Starting any business is costly, so it’s important to fully understand the financial investment involved when starting a handyman business. My spouse and I had a head start when we began our handyman business because he already had the skills and most of the tools that he needed to do a wide array of maintenance and repair jobs. 

However, tools are just one financial aspect involved in the startup costs of a handyman business. In this guide, I offer my insights, strategies, and cost-saving tips based on my experience in the handyman industry to help you effectively plan and budget for the initial phase of your business venture.

Related: Guide to starting a handyman business

Research and Planning Phase

Market analysis and business plan development are essential during the research and planning phase. Without these steps, you won’t know if your handyman business stands a chance or how to plan a successful entrepreneurship.

Market Analysis

A market analysis is crucial to ensure a demand for handyman services exists in your area. Without demand, your business is destined for failure. Luckily, there’s almost always a demand for handyman services because nearly everyone needs maintenance or repair work on their homes.

Identify your target market in your area or other nearby areas. We lived on the Oklahoma border near three other states, providing a relatively large market area within an easy drive. A prominent target group is homeowners, primarily those lacking the time, skills, and/or tools to do various home maintenance and repair tasks. Busy professionals and seniors are often a target demographic within this group.

To build our business quicker and almost guarantee repeat business, we also targeted real estate agents and property managers or property management companies. A significant plus for our business was offering our services in a college town. When students moved out of campus dorms and apartment complexes at the end of each semester, the work came pouring in. Make-readies are highly lucrative if you can get your foot in the door and handle the workload.

The final part of your market analysis involves analyzing your competition and what they charge to help you set competitive rates that allow for a steady flow of customers and profitability. We searched competitors’ websites, social media platforms, and online reviews to learn what they offered and whether people liked/disliked their services to identify market gaps and the most sought-after services within the handyman landscape.

Related: How to set prices for a handyman service

Business Plan Development

Armed with a solid market analysis, we targeted the most lucrative opportunities before creating our business plan. While this step isn’t required, I can tell you that writing one is worth your time, especially if you’ll be seeking funding from a bank or other lender.

First, crafting a detailed business plan creates the foundation for your business venture’s success. We began by defining the services we’d offer and any areas of specialization. For example, my spouse already had many years of experience in interior and exterior house painting, enjoyed doing it, and had plenty of before and after photos he could share. Although many people think anyone can slap on a coat of paint, doing it correctly actually takes some knowledge, skill, and practice.

Your business plan should cover estimates of your startup costs and ongoing expenses to ensure you have enough funds to start your business and continue operating it until it becomes profitable. A nice plus of handyman businesses is the initial costs are relatively low compared to many other businesses, especially if you already have most of the basic tools you need like we did. Ongoing expenses include adding tools and equipment to your collection, licensing, and insurance costs, and marketing expenses.

The final part of your plan involves setting realistic revenue goals. Based on your market analysis and cost estimates, establish achievable goals that align with your long-term objectives. Whether it’s monthly revenue milestones or annual growth projections, these goals serve as benchmarks for tracking your progress and adjusting strategies accordingly.

Breakdown of Startup Costs

Breaking down the costs of everything you need to start a handyman business gives you a better idea of the overall investment required. The following list provides an overview of your initial expenses based on my experience.

Tools and Equipment

Investing in quality tools and equipment is crucial for a handyman because each item is necessary to practice your craft effectively. Items within this category include: 

• Basic hand tools (hammers, screwdrivers, wrenches, pliers, etc.)
• Power tools (drills, saws, sanders, nail guns, etc.)
• Specialized equipment (ladders, paint sprayers, basic plumbing and electrical tools, etc.)

However, you don’t need to spend thousands of dollars buying every tool you think you’ll ever need. We’ve spent years building an extensive collection of tools and equipment. Start with the basics and add to your inventory as needed.

Work Vehicle(s)

We began with a single cargo van equipped with a ladder rack but later added a couple of trucks with large toolboxes to transport tools and equipment to and from job sites. Depending on the types of jobs you do to start, you might get away with throwing your tools in a car trunk temporarily. However, I suggest investing in a proper work vehicle sooner rather than later. Expenses for your vehicle breakdown include: 

• Purchase or lease cost
• Insurance and registration fees
• Vehicle maintenance and fuel expenses

Licensing and Permits

Licensing requirements vary by state, county, and city, as do costs. You may need to register with the State before conducting business, and many counties and cities require a basic business license, regardless of the business.

Depending on where you work, you also might need a specialized trade license based on the type of work you perform and the dollar amount involved. While many states don’t require handymen to obtain a license, some municipalities do. Local governments may require you to purchase building permits for certain projects, though we typically pass this cost on to the client.

You must also choose a business structure or entity for tax and liability purposes. Many individual handymen choose a sole proprietorship or a partnership if they’re teaming up with another handyman. These are the simplest, lowest-cost entities but don’t offer you any liability protection. We began as a partnership but later formed a Limited Liability Company (LLC) to protect our personal assets.

