Sunday, August 27, 2000

Who to do that fix-up job? A handyman can


Demand high, competitors few, but good work is essential

By Jan Norman
Orange County Register

        If you want to start a business with a virtual guarantee of low competition and more work than you can handle, forget the highly publicized, high-tech possibilities. Open a handyman service.

[photo] Arthur Neuman (left) and Marvin Belkin, co-founders of Springdale-based Handyman Connection.
(Dick Swaim photo)
| ZOOM |
        In the book, 101 Best Weekend Businesses, author Dan Ramsey ranks handyman service as number 7.

        These are the men and yes, a few women who don't scoff at patching a hole in the drywall, installing a ceiling fan or hanging a curtain rod. It's a growing niche within the $122 billion home-repair and remodeling industry. And demand is booming as fewer Americans have the time or skill to do such work themselves.

        But the real opportunity for handyman services comes from the industry's twin problems: unreliability and poor workmanship.

        Most professional handymen continually receives calls from frustrated property owners who can't even get a repairman to give them an estimate, let alone show up on time and complete the work properly.

        “The disreputable people really hurt the industry,” says Rich Panitz, owner of the Handyman Connection franchise in Orange, Calif. “A lot of our work is going in and fixing the work done by other handymen.”

        Handymen capture those small jobs that general contractors won't do, says Arthur Neuman, co-founder of Springdale-based Handyman Connection with 130 franchises in the United States and Canada. A big issue with this segment of the industry is that it's disorganized and full of people who don't treat it like a business.

THE BUSINESS
  Demographics

  • Number: Estimated 30,000 throughout United States.
  • Level of competition: Low. Most handyman firms have more business than they can handle.

 Necessities

  • Employees: Vast majority are one-person firms.
  • Plant/equipment: Majority are home-based. Requires wide range of tools from the basics (hammers and screwdrivers) to electric tools (saws, sanders, compressors and drills) to a truck.
  • Inventory: Virtually nothing is kept on hand. Generally, the customer provides the products (“Please install this ceiling fan I bought”), or handyman buys what's needed for each project.
  • Licenses and/or insurance: Business license in most cities; contractor's license not required, but some handymen get them to accept larger jobs and to emphasize their competency. Liability insurance and workers compensation is highly recommended.

 Income

  • Annual revenue: Varies because so many services are part-time or second businesses; averages $15,000 for part-timers, $35,000 for one-person, full-time, $150,000 for firm with employees.

  • Profit margin: 30 percent to 50 percent.
  • Owner's salary: Again, this varies widely, from $5,000 to $50,000, depending on size of company, level of expenses.

  Other considerations

  • Need for experience: Extremely helpful to have done construction, electrical or plumbing work in previous jobs, not just as hobby or odd jobs around the house; many handymen are former hardware store employees; a year working on the business side of a company (finance, marketing, management) is vital.
  • Pluses: Good work if you like dealing with people; no shortage of work if you're competent; variety of projects to do; you can solve problems and see tangible results of your work.
  • Minuses: You sometimes carry the burden of others in the industry who do an unsatisfactory job; collections can be problematic; work can be seasonal.
  • Franchise or business opportunities: Handyman Connection, Cincinnati (800) 466-5530, www.handymanconnection.com; 130 franchises throughout United States and Canada; franchise fee (varies by population of territory granted): $12,750 to $95,000; royalty: 5 percent of revenues; national marketing fee: 2 percent. House Doctors Handyman Service, Cincinnati (800) 319-3359, www.housedoctors.com; 200 franchises in 43 states and three countries; franchise fee (varies by population of territory): $11,900 to $29,900; royalty: 6 percent of revenues; advertising fee: 3 percent.

  Sources: business owners, franchisers, Entrepreneur.com

        “You don't have to be handy to run this business, but you do have to be a good business person,” Mr. Neuman says. “Our franchisees are former attorneys, bankers, stock brokers.”

        Mr. Panitz worked for 20 years in the electronics industry, including at Western Digital in Irvine, Calif. While he has done plenty of “honey-do” work, he runs the business now and has a group of 45 to 50 who go out on jobs.

        “Finding the right guys is hard,” he says. “We need guys with 10 years experience who can do two or three different trades each. If I doubled my staff, I might be able to keep up with the demand.”

        Handyman Connection is on the large end of the industry. This service often attracts people like Gary Sheldon of Orange who want a part-time or second business. The former general contractor and Home Depot employee has five main customers who call about once a month with lists of repairs and maintenance at properties they own.

        “There's more than enough work,” Mr. Sheldon said. “I could work six days a week, 10 hours a day.”

        However, many of the part-timers don't set up or run their ventures like businesses. They don't name their businesses. The phone number they give out is a pager or home phone with an answering machine message recorded by a 5-year-old child.

        They don't buy either workers compensation or liability insurance, which can leave customers on the financial hook if the handyman is hurt while working on their property, says Jonni Thomas, owner of JT All Maintenance in Tustin, Calif.

        “I do repairs for Bank of Yorba Linda, American Express and local property management companies, so I have to show certificate of insurance to get those jobs,” Ms. Thomas said. “I'm the only one I know who has a business license for every city I work in, as required.”

        While everyone alludes to the shortage of handymen, they can't hike their prices too much. Although some will only price their work by the job, the going rate is $25 to $50 an hour, generally cheaper than specialists such as plumbers or electricians.

        Replacement parts are extra and some handyman services charge for travel time, which tends to shrink the market they service but makes the most of the limited time they have each day.

        State licensing prevents many handymen from big price hikes or major jobs. They must give a written contract for every job over $300, and must have a contractor's license to do jobs above $500.

        The licensing is designed to protect consumers, but the wise handyman doesn't overstep his skills, says Scott Sweel, owner of Scott Sweel's Armorcoat and Handyman Service in Dana Point, Calif.

        “It's important to be honest,” he says. “I tell people in my ads and my business-recorded message that I'm not licensed. Then I refer them to someone else if I can't do the job.”

        Advertising does drive business growth, Ms. Thomas says. When she spent $12,000 a year on advertising in the mid-"90s, she had 10 workers, was working seven days a week and “had no life.”

        Now she spends half that much, mostly on direct-mail coupons and ads in local publications. She has two full-time employees and refers out jobs she can't do.

        “I do a lot of work for the Tustin Chamber of Commerce,” she says, “and most of my work comes from referrals and repeat business.”

        There's no better marketing tactic than quality work, says Mr. Panitz of Handyman Connection.

        “The home is one of the most expensive investments most people make,” he says. “If we do a bad job, they'll never come back and never refer us to others. Referrals are 30 percent of our business.”
       



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