A remodeling business is a construction niche that can do well no matter what is happening in the housing market. New home owners often make improvements the first year that they own their home; and when home sales slow down, people are more likely to make repairs, upgrade, or customize their existing homes.
If you’ve been thinking of putting your skill and experience to work at building your own business, here is what you need to get started.
How to start a Remodeling Business
From business plans to capital, to remodeling business insurance, here is everything you need to get started on the path to becoming a business owner.
1. Put together a Plan
A business plan is a crucial first step for your business. According to the U.S. Small Business Association, the business plan is an “essential roadmap” for your business success. A well thought out plan will map out the first 3-5 years of your business, plus all of the elements you need to get started, how much capital you need, and what steps you need to take to be profitable. Don’t rush this step, take your time and learn exactly what goes into creating a solid business plan.
2. Select a Business Structure
What sort of business will yours be? The way you structure your business can have an impact on your legal liabilities and tax implications. Some options for a small business structure include:
- Sole Proprietorship: You are the sole owner of a company and personally responsible for its assets and liabilities.
- Limited Liability Company: One or more owners have operational and tax flexibilities with limited liabilities and personal asset protection.
- Partnership: Two or more owners share the business profits and losses. Partners (and their personal assets) are liable for the actions, business debt, and decision of other partners.
- Limited Partnership: Partnerships with limited liability allow partners to limit liability and management input based on investment percentage.
Doing some online research will give you a general view of the pros and cons of each business structure. If you still need a little guidance, talk to an accountant or tax advisor about which would be best for your business. Yes, they’ll probably be a charge for meeting with them, but a one-hour meeting could save you thousands in tax liabilities down the road.
3. Start your Paperwork
The type of business structure you decide on will determine where you need to register your business. Limited liability companies, for example, will need to be registered with a county clerk and with your state government.
Your state and county will have specific license and permit requirements for all business owners, and specific contractor license requirements will vary by state, as well. Make sure you have contacted your county and state to determine what you need to start your business.
4. Figure out Financing
When you drew up your business plan, it may have become apparent that some startup costs are needed for your business. If you don’t need startup capital, you may still want to consider opening a business line of credit. Having an available line of credit can be extremely helpful for your remodel business; you may need to pay vendors, rent equipment, or purchase materials before you get paid on a project. A line of credit is a useful tool that can help you keep your credit, and reputation, in tact while you build up your cash flow.
5. Obtain Equipment
Do you have everything you need to get your first remodel job done? Not only will you need tools and equipment to work on projects, you also need the equipment to run a business. Make sure you have a working computer, tablet, or laptop for billing, invoices, orders, and project management; a work truck or vehicle that can transport your tools and equipment to job sites; and a business website for your marketing and lead generation.
6. Get Covered: Remodeling Business Insurance and Bonds
Certain remodeling business insurance policies and contractor bonds are required in most states before you start work on your first project, such as general liability insurance and contractor license bonds. But that doesn’t mean you should stop there. Contractor bonds can help you grow your remodel business, so don’t limit yourself to just a license bond.
General liability insurance can protect your business from third-party lawsuits, but it doesn’t cover everything. The good news is that most contractor insurance providers will discount your premium when you combine policies such as general liability, tools and equipment coverage, commercial auto, and course of construction insurance. That means you get the full coverage you need to protect your new business, your business assets, and even your personal assets at the lowest cost.
7. Deploy your Marketing Strategy
Now that your remodeling business is properly registered, and you have the appropriate licenses, permits, line-of-credit, bonds, and insurance policies in place… it’s time to find some business.
When you put together your business plan, you should have outlined a marketing and advertising strategy that includes a business website, blogs, and social media to help you reach out to potential leads in your local community.
Starting any business can take a bit of time, effort, research, and a whole lot of paperwork. But doing things the right way in the beginning means you can focus on what you do best, and put your efforts towards growing your business.