How to Start a $250K/Year Handyman Business

  • by Brandon Boushy
  • 2 days ago
  • Blog
  • 0
Handyman holding tools

Are you skilled at in-home and business repairs?

If so, you might want to provide handyman services.

Caleb started North Seattle Handyman in 2017 and is making $250k/year with only one employee. He started his handyman business with $5,000 and has never had a month where he didn’t break even.

He shared how he started his business, and we’re going to share his tips with you. We’ll walk you through how you can start your own handyman business step-by-step.

What is a handyman?

A handyman is a person who does odd jobs like small repairs, home maintenance, hanging TVs, and other tasks that homeowners and rental property companies require to ensure that their properties stay in good repair.

That means most handymen will be working in the client’s home or business.

Working on someone else’s property has special legal requirements that you need to pay attention to during the beginning stages of starting a handyman business.

We’ll cover them in general terms as each state will have different requirements.

What type of work can a handyman do legally?

Each state has different requirements, but in general, a handyman can typically do jobs under $1,000 without a handyman license. If you plan on taking larger jobs, small business owners should check what their state’s requirements are on Next’s Handyman License Requirements.

Local contracting laws may also impact whether you need handyman licenses for smaller jobs. Go to your city or county’s website to establish whether you have local licensing requirements.

If you wish to do larger repairs, like home remodeling, or other services like plumbing, HVAC, or major electrical repairs, you may need a contractor’s license. As previously mentioned, your city or county will give you the best information about which license is better for you.

Caleb told us:

I have a general contractors license so that I can manage larger projects than most handyman businesses, but I make more profit on my smaller projects.

Do handymen need to be licensed? I wish I could give you a better answer to this and on how to get a handyman license.

Unfortunately, the spectrum of requirements is so dramatic that the best I can tell you is to use Money Lion’s links to the proper governing authorities for each state.

Skills required to become a handyman

A handyman measuring a piece of wood

When starting a handyman business, you should have a variety of skills because your potential customers will want to be able to contact you for any of the tasks they don’t have the time or desire to do.

Some of the most common client expectations of handyman business owners include:

  • Know how to find a stud
  • Anchoring bookcases, TVs, and other objects on a stud
  • Filling holes in drywall with spackle
  • Fixing loose tiles
  • Caulking tubs, sinks, and bathtubs
  • Fixing leaking faucets
  • Unclogging drains (with or without a snake)
  • Seal cracks in pavement
  • Change showerheads and toilet seats
  • Clean gutters
  • Change doorknobs, tighten hinges and replace door locks
  • Change filters
  • Building and replacing window screens
  • Painting
  • Basic electrical like changing light switches and electrical outlets

If you want to learn about how to do many of the projects a handyman works on, check out The Handyman Youtube Channel.

He has a ton of videos on repairs and other work he has done. I found him entertaining too.

Tools required to become a handyman

According to Smart Service, every handyman should have:

  • Claw Hammer
  • Tape Measure
  • Level
  • Utility Knife
  • Impact Driver
  • Drill Driver – Included in the suggestion for Impact Driver
  • Drill Bits – This includes drills bits and screwdriver attachments
  • Circular Saw
  • Recipro Saw
  • Flashlight – I’d suggest both a handheld and headlamp
  • Charging Kit – Included in other power tools
  • Shop-Vac
  • Screwdrivers
  • Wire Stripper
  • Pliers
  • Gloves
  • A vehicle that can transport everything. Look at work vans and trucks if you don’t already have one.

Now that you have a great list of tools you need to provide handyman services, let’s look at how much it costs to start a profitable handyman business.

How much does it cost to start a handyman business?

A man doing computations at his desk

If you have the tools and vehicle to start providing handyman services, the startup costs can be fairly low. Caleb told us:

I started my business with $5,000, which was primarily the general contractor’s license, a surety bond, and general liability insurance.

If you have to purchase the tools and equipment needed, starting a new business as a handyman may cost as much as $60,000 if you buy a new truck. Depending on the payment terms of a car loan, most of the extra cost could be spread out over 5-7 years.

