Today’s show is about handyman services and its business difficulties.
Daniel Felt of Kura Home shares that they ventured into providing handyman services for more than a year. While it was booming it also encountered manpower and financial challenges. He mentioned that one of their major challenges is managing expectations with their clients. He talks about the miscommunications they had with clients and the creative ways of addressing them.
Reuben sought advice for homeowners who are looking to hire a handyman. Tessa inquires about the hourly rates of handymen and the charge for materials. Bill asks about how Daniel drew franchise agreements with local companies.
Daniel also updates about the five ancillary services in addition to Kura Homes’ routine maintenance package.
Reuben and Daniel are sponsors of a radio program The All-Around Home Improvement Hour on Talk Radio AM 1130 every Saturday at noon.
TRANSCRIPTION
The following is a transcription from an audio recording. Although the transcription is largely accurate, in some cases it may be slightly incomplete or contain minor inaccuracies due to inaudible passages or transcription errors.
Bill Oelrich: Welcome everyone. You’re listening to Structure Talk, a Structure Tech presentation. My name is Bill Oelrich, alongside Tessa Murry and Reuben Saltzman as always, your three-legged stool coming to you from the Northland, talking all things houses, home inspections, anything else that’s rattling around in our brain. Well, welcome to today’s episode. We are excited to have an old friend on the show, Daniel Felt, owner of Kura Home Maintenance has agreed to join us for a deep dive in conversation about handyman services. How is it going, Daniel?
Daniel Felt: It’s a beautiful day here in Minnesota. How are you doing Bill?
BO: Awesome, awesome. Yes, it is a beautiful day. It’s bright, it is warm, it is windy, and I couldn’t think of a better June day. Reuben, Tessa, maybe you guys are not lovers of blue sky and warm weather, but I’m not sure.
Tessa Murry: I love blue sky, but I do not do well in the heat, and for anyone that’s listening, it’s in the 90s today in Minnesota. It does get hot here.
Reuben Saltzman: In other words, you could say it gets really awesome. [laughter] I love the heat. I just can’t get enough of it. I don’t mind it a bit. Tessa we could never live together.
TM: No, we need two different zones for sure. I get so… I get frustrated easy when I get overheated. Like my patience goes from a level 10 to level zero very quickly. I’m not a fun person to be around when I’m overheated.
RS: Oh yeah, I’ll have to remember that for our next meeting like better control that thermostat.
TM: Keep it cool. [chuckle]
RS: Well, dress warm… I can dress warm.
TM: There we go. That’s… I like that.
BO: Tessa, what’s it like in the cold, do you freak out in the cold as well, or?
TM: No, I don’t freak out in the cold. See, you can always put on layers, but you can’t… When it’s so hot like this, you get to a limit and I just… That’s when I panic.
BO: It’s official. Tessa has transferred all ties to other geographical locations, she’s now from Minnesota. She says, “I can put on more layers at any point.” I mean, what the hell? Viewers…
TM: I love the cold. I do.
BO: It’s got its place. Alright, we digress. Daniel, how’s it going in your world? Been a while since we’ve last talk, probably over two years.
DF: Yeah, quite a while. I’m a frequent listener, but I think third time guest here, so it’s an honor to be on with you guys always. We’re busy on a personal front. My wife and I are expecting child number two, but we’re really busy. We really focused a lot on growth. That might be one reason why I haven’t been on with you guys, 2021 was a really adventurous year for us I should say, and I was talking to Reuben about it when the opportunity came up to talk. We launched a new division in 2021 and it failed and Ruben was like, “I love that, can you be a guest on the show?” So we launched a handyman division. The 30,000 foot view is… We did $424,000 worth of handyman work between February 2021 and November, and we had to close it down. It was not profitable. And Reuben and I both felt this would be impactful just in our network of speaking with home inspectors, we always are hearing people say, “Oh, we should start a handyman division,” and for this reason, that reason and…
DF: But through those failures of offering the service to other locations, we have switch miles up, we actually closed… We have opened a few locations and we close them down, they just weren’t profitable, and so we’ve twitched. A really important thing for people to know that I learned the hard way is that craftsmanship is not scalable. It’s really, really difficult. And what Bill, and Tessa, and Reuben, if us three or us four here, if we all took a minute to write down on how we define what a handyman should do and we all held our list up, it would be four very different lists, and that was very difficult to duplicate between our locations. So we’ve been very busy, we… Sometimes it’s a little embarrassing as a business owner to say you failed but if we can help one person build their business in a different way, or maybe they can do it better than we can, I hope we can help them all today.
RS: Well, I feel like it’s easy enough for you to admit failure in this one department when you are just smashing everything else that you touch.
DF: Thank you.
RS: Let’s talk about your company for a second. For anybody who hasn’t listened to some of Daniel’s previous podcasts, I think this is still fresh in my mind. Daniel and I, we were just heading yesterday, we did the radio show together, that’s why I feel like it hasn’t been that long ’cause we do the radio show together all the time.
DF: Right.
BO: Can you define what the radio show is for everybody who doesn’t live in your box.
