standard products and methods, standard installation, all the way to completion and follow-up with the customer. More than any other facet of the remodeling business, the operating system of the handyman business is very, very critical.

9. The diversity of customers, multitude of services, and wide variety of tradesmen needed, makes the handyman business very much a database business. Keeping track of all the aspects of the business absolutely requires the use of a computer for every possible function. The ability to control detail is an absolute necessity and must be mastered in order to make this a profitable enterprise.

10. The handyman business is also one of the easiest to franchise, or to run multiple offices. What a franchise needs to succeed is a brand name, operating system and ongoing support. The handyman business lends itself to all these requirements.

11. Finally, HomeTech's concept of the handyman business offers four different avenues by which it can be implemented.

The business can be run by an individual who has been a remodeling contractor and is tired of running other people. This does not require the sophistication of an operating system, and almost by definition will be limited to carpentry or the other abilities of that individual tradesman. The opportunity is there for an individual who is management-, sales- and marketing-oriented, and also talented as a tradesman to make a handsome living.

A home building or remodeling company may have a strong customer base but has been turning down requests by past customers to run small jobs. Setting up an almost autonomous handyman division with its own complete operating system is certainly one of the most attractive options, primarily because the handyman business has a running start based on the company's reputation and past customer list.

Retail lumberyards, home centers, and other building material suppliers who have seen their customers asking for installation of their products, will benefit from a handyman division either on a preferred contractor or an installed sales basis. Since the lumberyard is already the brand name for home improvement products, extending this concept to installed home improvement products is within easy reach. The building material retailer who does this must set it up as a separate division, run on an almost autonomous basis.

The fourth option is the person who has been in management with another type of company, and is either dissatisfied with that environment or has been fired or forced to take early retirement because of the changes in American industry. This individual has a retirement or severance package or has built up some savings, and is in a position to start a business. Their management and marketing skills are a tremendous asset in starting a handyman business. They will need to buy a franchise with an operating system, or find and develop an operating system to back up their lack of technical knowledge. Even so, the opportunity will be an attractive one for many individuals.

The handyman business in the 1990s will not be an extension of business as conducted in the 1980s and decades before. It will work with the "retailing of services" concept and will require combining the management skills of other American businesses with the hands-on capability of tradesmen.

Finding and Recruiting Handymen

The key to success is to locate, recruit, train, and ---- probably most important ---- keep your stable of handyman talent for a long time. Find very good people, then supply them with sufficient work with a liberal enough compensation package that they can make as much or more money as they had previously doing what they do best, which is primarily performing the work.

First of all, you must advertise for applicants for the position. This can be done with newspaper advertising, with copy as follows:

Wanted: Carpenters or contractors for handyman position with established marketing-oriented company. Must be able to deal with people, estimate work, write contracts and complete work satisfactorily. Supply own truck. Having had own contracting business an advantage. Generous compensation plan, steady work. Please call for interview or send resume to . . .

Get the word out to people in the trade through advertising, contact with lumberyards for recommendations, talking to contractors who know other small contractors, and so on. Once you have handymen working who are happy, they will tell their friends.

Every key person in your company, from manager to office coordinator to training director, should interview applicants in depth. Specific questions should be asked about:

Range of talents -- carpentry, electrical, plumbing, drywall, plastering, concrete work, masonry, and so on.

Jobs held in the past, and the type and quality of work done for other companies.

Jobs that required supervising or dealing with other people, administrative or selling skills, and so on.

If in their own business, the type of business; their strengths and weaknesses in running the business; how many hours they worked; if possible how much money they were taking home, and so on.

Ask for trade references. If they have been in business, get subcontractor and customer references. Then check the references.

Use one of the testing services that test for empathy, ego drive, ego strength, ability to take and give direction, ability to work with people, and so on. These tests are not infallible, but they usually can tell you who not to hire. They screen out most of the poor candidates, and do give an indication of whether the person is suited to the handyman business.

Give a written test on construction practices such as span for 2 x 8s, type of nail used for each application, and so on. This test will also reveal whether the individual can write clearly, is responsive to direction, and attentive to detail.

Ask what tools applicants presently own and use, and ask to see them, if possible. Many contractors and production managers believe you can tell more about a person from the condition of their tools than anything else you can ask. A similar check on an applicant's truck would be helpful as well.

Use an application form to get information about background, education, family and previous work experience in detail.

The interviewer should discuss in great detail with the candidate how the handyman business works. This should include the bottom-up management approach, the independent contractor status of the handymen, their responsibility for estimating the job, writing up the proposal, selling it to the customer, writing up change orders, collecting the money, obtaining the materials, doing the work, cleaning up and so on.

