Real Estate Agent Turned Handyman Wants to SCALE His Handyman Business

[heyheyheynoname]

I sat down with Mark, a realtor turned Handyman to discuss what it’s going to take for him to scale his Handyman business. You can watch the entire Business Breakthrough Here.

Mark reached out to me for a Business Breakthrough to ask some questions regarding his newly founded handyman business. He’s wanting to scale, and wanted some tips on how to do it.

Whenever I run into a founder that wants to scale, the first thing I’m thinking is “Niche Down” when I think “Scale” I think…Duplication, Repetition, Consistent results…

However, the Handyman Trade is one of, if not the hardest possible trades to scale…why? Because, there’s so many different tasks a Handyman business can take on! Let’s dive into the Business Breakthrough:

Background: Mark is a former Real Estate agent who saw a major need in the Handyman industry. He’s done some light marketing and has found a few jobs through Craigslist. It didn’t take much convincing to help Mark understand that he’s much more valuable “Not holding the Hammer” per se, he knows this very well. So his focus is: “How can I scale this business and get it to a point where I am no longer doing the physical work?”

Assessment:

• As I stated above, I’m always looking to see where the Niche is. In my own House Painting Business for example, we ONLY take on Interior & Exterior painting jobs. As a matter of fact, just 10 minutes ago I received a call from someone wanting us to stain a large deck… I turned down the job. Niching down is so important - it allows our employees/workers to develop and hone in on a skill, and it allows for predictability. When it comes to scheduling (Which is a very important aspect of your business) You want to have predictability with the time slots that you give each project, therefore giving you the ability to indicate KPI’s, costs, revenue, etc. On a predictable daily, weekly, monthly basis.
• One of the projects Mark emphasized that he frequently takes on is Installation of fans. He’s gotten a few of those jobs, so I decided to start with him there. In terms of profitability, he says they only take him about 30-40 minutes, and he’s able to turn that into $100.
• He’s simplified his business to the point where he only gives pricing for labor - he requires all of his customers to purchase the materials ahead of time. I like this approach in the beginning, it really gives him the ability to focus on simply selling the service, not so much incurring or worrying about incurring loss on materials by under-bidding…etc.

Barrier: The largest Barrier Mark has to overcome is production - he needs to either train and dispatch employees or use subcontractors to perform his work if he wants any chance at scaling profitably and consistently. He knows good and well that in order for him to give customers the attention they deserve, he needs to be in the office, doing bids, and managing.

My Take: Getting to the gist of it, Mark has one of two ways to go. I emphasized to him how much time, energy and effort it will be to train someone to become a handyman and work for his company. This will pro-long his efforts and intentions to scale massively, and instead cause friction, uncertainty, and it really doesn’t even guarantee that the person he trains will stick around…(If they develop the skills, why wouldn’t they go start their own handyman business?)

The Solution:

• Mark needs to develop a network of trusted subcontractors that he can trust to do jobs for him. However, in theory, this is very simple, but, there’s a caveat to my approach - he needs to offer them a 75/25 split. Essentially, he’s going to entice *Quality* subcontractors to work for him, and essentially act as a “lead generator”, with them getting 75% of the sale in return.
• Mark would be responsible for Marketing (Generating Interest), Sales (Closing The Deal), Project Management (Scope, Specs, Customer Service, Invoicing) and in return, his network of subcontractors will handle the fulfillment of the jobs.
• He will categorize his subcontractors based on their unique skillset, one of the major problems many handymen have is that they may have someone who is interested in having a service performed, but it could be outside of their scope. (For example, someone may want some bathroom tile done…he generated the interest in someone wanting to hire his company, but he lacks the skill-set) He will create a Round-Robin within his business to determine which handyman gets assigned which job.

Essentially, Mark needs to become a Handyman Dispatcher.

He did a local search of the handymen in his area, and found that the competition is incredibly low. It won’t take much for him to position him as a top-tier resource for homeowners and business owners in his area.