RS: Yeah, there’s a local radio show here called, “The All Around Home Improvement Hour.” It airs on Talk Radio AM 11:30 on Saturdays from noon to 1:00, and we’re both sponsors of the show, which means we come on like once a month or something like that, and sometimes we’ll be guests at the same time, so we get to see each other. It’s always fun when I’m on with Daniel. But then yesterday I was hosting the show, the radio hosts they both had these conflicts, so I ended up hosting the show and I’ll tell you what, I love podcasts. [chuckle] Doing radio where just the mic is live and you are on the air and there’s no do-overs… Oh my goodness, that is so stressful.
BO: I personally love seeing Reuben out of his comfort zone for what I think is the first time ever. I’ve seen you publicly speak Ruben, I’ve seen you and listened to on many podcasts and all these things, and I love seeing you out of your comfort zone, it was… Honestly, I didn’t think it existed, but there is an out of comfort zone Reuben out there, and it was… I was the first guest on with him while he was hosting, so that was… It was fun. He’s human everyone.
RS: Yes. Yeah. And I instantly sweated through my shirt, and I’m like, Oh, this is so high stress. But, let’s say, I think I gotta freshen off in my head to kinda say it what Daniel does basically. He’s got a whole maintenance company where they take care of all the little stuff that people don’t wanna do. It’s things like adding salt to your water softener, cleaning out the filters and the intakes on your air exchanger, changing your furnace filter, cleaning your air conditioner, cleaning the coils behind your refrigerator, just…
RS: They probably got a list of about 30 different things they offer, and you hire them to come out, they go through your house and then they get their iPad and they show you a list of all the stuff you’re supposed to be doing on your house, every one, two, three months and they say, “This is what you need to do. Which of these would you like us to do?” And you just check the boxes and then they say, “Okay, great, we’ll be here every three months and we’ll get all that stuff knocked out for you,” and it is just a fantastic service for anybody who’s busy. You don’t have time to do all this stuff. If you’re retired or whatever and you love working on your own house, they’re not for you probably, you probably have time, but if you’re a busy parent, you’re running kids to sports all the time, whatever, Daniel’s company is for you. That’s where you call Kura Home.
TM: Last time we had you on I think you said 50% of your business was duct cleaning. Is that still the case?
DF: Yeah, yep. So we have, to date, we have about 600 routine maintenance clients that we’re visiting once a quarter doing everything that Ruben perfectly explained, and then the other 50% is air duct cleaning and we started air duct cleaning after we were doing dryer vent cleaning for our routine maintenance clients, and they were like, “Oh, so you must also clean air ducts.” And we were referring so much business out that we decided to do it on our own and we bought a machine, it was horrible, so we reinvented the way we did that, and now we’re really happy with the system and the process that we use. So yeah, it’s still roughly 50% air duct cleaning, they really grow in tandem, which is really nice as a business.
BO: And COVID is probably a good experience for that part of your business simply, ’cause people were spending so much more time in their house and all of a sudden those little nuisance. What do you call those little dust puny things that fly around the air there, like get these things out of here now.
DF: Yeah, exactly. A lot of people… So our business in March of 2020, we were running four crews, and by August of 2020, we had nine crews running full-time, and we had launched into Denver. COVID was crazy for us, we learned that we can add a crew every Monday, we did that three Mondays in a row in June of 2020. It was really crazy, and obviously that’s not done alone, so you have a team of people similar to you guys, that’s just team of rockstars killing it out there. And it’s really fun to grow, and it’s kind of in our DNA, I feel like we just… We all love growing and yeah, it was… COVID was very healthy for our business, a lot of people were spending time at home, and then between doing construction projects and creating dust, but then also we’re home now and we should get some of these things done that we wanna do or we’ve been way too busy to do, and I’m working from home, so I’ll have the contractors come in.
RS: Back to Daniel’s success, they’ve grown a ton here in Minnesota, but he started franchising his company and now he’s opening up Kura over the country. Where are you so far, Daniel?
DF: Yeah, so that’s the goal, we are in Minnesota and Denver, and we had Dallas and Atlanta going as well, but due to personal issues and quality and the handyman stuff, which we’ll get into, we had failed, but we are 99% away from giving a territory away in Florida, we’re awarding a territory. So we run a few locations and due to quality and just watch that Google Reviews tick down, and for me, it wasn’t worth it, it’s not worth it to make a dollar and have upset clients. So we decided to ultimately close those due to personnel issues in a few locations.
RS: Okay. Point being, your business is very successful, this is just a new venture, kind of a side hustle that you had went into and it didn’t work out, and I wanna hear the whole story because like you and I were just having a side conversation, it was just fascinating. And a challenge that we have as home inspectors, so much of the stuff that we write up, the right person to come take care of this would be a handyman. You got a loose gutter, you’re not gonna call a gutter installer, they don’t wanna touch it. You got a loose shingle and you’ve got a door that needs to be painted, whatever it is, you’re not gonna call a full-blown general contractor to do this stuff, you want a handyman, and we have always struggled finding great handymen or women for that matter, handy people should we say? Is tht the right term?
BO: Yeah.
TM: That’s good.
RS: Handy-persons. We’ve had a hard time finding great people to refer for all of this, and after my conversation with Daniel, it really kind of shed some light on why it’s so challenging to find good people, and why just about everyone we ever refer is a one-man shop. It seems like it’s just not a scalable business, and we’re gonna talk a lot in generalities today, I know there’s gonna be some people listening today and they’re gonna be like, Well, “I’ve got a 10-person handyman company, it’s working.” Good for you, give us a call and tell us what you did to make it successful. We’d love to hear about it, but I don’t know of that really happening. Everybody I know is a one-person shop. So that’s just kind of building this up. Daniel, I wanna give you the floor and talk us through it a little bit.
