If you have been considering opening your own remodeling company, you are probably wondering how to get started. In this guide, we walk through the steps of how to start your own remodeling business.
This article details the different types of home remodeling businesses such as a kitchen remodeling business or a bathroom remodeling company. It explains what type of professionals are most successful at starting their own home remodeling business, the licenses and certifications required as well as the estimated costs of starting a remodeling business.
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Who should start a remodeling business?
Skilled remodelers who find their niche have the potential to run a growing and profitable business. Homes represent the biggest investment for most people and so they are
highly motivated to make them as comfortable, energy efficient and on trend as possible. With the encouragement of DIY shows and social media, they take on many projects themselves. But most homeowners lack the time and aptitude to unravel the more complex projects, and need the help of pros.
In the U.S. alone, the remodeling industry is huge, and has grown 50 percent in the last decade. But before you take the plunge, consider whether you are ready to take on the challenge of starting your own business. Besides having the experience, skills and tools needed to take on your own remodeling business, you will need to know how to run a company.
The advantages of owning your own remodeling business means you will be able to set your own schedule, help customers increase the value of their homes and enter a market that is growing. However, running a business is hard work, and running a remodeling business is even harder considering the physical labor involved. Besides being self-starters and knowledgeable about the construction business, the most successful remodeling business owners have strong communication skills to help them successfully deal with subcontractors and clients, the bread and butter of any remodeling company.
Learn more here about What Do Remodelers Do?
How much does it cost to start a remodeling business?
The cost of starting your remodeling business will depend on what equipment you already have available as well as the size of the company you plan to start.
If you already have the tools and vehicle, overall startup costs can be as low as $5,000 to cover setting up a name, licenses and permits, printing business cards, getting insurance, and creating a website.
If you need to buy tools and a vehicle, even if you are starting a small remodeling business, the startup costs can range from $50,000 to $70,000. And, if you decide to open a physical office outside of your home, figure in the cost of rent, utilities and computer equipment. Starting a larger company that offers more major renovations and includes staff requires six-figures capital to begin.
What does it take to start a remodeling business?
With the cost considerations and length of time it takes to start a remodeling business in mind, let’s walk through each step of opening a remodeling business:
Step 1: Conduct Market Research
Knowing the construction landscape in your area will help your business be more successful and help you nail down your specialty. Do research to determine who your potential clients are, as well as your competitors. This will help you know how to reach your customers and choose the services to offer.
- Research the Competition What type of remodeling services are other companies in the region offering? Look into the other businesses in the area and see if there is a gap in the market that your company can fill.
- Determine Your Ideal Client Conduct research to identify the type of client you are seeking.
- Assess the Potential Demand for Services: Does your ideal client match up with the demographics of the community where you plan to open your business? If not, determine what type of services are needed there or find an area where your services might be more in demand.
Step 2: Choose Your Remodeling Name & Niche
Armed with your marketing research, it’s time to pick your specialty and business name:
- Decide Your Niche Perhaps you may decide to specialize in kitchen remodeling, sunrooms, or outdoor spaces. Maybe you want to be more of a generalist.
- What Services Will You Offer This may include tile work, plumbing, painting, cabinet installation, fixture installation, and more. Narrowing down your products will help you be able to communicate the type of work you do in marketing materials and to clients.
- Pick a Name The name of your business should convey your services and mission so the clients know immediately that they are contacting the right company for their project. Here are some things to consider when deciding on a name
- Brainstorm many first Make a list and narrow it down later.
- Make it easy to pronounce and spell.
- The name should be relevant to the services you offer
- Keep it simple, but catchy. The best remodeling company names are not overcomplicated. You want your home remodeling business name to be easily understood and recognizable.
- Use keywords such as remodeling when coming up with remodeling business name ideas.
- Don’t paint yourself in a corner Avoid remodeling business names that are geographically specific so that you allow for future expansion in both region and services.
