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How Much Does It Cost to Start a Handyman Business? (Sales Forecast and Breakeven Analysis Included)

How to Start a Handyman BusinessWith as low as $5,000 or even lower, you should be able to start a small-scale handyman business especially if you will be operating the business from your home or a shared office or a virtual office.

It is important to note that you can also spend over $50,000 to start a standard handyman business with employees working for you. This goes to show that some key factors can determine the total budget of starting a handyman business.

A handyman business is service-oriented and provides a range of repair, maintenance, and improvement services for residential and commercial properties. This includes tasks such as plumbing, electrical work, carpentry, painting, and general property maintenance.

So, if you are looking to start a handyman business, you should first acquire the required technical skills before drawing up an estimate of what it will cost you to start the business.

Estimated Cost Breakdown for a Handyman Business

  1. Business Licensing and Permits: $500 – $2,000
  2. Insurance: $1,000 – $3,000 annually
  3. Tools and Equipment: $5,000 – $15,000
  4. Vehicle: $10,000 – $25,000
  5. Marketing and Advertising: $2,000 – $5,000
  6. Software for scheduling, invoicing, accounting, and customer relationship management (CRM): $500 – $2,000
  7. Office Supplies such as Stationery, mobile phone, laptop or tablet: $500 – $1,000
  8. Initial Operating Capital: $5,000 – $10,000
  9. Training/Certification Courses: $500 – $2,000
  10. Legal and Professional Fees for business structure setup, contracts, legal advice, financial planning and tax advice: $1,000 – $3,000
  11. Uniforms and Branding for Team: $500 – $1,500

Total Estimated Cost for Opening a Handyman Business: $26,500 – $69,500

Sources of Income for a Handyman Business

  1. General Repairs and Maintenance such as fixing leaky faucets, repairing broken windows, or patching holes in walls.
  2. Installation Services for homes and businesses
  3. Renovation and Remodeling Projects such as bathroom remodels, kitchen makeovers, or the conversion of spaces.
  4. Painting Services including touch-ups, full-room repaints, or exterior home painting
  5. Assembly Services such as furniture, outdoor equipment for both residential and commercial clients
  6. Safety Modifications for elderly or disabled clients, such as grab bars, wheelchair ramps, and stairlifts.
  7. Home Improvement Consultations
  8. Seasonal Services such as gutter cleaning, snow removal, or preparing homes for winter or summer.
  9. Emergency Services for issues like burst pipes, storm damage, or lock replacement
  10. Contract or Subscription Services
  11. Specialized Services such as electrical work, plumbing, HVAC maintenance, or landscaping. These require specific skills or certifications but can significantly increase income potential.
  12. Technology Integration including thermostats, security cameras, and home automation systems. As homes become more tech-centric, these services are increasingly in demand.

3-Year Sales Forecast and Breakeven Analysis

Year 1: Establishment and Growth

If your handyman business strives to take up 10 projects per month with an average revenue of $500 per project in the first year.

  • Annual Revenue: 10 projects x $500 x 12 months = $60,000
  • Cost:
    • Fixed Costs (insurance, marketing, software, office supplies, legal fees, etc.): $15,000
    • Variable Costs (materials, fuel, subcontractors, etc.): 40% of revenue = $24,000
  • Total Costs: $15,000 (Fixed) + $24,000 (Variable) = $39,000
  • Net Profit: $60,000 (Revenue) – $39,000 (Total Costs) = $21,000

Year 2: Expansion

If you can increase project done by 20% and average revenue per project by 10% due to experience and reputation growth.

  • Annual Revenue: 12 projects * $550 * 12 months = $79,200
  • Cost:
    • Fixed Costs: Slightly increased to $17,000 (expansion of marketing and maybe hiring a part-time admin)
    • Variable Costs: 40% of revenue = $31,680
  • Total Costs: $17,000 (Fixed) + $31,680 (Variable) = $48,680
  • Net Profit: $79,200 (Revenue) – $48,680 (Total Costs) = $30,520

Year 3: Maturity and Stability

If project count increases by another 20%, and average revenue per project increases by 10%.