DF: Yeah, for sure. I think similar to anyone that’s running a business and thinking about adding handyman services, we were rocking and rolling with our maintenance program, that’s kind of a snowball effect for clients, just keep signing on and we still service client, number one, so that’s exciting. And the ended up cleaning… Tessa to your point, was going really well, and now there’s so many people are Googling handyman, Reuben, you just made the point that they’re missing out. So in February of 2021, we put an ad out, hired a full-time handyman, we got a guy who’s extremely experienced, he had 30 years, and I’m like, “Okay, this would be great, maybe we could run a crew or two.”
DF: We sent out one newsletter and instantly we were booked out two months. It was book… Booked to the wazoo ’cause we’re running a business, so we’re answering our phone, we’re answering emails, texts, incoming social media messages. And so it was just like, boom, boom boom boom you’re booked. So this guy, which bless his heart, is like, “Well, I have a neighbor who can help you out too,” and so we’re like. “Okay.” Within two weeks we were running two handyman crews.
DF: And so that’s going, these guys start doing work and they are in the beginning doing good job and all of a sudden we’re like, “Okay,” this was maybe March or April, we’re running now three crews handyman. It was super super fast, and we’re kinda trying to catch up and we’re getting actually to Reuben’s point, people are searching for reputable handyman companies that’ll answer the phone, show up when they’re supposed to show up, this basic business things. And we’re rocking and rolling, at the time we were operating in Dallas and Atlanta as well, and we got a few accounts that were really large accounts through Habitat for Humanity, for example, where they’re like, “Hey, we need you to flip a house,” and one example of this is like, “We need you to flip a house, we’ve budgeted 12 grand for this, it’s a 1500 square foot house, and it’s like just paint the rooms, put new carpet in, new cabinets and here’s what it is.”
DF: And for me, I’m not like the best business person in the world, but I know what a P&L is, right? And so I’m looking through this and we’re running the margins and it’s like, okay, we should make… There should be an extra $2500 at the end of this, when we’re all done. If we do in the amount of time, add in a 10% to 15% like buffer or whatever, and the problem is you get there and it’s like, you start filling up a dumpster and you fill the second dumpster that was in that 12 grand. And you’re like, oh my gosh, We need a third one. And a third dumpster is $495. And then all of a sudden, like the cabinets are wrong or one was damaged, right.
DF: And so you get the wrong order. You have to go and cabinets are out a day and you had two guys there doing this stuff and it so rapidly sucks out the profit margins. And we’re growing so quickly that we’re trying to do this. So then, so you’re rocking and rolling for a few months and it’s like going well. But then all of a sudden, the work that you were doing is customers aren’t… Also they’re not satisfied. Because, if we punch a hole in the Sheetrock here behind us and repair it, all four of us on this call are gonna have a different expectation of exactly what that looks like. So it’s like, okay, I need a really good Sheetrock guy. So now we get people specialized, but to fix and repair Sheetrock, we’re looking at about three visits. So I need to charge about $450 to make up for these visits and no one’s willing to pay that either.
DF: So the problem is you’ve got me involved, insurance companies, a client care coordinator, answering phones, vans and things like that. So we ended up, we did $424,000 worth of handyman work between February 2021 and November. And I spent 408,000 on labor and materials. So we lost a lot of money doing handyman stuff. And we tried almost every single creative way that you could think to pay people on commission, hourly, all the things, job… Time on the job. We tried to be really creative on all of it and we couldn’t make it work due to inefficiencies. But one of the hardest things to manage as someone who really like cares about their brand, every day you see me, I’ve got my logo on my shirt and you know it’s my baby right?
DF: Started it on my garage in 2016 to keep up with these customers’ expectations it was basically impossible. And you show up on a job site and the person’s like, “Look at this, this is the worst… Like you call this professional.” I’m like, I feel like I’m looking at brand new perfect construction. What are we looking at here? And she’s like, “This tone is way off.” And the guys are like, she signed off on the stain. I don’t know. What do you do? Like it’s so it was really, really complicated to deal with that expectation where for routine maintenance yes or no, did you change the filter? You know what I mean? We… There’s no, there’s no arguments here, right? Yes or no, did you put smoke alarm batteries in, it’s, so much easier to manage customers’ expectations because here’s what we’re gonna do, here’s the list and it’s a relationship.
DF: So it was extremely challenging. I would define handyman as Cowboys is the best thing in trying to manage 11 Cowboys. We had 11 Cowboys at one point out there doing it. And at one point in Dallas, our guys felt bad for someone and they charged her… They were on the job site for six hours to change a ceiling fan and they charged her $125. So we lost colossal amounts of money. And it was, we tried to, we tried as fast as possible to get it going and my project manager quit, midway through and it was extremely, extremely challenging. So I think that the reason why you see so many, one man show handyman things is because they can charge a hundred bucks an hour or 60 to a hundred or 60 to 150, whatever they’re charging.
