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Growing Business

 
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Old Yesterday, 03:04 PM   #1
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Growing Business


Hey guys, looking for a little wisdom. The business is growing. I'm a handyman. Simple stuff mostly, everything from assembling ikea furniture to repairing fences and replacing garage door openers. I don't take on re-models. But I want to start growing the business beyond just me. Subs are an option a preferable one to me. I don't want to manage employees. I work in a lot of high end homes. Where the clients trust me on a personal level. We talk about eachothers kids and whatnot.

Just yesterday I had a client with a 1million dollar house(in my neck of the woods that's 4x the median I know out in Cali y'all call that a shed) call me and the project required 2 guys. It was last minute and we made it happen same day.

How would y'all go about charging for 2 guys? Much of what I do I charge hourly. I do bid some stuff out.

So when I'm on my own I charge $60/hr This allows me to be generous with any mistakes, offer a good warranty and pay for overhead. I'd like to go up but I want the business to grow and so I intend to keep pricing suppressed for as long as I can.

The guy I brought with me I pay $25/hr. He's probably smarter than me. and definitely works harder. Should I be charging $120/hr on projects that take 2 guys since they'll get done twice as fast? just go to $90 and make the $5 spread? Should I charge $80 and only make $55/hr personally to keep my rates down(he is working harder after all )? I can't be still charging $60 right?

Ideas and input much appreciated!
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Old Yesterday, 04:14 PM   #2
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Re: Growing Business


A man hour is a man hour is a man hour. Of course you charge $60 for him and $60 for you.

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Old Yesterday, 07:07 PM   #3
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Re: Growing Business


You should be looking to generate AT LEAST a thousand dollars a day in revenue for a two man team.

If you have a $25.00 an hour employee they likely cost $30 to $35.00 per hour in wages, taxes, payroll costs and medical. If you pay 30% of revenue in taxes (And you will), that means to make money on that employee he needs to personally generate $3k per week in revenue. At that rate you might earn $500.00 to $1000.00 a week on his labor.

If you are breaking even on the employee why are you assuming the risk of having an employee?

Also, subbing out handyman work is insane. You want to be the middle man between cheap customers with small jobs and low skilled under capitalized subs? Had a local company grow fast in my town about five years ago. Lots of branding, lots of trucks. Out of business in 36 months due to lawsuits. They charged 90$ an hour and subbed out everything.

Handyman involves an enormous skill set and all of the tools, low profit and high risk. Remodel involves a somewhat smaller skillset and all of the tools with higher profit and lower risk. What happens when your $25 an hour 'sub' doesn't tighten the fitting on a dishwasher and you have to replace the floor, and the cabinets, oooh yeah gotta remove the granite top and put it back in one piece too. If you have a legitimate subcontractor who charges legitimate rates you will be covered; not so with an under the table 'sub.'
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Old Today, 05:36 AM   #4
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Re: Growing Business


Quote:
Originally Posted by Jay hole View Post
A man hour is a man hour is a man hour. Of course you charge $60 for him and $60 for you.

is this guy a carpenter , or a helper , or laborer?
you really can`t charge your same wage if he has no skill at all
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Old Today, 08:10 AM   #5
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Re: Growing Business


Ok, your answers definitely bring up some holes I left in my story.

Right now my business is just me. I'm not busy enough for an employee and frankly the added difficulty of payroll & taxes for an employee hardly seems worth it. I would love to grow it up to needing one but right now I don't have the margin in my time to add all the extra back end work.

The guy I hired to help me with this project is a friend. He's very talented and skilled in many areas. He's not a handyman, his trade is structured cabling but he's competent in many areas.

You presume I want "low skilled undercapitalized subs" why is that?

I'm well aware of the extensive skill set needed to be a handyman. "What happens when your $25 an hour 'sub' doesn't tighten the fitting on a dishwasher and you have to replace the floor, and the cabinets" The same thing as if an employee did it. Except I use HIS insurance. Again, what's with the "under the table sub" commentary?

Correct me if I'm wrong but I feel like my post suggested I'm working with high end clients and need high end sub contrators.

Why not remodeling? mostly because that's not my trade. I don't know anything about constructing things. I can fix what's already there like nobody's business but ripping out a bathroom and putting back a new one? I could do it. I'd do it to my own house. But thats just not my job, it isn't what I do. It's like asking a doctor to check your teeth because dentists are doctors too.
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Old Today, 08:11 AM   #6
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Re: Growing Business


Quote:
Originally Posted by woodspike View Post
is this guy a carpenter , or a helper , or laborer?
you really can`t charge your same wage if he has no skill at all
He's highly skilled, but the task at hand didn't require skills just another body. So that kinda complicates it. He needs to make what he needs to make but my client could have gotten it done cheaper. But probably not the same day.
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Old Today, 08:39 AM   #7
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Re: Growing Business


I always charge based on their skill level; laborer, skilled trade, supervisor, etc.
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Old Today, 11:21 AM   #8
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Re: Growing Business


Quote:
Originally Posted by ConantHandyman View Post
He's highly skilled, but the task at hand didn't require skills just another body.
There's your answer. Doesn't matter if he's a rocket surgeon, what he brought to this particular table was the ability to hold up the other end of a board. His pay and your billing should be commensurate with that.
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Old Today, 03:07 PM   #9
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Re: Growing Business


To get your pricing on the right footing I suggest you approach things like a mature contracting business would. Separate the cost to do the work (even when it is just your labor) from what your business needs to cover overhead and profit. Even a modest business like yours must pay for things like insurance, vehicles, bank charges, admin costs etc… AND your business needs to make a profit.

Looking upon your wage for doing the work as profit to the business is what causes confusion when other things like materials or other people’s wages are involved. Most contractors would determine their price by adding a mark-up percentage onto their cost to do the work. Up to now you have been charging $60/hour. Consider this as the sum of two amounts. Something for your labor (less than $60/hr), plus something for mark-up to pay overheads and profit. They add up to $60/hr.

You need to determine what that mark-up percentage will be. Your experience as you price out jobs (win some, lose some) and market conditions in your area will be the thing that determines what is a reasonable mark-up %. For arguments sake let’s say the value of your labor alone is $45/hour. That means up to now the business had been marking cost up by $15/hour or 33% ($15/$45 = 33%).

You now have a rational way to price your future work. Add up the cost to do the work (your labor, other labor, materials, sub-trades, tool rentals etc…). Multiply that by 1.33 (or use the percentage you believe is appropriate). That also deals with the question of whether you charge for the skill of your helper or the value of the work they did. You would charge for what that person costs you plus a mark-up.

Now, don’t feel that this is written in stone. There is no law that says you must charge exactly what your mark-up formula tells you. If you think it is reasonable to charge more, you can. If you need to charge less to get the work, that’s OK up to a point. But remember, that markup isn’t all profit. You need some of it to pay those overheads, so simply getting paid for your job costs plus a few dollars is a poor way to make decisions.

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