- Run your top remodeling business name candidates through a search on the US Patent and Trademark Office website to make sure they are available, and conduct a domain search to make sure they are not already taken.
Step 3: Develop Your Remodeling Business Plan
In the rush to start a new remodeling business, it is tempting to hurry your business plan, or skip it completely. But having a map to follow will lead to a more successful company. Here are the typical components of a business plan:
- Executive Summary A short recap of what will be included in the plan.
- Company Description This details the name of your company, size and type of services it will offer
- Target Market A remodeling business plan includes a description of the type of clients your business is seeking to serve as well as their geographic location, and other demographics.
- Market Analysis What did you discover during your market research and why did you decide on this particular clientele and product offerings? This section provides those details.
- Marketing & Sales Strategies Sketch out how you plan to reach your target audience and start filling your sales pipeline with leads.
- Financial Projections Detail the revenue streams and how your company plans to make a profit. Also, include in this section the percentage profit anticipated in the first year of business, and how it will grow five years out in the future.
Step 4: Choose Your Remodeling Business Entity
To protect yourself and your business, you will need to legally form your business before you open your doors. That means picking your business structure and forming a business entity. The type of structure you pick can also impact your ability to get business loans and seek investors, if that is a route you are considering. Here are the most common ways remodeling businesses are structured:
- Sole Proprietorship Business owners who choose this structure are in the business alone and have less protection from putting their personal finances at risk in cases of liability.
- LLC A limited liability company provides remodeling business owners a stronger legal shield because it limits the amount of liability because the members of a LLC are generally not personally liable for business debts and liabilities.
- Corporation This is one of the most complicated business structures and may be necessary if you plan to seek investors or go public with your company.
Step 5: Register Your Remodeling Business
No matter what type of business structure you choose, you will need to register your remodeling business with the state where you plan to locate it. Registering a sole proprietorship is as simple as registering a DBA Doing Business As name. An LLC register is a more complex process and requires filing articles of corporation, and other documents.
You also will need to get an EIN or Employer Identification Number to use when filing federal and any applicable state taxes. Check with your state to learn the specific requirements.
Step 6: Get Remodeling Licenses and Permits
Starting a business requires obtaining several licenses and permits from the federal government, state and even local government. These include a permit from the Occupational Safety and Health Administration, and other industry-specific licenses.
To learn which type of licenses are required check the websites of the state, local and county governments of where your business is registered. Professional groups such as the Small Business Administration can also provide guidance. And, you may also want to seek professional legal advice.
Step 7: Get Remodeling Business Insurance
Protect yourself from financial risks by purchasing insurance for a remodeling contractor. The most common type is general liability insurance to cover possible liabilities. If you have employees, you will likely be required to also acquire workers compensation insurance. Again, check to find out what type of insurance you will need before you open your remodeling business.
Step 8: Set Up Your Remodeling Business Finances
The bottom line of your remodeling business is assuring that it will be profitable. That means setting up your finances, determining how you will fund the business, deciding how much you will charge and setting up your accounting processes. Here are some steps to take:
- Secure Financing If you are lucky enough to have money saved for your business, you may decide to self- fund your business. But there are many other ways to secure capital to start a remodeling business without money. These include bank loans, government grants, Small Business Administration loans, and more. You may also decide to tap friends and family who are willing to invest in you, or use crowdfunding to kick start your business.
- Set Up Accounts It is crucial to separate your personal and business finances to avoid confusion and make it easier to file your federal, state and local taxes. Check out the various rates and services offered by banks to decide which one will work best for your business. Also consider what type of credit card you will use for your purchases.
- Accounting How will you handle the accounting of your business? There are various software services available as well as professional accountants who can help you along the way. Consider how you will track your expenses, create a budget and assure that you have all the documentation necessary to file your tax returns when the time comes.
- Pricing Before you open your doors, determine how much you will charge for your services. Research competitive rates in your area, and figure out how much you will need to price your services in order to cover expenses and make a profit.