DF: And when it’s a one man show, you can control your quality. You can control your schedule. You have so much control over these things and you can control your skill level. So I might be able to say that Jim can do an incredible job at Sheetrock. And Jim’s like, “I never said that”. And we’re like, “You just did a really good job yesterday on Sheetrock.” He’s like, “Yeah, but I don’t like doing it. I don’t wanna do it anymore. So I’m done doing that. I’m not doing that job today.” And it’s like, “Jim, like, come on, you’re killing me, man.” I’m like, now all of a sudden, my other guy who was good at Sheetrock and he’s like, “Well, I didn’t dress for Sheetrock today.” It’s like, [laughter], you’re killing me. So extremely challenging Ruben, to your point. Like, could someone else do it better probably. Right. I’m sure there’s people out there who are incredible business people and they’re doing a really good job, but it’s one of the most challenging things I’ve ever done in my entire life trying to properly manage a reputable handyman company.
BO: Hey, Daniel, I’m not surprised it would go south in Atlanta. I mean, just getting from point A to point B in Atlanta’s no joke. It’s how much time you lose in a van or whatever going from the box store, back to the house to try to get this work done. It makes complete sense to me. I mean, I personally looked at this model and thought it needs to be a hyper micro model. Literally you need one handyman for a particular neighborhood, and then they can bounce around the neighborhood effectively. If you’re asking somebody to go from the Southwest side of town to the Northwest side of town, or even, Northeast to Southwest it’s just too much time in a vehicle.
TM: And also like what you said too Daniel about, just the scope of the projects that you were taking on. There’s so many variables. And so many of those variables are out of your control. How do you…
BO: They feel like handyman stuff.
TM: How do you plan for that? Yeah. How do you manage that?
DF: Yeah, so we, what we tried to do is create a list of things we were willing to do. And so we had a really nice Excel file with a list of everything that the company is willing to do, and then we have the guys actually like, you know, check an X, well, if it’s something that you feel you can professionally do, which means that you’re willing to let someone pay you to do this, and you’re gonna put your word behind it. And so the guys would check it off. And I literally, had them sign off. When I say, I feel like we tried everything I mean it, and so really try to like specialize on, “Hey, like you’re gonna be our Sheetrock guy, like you’ll tape and mud and Sheetrock… You’re our expert Sheetrock.” And it’s crazy ’cause you look at it and it’s like, this is an expert job.
DF: And people would be like, “Oh, we’d talk to someone and be like… ” And they’d even sign off a customer. Right. And to get into a story of a customer, be like, “Can you help me tape and mud or Sheetrock tape and mud my bathroom?” “You bet. Come on give an estimate.” And the guy’s like, “But when you guys come here, I’m gonna have everything demoed. So you don’t need to worry about any of that.” “Okay. Sounds good. So sign it off, we can do it for whatever.” I forget the exact price… Let’s say like 450 to do this and you show up and the bathroom’s not demoed, and it’s like, okay. [chuckle]
DF: And now, we actually, you he’s mad at us that we… He’s like, “You didn’t include demo in the bid?” We’re like, “No, we didn’t. Because you said you were gonna demo, you said you were gonna demo over the weekend. That’s why we’re here Monday morning to get the project done for you.” He’s like, “No, this is absurd,” and lose their mind, like bad review. Keyboard warrior, like this is absurd and it’s like, you signed off that we were just gonna come in and it even says in the notes, bathroom will be demoed, all construction debris removed. We’re coming into a nice, fresh, clean slate here, and it’s not the case. And so like, things like that, you’ve got managers in place and all these things and it’s like, I’m dealing with it. It comes all the way up.
DF: And at the time we have 52 employees, so I’m trying to manage all this. And it’s like, how do I deal with this guy that said one thing and now his brain is in a completely different spot two weeks later when we’re actually on the job? Very difficult. But another problem that we run into is if you have someone, if you have person A come out and give an estimate and person B shows up to do the job, we found that a majority of people would try to… The verbiage would change when, what was being said. And so, our solution to that is we would record with the customer like, “Hey, will you just, I’m just gonna record exactly what we’re gonna do here. And will you just stand behind me and confirm?” And so, we’d stand there with it and we’d record and say, “Here’s everything we’re gonna do and Susie’s standing right here just to confirm all that. And here’s what we’re gonna do for the scope of the project.” And they’d be like, “Yep, sounds good.” Hit end record. And we’d be on the job site. And she’s, “I did not say that, nuh-uh.” And we’re like, “It’s, we’re not Photoshopping or editing this video at all. Like, this is the video that he texts me for the exact scope of the work.” So we tried a lot of creative things to get into, to really try to figure it out. And it was very challenging.
BO: Language is not something that’s easily… One word to me might not be the same to you. And I’ve experienced that firsthand dealing with complaints. People would be like, “My contractor said this and blah, blah, blah,” and you get out there and it’s nothing of what they’ve said. And then you have to go through that process of educating. It’s like, “Well, this is actually a air exchanger. It’s not a, this. And what you stated was wrong isn’t really what’s wrong, but this is, and can we kind of come to some solution,” and you just, you spend so much time in conversation. Mainly because people were not misled, they just had a different expectation. And when you’re managing expectations, that becomes so difficult. How big of a problem was it? Where you’d get there to do one thing and then all of a sudden they’re like, “Oh, before you leave, can you look at this real quick? Can you tighten this nut and stop this leak?” And then the next thing you know, there’s water spraying everywhere.