Business Insurance

Protecting you, your business, and your assets is a must. Business insurance safeguards against unforeseen incidents, such as property damage, vehicle accidents, and incidents that cause injuries to customers or employees. Necessary coverage includes: 

• General liability insurance covers property damage or bodily injury to a customer.
• Worker’s compensation insurance (if hiring employees) covers medical expenses for injuries or illnesses that occur on the job.
• Vehicle insurance with commercial coverage covers vehicles used for business purposes.

To protect your growing inventory of tools and equipment, you may also want to purchase inland marine coverage (tool and equipment insurance) for repairing or replacing broken or stolen items.

Related: What kinds of insurance do handyman businesses need?

Marketing and Branding

Establishing a strong brand presence attracts clients. My previous work experience allowed me to lower some of our marketing and branding costs, such as building our website and designing printed marketing materials. However, most handymen should budget for the following marketing expenses to help showcase their services effectively: 

• Website development and hosting fees
• Printed marketing materials (business cards, flyers, vehicle decals, etc.)
• Online advertising expenses (Google Ads, social media ads, etc.)

Related: How to find handyman jobs

Administrative Costs

My previous work experience also allowed me to tackle many administrative tasks, saving us the cost of routine accounting services. However, we still paid for tax preparation assistance. Other administrative costs include legal fees for forming your business entity and communication expenses, such as postage, landline phones, management software, business cell phones, Internet access, etc. Even office supplies can add up, especially if you’re a self-proclaimed office supply junkie like me.

Cost-Saving Strategies

Some people advise you to only buy brand-new, high-quality tools and equipment because they’ll work better and last longer. I typically agree with this concept for tools you’ll use often or that need to be highly accurate. 

Tools you rarely use can be of lower quality, but some of these tools might surprise you. We’ve bought low-cost tools at Harbor Freight that lasted for years, even with regular use. Here are some suggestions for saving money when you’re starting out: 

• Rent Specialized Equipment: Use rental services for specialized tools and equipment you won’t need often, especially high-dollar items, to avoid an unnecessary investment early on. You can always purchase these items later once you have more business and need them more frequently.
• Share Equipment: Although we’ve never tried it, you can also consider splitting the cost of expensive equipment with other handymen and sharing it. One drawback of this strategy arises if more than one person needs the equipment at the same time.
• Buy Used Items: Secondhand purchases through local and online marketplaces can help you obtain quality tools and vehicles at reduced prices. We’ve bought several work trucks, trailers, and larger pieces of equipment, including a commercial lawn vacuum, paint sprayer, and Kaivac No-Touch Cleaning system, through Craigslist and Facebook Marketplace. Auctions and estate sales also provide outlets for potential bargains.
• DIY Marketing: While my previous work experience helped us cut our marketing expenses, it’s relatively easy to do many of these tasks yourself, even if you’ve never done them before. Save money by building a basic website using an affordable platform like WordPress or designing and printing your own marketing materials using Microsoft Publisher and a high-quality color printer. We’ve also used Vistaprint to order low-cost, professional-grade business cards.
• Networking and Bartering: Local networking is a must to expand your customer base. Forming partnerships with complementary businesses, such as real estate agents, is one of the best ways to receive referrals. Bartering may sound old-fashioned, but we’ve traded services with other small businesses for mutual benefits. For example, we once traded some flooring work for office cleaning with a local Merry Maids.

Related: How to start a handyman business while working full time

Financial Management Tips

Effective financial management is key to sustaining a thriving handyman business. In this section, I share practical tips for budgeting, pricing strategies, and cash flow management. Understanding these principles helps you navigate the financial challenges and ensure long-term success.

Budgeting is the foundation for financial stability in any business. I emphasize creating a detailed budget to outline startup and operational expenses. Additionally, I stress the importance of monitoring expenses closely and being prepared to adjust budgets as needed. This proactive approach ensures financial accountability and lets you make decisions quickly as your handyman business evolves.

Setting prices is one of the most challenging aspects of beginning a handyman business. There’s a fine line between underpricing and overpricing, both of which can cost you money and customers in the long run. Calculate your service prices thoughtfully, factoring in overall expenses, competition, and market demand. I also encourage new businesses to implement dynamic pricing models to effectively account for fluctuations in supply costs, market demand, and seasonal maintenance needs.

Related: Common mistakes made by new handyman businesses

Cash flow management is essential for the sustainability of your handyman business. I advise establishing clear payment terms with clients to maintain a steady cash flow and minimize late payments. Also, always set aside funds for taxes and emergencies to support financial stability during unforeseen circumstances. Exploring financing options for large purchases or unexpected expenses provides flexibility and ensures your business can continue operating smoothly even if you experience challenging times.

Is the Initial Investment Worth It?

Starting a handyman business demands careful planning, strategic budgeting, and dedication to growing a successful enterprise. By understanding the investment requirements, implementing cost-saving strategies, and practicing sound financial management practices, you can set your business up for success. Despite any initial challenges, the potential rewards of owning a thriving handyman business make everything well worth it.