The subject of markup and margin in the handyman business must be discussed in detail. This will be especially important with older applicants who are more likely to believe that a 50 or higher markup in remodeling is a rip-off, and will be unable to grasp the need for a 100% minimum markup in the handyman field. If applicants are not willing to accept this after discussion and explanation of the approach, you should not hire them even if they meet all other qualifications.

The problem, of course, is that the unconvinced handyman will constantly be complaining that the prices are too high and he cannot sell at that level. Even worse, he will say things to customers such as, "I know these prices are high, but the company makes me charge that. I apologize, but that is the way it is." The company must advertise, develop products, train, pay an administrative staff, and so on and all of this costs money. Unless this can be explained and accepted by applicants, they should not be hired.

Training

Newly hired people should be trained in the handyman approach before putting them on the street to represent the company. This can be done in a concentrated form, in three days to a week, or in the evenings and on Saturdays for those who are working another job and want to phase into the handyman business.

Administration. The handyman should understand the entire process from the first call through setting up of an appointment, scheduling, estimate and sale of the job, completion, and administrative follow-up. They should actually spend a day in the office watching the staff set up appointments so they can understand the challenges of this part of the business.

Company Presentation Book. The company should develop a company presentation book that is very similar to those recommended for remodeling companies, including background and experience of the individual handymen, before-and-after pictures of products they install, and a list of products and services they provide.

Estimating. This training will teach the handyman how to use the estimating system and/or database; how to do the four-part judgement analysis (condition, project, customer and company capability); and for items without a cost in the system, how to cost out the materials, estimate the labor, mark it up and produce the price.

Specifications. The database will provide specifications for the items it contains. The handyman must also be trained to write specifications so that a proposal is specific enough to make sure there is no misunderstanding with the customer.

Sales. The training must include indoctrination in the counselor approach to selling, questions to ask customers about their needs, and selling up to additional work once those needs have been determined. Overcoming objections on price, explaining the efficiency of trip charges rather than bidding, simple ways to ask for the order, closing on a minor point, and assuming the sale are important skills in sales training.

Production Administration. This training includes how to conduct a mini pre-construction conference; how to handle change orders; how to conduct a mini quality control punchlist; and company rules and policies dealing with customers during the work process -- including the importance of neatness and clean-up, clean-up, clean-up.

Money Collection. Collecting money by check, cash or credit card; asking for money down and the balance on completion for a job lasting more than one day; reassuring customers that the company will not run off with their money, are important skills. The handyman must learn that they are paid when the company is paid, and if collection is not made on the spot or by credit card, they will not receive their money until the payment is received by the company.

Product Training. This is essentially indoctrination into the features and benefits of all the products the company sells. The product presentation book should be gone over item by item, and the handyman must be taught how to use the book most effectively.

Installation. Installation and job skills should be a part of the training. If the company specializes in closet installations, a fairly brief training period will substantially increase the handyman's ability to do this in an expeditious manner. Training should be done on every type of process: cutting off doors, replacing windows, roof repair, concrete and masonry repair, and so on. Such product and installation training will be an ongoing process in any successful handyman operation.

Field Administration and Reporting. Filling out job reports, time cards, material lists, and customer satisfaction sheets on every job as soon as completed, is absolutely essential. Administration and paperwork is every bit as critical as the actual work, and customer relations.

Scheduling. Training is needed in how to anticipate the time it will take to complete a job, to fine tune the scheduling projected by the company. The art is in being able to schedule two or three appointments in a day at 2-4 hour intervals, then arrive on the first job and sell up from a three hour to an 8 hour job, convey the information to the office, and get the later appointments rescheduled. The constant changing, extending and re-scheduling is an extremely important part of the process and handymen must understand their responsibility.

Suppliers. Handymen must be responsible for ordering and delivery of all their own materials; this is part of the bottom-up management concept. They must know what suppliers the company uses; where and how to order materials; how to keep invoices, etc.

Subcontractors. Even though the handyman is expected to do many different types of work, there will be jobs that require a subcontractor in a specific trade. Also, selling up jobs that can be handled by a separate trade is a useful skill. An example would be a job where the customer needs new gutters and downspouts. This requires a subcontractor to do seamless gutters, but it is relatively easy to estimate, sell and set up for the subcontractor to perform the work. The handyman is paid a sales commission on this, and in order to prevent misunderstandings, a mini pre-construction conference is held with the customer.