DF: Yeah, that was for sure a pretty big issue of one thing turning another. Usually it was just the fact of like, as long as you’re here, can you also do this? Wasn’t so much where like we’re creating more work, but that definitely did happen Where you, take off something or like tile, for example, like the, you never know what the last guy did. And so that was challenging. A lot of it was mostly a customer seeing what we’re doing and like, oh, as long as you’re here, please, additionally, can you come into this room and also replace this door or do things like that. And then, so the guys would be like, “Yeah, sure.” And they were all way too nice, especially when they were being paid hourly. And so all of a sudden at the end of the day, we’d be billing, four or $500. And the guys clocked in for 10 hours and today a technician with a van that’s insured and all the things you’ve gotta be doing about 125 per hour you’ve gotta you can’t just be giving away free stuff. And it, it would creep very, very fast, but there’s no consequence for the technician. And even on commission, they’d be like, well, yeah, sure. Like I don’t wanna have this awkward conversation and it’s easier, especially in Minnesota, Minnesota. Nice. Easier to just say, “Yeah, I’ll do it for you real quick.”
TM: One thing you said earlier, Daniel, that stuck out to me was that, and I don’t know if this was in a different state, but you were, doing like, almost like projects, like a general contractor would handle, like being hired by organizations to come in and do a whole slew of things. And I think that’s really interesting, like you’re, almost kinda walking this fine line between like handyman and like general contractor at that point. And do you think that’s because there’s just such a shortage in skilled quality trades people out there to do the work that these organizations and other people are looking for, like a handyman to fill those, those roles?
DF: Yeah. I think there’s a really a huge gap of people willing to do like the two plus hour, like two to like two and a half day, three day projects ’cause…
TM: Okay. Yeah.
DF: Like the little thing of, like, come hang a photo, right? Like that’s pretty like a neighbor can help out a lot of times or your father father-in-law whatever. Right. But it’s these like two to two and a half day projects where a general contractor doesn’t even… Well, they don’t even look at. They won’t even bid it and…
TM: It’s not profitable. [laughter]
DF: Yep. Not profitable for these larger companies, some of them had like 1200, 1400 homes underneath their management and they’re flipping like 10 to 12 a month. They’re wanting us to take care of that. A one man handyman show it’s that’s way out of his scope. Like he’s like, there’s no way I can do that. And it probably wouldn’t even be a good business decision for him anyways ’cause now all your eggs are in one basket. If they decide to stop using you, you’re out of business. So yeah, there’s definitely a huge gap in the market for people that can to do, but it makes sense because for someone like me, who I do love doing weekend projects at my own house, don’t get me wrong, but I can’t do it for everyone, but I can’t… I can’t run a business doing it.
DF: There’s so few people that are willing to pay the price that is actually needed to do these jobs. And it’s just not profitable by the time you go out, you do an estimate, you go and do the materials. Even the amount of people like between the difference between Chrome and satin or whatever on a faucet handle. I mean, oh, you got the wrong one. I know I said Chrome, but I meant satin and okay, well I guess I’ll just take this 45 minutes to go back to Home Depot that I’m not really billing you for. And that’s just one, the list goes on and on and on of like how fast it is that your profit margin is just gone.
BO: People don’t budget for repairs, they budget for projects, right? When you’re gonna do a kitchen, you’re like, okay, I gotta get my ducks in a row and understand what this is gonna cost. But when you just need to repair, they just, there’s some perception that that’s 50 bucks or that’s a hundred bucks. And it’s just not that way. ‘Cause if you’ve ever replaced the drain on your sink, you know, it’s three trips to the hardware store by the time you get the right parts, unless they’re on a van. And that means you have to stock that van with $10,000 worth of parts or some goofy thing. Nevertheless, I just think people, when it’s a repair, they think it’s cheap and it’s just somebody doing something on the ticky tacky, $5 part. Well, it’s not always that way. Oftentimes it’s much more expensive than that. Finding that part in that store isn’t as easy as you think it is either.
DF: Right? Yeah. And getting the right one, right? Chrome versus satin, you know the difference. I think that one of the best examples that I can think of people who are doing this right, is I think at many times in my life, I’ve looked at these people who are coming in, and they’ll come in and they’ll Sheetrock like an entire new construction house. But then another crew comes the next day and you’re like, “Why wouldn’t you do the same thing? And you’re… ” It makes so much sense that you would do the two. But now I completely get it, and I applaud the companies that are doing two different things. Because even though it seems like to so many people, why wouldn’t you just tape and mud the Sheetrock that you just put up?
DF: You’re on-site, you’ve got the people there, you know what’s going on, but it makes total sense to me because it’s two totally different things. It’s such a… One of them is manually getting the stuff up there, and just make sure it’s straight and level and flush. And the next one is an art, taping and mudding is… It’s an art form, and it’s two completely different things. So trying to explain that kind of thing to a consumer like, “Well, you said you were a handy man.” And it’s like, “Yeah, but I’m just… I’m really good at hanging Sheetrock, not taping and mudding, they’re two completely different skill sets.” But Jim next door who has been doing this as a side gig for 50 years, he can do both because he doesn’t care if it takes him an extra two or three hours, for us an extra two, three hours, profit’s gone.
