Head-on with Handyman

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Demand has been building, and now Owens Construction is ready to attack the market.

April 01, 2000

Necessity proved to be the mother of invention for Bill Owens, who earlier this year started a separate handyman division to supplement his regular full-service remodeling business. Now that he’s taken the plunge, he knows he faces key challenges in marketing, pricing and staffing the business. But the advantages of offering the service so outweigh the obstacles that he anticipates strong and profitable business.

"I’ve been researching the idea for several years to see if it was right for us," says Owens, CGR, president of Owens Construction Contracting Co. in Powell, Ohio. "As I looked into it, it evolved into something that we had to do because it would satisfy both a client need and an internal organizational need."

 

The Man for Handyman

Patrick McCafferty has his work cut out for him in managing the new HouseWrights, but he relishes the task. Hired earlier this year to head up the new one-man business, he says he’s comfortable with all the aspects he’ll be called on to handle: selling the job, estimating, doing the work, billing and collecting - all on one visit.

"I think all that will come quickly," he says. "My biggest area of focus will be to put in systems to ensure things run smoothly and that the business stays on track as it grows. We hope it will grow quickly so I can hire additional staff, and we need to be sure the operations are in place. Good organization will be the key to success."

McCafferty worked for five years with his father in his own business before deciding to go out on his own and hook up with Owens. His background includes a stint in the military as well as time in banking prior to joining his father’s company.

He’s now working on his bachelor’s degree in business. "He really fits the bill for what I need in a manager," says Owens.

Both are sure that once McCafferty gets his legs, the business will take off. "There is a great demand for the work already, as is proven by the calls we get from past customers to do small jobs," McCafferty says. "We also get a lot of inquiries from people that we have to turn down. All we need to do is turn those calls into jobs and build on that foundation."

A marketing consultant has been hired to help both Owens Construction and HouseWrights maximize their images, Owens says.

"Right now, we’re proceeding cautiously, because we don’t want to overcommit. So Pat will handle it from the ground up now and we’ll expand from there. But properly marketed, we’re confident it will take off."

Its increasing value comes in its ability to solve a growing problem from Owens’ philosophy of handling small jobs of any type for past customers who request them. This can include a wide range of jobs, including replacing a window, hanging a shelf, changing kitchen-cabinet knobs, or wiring a ceiling fan.

"We’ve never actually replaced a light bulb, but we’ve done about everything else," he says. "And our production guys were getting more and more flustered by being pulled off big jobs to handle fill-in and smaller jobs."

Some remodelers might agree whole-heartedly with the production guys. But Owens argues strenuously that taking on small jobs benefits remodelers focused on bigger products. First, some of the small jobs are required under warranty coverage. Others supply unrelated after-project service to satisfied customers. All of them serve as a tremendous marketing benefit that shouldn’t be viewed as simply low-profit or distracting work, he says.

"We have tracked leads and know for sure that smaller jobs often lead to larger ones for the same customers," he says.

About 95 percent of the company’s business comes from repeat and referral business, and the small jobs keep the company’s name front and center with customers who recommend them to others. "We’re providing a service more than a product," he says. "If remodelers would look at their handyman services as a marketing expense as well as a profit center, they’d realize it’s the best marketing they do - and one with possibly the best payback."

Remodelers’ lack of interest in working around the challenges of establishing a handyman service surprises Owens. "So many businesses are looking for a strong service to offer customers, and homeowners can’t find anyone willing to do small jobs and do a good job with them," he says. "We’ve definitely found that doing jobs well leads to bigger jobs. Once you get your foot in the door and reassure them that you can execute, they’ll have you back."

But pulling production-oriented contractors from large jobs to do small touch-ups and such was dragging down morale and hurting efficiency. So Owens decided to create a separate division called HouseWrights at a stand-alone location closer to the main area being serviced. Initially, it will be run by Patrick McCafferty, a new hire who will serve as manager/contractor and perform all duties. Ultimately, as work grows, additional field staff will be added.

 

Bill Owens hired Patrick McCafferty to serve as manager/ contractor and perform all duties for HouseWrights.

Owens sees a number of strong markets for such a service beyond his existing customers, markets that won’t require additional advertising. These include the real-estate market, which requires both pre- and post-sale construction jobs of various types on most home sales. The handyman service also will provide another strong benefit: allowing specific tracking on Owens’ own warranty work.

"HouseWrights will handle all our warranty jobs, and we’ll bill back costs to Owens Construction on each project," he says. "That will separate out the jobs we’ve been handling and apply a cost to them so we’ll see how much the business actually can make for us." This work also will allow the company to track the types of warranty work it performs and analyze areas where problems recur. That will enhance quality control and help eliminate similar call-backs that may go unnoticed in the current system.

Owens realizes he’s adding significant overhead by setting up the division in a separate locale with its own staff, requiring more profit to keep solvent. As is often the case with smaller jobs, pricing remains paramount for the division to succeed. "We’re playing with pricing options now, and it may vary based on the size of the job and the amount of material that goes into it," he says. He hopes to maintain the company’s net profit of 9 to 11 percent, which he calculates will mean hitting a gross profit of 30 percent.

Rather than marking up labor, materials and other elements as would be done on larger jobs, Owens currently prices the jobs by singling out the labor cost. He applies a larger markup to the cost, since most handyman jobs require fewer materials compared to larger projects. But he also must keep the projects competitive.

"How we determine markup will depend on the type of job, so it will vary," he says. "But we’re aiming overall for a 30 percent gross profit." Overall, he’s envisioning a basic $60 rate for the first hour and $40 for additional hours.

Ideally, time and costs will be cut because most handyman jobs can be handled in one call. This requires the service person to sell the job, estimate it, do the work, bill it and even get paid on the site.

"Most heating and cooling companies have handled this type of work very effectively," he says. "They present this to their customers as a one-stop job that saves them time and effort." Jobs of sufficient size will be referred to the construction side, to be estimated by a sales person.

The manager is the key to making such one-stop service possible, Owens says, and he thinks the service is in good hands with McCafferty. But as it expands, McCafferty will move into managing the work and additional field people will be hired, making the tight labor market a critical issue.

"It takes a well-rounded person to handle all the things that might come up as jobs," he says. "It does concern me if the market has people of that capability who will want to do these jobs. Too often, we take our staff for granted and don’t realize how many talents we require them to have. I hope by concentrating on this need and not taking it for granted that we’ll be able to meet the staffing needs."

The upside is well worth the challenges that may come, he adds. Whether it operates as a profitable entity on its own, Owens is sure the handyman service will provide several key benefits. It will improve company morale while enhancing quality by keeping lead carpenters focused on big jobs and tracking recurring problems. It also will provide additional name recognition for the Owens brand name and supply additional service to customers, resulting in more referrals and repeat business. And if priced properly, it will add profit on its own.

But it also will aid the company by allowing the whole to be more than the sum of its parts, Owens says. "We want to be a clearinghouse for all our customers’ needs," he says. "We want them calling us first because we can either help them with what they need, coordinate the work for them,or direct them to where they need to go. We know our customers are buying an experience from us more than a specific product, so the more opportunities we have to provide them with a good experience, the more chances they’ll give us to work with them."

 

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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.
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Owens Construction Contracting Co.

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