You’ve always loved working on home renovation projects and have been told your skills are top notch. Now, you’re thinking about starting your own home renovation business. Great idea, but where do you begin?
Don’t worry, we’re here to help. Read on for advice about structuring your own home renovation business, setting up an efficient system for managing your finances, and promoting your renovation services through word of mouth, social media, and other marketing.
This guide will walk you through the key steps to successfully launching your own small home renovation business.
Laying the groundwork for your home renovation business
If you want to start your own home renovation business, the first thing you need to do is lay the proper groundwork. This means setting up the legal and financial aspects of running your own company.
Choose a business structure
You’ll need to decide whether you want to operate as a sole proprietorship, partnership or corporation. For most small home renovation businesses, a sole proprietorship or limited liability corporation (LLC) works well. An LLC protects your personal assets if your business is sued. You’ll also need to obtain an employer identification number (EIN) from the IRS for your business.
Develop a business plan
A solid business plan is essential for success. It will help you outline your business model, target market, and financial projections. You’ll also need it if you intend to take out a loan or look for investors. The Small Business Administration has resources to help you craft an effective business plan.
Open a business bank account
Keep your business finances separate from your personal accounts. Open a business checking account to pay for expenses like materials, marketing, and wages. You’ll also want a business credit card to keep track of renovation costs.
Obtain the necessary insurance and licenses
Don’t start any renovation work without the proper insurance like general liability, workers’ compensation, and vehicle coverage. You’ll also need the right licenses and permits to operate legally in your area. Requirements vary by location, so check with your local government.
Obtaining licenses, permits and insurance for your home remodeling business
As a business owner running your own home renovation business, you’ll need to obtain the proper licenses and permits to operate legally. The requirements vary in each state, so check with your local municipality for the details.
Licenses for your home remodeling business
Typically, you’ll need a general business license or permit to legally run a business. You may also need special licenses or certifications for certain home renovation services like plumbing, electrical work, or HVAC installation.
Legally establishing your home remodeling business
For legal and liability purposes, you should establish your business as a sole proprietorship, limited liability corporation, or partnership. You’ll need an employer identification number (EIN) from the IRS to open business bank accounts and file taxes. Work with the Small Business Administration for guidance on the best structure for small businesses like yours.
Vital insurance for home renovation businesses
Don’t forget insurance. As a home remodeling business, you’ll likely need both general liability insurance and workers compensation insurance for your employees. General liability insurance protects you financially in the event of an accident or injury on a home renovation project, while workers comp provides coverage for employees who are injured on the job.
Building your brand and attracting clients
Building your brand and attracting clients is key to success as a service business owner. Focus on providing high-quality renovation services and rely on word of mouth recommendations from happy customers.
Determine your business model
Decide what kinds of home improvements and home renovation projects you want to focus on. A solid business plan will help determine things like your target market, marketing strategy, and financial projections.
Build your online presence
Create a professional website to showcase your services and share before-and-after photos of your work. Start accounts on platforms like Facebook, Instagram, and Houzz to increase visibility and connect with potential clients. Run ads on social media to spread the word about your new business.
Network in your local community
Introduce yourself to real estate agents, contractors, architects and interior designers in your area. Provide them with business cards and information about your services, and ask if they’ll refer clients to you for home remodeling projects. Look for opportunities to join your local chamber of commerce and get involved in community events.
Managing operations and cash flow for your small business
Managing your operations and cash flow effectively is key to success. Focus on providing high quality renovation services and building word of mouth to keep small jobs coming in steadily.
Set your finances up for easy management
Open a business bank account to keep your personal and business funds separate. This will make it easier to track cash flow and expenses. Many home renovation projects require upfront costs for materials, so money coming in and going out may fluctuate. Use software like vcita to keep on top of invoicing clients, paying vendors, and tracking finances.
Keep on top of your finances
Keep records of all business income, expenses, invoices, receipts and payments. Meet regularly with an accountant or bookkeeper to ensure your finances stay in good shape, especially in the early stages of running your own home renovation business.
Expand your customer base
Focus on doing excellent work and providing great service, because satisfied clients and word of mouth are the best ways for home remodeling businesses to get new jobs. Build your online presence through social media and your website to help people find your business, and consider offering promotions or discounts when you have downtime between jobs.
Grow your business
As your business grows, you may need to hire employees. Make sure you have proper insurance like workers compensation and general liability insurance first. Start with independent contractors or part-time employees before hiring full-time staff. Provide good training and oversight to maintain your standards of quality and service.
Your new home renovation business is just around the corner
Running your own home remodeling business is rewarding but challenging. Focus on serving your clients well, managing cash flow, and growing in a sustainable way. Keep making improvements to your business model and processes, just like you do for your clients’ homes. With hard work and persistence, you’ll be well on your way to establishing a thriving home renovation company.