He will perpetuate his reputation by being the handyman that is “Omni-Present”. With this network of handymen, his loyal customer base will know his company as the one that always says “yes”. One of the many bottlenecks of handymen, is that since they are mostly busy doing the actual work, it’s hard for them to take on multiple projects…

One thing to understand about the market for handymen is that 80% (Give or Take) require the need to be met within 24 hours…that means, if Mark doesn’t have someone available, he looses out on that business.

What if they take work from me?: This is a question many contractors have. My solution to this question is to incentive the handymen to sell more work. Bring it up often and early. “Anything you sell, you get 75% I get 25% just like our agreement”

Now, instead of creating a potential competitor, or creating a divide - he’s creating salespeople out of his subcontractors that will be excited to offer more work or products knowing that they are getting ample reward from it.

The Money:

One of the pitfalls with this early on is that Mark has to understand that if he sells work himself, yes, he will be entitled to 100% of the Gross amount of the project.

Giving up 75% of his sales early on to a handyman might be tough…

However…

When he grows his network, he will be taking 25% from each handyman.

Here’s a real world example. Let’s say each handyman is able to generate a cap-out rate of $500 per day in Gross Income.

Including Mark, this is what he would make on a daily basis if he were to keep 100% of his earnings. However, he is trading his TIME that he could be using to network, market, and sell (Opportunity Cost)

• If he hires 1 handyman, he’ll be netting $125 per day (And have his time)
• If he hires 2 handymen, he’ll be netting $250 per day (And have his time)
• If he hires 3 handymen, he’ll be netting $375 per day (And have his time)
• If he hires 4 handymen, he’ll be netting $500 per day (And have his time)

It will take 4 handymen that he is adequately staffing for production to break even on what he could be generating for himself. If he has a network of 5 handymen working at full capacity, he’s now put himself in a position that leaves him better off (In terms of income) than he would be if he were doing the work himself.

Don’t forget the intangible resource that he gains either way: His time.

Thanks for checking out this Business Breakthrough! Mark found me on Reddit and asked me to assess and help with his business. If you’re interested in joining me on a Business Breakthrough, please reach out to me through DM.

If you’d like to see this episode and many more, shoot over to my IG where I share the episodes first as they come out.

Thanks r/sweatystartup & @mariusk!

 

[alexander5106954665]

@heyheyheynoname Why wouldn't he just become a property manager? It's basically the same thing.

 

[heyheyheynoname]

@alexander5106954665 Collecting rent, evictions, etc not the same

 

[yaroslavdonchenkofraud]

@heyheyheynoname Ya, what??

 

[secretsunlight]

@alexander5106954665 Definitely not the same, plus you need a broker's license.

This would make an ideal customer. Bigger property management companies have full time staff for handyman services but still contract out for bigger jobs like rehabs. It's nice scheduled work for when this last minute residential jobs aren't coming in.

Smaller property management companies can always use reliable handymen. Heck, they could given contract out to you for emergency services like clogs and lock outs so the tenants don't bug owners or smaller property managers without resources to support tenants.

You're also dipping into general contractor roles then as well if you go the bigger jobs route.

 

[alexander5106954665]

@secretsunlight I could see getting maintenance contacts from individual landlords. Charge a monthly flat fee and have a hotline/web form for the tenants with repair issues with a max spend before the landlord gets called to give approval. That way an individual could automate their landlording using online payment tools to collect payments and not have to worry about those 10pm phonecalls or dealing with a property manager.

 

[thewolfmotheracolyte]

@heyheyheynoname Good post. I’ll offer a few words of caution though.

If he’s going to sell leads, that’s a business with tons of competition from big players. The market is flooded with lead-gen middleman crap.

If he’s going to subcontract the work, then he’s acting as a general contractor. Exactly what that requires depends on local jurisdictions, but generally it means he will be responsible for his license, insurance, and bond, etc. AND he will also be responsible to ensure that his subcontractors have their own licenses, bonds, insurances, etc.

Ultimately, most problems that come up on a general contracting project will become the GC’s problems. There’s a lot of liability that 25% of sale price might not be enough to cover, especially on small, high-risk activities.

If the guy’s marketing is on point, he’s known for charging high prices and providing high value, and he gets about 10x as many leads as he needs, then maybe he can do it.

Good luck.