Remodeling projects will always be trendy. No matter what time of the year it is, there will always be someone willing to make a change to their property.
According to Polaris Market Research, the U.S. residential remodeling market was valued at $517.61 million in 2023. Interestingly enough, that same market is expected to grow to $754.75 million by 2032. This means that there are plenty of opportunities out there for those wanting to explore the remodeling industry.
How hard is it to start a remodeling business, though? Saying you're going to do it is one thing, but coming up with a plan is entirely different. You must figure out how to reach potential customers, come up with a unique selling proposition, and more. Also having a website designer for remodelers can be very beneficial.
On this page, we'll give you a breakdown of how to start a remodeling business from scratch. This guide will give you a better idea of what to expect from the industry and if this project is worth your time and money. Blue Collar Websites can also explain how to start a pool builder business.
Why Would You Start a Remodeling Business?
There are many reasons why you may start your own home renovation business. However, most people do it because the market is wide open right now. It gives you plenty of room to innovate and grow.
Whether you have an established network or are just starting in this field, you can open the door to many opportunities if you commit.
It may sound discouraging to try and open a remodeling company when there's so much competition, but that should motivate you even more. You can come up with new remodeling services that make you stand out from the competition. With the right business plan, you can make it happen.
Usually, remodeling is a profitable business. All you must do is keep your prices fair and consistent, as well as give your clients the perfect balance between value and service cost.
Is Starting a Commercial or Home Renovation Business Expensive?
It depends on the area you want to specialize in and the scope of your project. If you want to start a home remodeling business, for example, the average start-up costs would range between $250,000 and $500,000. This is because you'll have to pay for materials upfront, not to mention the subcontractors you must hire.
You can save a lot of money during this process if you draft a decent business plan. Many people end up spending more money than they have to because they don't know how to organize themselves, which leads to a lot of unexpected expenses.
Of course, any remodeling business brand will involve spending some money. However, if you play the right cards, you'll secure a decent cash flow, so you'll be making that money back in no time.
How Risky Is the Home Improvement Industry?
As you can see, going into this industry isn't risky when having the right business structures and plans. Like any other business model, you may face some risks, such as:
Difficulty adopting new technologies
Balancing your budget when the market becomes volatile
Managing delayed projects
Finding skilled employees
Retaining employees
Now, is there still demand for home improvement? It doesn't matter if you can survive all these challenges if no one is there to hire you. Thankfully, the demand for these services is still solid.
Creating a new business won't be easy, and it will be hard to stand out among established companies. However, if you make the right moves and come up with something unique, it won't take you long to find your place in this industry.
Before You Begin: Ask Yourself These Questions
It's exciting to create a business plan, especially for these kinds of industries. Before you begin, take a step back, and ask yourself a few questions:
Why am I choosing this industry?
What's my role in this industry?
What am I selling?
Where will I sell?
Who's my ideal client?
What value do I bring to the market?
What are my potential competitors?
How long will this project take to get established?
How big can this company get?
Is this project feasible?
Writing down the answers to these questions will give you an excellent head start when starting your market research. It will help you get started on the right foot and set your expectations.
Start a Successful Remodeling Business with These Steps
You're ready to begin your adventure! By following these 10 steps carefully, you'll have everything you need to start your remodeling business.
Remember to take your time to create something unique. Once you're done, make sure to review your ideas with your team.
1. Do Market Research
The first step is to learn as much as you can about the current state of the remodeling market. You'll already have some answers thanks to what you did in the last section.
With market research, you will understand who your target customer is, how to price your services, and what things people are looking for.
The beauty of market research is that you can do it in many ways, including:
Competitor Analysis: You can use search engines or social media to check out what your competitors are doing. This may help you determine what content works best, who their target audience is, and other factors that may help you when building your company.
Surveys: Conducting surveys will give you direct information on what people are expecting from a remodeling business. You may do online, mail, phone, or even in-person surveys. Online ones tend to be more convenient, though.
Content Surveys: Compared to the previous method, content surveys help you understand what content your target audience is interested in. You may do these surveys through social media posts, emails, or blogs.
Industry Reports: Many reputable websites online can give you an overview of how the industry is doing today. These free reports will help you when crafting your business plan.
2. Pick a Specialty
Next, think about what you want to specialize in. Do you want to tackle kitchen remodels only, or are you planning to offer a general renovation service?
There's a lot of room to pick when it comes to remodeling businesses, so choose wisely. In some cases, having a specialized skill or style could help you stand out among the competition.
Contractor vs. Subcontractor
Once you have your specialty, it's time to decide whether you'll be a contractor or subcontractor. Being a contractor is better if you want a generalized and inclusive company, and it will give you more opportunities for high-paying jobs.
On the other hand, if you have a special skill, you may prefer working as a subcontractor. This will help you work on your skills and connections.
3. Create a Solid Business Plan
Here's one of the most important parts of your strategy. In this step, you'll create your business plan. It should outline your goals and plans, as well as how you'll execute them. Remember, if you're careful with this part, you're guaranteed to be successful.
All business plans must include a variety of elements, including:
Overview: Create a general description of your business model.
Target Market: Identify your target audience. Make sure to describe their wants and needs thoroughly.
Competition: Make a thorough analysis of your competition.
Unique Value Proposition: Your USP is what sets you apart from the rest. Explain the unique value you bring to people.
Resources: Outline the key skills or resources you bring to the industry.
Revenue Stream: Create an outline of how your business is expected to make money.
Financial Structure: Explain all your start-up costs and operating expenses. You should also include your projected revenue.
General Goals: Outline all your goals.
If possible, include as much information that may seem helpful for your business, including any laws and regulations that may affect the company, the amount of foot traffic in the area, etc.