Learn More These resources can help you with tips of how to overcome the challenges of getting your financing ducks in a row:
Step 9: Build a Strong Remodeling Brand
The old adage about having an elevator pitch still runs true. Successful pros are able to articulate in a few sentences the values of their remodeling company and the services it offers.
Your brand conveys what your business stands for so take some time to list your values, goals and services. Then, use the information to write your elevator pitch and create the public-facing tone and message of your remodeling business. Do you want a logo? Is there a one-line catch phrase that summarizes your company that you want to add to your website and other promotional materials?
For more tips, check out How to Brand Your Construction Business
Step 10: Market Your Remodeling Services
Now that you have created and refined your brand, it is time to get the word out about your new remodeling business.
Here are just a few ways to let people know about your remodeling venture:
- Use Social Media The great thing about social media marketing is that it is essentially free, and where your potential customers are. Start by picking just one or two social media platforms, and post regularly. Photographs of projects, your team members, and more, are all great fodder for posts.
- Create a Website Having an online presence is no longer just an option these days. It is a prerequisite to success. While word of mouth is still strong in the remodeling business, searching the web is where homeowners turn when they are seeking a pro. A quality website with professional-looking photos, and information about your mission, services and team builds brand awareness and credibility.
- Networking Attend events, conferences and join professional industry organizations to make connections with your community and others in the remodeling business.
- Leverage Client Reviews There is nothing like a proven track record to turn the heads of new clients. Make it easy for your customers to deliver five-star reviews and consider starting a referral program. Post the testimonials on social media and make them prominent on your business website.
Marketing does not have to be a mystery. Learn more about how to fill your sales pipeline with a steady stream of clients:
When should you start a remodeling business?
Running your own remodeling business is filled with rewards. You are your own boss, you can channel your creativity and skills into the areas you determine, and a remodeling career can be profitable.
It is also not without its challenges as you compete with big box store services and a rising number of DIYers. Before you take the plunge, consider if you have taken all the steps discussed in this article to help assure your venture into entrepreneurship will be a successful one.
Where should you start a remodeling business?
Location. Location. Location! Where to lay down your business roots is an important consideration. Using the market research you conducted regarding competitors and the type of services clients are seeking in a particular region can help you decide where the best place is to open your doors. Some pros also consider the regulations, tax costs, and other expenses of particular geographic areas, which can vary widely.
Other tips to remember when starting a remodeling business
As you advance in your journey of starting your first remodeling business, here are a few other reminders to help you be successful:
- Follow up on Leads Eventually, you will be able to be more particular about which clients to take on, but at the start, build a strong reputation by checking out every lead.
- Build a Strong Online Presence When homeowners search online for remodelers, greet them with a website that makes them want to learn more.
- Get Estimating Right Accurate estimates are one of the most important ways to assure you make a profit and avoid costly change orders down the road. Invest in the time and resources to perfect your proposal-making skills.
- Prioritize Building a Strong Team As you add employees, focus on creating a skilled team that reflects your brand, and values. Investing in training can help assure that everyone is on the same page.
- Choose a Remodeling Business Software Technology can make your business life easier by helping you organize and manage leads, speed up your business processes and assure that you have the latest high tech tools that clients expect.
Seek out a software that is easy to use, includes powerful takeoff and estimating tools, makes it easy to collaborate with clients, is mobile-friendly so you can work from anywhere. Make sure it tools like 3D floor planner to impress clients with your presentations. Sign up for a free trial of Houzz Pro to explore our home remodeler business software
Conclusion
Yes, starting a remodeling business is not as simple as picking a name and opening your doors. But with careful planning and determination, you can build a business that will grow and thrive for years to come. You will be well along the way if you do your homework, create a solid business plan, learn the legal requirements and invest in marketing and branding. Best of luck!
Learn more about How to Grow a Construction Business.
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