RS: And I love the story you told me about… I think it was hanging a picture or something in a tall stairwell or something, tell me that story again Daniel.
DF: Yeah. [laughter]
RS: It’s great.
DF: So… I hope I’m telling the same one of like, “Hey, can you come hang a photo for us?” “Sure.” $100… I think we billed her like… It was gonna be like $125. And we get there, the picture, it was like an 85 pound wheel from one of those wire cables that someone painted an American… Map of America on it. So it weighs like 75 pounds, and this is… One man can’t lift 75 pounds above his head. But additionally, it’s actually 18 feet up, so now you can’t even get a ladder. So this $125 job… I end up… I’m like, “I’m just gonna go help these guys, it’s a couple of minutes down the road.” I get there, I’m like, “There’s no way you guys can’t do this.” I get there I’m like, “This is nuts.” Go rent scaffolding for $75, and… Which now we own scaffolding, which we don’t even use, so if anyone wants scaffolding in Plymouth, Minnesota, we got a set for sale. [laughter]
DF: And so you set the scaffolding all up and you get up there and you put the little… The nice hanger in, that’s for 250 pound test, and you hang the picture, it takes a minute once you get up there. It was… I think it was about four man-hours that it took to get that giant picture hung up. And it’s just crazy ’cause like, well, I’m not gonna go do an estimate to hang a photo, you just want a photo hung. And she’s like, “Yeah, just in my living room. I just want a photo hung in my living room, above the fireplace.” “Okay, no problem.” [laughter]
DF: I didn’t know it was gonna be 18 feet tall, and you’d have to be in a weightlifting competition to get this thing up there, it’s just crazy. So yeah, time after time after time, it was so rare that there was a win for the day. What we actually ended up doing is we have… The guys would come back at the end of the day, we had a really nice little Excel file up and they would put in their sales, the amount of time that they clocked in, the amount of materials, and if that was charged to the customer or not, so you billed. And then that would give you either a green light or a red light, the cell would turn green or red. And constantly it was red for not profitable, just red day, red day, red day. And these guys that were working with us, they were all in, they’re like, “We wanna make this work, Daniel, we enjoy doing this. We like that we don’t have to answer the phones, we don’t have to deal with scheduling, it’s all done for us.” I’m like, “Yeah, I bet, but for us it’s a nightmare.” And it was so difficult to get that to work. But yeah, I feel like we… Maybe we missed something, but I feel like we tried everything to get it creatively profitable and at a fair price for the customer.
BO: Were a lot of these projects coming from your existing database? Or was it… It got out into the neighborhood where your database is dispersed around, and then this was a fresh customer? Or did you end up pissing people off that were paying customers for a while just because you got into this expectation game?
DF: It was a lot of everything. We had a few existing customers and they were like, they’ve used us for routine maintenance and air duct cleaning. And luckily they knew us well enough that they were like… At the end of the day… ‘Cause we have a customer, he was like… We did his caulking around his bathroom, we did caulking everything, it was like 800 bucks. And eight months later, he’s like, “Hey, the caulking isn’t staying, I just want a refund on it.” And it’s like, “So you still use us for routine maintenance and we’ve cleaned your air ducts before.” And it’s like, well, what do you do you? Do y’all redo the job? These handymen that were employed for us six months ago are no longer with us. It’s like, you can’t redo it. It’s like… And they even say, “You guys… It’s obvious you guys know how to do a routine maintenance really well, you’re really good at cleaning my air ducts, but you’re not a handyman company.” Like, “Yep, you’re right.”
DF: So for the few routine maintenance clients that we’ve made a mistake at, that was fine, a lot of these people were existing. But realistically, when we put handyman, the keyword on our website, it just flowed in and then you answer your phone and you show up when you say you’re gonna show up, that was… We are already… We are well in. So we were getting a lot of referrals for these projects that we were doing well, but some of them… A perfect example is we did a job for… On a deck under-bid it of course, because it ended up taking a half-day longer. Now, the neighbor is like, “I really love the way you did this, can you do my deck for that same… Whatever, $2500?” I’m like, “No, we can’t do it, we have to charge you another $800, ’cause you know it takes an extra day.” And she’s just like, “Oh, there’s no way I’m… I’m not willing to do that, that’s… Absolutely not.” And she’s like, “It’s just not gonna work.” What do you do? But if you’re not catching those situations and you’re not analyzing the last job, the office is like, “Oh sure, yeah, we can do… Your deck is the exact same, ’cause you live in a condo, and yeah, we can do your deck.” And now you’ve lost money on two jobs, and that multiplies really fast when you’ve got 11 guys out there working.
BO: I hope that homeowner enjoys the weekend they spend fixing their deck. What is it? The opportunity cost that $800 represented.
DF: Yeah.
BO: Live and learn, live and learn.
DF: Yeah, yeah.
BO: Okay, so you’re done with it, 100%?