Handyman startup pricing will obviously depend on your area of the country and local regulations.

Many handymen will be able to start a business with no special requirements, but places with higher-cost handyman business license requirements may be more expensive places to start small businesses.

How much do handymen charge?

When I researched “How much do handymen charge?”, this is what I found:

  • Self-employed handyman hourly rate: $50-$125/hour
  • Most jobs are between $65-$1200 with an average of $390
  • Common jobs may have a flat fee
  • Materials are typically in addition to the hourly rate

We asked how much Caleb charges per hour and he told us:

I charge $100/hr plus material costs. I found that was the rate that attracted clients that appreciate the work and can afford the service.

You can watch the entire interview here

How much does a handyman business make?

This is the part of every business that really matters: how much do handymen make a year?

Caleb told us:

I pay my handymen between $30-35/hr ($62,400-72,800/yr.)

According to the Bureau of Labor Statistics, Repair Workers tend to average around $40k/year. 

Because business best practices suggest keeping employee compensation (including benefits) at less than 1/3 of revenue, a handyman business should plan to make at least $120k revenue per handyman.

That’s consistent with what Caleb told us:

I’m making about $250k/year with me and one other handyman. We’re about at the limit we can handle without hiring another local handyman.

To further give you an idea of how much money many handyman businesses make, we asked Caleb how many clients he takes a day.

He told us “Each handyman can normally handle about 5 calls a day.”

Now that you know the basics of what you need to become a handyman, let’s dig into the process of how to start your own handyman business.

Identify the target market for your handyman business

A white notepad and cup of coffee on a desk

Every new business will need to establish who its ideal customers are. Caleb was the most informative small business owner we’ve talked to about who the potential customers are.

He gave us a list of potential target markets you may want to pursue when starting a handyman business.

  • Property management companies because they create business growth quickly due to the number of properties they manage.
  • Real estate agents because the buyers will frequently ask for small repairs that were noted on the pre-sale home inspection.
  • Homeowners in wealthy areas who are able to afford service calls that are $500+

He also told us:

I talked to a business consultant who recommended including Northern Seattle in my business name. That had 2 benefits, made it easier for my small business to rank on the first page of Google and narrowed down the area I service to between North Seattle and Mukilteo.

For those who don’t know the Greater Seattle Metropolitan area, it is approximately a 1.5-hour drive to drive from Olympia to Mukilteo, but only 22 minutes from North Seattle to Mukilteo, reducing the time sitting in traffic by 67% percent.

That makes it where each vehicle can take an extra service call or two per day.

I’d recommend doing the same if you live in a metropolitan area and constrain your target audience to a much smaller geographic location.

Keep reading to learn about writing a business plan.

What to include in your handyman business plan

A business plan will help guide your decisions and strategy if you want to start a profitable handyman business.

Exactly what you should include in it depends on whether it is just to guide your decisions, to help employees understand their roles in the business, and whether you are trying to get small business loans.

At a minimum, I would recommend including:

  • The business’ services
  • The business’ goals. Do you just want to make as much money as you can make on your own, or do you want to hire employees?
  • Who the ideal clients are. If there is more than one, you should break down each segment separately.
  • What you need to achieve before you can begin business operations.
  • Budget and funding-startup costs and how you will get the funding. If you need to take out loans, how will you accomplish that?
  • Naming the business – This is how companies will know your business.
  • Forming a business – All the legal requirements that you will have to meet to start a small business and maintain your handyman licensing.
  • Hiring employees (if you plan to) – What roles you will need to fill and how you will fill them.
  • Marketing Plan – Guides what marketing strategy you will use, including marketing materials, social media platforms, and a brand style guide
  • Operations Plan – Guides how the business will and will not operate, including customer relations, processes, vendor management, and employee management. If you are seeking funding or need the business plan to guide employee decisions, you’ll want a more in-depth plan. Here’s some free and low-cost education on business plans:
  • UpFlip’s blog on How to Write a Business Plan
  • SCORE’s free business plans and startup assistance resources
  • The Complete Business Plan Course (Includes 50 Templates)

I’d also suggest checking out our interview with Mike Andes on how to write a business plan.

