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My Monthly Report – June 2012

Welcome to my seventh monthly report!  This marks my seventh month in business.  I write these reports each month and tell the story of my handyman business startup life.  In them, I include how much money I made the previous month, the advertising sources of that income, and other insightful tips and tricks I learned during the last 30 days.

I share this information to help handymen and other service providers to grow or start their own  businesses.  Through my trials and tribulations, I hope to save others some of the stress that comes with the startup life by showing them what works and what doesn’t.

The month of June was a very interesting month.  Business was slower than expected, I started experimenting with some new marketing strategies, and I even got in trouble with the state contractors board.  Not fun.

Interesting Events and Random Tips

Normally I start this section off talking about what a great month I had.  This month wasn’t so great and I had a few setbacks.  However, I think this happens with all businesses so I’m not letting it get me down.  Each month I learn something new that makes the next month easier and more enjoyable.

Don’t Sweat an Open Schedule (Part 2)

For the first 6 months of my handyman business I experienced a steady growth in revenue and profits with my handyman business.  This month that changed and I made less money than last month.  I don’t know what it was, but the phone just wasn’t ringing.  I don’t know if everybody was just on vacation, or what.

In May’s monthly report, I talked about why you shouldn’t worry when you have an open schedule.  I definitely needed to keep that advice  in mind during June because my schedule was wide open.  Despite my attempt to stay positive, a lot of negative thoughts where running through my mind.  I started to seriously doubt myself and my business.  I even considered lowering my hourly rate thinking that my customers weren’t calling because they found me too expensive.

Finally, toward the end of the month things started picking up and I landed a couple of jobs.  As it turns out, I was just in my own head. Despite the fact that I had experience slow times before, it was still very difficult to stay positive.  I did a lot of worrying and in the end sitting there worrying about it didn’t help anything.  I should have just went out and enjoyed the time off.

Since then things have picked up and I now have a positive outlook again.  I’m ready to kill it this month and have my most profitable month yet!

Getting Stung By the Contractor’s Board

In addition to a slow month, I also had a run in with the authorities.  While driving home from a job, my phone rang.  When I answered everything seemed completely normal.  The guy on the line claimed to be starting a new business called “Matt’s Furniture” and needed a couple of small rooms painted.

As it was explained on the phone, I thought I was going in to quote a small painting job.  When I arrived, the guy (so called Matt) seemed a little off.  He was unnatural in the way he spoke and I should have picked it up.

As I entered the completely deserted and bare walled 6,000 square foot office, I knew right away that this job was bigger than what I can do without a painting contractor’s license.  So, I immediately let him know that I was unable to complete this job as the job value was clearly over $1,000.

Thinking that I was doing the right thing and was completely legit, I was prepared to go on with my day.  Matt then asked for my business card and upon handing it to him, he stated that he was with the state contractor’s board and he was going to cite me.

Perplexed, I immediately asked why.  I hadn’t submitted a bid for the job and was following all the rules.  Well, so I thought.  Apparently, I’m not allowed to list painting or any other trade related skills in any of my advertising without a contractor’s license.

“So, I’m allowed to do a painting job under $1,000 but I’m not allowed to advertise it?”  I asked.

“Yep” he said in a smug little voice.

“Well that doesn’t make any sense.  How am I supposed to get customers?”  I continued.

“You can advertise as a handyman.  If the customer asks you to do a painting project, you can say yes.”  Matt said.

Now I don’t know about you, but this doesn’t make any sense to me.  I’m not going to go on a political rant because that isn’t the point of this blog, but this is a little ridiculous.  I checked the entire contractor’s board website and it mentioned nothing about this little detail.  The only thing I found was a law that you cannot advertise as a licensed contractor without a license.

I wasn’t claiming to be a licensed contractor so I think the contractor’s board was wrong to cite me.  I talked to an attorney he said I have a really good shot at winning if I decided to take it to court.

Which is exactly what I’m going to do…(to be continued)

Angie’s List Experimentation

One of the things that I plan to do for this blog is to test different marketing strategies, discuss my results, and provide my overall opinion on the effectiveness of the tested advertising.  Since I’m a one-one band at the moment, I’m going to limit my testing to one new method at a time.

At the moment, I’m testing a paid listing with Angie’s List.  Basically, I’m paying about $83/ month to come up first or second anytime a member of Angie’s List in my area types in the keyword “Handyman” or “Handyman Services.”

If you aren’t familiar with Angie’s List.  It’s a membership website where homeowners pay a yearly fee to gain access to reviews and ratings of local service providers.  Supposedly they attract a higher end clientele because of the fact that they charge for access.  It seems to be the closest thing to “word of mouth advertising” on the Internet at the moment.  When a customer submits a review of a contractor, handyman, or other service provider, they fill out a “report card.”  The report card includes an overall rating, price rating, professionalism rating, as well as a comments section.  It’s a very thorough report that members can use to evaluate different services before hiring.

