Do you want to start a home improvement business? If YES, here is a complete guide to starting a home remodeling business with NO money and no experience.
Okay, so we have provided you an in-depth sample home remodeling business plan template. We also took it further by analyzing and drafting a sample home remodeling marketing plan backed up by actionable guerrilla marketing ideas for home remodeling companies. In this article, we will be considering all the requirements for starting a home remodeling business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Home Remodeling Business?
As an aspiring entrepreneur, if you are thinking of starting a business with huge returns on investment, then one of your best bet is to venture into the real estate industry. Of course, there are several money spinning business opportunities in the real estate industry and one of them is home remodeling.
Just like all other investment vehicles, there are potential down sides that you need to look out for as a home remodeling agent. One of the major risks in home remodeling business is a sudden down turn in the economy. Selling properties could take a period of two to three years from conception to completion depending on the size of the project and the cash flow.
As a matter of fact, some home remodeling projects could even take much longer than that. Because of the time frame involved in renovating and decorating a property from start to finish, loads of unanticipated things could crop up and and disrupt the already laid down plans.
Another factor that is of major concern in the home remodeling business is the cost increase as a result of inflation, currency devaluation and economic challenges. Unforeseen delays from the part of government agencies, litigation and also delays from contractors could lead to substantial cost increase especially if the project is heavily dependent on bank loans. If perhaps during this period, there is a change in the supply and demand dynamics of the property sector the project could be affected negatively.
No matter the type of business you choose to start, it is important to state that before launching the business, you should ensure that you carry out market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your home remodeling business, it will not take you long before you secure enough corporate clients and start smiling to the bank.
If indeed you want to start your own home remodeling business, all you need do is to read this article and you will be well informed and equipped. You can start your home remodeling business from a small town in the United States and if you are consistent and creative, it won’t be too long before your brand becomes a nationally recognized brand especially if you go into franchising.
Starting a Home Remodeling Business – A Complete Guide
- Industry Overview
The real estate industry of which home remodeling is sub set of is indeed one of the many industries that is a major contributor to the growth of the economy of many nations of the world; there is hardly any country where the real estate industry is not very active.
Players in the Home Remodeling industry primarily engage in the remodeling and renovation of the interior and exterior of residential buildings (i.e. single-family homes and multifamily apartment building units). Remodeling consist of additions, alterations, reconstruction, maintenance and repair work.
General contractors, operative remodelers, remodeling design-build firms and remodeling project construction management companies are all part of the home remodeling industry, while commercial building remodeling is not included in the industry.
If you are a close watcher of the Home Remodeling industry, you will agree that the industry’s foundation shook as the housing bubble burst, with several factors contributing to discourage consumers from spending on home improvements.
Experts projected that the home remodeling industry recovery will be driven by improvements in employment and per capita disposable income. In the United States and in most countries of the world, home prices are expected to continue to rise, facilitating growth in demand for home remodeling industry services because homeowners often leverage on the value of their homes to fund remodeling projects.
The Bureau of Labor Statistics (United States of America) projects an 11.1 percent job growth for real estate industry between 2012 and 2022, which is about as fast as average. During that time, an additional 38,000 jobs will open up in the industry. Hence any home remodeling company that is well equipped and positioned will sure rake in huge revenues from this industry within this period, and of course the future is bright.
The Home Remodeling cum Real Estate industry is indeed a large industry and pretty much active in countries such as United States of America, United Kingdom, Germany, France, Italy, Holland, Switzerland, Australia and Canada et al.
Statistics has it that in the United States of America alone, there are about 415,994 registered and licensed home remodeling companies scattered all across the United States responsible for employing about 652,647 and the industry rakes in a whooping sum of $75 billion annually. The industry is projected to grow at 4.2 percent annual growth between 2011 and 2016. It is important to state that there are no establishments in this industry that has a lion market share.
A recent report published by IBISWORLD shows that the Home Remodeling industry is very labor-oriented, as it relies on employees to carry out most industry activities. Therefore, the industry requires a low level of capital investment and instead allocates much of its cost structure to labor payments, which accounts for 23.1 percent of revenue.
Purchases account for 56.9 percent of industry revenue. The report further stated that these costs are largely related to materials, components and supplies used during service requests as well as the costs associated with contracting work out to third-party subcontractors. Depreciation absorbs only 1.0 percent of industry revenue, and capital purchases are largely limited to vehicles and computers used in sales offices.