Create a budget and obtain funding for your Handyman Business

Creating a budget requires financial discipline. You’ll want to estimate the costs that you will incur before starting your business and during operation, and you’ll want to include a miscellaneous expense amount.

Let’s look at each of these.

Startup costs for your business

While I have already given you an idea of how much startup costs can run, I feel like we should break it down into more detail. Here are the line items you should probably consider:

  • Cost of tools (if you don’t already have them): _______
  • Cost of work vehicle (if buying): _______
  • Cost of DBA in your location: _______
  • Small Business Insurance/Handyman Insurance (talk to your insurance company to see if they offer this): _______ How often is the renewal period?
  • Local Licensing: _______ Is there a renewal period?
  • State Licensing:_______ How often is the renewal period?
  • Cost of Commercial drivers insurance: _______ How often is the renewal period? Are you using your personal vehicle? If so, what is the difference between personal insurance and commercial insurance?
  • Cost of website and other software: _______ How often is the renewal period?
  • At least 1 month of marketing expenses:_______. If Caleb uses paid marketing, it’s $600/mo (read marketing section for more details.)

Operational Costs

Operational costs should be broken down monthly. Remember, you should assume best-case revenue is $120k/handyman. If you are just doing this for yourself, I would probably do a one-year analysis and return to it each year.

If you are trying to get financing, I would use a 5-year budget.

  • Any renewals mentioned above (add 3% each renewal period to protect against inflation):_______
  • Vehicle costs:_______ assume $.58/mile
  • Loan Payments (if applicable):_______
  • Employees: _______ Assume $40k per employee or 30% of revenue attributable to that employee (or more if you are paying higher than average wages.)
  • Sales tax: _______ Base it on your location and revenue estimates
  • Income Tax: _______ Assume 20% of revenue
  • Materials: _______ Assume 10% of revenue according to BPlans.
  • Miscellaneous expenses: _______

I created a mock income statement using:

  • Data Caleb gave us about his revenue and other expenses.
  • Assumptions from the BPlan link above.
  • Breaking it down for 1 and 2 trucks.

These were the results:

Operational costs breakdown of handyman business

If you can achieve these results (or better), your business bank account should be in good standing.

During the first year, meeting the $125k mark may be a challenge. Fortunately, you only have to make around $30k to break even, which should be completely achievable.

Funding your business

In the previous section, the interest expense was based on 10% of the total operating expenses. If you seek funding, you’d want to use either total operating expenses or (Total operating expenses + Direct cost of sales = Funding needed).

Common funding paths include:

  • Personal funds/personal assets
  • A loan from family or friends
  • Funds from a business partner
  • Government programs

The SBA offers free courses on financing options and funding programs. For info on using personal funds to start a business, check out this article from The Hartford.

Alternative sources of funding include:

Keep reading for tips on naming your business.

Select a Business Name for your Handyman Company

Next, you need to name your handyman company. Consider these questions while naming your company:

  • Does it describe what you do?
  • Is it easy to remember?
  • Does it prevent weird acronyms?
  • Is it available as a domain name? Check that the domain name and social media accounts are available with namechk.
  • Include your location/area you serve, as Caleb suggested.

Try the business name generator from Shopify and make sure it is available with the Business Name Search from Better Legal.

Get a domain name

You can buy domain names from the platform you set up your online store on, but if you want to spend money on it elsewhere, you can find domain names for as low as $0.88 at NameCheap.

Other providers include:

You can’t learn how to become a handyman without learning about the legal requirements. Keep reading to learn more about becoming a legal entity.

Become a Legal Handyman Business

Before you can legally work as a handyman, you’ll need to meet the legal obligations of your area. Depending on your location, you may require all of these, but the insurance and bonds are most commonly associated with major cities that have special contractors licensing requirements.