Non-compete or Exclusivity. Handymen cannot do work on the side for customers of the company. However, since their relationship with the company is as a subcontractor, they cannot be 100% captive for the company. Thus, they should be encouraged to do several jobs a year for friends of theirs or in areas in which the company does not work.

The handyman must also be able to arrive at a house, inspect the work to be done, and determine other items that need taken care of either immediately or in the future. The immediate items should be suggested to the customer and included in the day's work and the remaining items can be logged on the customer's house inventory for future solicitation by the handyman service. The ability to recognize essential projects is an important aspect of the successful handyman's responsibilities.

Qualifications of a Handyman

For years, the handyman was the guy in the neighborhood who hung around to get odd jobs. He knew how to fix almost anything, but basically worked for wages. Customers treated him more like an hourly employee than a business person. Frequently the handyman did not have money to buy materials without an advance, and made no profit on them. The work might have been top quality, average, or nothing more than patchwork. That is not the profile for the 1990s. The handyman of the 1990s has the following qualifications:

He is competent in his specialty, usually carpentry, and is able to hang a door, build a deck, take out a load bearing wall and install supports, install a kitchen, build basic cabinetry, trim out a house, and lay flooring. At the same time, he is able to perform many other tasks, and is willing to learn new tasks. He can usually disconnect a sink or commode, work with electrical, patch plaster and drywall, paint, lay floor tile or sheet goods, install and replace ceramic tile, and so on.

He is business oriented and is able to estimate work using a unit cost system. If there is no price for the item in the database, he is able to figure an approximate material list, estimate hours, and come up with a price by this method. He is able to write up the estimate and the contract, with precise specifications (guided by company-provided boilerplate specifications), and present this to the customer explaining what has to be done and get a signature on the contract. Just as important, he is able to do the administrative work of keeping material invoices and time cards, so that he always pays attention to the profit generated on each item on the job.

He likes people and is able to deal with all types of customers, both in the selling situation as well as in the hand-holding and customer satisfaction part of the equation. He is not necessarily an outgoing sales personality, but he gets along with people, reassures them they are dealing with a professional, and can handle any questions about the scope of the work, problems with the job, and so on. While the technical part of the job is important, the ability to be a "house doctor with a good bedside manner" is perhaps more important in generating referral business.

The handyman is also a problem solver: able within reason to look at problems and determine the cause, recommend a solution and then come up with a price and specifications for that solution.

The handyman must be adequate administratively, and punctual in every respect. The importance of meeting time commitments is crucial to the handyman business. The first call in the morning must be on time, and during the day the handyman must be able to estimate time to complete projects so that the next appointment can be scheduled with no more than an hour leeway.

The handyman must also be able to estimate work for subcontractors: electrical, plumbing, heating, roofing, painting, and other trades. The good handyman will extend his volume by being a sales and production manager for other single trade job.

The handyman should not only inspect the work to be done but determine other items that need to be taken care of, either immediately or in the future. The immediate items can be suggested to the customer and included in the day's work, and the remaining items can be logged on the customer's house inventory for future solicitation by the handyman service. The ability to recognize potential projects is an important aspect of the successful handyman.

The ideal handyman has been in business for himself in the past, as a handyman or a contractor, but was not strong enough in sales and administration to succeed on his own or be happy in his work.

The secret of success in the handyman business is for the company to be a marketing and management organization, coordinating the services of a number of handymen tradesmen.

The Single Trade Contractor In the Handyman Business

A single trade contractor must be licensed and bonded (where applicable), and be able to handle all types of residential jobs. An electrician must be able to do a heavyup, run circuitry, install fixtures, find problems, make repairs and so on. A plumber must be able to install complete bathrooms, replace lead pans, install plumbing for kitchens, run gas lines, supply and install hot water heaters, and so on. An HVAC contractor must be able to install furnaces, boilers, heat pumps, air conditioning units, ductwork, radiators, baseboards, as well as accessory items such as humidifiers, electrostatic air cleaners, etc.

The sub must be willing to work on a markup of 25-30% to cover 20% overhead and make a 5% net profit. The handyman service, by providing the lead and the guaranteed sale, reduces the sub's overhead by 10% by eliminating the advertising and sales cost. This must be understood and accepted if there is to be enough profit for the handyman service to include the sub's work in their product line.

The subcontractor, like the handyman, must be able to go to the house, analyze the problem, write up the contract with previously determined unit cost prices, sign the contract, perform the work, and collect the money, with the check made out to the handyman service. The only real distinction is that the subcontractor concentrates on one trade.