4. Register for Taxes
Make sure to register your company for taxes. The process involves getting an Employer Identification Number (EIN) through the IRS website. Once you're done, you can register for state and local taxes by contacting your tax office or checking its website for more information.
Keep in mind that taxes will vary depending on the business structure you pick.
5. Get Licensed and Insured
Not only does getting licenses and insurance coverage crucial for operating your business, but it also gives you more credibility. People won't trust a business without the right documentation.
Licenses are generally issued by your local government, and they allow you to do business without any legal problems. You must check your state's requirements before applying.
Permits, on the other hand, allow you to do your projects in certain states, cities, or areas. Since you already have a work area in mind, check which requirements you need to meet to perform your remodeling projects there.
Never start working without the right business licenses and permits, as that could lead to hefty fines.
Next, you must purchase insurance. It protects you and your employees in case something goes wrong in one of the projects.
There are many types of insurance, including:
Property insurance
Liability insurance
Workers' compensation
You may go directly to an insurance company or talk to an agent to pick the best policy for you. Consider the following factors before buying insurance:
The company's reputation
The cost of the policy
The amount of coverage
The policy's conditions
Type of Business You Can Register As
You have three main options when registering your business:
Limited Liability Company (LLC): It's the most common option for business owners. Not only does it offer beneficial tax breaks, but it also protects the company in case of a lawsuit. Also, it separates your personal assets from the business.
Corporation: Corporations allow the business to operate separately from the owner. It's great for those who are planning to grow larger operations. However, such a business may be harder and more expensive to establish.
Sole Proprietorship: It's cheap and easy to set up. Moreover, it comes with tax benefits. Unfortunately, it doesn't protect the owner from personal liability, as it links the business to them directly.
6. Get the Necessary Training, Tools, and Resources
In this stage, you'll have to gather the resources needed to start working. The amount of things you need will depend on the scope of your project.
Before starting, make sure to set up your accounting process. The best way to do this is by hiring an accountant. If you can't or don't want to, you may get professional accounting software or bookkeeping services. This will help you keep track of your income and expenses.
Now, let's talk about the essentials you need:
Funding: You can't do anything without money. Whether you apply for funding from banks/lenders or use your own money, make sure to stick to your budget.
Assets: Here's when you'll get all the tools, equipment, and machinery you'll need for your projects. Only buy what you can afford. Consider renting expensive equipment, such as trucks or power tools; you can buy them later. Other common tools include ladders, hand equipment, and safety gear.
Suppliers: Pick a supplier for your plumbing, electrical, and construction materials. They will provide you with the resources you need to complete certain projects.
Labor: Hire project managers, subcontractors, handypersons, and anyone else you may need for your projects. You may hire staff on a contract basis at first if you're on a budget. When making permanent hires, remember that you must also spend money on training.
7. Create a Brand
Defining your brand is as important as any other step in this guide. It will help your customers identify your company.
In a nutshell, your brand is anything that people can link to your company, so it can be your name, your logo, or even your USP. Strong branding will lead to more trust and credibility, not to mention a better reputation.
When creating your brand, keep in mind that it should reflect your company's values, mission, and qualities. Think about what you want to show to the world, and work with an expert to reflect that in every piece of branding you pick for your business.
8. Start Your Marketing Plan
Here's the fun part of your business plan. Your marketing plan involves showing your business to the world through many channels. If you do it right, you can generate leads and get your first clients.
Thanks to technology, you have many ways to market your business, so don't hesitate to try some of these methods out:
Social Media: It's one of the newest methods of marketing. About 5.07 billion people use social media, so there are many opportunities to be seen, regardless of the channel you use. You can pick Instagram, X, Facebook, TikTok, YouTube, or any other channel you prefer. As long as you create a great campaign, you'll get excellent results.
Traditional Advertising: Common channels include print and television. Although they may not generate as many leads compared to online advertising, they could still give you positive results. However, this method could be more expensive.
SEO: Search Engine Optimization (SEO) ensures that your website content ranks higher on search engines, including Google. With the right strategy, you ensure that your online presence is in its best shape.
PR: Work with the right professionals to get positive press coverage. Of course, you'll also have to work hard and create a good name for yourself if you want to have a great reputation.
You don't have to stick with one marketing strategy. Try different plans until you reach the one that best suits your needs.
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9. Choose Your Team Wisely
As your project grows, you'll have to hire more people. This is the time when you must think if you want a subcontractor or an employee.
Subcontractors are better if you need help with something specific. They are people with specialized skills, so they will assist you with one project and move on with their other jobs.
Employees, on the other hand, are better if you have more on your plate. If you think you will need more help all the time, you must make permanent hires. Whether this means hiring a contractor or an office employee, this could give your company a boost.
10. Pick the Right Suppliers
Picking a supplier is easier said than done. If you make the wrong call, your entire business could fail.
Only work with suppliers that have quality materials and work with ethical policies. Once you establish a relationship with them, work hard to maintain it. Building a great relationship with your partners/suppliers is one thing that will keep your business afloat.
Mistakes You Should Avoid When Entering the Remodeling Industry
It's easy to make mistakes when starting a remodeling business. However, that doesn't need to be a reason to give up. Here's a list of things you should avoid at all times:
Not having a solid business plan
Underestimating the competition
Starting with little cash
Not paying attention to customers
Trying to do everything yourself
Trying to expand too fast
Setting the wrong prices
Managing projects poorly
Bottom Line
That's all you need to know before starting a remodeling business. It's a lot of information to digest, but take your time to read everything carefully, and you'll have no problems. Blue Collar Websites also know how to start an excavating business.
The industry is filled with opportunities for newcomers, so today is the best time to give it a try. Whether you want to specialize in general renovations or kitchen overhauls, remember that the key to success is having a great plan.
We hope this guide has helped you with your first steps!
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