The home remodeling cum real estate industry is highly regulated in the United States of America and anyone who aspires to start a home remodeling company must apply and obtain a license before they can legally operate in the industry.
Lastly, as a home remodeling professional, it is very important to be creative, to be able to use your ideas to meet the rapidly changing needs of the society when it comes to properties; you should be able to convert a slum into a beautiful city if indeed you want to become a major player in the house remodeling cum real estate industry.
Starting a Home Remodeling Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who hire the services of home remodeling companies cut across all households and players in the real estate industry hence the demographic composition for a home remodeling business is all encompassing.
The truth is that when it comes to the home remodeling business, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just households within your location, but to all players in the real estate industry around the city where you have your business presence.
So, if you are thinking of starting your own home remodeling business, then you should make your target demographics all encompassing. It should include families who are interested in acquiring a decent and well renovated home, corporate organizations who are interested in acquiring their own property, home owners who are interested in remodeling and selling off their homes/properties, foreign investors who are interested in owning properties in the United States of America and remodeling the property, the government of the United States of America (Government contracts), and managers of public facilities who would want to engage home remodeling companies to help them remodel properties under their care.
List of Niche ideas Within the Home Remodeling Business That You Can Specialize in
It is safe to say that there is no niche area in the home remodeling line of business, every player in the industry primarily engages in remodeling and renovating the interior and exterior of residential buildings (i.e. single-family homes and multifamily apartment building units).
So, if you are looking towards starting your own home remodeling business, then you should clearly define your market so that you will be able to know how to get to them. On the other hand, a home remodeling company may decide to major in any of the under listed;
- Residential additions, alterations and renovations
- Construction management for residential remodeling
- Fire and flood restoration
- Home improvement
- Porch construction
- Sunroom additions
- Kitchen and bathroom upgrades
- Other remodeling projects
- Systems and equipment
- Disaster repairs
- Real estate consultancy and advisory services
The Level of Competition in the Home Remodeling Business
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your services or business properly, you will always make headway in the industry. Just ensure your workforce can carry out thorough home remodeling, you can deliver excellent customer care services and you know how to attract and reach out to your target market.
But over and above, there are several home remodeling companies and other players in the real estate industry that also carry out home remodeling scattered all around the United States. So, if you choose to start your own home remodeling business in the United States of America, you will definitely meet stiff competitions amongst home remodeling companies and other players in the real estate industry that also carry out home remodeling. Besides, there are larger home remodeling companies that determine the trends in the industry and you should be ready to compete with them for customers.
List of Well – Known Brands in the Home Remodeling Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their business and the results they have achieved over the years.
These are some of the leading home remodeling companies in the United States of America and in the globe;
- Quality Renovations & Home Services
- Remodel USA
- S. Home Remodeling Corporation
- Booher Remodeling Company
- G & S Home Remodeling
- Orange County Home Remodeling – Sea Pointe Construction
- Marrokal Design & Remodeling
- The Remodeling Company
- American Home Remodeling
- DWR Construction Inc
- Daniels Design and Remodeling, Inc.
- Cipriani Remodeling Solutions
- Case Design/Remodeling, Inc.
- Foster Remodeling Solutions Inc.
- Lars Remodeling & Design
- Elite Remodeling
- Jackson Design & Remodeling
- Jericho Home Improvements, LLC
- Synergy Builders
Home remodeling business is not a green business; as a matter of fact, you will come across several home remodeling companies and other players in the real estate industry that also carry out home remodeling when you drive through town, search through directories and browse through the internet.
So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey and costing of what is required to rent a space where you are expected to open your home remodeling business, working capital and also the cost to successfully run the business.
Over and above, if you are considering starting a home remodeling company, then your concern should not be limited to the cost of renting an office space, securing your license, and working capital et al but also on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
Starting Your Home Remodeling Business from Scratch vs Buying a Franchise
If you are looking towards starting a home remodeling company, you would have to start from the very scratch because you can hardly get the franchise of a home remodeling company to buy. It is a business that is open to all and sundry.
Besides starting a home remodeling company from the scratch is less stressful when compared to other small scale businesses which usually require detailed groundwork before launching the business. With a home remodeling company, you should just try as much as possible to get the right employees, build business relationship with key stakeholders and then leverage on every marketing tool within your disposal especially the internet to market your properties.