I think this is a little funny, however, because Angie’s List claims to their members that businesses can’t pay to be listed with Angie’s List.  However, I’m paying to be listed at the top of the list!  Nice.

I signed up about halfway through June and am now working on getting some more reviews to help sell my services.  So far, I have received one lead that ended up working out well.  I’ll be sure to post more info on this as I gain experience.

Income and Expenses

Income:

  • Existing Customers:  $1,695.15
  • Craigslist leads: $545
  • ServiceMagic Leads: $920
  • Website and Online listings: $370
  • Referrals: $622

Expenses:

  • Direct Job costs: $874.03
  • Advertising: $277.96
  • Vehicle Mileage: $222
  • Uniforms: $118.49
  • Phone: $69.82
  • Tools: $252.88 ( bought a new drill)
  • Insurance: $94
  • Mailbox Rental (6 months): $126

Total Income:      $4,152.15
Total Expenses:  $2,035.18
Net Profit:             $2,116.97   (last month: $3,678.72)

This is the first month that my net profit actually went down.  While I am a little disappointed in this, I’m not really concerned.  As I write this post, business has picked up quite a bit and July is looking like it will be a good month.  I think June was just a small bump in the road toward a very successful handyman business.

Taking a look at the income numbers, you can see the importance of keeping your customers.  Existing customers is by far the highest income category for me the last two months.  By building relationships with my customers I’m slowing building my income each month and essentially giving myself a raise (well, not this month).  I never had this option at my desk job as I was always paid exactly the same regardless of how hard I worked.  Just another little bonus of being a business owner.

My Handyman Hourly Rate

I kept track of my hours this month again so I could continue to evaluate how accurately I’ve been quoting customers.  My target for billable hours is currently $40.  Setting a goal of $40/hour has really helped me avoid underselling myself.  While I didn’t make as much money as last month, I also worked way less hours and the result was an increase in hourly rate.

Billable hours:  65

Income from labor = (Total Income) – (Materials x 1.25) = $3059.61

Hourly Rate = $3059.61/65 = $47.07

Monthly Goals

Last Month’s Goals:

Last month I set 2 goals.  One goal was to make $40/hour and the other was to gain insight on a potential product offering.  I pretty much dominated the hourly rate goal but it was at the expense of some business.  I had several leads that I lost due to my pricing.

Most of the jobs that I lost were for smaller jobs under $100.  I believe it’s actually worth it to lose these customers that are only price shopping.  In the long run, they probably won’t be profitable customers, anyway.  Sticking to your price is a great way to filter out customers that are less than ideal.  The only problem is when you need the money, it can be hard to lose business due to pricing.

While you may get more customers in the short term by charging less for your services, in the long run I think this can hurt a handyman business financially.  Since you won’t have enough time to focus on building relationships with your ideal customers that are willing to pay for quality services, you won’t be able to charge top dollar and your efforts will be wasted on less than ideal customers.  Instead, focus on the people you want to work with that are willing to pay you what you’re worth.

This Month’s Goals:

Goal #1:  Have a net profit of over $3,000

I’m still going to continue to charge $40/hour, but this month I want to focus on the end result a little more.  I want to actually make some good money again.  This may be a little tough, however, because I took the first week off for a trip to Idaho to celebrate the 4th of July.  I’m really going to have to work hard and follow up with customers to reach this goal.

Goal #2:  Get at least 4 A rating reviews for my Angie’s List Profile

The main thing that Angie’s List members look at is the reviews you have.  I currently have 4 reviews and in order to maximize advertising dollars, I’m going to need some more reviews to hang with the current Angie’s List competition.

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  • Steve V July 17, 2012

    Big-D,
    You mention that your state prohibited you from doing plumbing and electrical and you’re capped at $1000, so what types of jobs your preforming on a weekly basis? Do you find yourself specializing in a certain thing or many different types of small jobs?

    Steve

    • Big D July 19, 2012

      Hi Steve,

      Most of my business right now comes from smaller jobs including screen repairs, door repairs, window repairs, appliance repairs, fence repairs, TV mounts, painting, drywall repairs, and many more. Every once in a while I’ll get a small flooring project or a job to build some custom shelves which I enjoy.

      I do think that specializing in something can be a good idea, however. Right now my specialty is that I can take care of almost any repair excluding electrical and plumbing. Many people like that the fact that they only need to call one person for the majority of their home repairs. Once you gain their trust, they call you back on a regular basis.

      I hope that helps.

      Big D

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