Startup Checklist: Creating a Profitable Handyman Business
If your neighbors regularly ask for your help to make home repairs or conduct general maintenance around their property, you might consider opening a handyman business. Homeowners and companies alike regularly need a repairman to come in and take care of maintenance issues that are causing havoc. As a result, your skills are in high demand, from unclogging drains to installing new doors or patching broken concrete.
But how do you go about creating a profitable handyman business? Knowing what steps you need to take to operate legally can be time-consuming and confusing. In this article, we’ve broken down the initial steps you need to take into a checklist to help get you started:
Step 1: Getting Licensed
As a handyman service, you can expect some red tape to get through at almost every level of government. You’ll need to get a business license at a minimum, but you may need other permits depending on the type of projects you’re working on.
To determine the necessary licensing, reach out to your local government first. Many municipalities and counties have a small business division or website providing this information. From there, check out the Small Business Administration’s site to find out how to contact your secretary of state or other agencies that regulate businesses in your state.
Step 2: Purchasing Your Tools
As a handyman, the scope of work you take on will vary greatly from day to day. One week you may replace a water heater, and the next, kitchen tile replacement. These projects require different tools, so making a list of what you already own, what you need, and the equipment you want isn’t crucial. This approach helps keep your expenditures under control until you grow your revenue stream enough for larger investments.
Also, consider the cost of leasing equipment you only need once or twice a year compared to buying it. It may be more cost-effective to rent it simply.
Step 3: Making Your Business Official
You’ll have to register your business name and get a license to make your new service legal. This makes you official with those who matter (the law) and may even give you protections if you wish to apply for trademark protections for your brand in the future!
One of the first decisions you’ll need to make when applying for a business license is its structure. As a handyman, you might prefer being a sole proprietor, the simplest form of business to register. If you want to build a company with someone else, forming as a partnership, corporation, or limited liability company (LLC) could be your best bet. Relying on an accountant or lawyer to help you choose the best structure may be best since they can explain the tax obligations and benefits of these business models.
Step 4: Your Business Needs Protecting
When you establish your handyman business, protect it at all costs. One way to do this is by getting business insurance. Many coverages are available to protect your livelihood against perils, such as lawsuits and injury claims that can devastate your service financially.
Some clients won’t consider hiring you without some of these policies in place. You increase your business risk significantly when you go to another person’s property to do your work. Who pays for the financial consequences if you do something that damages their home or you get injured? And how will they pay?
You’ll find that most cities and states require a small business owner, handyman services included, to have a commercial insurance policy. However, don’t just buy general liability insurance and call it quits! This type of insurance doesn’t cover every claim situation.
To better understand what protection for a handyman business is necessary for professionals in this field, we’ve broken down the most common policies for handyman services purchase:
Type 1: General Liability
The first type of business policy is general liability insurance. This coverage includes everything you think basic insurance would, including:
- Third parties bodily injuries (not your employees)
- Customer property damage claims
- Slander, libel, and defamation claims (defense costs are also included)
Type 2: Workers’ Compensation
Only one state out of fifty doesn’t require employers to carry this coverage. And if your handyman service operates in it, it’s still wise to purchase a workers’ comp policy anyway. Why? Because general liability doesn’t cover workers getting hurt or sick on the job.
Here is a list of things that workers comp will cover:
- Medical treatment for your hurt employee
- Lost income
- Personal injury claims alleging your company was negligent
Having this coverage can save your business from going under since workplace injury claims can receive up to several hundred thousand in compensatory damages.
Type 3: Professional Liability Insurance
An oversight in judgment can be costly. But, there’s a difference between professional errors and general mistakes. For example, installing a toilet incorrectly and causing water damage requiring floor replacement isn’t the same as accidentally dropping a tool and gouging someone’s hardwood floor.
General liability won’t cover the consequences when you cause damages related to professional advice or services you rendered. Instead, you need a professional liability policy to step in and protect your business instead.
Type 4: Commercial Auto Coverage
As a handyman, your work truck will be your second home and one of your most valuable assets. What would happen if it were to get into an accident on the way to a job site? What if your equipment and tools are damaged? How will you pay to get them repaired or replaced? Not your personal auto policy–think again!
Personal car insurance won’t cover auto accidents involving business-related activities. You need commercial coverage to provide your business with this protection instead. Commercial auto policies cover many unimaginable situations, including vandalism and theft!
Type 5: Insurance for Tools and Equipment
Let’s face it. It is easy for tools to go missing. Whether they get stolen, lost, or damaged due to inclement weather, this coverage option can help with the replacement and repair expenses. Some conditions must be met for the tools to be replaced, such as their size, age, and whether the loss occurred while transporting them to a worksite or not.
Step 5: Marketing Your Business
How will you convince customers to hire your handyman service if they can’t find you? Getting your business into public view is the final step on our checklist.
You can market your business in many ways. This may have already been on your mind during the planning stage of forming your company. Using multiple marketing channels will help you reach a larger audience of prospective customers, but it can also be quite costly if you don’t have a strategy in place.
Take advantage of free social media profiles, Google’s map, and online directory features. These platforms will help you connect with your preferred market audience at a minimal cost. Also, consider investing in a small website to showcase your contact information, services, completed projects, and client testimonials—some providers, like Card. Co offers free hosting and easy-to-use design tools for this purpose.
You’re On Your Way to Becoming a Successful Handyman
A lot of effort goes into starting up a handyman business. It’s not always easy, but it can be a profitable experience for anyone who is willing to dedicate their time to make it grow.
If you have decided that a handyman service is your calling, consider all the liabilities involved and plan a risk management strategy early in your career. Business insurance will be an important cornerstone in providing financial security for your business. From storm damage to workman’s comp claims, having adequate coverage will see your company through the tough times so you can focus on the future.