Please note that most of the big and successful home remodeling companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own home remodeling company brand to become a successful brand with corporate and individual customers in your city and from all across the length and breadth of the United States of America.
Possible Threats and Challenges You Will Face When Starting a Home Remodeling Business
If you decide to start your own home remodeling business today, one of the major challenges you are likely going to face is the presence of well – established home remodeling companies and other players in the real estate industry that also carry out home remodeling. The only way to avoid this challenge is to create your own market.
Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in bad shape, history has it that businesses such as home remodeling companies usually struggle to maintain their old customers or even welcome new customers.
So also, unfavorable government policies can hamper the growth of your home remodeling business. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
Starting a Home Remodeling Business – Legal Matters
- Best legal entity to use for this type of business
Generally, you have the option of choosing a general partnership, limited liability company which is commonly called an LLC, or even a sole proprietorship for a home remodeling business. As a matter of fact, if your intention is to grow the business and have offices and corporate clients all across key cities in the United States of America and other countries of the world via franchising, then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your home remodeling business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities available to use for your home remodeling business with the ability to sell franchise, then you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your home remodeling business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures.
Catchy Business Name ideas Suitable for a Home Remodeling Company
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own home remodeling business, here are some catchy names that you can choose from;
- Zoe McLaurin® Home Remodeling Company
- Allen Township® Home Remodeling, LLC
- Brick House© Home Remodeling, Inc.
- Kings Court® Real Estate Company, Inc.
- Mo Granville™ Home Remodeling Company, Inc.
- Ten Twenty™ Home Remodeling Company, Inc.
- Deck Nation© Real Estate Company, Inc.
- Heritage Linage® Home Remodeling Company, LLC
- Vintage Group© Home Remodeling Company, Inc.
- Columbus Kennedy & Sons© Real Estate Company, Inc.
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your home remodeling company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own home remodeling business in the United States of America;
- General insurance
- Health/Medical insurance
- Liability insurance
- Workers compensation
- Property/Building Insurance
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own home remodeling business, usually you may not have any need to file for intellectual property protection/trademark. This is because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Is Professional Certification Needed to Run a Home Remodeling Business?
Aside from the results you produce as it relates to renovating buildings, professional certification is one of the main reasons why most home remodeling companies stand out. If you want to make impact in the home remodeling industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in the competitive market. These are some of the certifications you can work towards achieving if you want to run your own home remodeling company;
- Universal Design Certified Professional (UDCP)
- Certified Graduate Remodeler (CGR)
- Certified Environmental Access Consultant (C.E.A.C.)
- Professional Home Builder Certifications
Please note that you can successfully run a home remodeling company in the United States and in most countries of the world without necessarily acquiring professional certifications and business license as long as you have adequate experience cum background in the home remodeling cum real estate industry.
List of Legal Documents You Need to Run a Home Remodeling Business
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own home remodeling business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Business Plan
- Contract Document
- Non – disclosure Agreement
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
Financing Your Home Remodeling Business
Starting a home remodeling business is capital intensive if you choose to start on a small scale. Securing a standard office space in a business district, and raising working capital et al are part of what will consume a large chunk of your startup capital. If you choose to start the business on a large scale, you would need to go source for fund to finance the business because it is expensive to start a standard large scale home remodeling business.
No doubt when it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your home remodeling business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Suitable Location for a Home Remodeling Business
Generally, in business, it cannot be overemphasized that the location you chose to start your business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where there are high real estate activities and households with the required purchasing power and lifestyle. If you make the mistake of renting or leasing an office facility for your home remodeling business in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business.
Most importantly, before choosing a location for your home remodeling business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set – up your own home remodeling business
These are some of the key factors that you should consider before choosing a location for your home remodeling business;
- The demography of the location
- The demand for home remodeling services and real estate activities in the location
- The purchasing power of residents of the location
- Accessibility of the location
- The number of home remodeling companies and other players in the real estate industry that also carry out home remodeling in the location
- The local laws and regulations in the community/state
- Traffic, parking and security
Starting a Home Remodeling Business – Technical and Manpower Details
On the average, there are no special technology or equipment needed to run a home remodeling company but you will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst other and all these can be gotten as fairly used.
As regard leasing or outright purchase of an office facility, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/ease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location/facility for such business.
