The d-i-y and tradesman field is increasingly busy thanks to a steady rise in the number of households demanding maintenance and alterations to their homes.
The market is set to grow revenue at an annualised two percent over the next five years.
However, despite favourable growth conditions, competition will heat up. This means tradesmen will need to broaden their skill base to compete, and the decline of the high profit margins will continue. The increased competition over the last five years has resulted in more handymen lining up to become franchisees to boost their exposure and their competitive edge.
Despite the growth, there will remain strong competition for franchise operators. In regional areas where word of mouth counts more than a brand, sole traders providing building and gardening services may have an advantage over franchisees.
And so the quality of service, and price, will become crucial elements for a franchisee.
An IbisWorld report reads “Franchises that provide quality services at affordable prices are generally able to retain existing clients, increase franchise reputation and potentially take business from rival franchises.”
The report suggests there is a moderate level of market share concentration with three businesses – Jim’s Group, VIP Home Services and Hire A Hubby – accounting for 48.4 percent of market share. The rest of the sector is highly fragmented.
IbisWorld’s report reads “Market share concentration has remained relatively stable over the past five years, as major players have had to contend with their own market saturation despite demand growth for handyman services. Over the coming years, this is not expected to change significantly. This is due to the difficulty of individual businesses to expand nationally, a franchisee is not likely to travel interstate to perform work. Due to the competitive nature of the industry, new national franchises will find it hard to break into the industry.”
In this arena the majority of the jobs are of a generalist nature, not demanding specialist work but still at a level higher than most consumers could perform. Consumer sentiment is a key driver of demand: a positive outlook gives consumers confidence to spend on repairing their property. While households are the major source of income, commercial property owners, builders and property managers can also provide business for the handyman.
For those brands already operating in the market, it has been a lucrative time. The number of consumers who lack both the time and the skills to perform labour-intensive tasks has increased over the past five years, and while revenue for the next five years won’t match the three percent growth of 2010-15, it will sit at two percent and is expected to reach $1003.9m in 2019-20.
Key success factors
The most important elements for a business in this sector:
- Having a good reputation
- Having a clear market position
- A qualified work force
- The ability to compete on tender
- The ability to expand and curtain operations rapidly in line
- with market demand