  • Business License/Contractors License
  • Business Insurance
  • Bonds
  • Business Formation
  • Apply for an EIN
  • Sales Tax Permits
  • Tax Filing and Withholding
  • Federal employment and labor law posters
  • Unemployment Insurance

I’d like to remind you that earlier in the blog, Caleb told us that his startup costs were $5,000, most of which involved this process.

Keep reading to learn more about each of these requirements.

Business License/Contractors License

A black binder and a calculator on a desk

The business license may be required on a state, city, or county level. The requirements will be different for each location. I provided information on the state level earlier in the blog. 

Unfortunately, there’s not a definitive source for local levels.

Just to give you an idea though, for jobs over $1,000 in Nevada (and jobs less than $1,000 that are part of a larger project, or involve HVAC, plumbing, or electrical work), the state Contractors Board requires:

  • Submittal of resume and references
  • Disclosure of financial records
  • Disclosure of criminal background (if any)
  • A commercial bond of up to $500k
  • Passing an exam on business law AND trade practices
  • $300 application fee
  • $600 license
  • Up to $1,000 annual payments to the consumer recovery fund

That means most of the jobs a handyman will do would need a contractor’s license in Nevada. In NV, you’d want to go for a general contractor license so you can handle any projects you want.

It might be tempting to run the business without a license, but that risks criminal penalties of up to 4 years in prison for operating as a contractor without a license.

Make sure to do online research on the following topics to make sure you follow the proper procedures:

  • Do I need a contractor license in (Insert your state)?
  • Do I need a contractor license in (insert your city)?
  • Do I need a contractor license in (insert your county)?

Business Insurance

Business insurance can be purchased from most insurance companies. I’d reach out to your current car and home insurance first as you may be able to get the insurance through them.

You’ll want a commercial liability policy, which will typically be $1 million occurence/$2m lifetime coverage, but some areas or clients may require more.

For instance, in my hometown of Las Vegas, MGM casino properties require $3m per occurrence. They also require $1m automobile coverage for contracts.

If you have a client that needs work done very occasionally that has these requirements, you can often change it for the length of the time it takes to do the job and reduce it again upon completion.

Bonds

Letters and coins on a desk

If you need a bond for a handyman business, you will need to get the details from the governing agency that approves the contractor licenses.

In NV, they require a bond agency with long-term debts that are A grade or a cash bond of up to $500k. I strongly suggest going with the bond agency.

Business Formation

Now is the time to establish the legal structure. For best results, hire legal representation that has experience starting a business, like an attorney, accountant, or tax specialist.

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to identify what your handyman company needs.

We have partnered with Better Legal to help you with the business formation process. Better Legal will set up an LLC or Corporation for you. Their services include:

  • LLC or Corporation Filing
  • Employee Identification Number
  • Operating Agreement
  • Banking Resolution Document
  • Free Website with Inventory Management
  • Free Business Checking Account
  • Free Tax Analysis
  • Business Specific Insurance Suggestions
  • Suggested Payroll, Benefits, and HR Platforms

They’ll help you get your business started quickly so you can focus on how to start getting clients for your handyman business.

Keep reading for information on different legal structures.

Limited Liability Corporation (LLC)

An LLC is the most common business structure used in the United States because the company protects the owner’s assets.

It’s similar to partnerships and corporations but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements.

People may register in specific states due to the cost of doing business. Delaware and Nevada are common states to file an LLC because of their business-friendly laws.

Here’s a post on the top 10 states to get an LLC.

Sole proprietorship

A sole proprietorship is the easiest way to become a handyman, but the structure doesn’t protect the owner’s assets from legal issues.

This structure should not be used because the handyman work includes work and materials that can cause injuries to employees, customers, or physical property.

To start a sole proprietorship, fill out a special tax form called a Schedule C. Sole proprietors can also join the American Independent Business Alliance.

Partnerships and corporations

Partnerships and corporations are typically for massive organizations or legal firms. Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC.