DF: Yeah. Yeah, we don’t employ any handymen right now, we’re solely… Our big rocks that we’re really focusing on, we really wanna get selling franchises, I think that’s the most important part. I think if you’re gonna scale your business… I think there’s two ways to do it really well, if you wanna scale outside of your location. I think either you, A, you franchise, or B, you partner with someone that has skin in the game, their name is on the LLC with you. So they’re some sort of shared 30%, 40%, 50-50, whatever it might be, they’re part owner with you, so they have skin in the game. And now that bottom line really matters to them. It’s not just getting paid on Fridays. So we’ve decided to use the franchise model and that’s what we’re really, really focused on. It’s getting to 1000 routine maintenance clients in Minnesota. It’s selling franchises and then organically growing the air duct cleaning side of our business.
BO: Who did you hook up with to draw up your franchise agreement? Was that a local company? Have you gotten a lot of time with attorneys that you never thought you were gonna have to work on?
DF: So that’s a really interesting story because I bootstrapped that thing like, you can’t believe. I helped my brother in a previous life franchise his business. And when it came time to franchise ours, I took the FDD with his permission, I took the operations manual. I took all that information. I said, “David, can I use this same format?” “Yes, you can.” I called an attorney. I said, “I have an FDD, I wanna rewrite it. And will you approve it.” For us to have a registered FDD that we could legally sell it, it cost us, I think it was $6000 to get that done.
BO: Wow.
DF: Most companies, I would say if you can get it done for less than $100,000, you’re really lucky. This is… It’s 107 page document. So you can imagine having a lawyer draft all that up. So for me, taking the time to reread, draft it up and then she proofed it and stamped it yes as good to go. Since then, it’s cost more to register in the states ’cause there’s 13 states that are you have to register your FDD and they all have ranging fees $500, $600, $700 to register in those states. But then you also have to have a financial audit on your business as well. And that costs us $3,00 to get that done. Signed on it was about 12 grand to get to the point where we could sell franchises. But then if a broker sells it for you, you give them a very, very large commission check. So it’s the franchise stuff you’re not making any money on, like the the buy-in. It’s for sure you want that business to succeed and grow and we collect a small royalty on the back end.
BO: Were there any states that you thought you could play ball in but you realize, no, we’re just not gonna even go there?
DF: From an operations standpoint, we thought we could do really well in Illinois, mostly because on Instagram we have about 12,000 followers and I believe 4000 of them are in Illinois, which is just crazy to me. And yeah, and so we went through the process we like very slowly tried to like walk in just very hesitantly, just to see the number one issue is that we could not find someone who was willing to do routine maintenance or air duct cleaning for less than $80,000 a year. Like we could not find an employee for the life of us, it was impossible. Illinois is a huge opportunity for a ton of people who want routine maintenance. We get messages all the time. “Do you know someone who does this in Illinois and the Chicago area?” But we just couldn’t find and I think not having a local presence, not having it in was probably… And it was during the time that was very difficult to find employees as well. I assume today it would be a lot easier, but one year ago we really struggled.
BO: Interesting. Is your same attorney handling all your franchising across the country?
DF: Yep.
BO: If you don’t have a good attorney on your side, on your team, somebody you can pick up the phone and call and ask a question you need one. [laughter] They work their way in till…
TM: No one ever tells you how expensive they are though Bill. [laughter]
BO: No, but they’re a lot more expensive when you don’t talk to them first. Right? And a lot of people don’t. They go alone and then they need the attorney to dig them out of the hole that they’ve dug for themselves. We’ve seen this over and over again. You need a good CPA. You need a good attorney. You need people who understand your business and get to it quickly. They don’t waste your time. They don’t ask silly questions, build your team from the ground up and have confidence in them. That’s all I’ll say.
RS: Daniel, I wanna ask you for anybody who’s looking to hire a handyman, what advice would you have in finding somebody good? And also just setting the right expectations, making sure that your handyman is gonna give you exactly what you want done on your own house. What type of advice would you give people having been on the other side of all this?
DF: Yeah, I would say as a consumer using Apps like Nextdoor or your Facebook community page to Bill’s point, handymen that stay in a small area are probably going to be doing better. Usually hiring the cheapest guy isn’t necessarily the best. So if you find yourself with a bid for $80, $90, $100 per hour, these guys are not driving up in a Maserati to do your handyman stuff. I mean, that’s a very fair, affordable rate. But I would say looking on those, Google is great, too. But your community websites are a great place to find people, but additionally being as forthcoming as possible on what you want done. A photo, videos are very easy to send to these people. “Hey, I’m just looking for a rough estimate on what this will cost to have this job done,” especially if you’re looking for a couple of hours. I think some of the successful handymen that I’ve talked to, they have they have two options. It’s a half-day rate or one day rate, pick one and you’re gonna pay for that. And they’ll be there for up to four hours or up to eight hours. And I think that’s a really fair way to do that.
DF: We tried doing that. Of course, it didn’t work for us, obviously. But I think that being as forthcoming as possible, exactly what’s the project. And knowing that if you want a bathroom remodel, for example, when they pull the sheetrock down, there might be a ton of mold behind the sheetrock that no one could have known before taking that sheetrock. And the handyman might have to give you a different bid, take care of you and take care of your home. And most of the time, they’re just trying to make sure that they can pay their bills, too. They’re not changing the price. They didn’t put the mold there, you know they may… And hopefully that handyman or handy woman can be forthcoming and truthful with you and say, “I took down the sheetrock, there’s mold here. It’s gonna be different. The scope of the project has changed. I can provide you a new estimate if you’d like me to continue.”