  • Annual Revenue: 14.4 projects x $605 x 12 months = $104,544
  • Cost:
    • Fixed Cost: Increased to $20,000 to account for additional tools, insurance, and potentially renting a small office.
    • Variable Cost: 40% of revenue = $41,818
  • Total Costs: $20,000 (Fixed) + $41,818 (Variable) = $61,818
  • Net Profit: $104,544 (Revenue) – $61,818 (Total Costs) = $42,726

Breakeven Point

The breakeven point is when total costs equal total revenue

  • Fixed Costs per Month: $15,000 ÷ 12 = $1,250
  • Variable Cost per Project: Assuming 40% of the average project revenue, which is $500 x 40% = $200
  • Revenue per Project: $500
  • Contribution Margin per Project: Revenue per Project – Variable Cost per Project = $500 – $200 = $300

Breakeven Point (in number of projects per month) = Fixed Costs per Month ÷ Contribution Margin per Project

= $1,250 ÷ $300 ≈ 4.17 projects

So, in the first year, the business needs to complete slightly over 4 projects per month to break even. It is important you note that actual financial results can vary significantly based on numerous factors, including market demand, cost control effectiveness, and operational efficiency.

Factors That Influence the Cost of Opening a Handyman Business

  1. Your Choice of Location

When we talk about the location of a business, we are not just talking about the physical address of the business, but about everything that the location of the business brings.

Of course, you know that the location of a business will determine how much rent or lease you will pay, how much you will spend on labor and employment, operational costs, and utilities.

For example, if you lease an office and storage facility for your handyman business in a busy business district, then you will spend more compared to someone who rented or leased an office or storage facility outside a major city or in a less competitive place.

  1. The Choice of Facility

Even though you have the choice of starting your handyman business from a small office space on a street corner, it is important to note that to start a standard handyman business, you are expected to rent, or lease an office facility that has a storage space for your materials, tools, equipment, and supplies. 

  1. Your Budget for Equipment and Supplies

The budget for your equipment, tools, and supplies is a major factor that can influence how much it will cost you to start your handyman business.

As expected, if you are planning to start a handyman business, then you must purchase a cordless drill, hammer, screwdriver set, adjustable wrench,

Tape measure, utility knife, pliers, level, saw (hand or power), tool belt or toolbox, ladders, safety gear (gloves, safety glasses, etc.), first aid kit, and service vehicle or transportation.

  1. Licensing and Permit Requirements

You cannot legally start a handyman business in the United States of America without having the basic licenses and permits which can include a:

Business license, trade license, home improvement contractor license (in some states), zoning permits, contractor’s license (if required by state or local regulations),

Handyman license (if applicable), sales tax permit, home occupation permit (if operating from home), Federal Employer Identification Number (EIN), and local permits for signage or advertising (for storefronts).

Note that there might be other permits or licenses that are unique to the city or state you want to start your handyman business hence you should make your enquiries from the nearest local government or county office.

  1. Your Budget for Training and Education

The whole idea is that if you are looking to start a handyman business, then you should have a budget for training and education.

This is so because handyman the business requires specialized training and skills and the amount you will spend to acquire handyman skills can significantly influence the overall cost of starting the business.

For instance, training for a handyman business involves completing vocational courses in carpentry, plumbing, electrical work, and general home repair.

  1. Your Budget for Insurance

The need for insurance for a business is not just all about complying with state regulations but protecting the business owner, and the business from claims, accidents, and unforeseen events.

In essence, if you are planning to start a handyman business, then you must make plans to purchase at least some of the basic insurance coverage for a handyman business.

Insurance policy coverage such as general liability insurance, professional liability insurance (errors and omissions), commercial property insurance, business interruption insurance,

Workers’ compensation insurance, equipment breakdown insurance, employment practices liability insurance, and environmental liability insurance are some of the insurance coverages you should consider.

  1. Your Budget for Marketing and Branding

If you are planning to start a handyman business, then you must create a robust budget for marketing and branding that covers your website, the designing of a logo, printing your business cards, and other promotional materials.

Even though there are no specific costs attached to marketing and advertising a business, the bottom line is that if you want to launch a handyman business that will win a fair share of the available market in your location, then you must be ready to invest a significant amount to promote your handyman business.

  1. Your Budget for Staff and Labor

Starting a standard handyman business with the capacity to deploy your services at the highest levels means that you must be ready to hire competent people who would help carry out the day-to-day activities.

You should be able to hire a licensed handyman, office manager, customer service representative, estimator/quoting specialist, field supervisor, accounting clerk, and marketing coordinator.

The truth is that, no matter the level you choose to start your handyman business, you must make provision for staffing and labor costs even if it is for casual laborers,.

  1. Miscellaneous

When we talk about miscellaneous for a handyman business, we are referring to a budget that covers unforeseen expenses such as:

Vehicle maintenance, fueling, licensing and permit renewal fees, tool and equipment repairs or replacements, advertising materials, insurance deductibles, and unexpected business costs.

Although your budget for miscellaneous for a handyman business might depend on the extra money that the owner of the business has to spare, it is indeed an important factor that can influence the cost of starting a handyman business.