Investopedia has good information about partnerships and corporations.

Apply for an EIN

A notebook and pencil on a table

Every business operating in the United States needs an employer identification number.

It’s like a social security number for your business. Apply for it on the IRS website. It’s used on tax forms when filing taxes and to tie employees’ pay to the proper employer.

Sales Tax Permit

Most states have a sales tax, and you need to adhere to their requirements. This blog isn’t the place to discuss the permits for all 50 states, but Avalara has a guide on Sales Taxes. Check it out.

While you are learning about sales taxes, consider using AvaTax with Shopify Plus to make your tax compliance super easy.

Tax filing and withholding

Federal and state tax filing requirements apply to new employers. You must keep records of employment taxes for at least four years, including special forms and accounting for state taxes.

Don’t worry! We’ve got you covered! Check out the IRS guide for employers here.

Federal employment and labor law posters

All employers must display Workplace Posters, which you can download from the website.

Other requirements include:

  • Employment Eligibility Verification (Form I-9)
  • State’s New Hire – This is required so that people who owe child support remain in compliance
  • Worker’s Compensation Insurance- Insurance for when employees get hurt on the job. Check out this guide to state laws
  • Disability insurance – California, Hawaii, New Jersey, New York, and Rhode Island, and Puerto Rico have requirements. Learn more about disability insurance
  • Occupational Safety and Health Administration (OSHA) – Federal and state laws govern what are safe working conditions. Fines can be up to $136,532/violation or up to $13,653/day. Make sure you understand your area’s laws at OSHA.gov.

Unemployment Insurance

The U.S. Chamber of Commerce has a ton of information on unemployment and also offers links to each state agency that handles state unemployment.

You’ll have to pay $420 per employee on a federal level plus any state UI.

Let’s look at some tips on hiring employees to run a more profitable handyman business (measured in total dollars).

Hiring Employees

Hiring employees is primarily focused on hiring people who are skilled at the type of services you provide. Caleb told us:

If your employees aren’t making you money, then it’s not worth having them. In the Seattle area, you are going to pay each employee around 6k a month in wages and also have LNI and insurance for them.

When hiring a handyman, you’ll need to:

  • Post Open Jobs
  • Conduct Interviews
  • Establish Compensation
  • Manage Tax Filings and withholdings
  • Comply with federal and local labor laws

Keep reading for more info on each step.

Job Posting 

A board and a cup of coffee on a table

Hiring people requires posting “now hiring” signs and posting on prominent job boards. Some places you can start posting job requirements are:

Make sure to include the tools you expect them to have as well as the most common jobs they need to be able to do without guidance.

If you have to train them, you’ll be spending more time on each job as opposed to taking on more jobs.

Interviews

Having a prepared list of questions for interviews can make hiring the right people easier.

Indeed offers a variety of resources to help you make better hiring decisions. Read their guide on how to hire your first employee.

Some questions you should ask during the interview process include:

  • What handyman work are you most comfortable with? Least comfortable with?
  • If you have to use a tool you have not used before, what would you do to make sure you handle it safely?
  • How do you respond to a customer when you don’t know the answer to your question?
  • I intentionally left (something in the shop that needs to be repaired) needing repairs for this interview, can you walk me through how to repair it?
  • What are your compensation expectations?
  • Do you have any ongoing commitments that impact your availability? If so, what dates and times will it impact?
  • Do you have any points or DUIs on your driver’s license?

Check out Indeed’s list of questions to ask for more interview questions.

Compensation

Employees are typically a company’s biggest expense. There are three common pay structures in business.

Each fits different scenarios. Let’s take a closer look.

Salary

Flat weekly/monthly rate based on a person working a specific number of hours.

This is typically reserved for owners, managers, and some admin roles. You might want to assign this to yourself for budgeting purposes.

Hourly

This pay structure just tracks the hours an employee works and pays them a set hourly rate. This pay structure is solely based on time, not performance.