BO: Or hopefully they have a network of people behind them who can quickly come in and do the testing or the remediation or whatever might be required, because all of a sudden you’re at a standstill till that work gets done.
DF: Right. Yeah.
TM: So, Daniel, if you’re like a homeowner who’s never worked with a handyman before and this is a new experience for you, you can expect that they would do like an hourly rate and anywhere from like $80 to $100 or more. And then they would also charge for materials on top of that, too.
DF: Yeah, I think that’s very, very fair. Yeah, for sure. You can expect an hourly or project rates. One thing that’s worked well for me when working with people as being a business person myself is saying, “Sounds good, so it seems like the project is going to be $500. Will you do me a favor? If you expect that rate to change or exceed $500 at any time, will you stop what you’re doing and come and communicate that with me?” And man, that just like makes it so much easier for a handyman or a contractor to be like, “Yeah, for sure.” And if it does change, they come up and say, “It looks like we actually need $50 worth of more material. If you want me to continue, it’s gonna be $550 rather than $500.” “Yep. That makes sense to me. Go ahead.” So these are all… You’re working with people, right? I mean it’s… There are a few people out there like trying to mess someone over or the consumer over, but a lot of people, especially in small communities, they’re just trying to do a good job for you and make a living.
BO: Yeah. Especially in small towns or smaller communities, where your van will be seen and recognized.
DF: Right.
BO: That’s not so easy in the bigger, the bigger cities, especially if you’re driving into an area to do work.
DF: Yeah. I will say one thing just to be really hesitant about is if someone’s expecting money upfront, usually most projects, the only time that that is needed is to cover the material cost. And I would say if you’re at all hesitant about a consumer and a contractor is asking for money up front, maybe rather than paying them, say, “Would you be okay if I just bought the materials up front so they’re here when you get here?” Rather than giving them, you know, like a thousand or two, $3000, because that’s probably the most common way I think is contractors get really busy and all of a sudden the money is spent somewhere else and it’s gone. So, that would be my one hesitation about putting down payments. Sometimes it’s really necessary. And if you really trust them, that’s great. But if there’s an opportunity for you just to buy the materials rather than paying them a down payment, that’s probably easier on both ends, especially if they have an exact list. And they’d probably appreciate that, anyways.
TM: That’s good advice.
BO: Daniel, have you added any ancillary services that we’re unfamiliar with to Kura?
DF: Yeah, we have, we added five services to our routine maintenance package. Some of them are not as important as others, but one of them is changing the direction of ceiling fans in the spring and fall, seems really easy, but we also clean them. We now are cleaning the horribly disgusting rubber seal on washing machines.
TM: Good one. [laughter]
DF: Yeah.
BO: Yeah.
DF: We took that plunge. Our guys said they were willing to do it, and we’re also… We also use a solution that can clean the entire thing really nice once we’re… We’ve gotten done doing the elbow work on that. We also have a solution that can clean the interior of dishwashers as well. And in the kitchen, we also now polish stainless steel appliances. Not that that’s super important, but just, we have people asking us, it’s not like from a maintenance standpoint not crazy important. Your refrigerator won’t last longer by cleaning the stainless steel on it, but consumers have really liked that. And lastly, we are providing fire extinguishers for our customers as well. Super important. Can’t express enough how important it is to have a plan in place. So I recommend everyone has their opinion, but have a meeting place. If there were ever to be a fire in your family, especially if you have young kids, it’s best to be meeting in the front yard, if you live in town so the fire department knows where you are when they get there. And I really love having a fire extinguisher underneath each sink in the home that just lets you know that wherever you’re at, you can get access to a fire extinguisher. So those are, that’s my little quick fire safety. I don’t know if it’s fire safety month or not, but that’s my quick plug for fire safety.
BO: How did you happen onto the fire safety stuff? Because that’s not something a lot of people are talking about.
DF: Yeah. So, I mean we changed smoke alarm batteries for people, right? So we get asked all the time. I’m sure, similar to you guys, you’re seeing expired smoke alarms, carbon monoxide detectors, all the time. So, you know, we’re kind of, we’re always trying to, one thing that I tell my guys all the time, we have meetings every morning at 7:20, we’re gonna treat every single customer like it’s our mom, our sister, our mom, or our grandma. And we have a moral obligation to take care of these people. So that’s one thing that we’re really focusing on on with our customers and telling people that stuff.
BO: All right, Daniel, thank you. We appreciate your time as always and the very, very good suggestions that you have for home maintenance. Because Lord knows, Ruben, Tessa, you’ve seen enough houses where people just simply stopped caring years ago, right? [laughter]
RS: Yes.
BO: The furnace filter is somewhere…
TM: Either out of ignorance or they chose not to. I think there’s a lot of people out there that don’t even know about some of these home maintenance things that should be done on a regular basis.
BO: Yeah. And at least neglect on your house doesn’t cost you money at some point.
TM: Yeah.
BO: Well, I think we’re gonna put a wrap on today’s episode. Thank you, Daniel. We will catch you again at some point, but you’ve been listening to Structure Talk, a Structure Tech presentation. My name is Bill Oelrich alongside Tessa Murry and Reuben Saltzman. Thanks for listening. We’ll catch you next time.