When it comes to hiring employees for a standard home remodeling company with plans to have corporate clients all across major cities in the United States of America, then you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Project Manager, Company’s Lawyer/Secretary, Head of Construction and Renovation, Business Developer/Sales and Marketing, Accountant, and Customer Service Executive/Front Desk Officer.
These are some of the key employees that you can work with. On the average, you will need a minimum of 5 to 10 key staff members to run a small – scale but standard home remodeling company.
The Business Services Process Involved in a Home Remodeling Business
On the average, the way home remodeling companies work vary from one company to another, but ideally, a home remodeling company is expected to first and foremost build a robust company profile before biding for home remodeling contracts from top clients/corporate organizations; it will give them an edge over their competitors.
The service process involved in the home remodeling industry depends on the niches or the services the home remodeling business offers. On the average, the process starts with biding or submitting proposal for a home remodeling contract, once the contract is won, then all the contract documents are signed and advance payment made as required.
Once the payment has been sorted out, the next step is for the home remodeling company to deploy workers, equipment and building supplies as required to execute the job.
Over and above, it is the practice of home remodeling companies to first access the risk involved and the nature of job they are to do before billing the organization that requested for their services. Most often than not, if the contract involves high rise buildings, the bills would usually increase because of the risk involved in climbing and also the equipment that would be used in executing the job.
It is important to state that a home remodeling company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated home remodeling business process is not cast on stone.
Starting a Home Remodeling Business – The Marketing Plan
- Marketing ideas and Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a home remodeling business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the home remodeling industry.
As a matter of fact, your marketing strategy should center on attention to details, reliability, swiftness, safety, pricing, thoroughness, and above all excellent customer service. You should ensure that whenever your customers hire your services, they will get excellent service. The truth is that if you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
Businesses this days are aware of the power of the internet and which is why they will do all they can to maximize the internet to market their services. In other words, a larger percentage of your marketing effort should be directed to internet users; your website should become your number one marketing tool.
These are some of the marketing ideas and strategies that you can adopt for your home remodeling business;
- Introduce your home remodeling company by sending introductory letters alongside your brochure to households, estate managers, corporate organizations, small scale businesses, medium scale businesses and other key stakeholders throughout the city where your home remodeling company is located
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across so that those on the social media or those who read blogs will know who to call when they need the services of a home remodeling company within your location
- Create a basic website for your business so as to give your business an online presence
- Directly market your services
- Engage in road shows in targeted business communities from time to time to promote your home remodeling business
- Join local home remodeling business associations for industry trends and tips
- Join local chambers of commerce and industry with the aim of marketing your services
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Product Pricing for your Home Remodeling Business
One key factor that will help you offer your home remodeling services at rock bottom prices is to purchase your building materials directly from wholesalers and importers in large quantities. The truth is that the higher the quantity of items that you purchase directly from importers and wholesalers, the cheaper you tend to get them.
Another strategy that will help you offer your home remodeling services at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives and also purchase.
Possible Competitive Strategies for Winning your Competitors
The availability of competent and reliable construction workers under your payroll, your business process and of course your pricing model et al is part of what you need to stay competitive in the industry.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base, and ensure that your remodeling works are top notch and trendy. Over and above, ensure that your organization is well positioned, key members of your team are highly reliable and competent and can favorably compete with the some of the best in the home remodeling industry.
Strategies to Boost Your Home Remodeling Brand Awareness and Create Your Corporate Identity
If your intention of starting a home remodeling business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening offices all across key cities in the United States and franchising, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is a dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a business that is profitable and last long.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your home remodeling business;
- Place adverts on both print (newspapers and real estate magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your home remodeling business
- Install your billboards on strategic locations all around your city or state
- Engage in roadshows from time to time in targeted residential communities to create awareness of your home remodeling business
- Distribute your fliers and handbills in target areas
- Contact households, corporate organizations, small scale businesses, medium scale businesses and other key stakeholders throughout the city where your home remodeling company is located informing them about your home remodeling company and the services you offer
- List your home remodeling company in local directories/yellow pages
- Advertise your home remodeling company in your official website and employ strategies that will help you pull traffic to the site
- Position our Flexi Banners at strategic positions in the location where your home remodeling company is located
- Ensure that all your staff members wear your branded shirts and all your carts, vehicles, trucks and vans are well branded with your company logo et al.