Commission

A laptop, iPad and a cup of coffee on a desk

Typically used in sales to give employees a percentage of revenue. It is a strictly performance-based compensation model.

Hybrid Models

Hybrid models combine two pay structures: for instance, hourly and commission to compensate for time and performance.

The hourly rate will typically be lower than an hourly rate without commission, but the commission should make it where good performing employees make more than they would without commission.

These structures also help reduce the variability of pay from week to week.

Paying employees an hourly wage works for most positions for clothing lines, but depending on your business structure, a commission or hybrid payment model might make sense.

The article, “How to Create a Pay Structure That Promotes Team and Company Growth” offers some insights into thinking about pay structure.

Outsourcing

If you don’t need a full-time employee, you can consider outsourcing or hiring a freelancer on sites like Upwork.com.

You may pay more per unit hour, but it saves you time in hiring, training, and other time-consuming activities.

Accounting and payroll are often prime targets for outsourcing because they can be done remotely on a weekly or biweekly basis.

Marketing a Successful Handyman Business

Caleb gave us a lot of great advice when it comes to marketing the fact that you provide handyman work.

He emphasized:

If you start a handyman business right now, you will immediately get real estate agents or people managing condominiums. I do direct-to-customer, that way, I can charge $100 an hour. I’m not using a 3rd party customer.

In other words, avoid using companies like Homeadvisor, Thumbtack, and other services that take a large cut for marketing.

You have to market your skills, define your skills. Anything from hanging TVs, installing faucets, to lifelong carpentry.

Share pictures of projects on social media and Google My Business.

Having a website is what has made the difference in my business. Having somewhere people can see me virtually increases my customer base about 1000 fold. We use branding on the side of the van, the website, and by doing a good job for the customers. I use Squarespace for my website. We have an online portal where the customer puts a bunch of information in for us. Our system is created to accurately quote based on emails and pictures.

In other words, create an awesome site using Squarespace or other platforms and integrate it with other software to make life easy. If you are going to build your own website, check out our blog on how to create a website.

We do a lot of things to stay relevant on Google. First, the website name. Our Yelp ads help keep it ranked. Second, we ask people to include the name North Seattle Handyman if they leave reviews on Google or other places.

Useful Software for Handyman Businesses

When a client is gets directed to my website, they fill out the info that gets put into a Google Form, and then we have a 3rd party software called Zapier that connects other parts of the business. It sends me an email, and then it also sends it to my customer management system, and that keeps everything in one place. So I can invoice, I can talk to the customers, I can schedule through that system which is Field Pulse. Those systems run around $100 a month. We use HomeWyse, it’s like having an estimating book in your car.

If Field Pulse doesn’t seem like the best CRM for you, there are a ton of Customer Relationship Management tools for handyman businesses. Jobber and Housecall Pro seem to be two that have high usage and good ratings.

Operating Your Own Handyman Business

A friendly handyman business owner

Caleb gave so much advice on operating your own handyman business that I think it is best to let his words do the talking.

Caleb on learning business skills:

Online tutorials are great, but I found having a business coach beneficial. You do have to spend some money on them, but they will help you make decisions you avoid making. (He uses Rebecca Ellison.)

Caleb on the early stages of business:

Freedom is the best part of being a business owner. You can make being a handyman into whatever you want it to be, I made it into a professional service. When you first start out, you can definitely do this with a pickup truck and a set of tools. Eventually, I think it’s a good idea to buy a sweet van. When I first started, I was going to charge $60-70 an hour, but friends in the business said I needed to charge more, so I did. I charge around $100 an hour. $100 an hour is perfect for middle to upper-middle-class clientele. When you first start, you are going to overbook yourself. You have to pay attention and revise your decision-making.

I hope you have found this information about starting a handyman service company as informative as I have. If you found this walkthrough useful, subscribe to our mailing list to keep up to date on how to start different types of businesses.

I want to leave you with the best three pieces of advice that Caleb can give you:

Get started, treat your customers like people, and systemize, systemize, systemize.

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