If you’ve been considering starting a home improvement business, you’ll be happy to know it’s profitable. When homes are in high demand, sellers renovate their homes to make them more appealing to buyers, and buyers do the same to satisfy their unique needs. During slow real estate seasons, homeowners customize their homes to stay current with the latest trends. If you like the sound of being known as the owner of a home renovation startup in your neighborhood, here are tips to help you open and run it successfully for years.
1. Find Your Motivation
To become a successful home renovation startup, you must understand the fundamentals of the industry and craft a solid business plan. Besides that, you also need the right motivation, particularly in the beginning stages. It’s what will give you the will to get things done when you feel like you don’t want to get out of bed.
It’ll also make you enjoy your work and take an active role in running your business. So before moving forward with any plans, take yourself on a date and think about whether this is the kind of business you want to do for the next few years or possibly forever. Once you have an answer, you’ll know if opening a home improvement business is the right decision for you.
2. Determine if You’re the Right Fit for a Home Improvement Business
You may think that formal education is all you need to run a successful home renovation startup, but nothing’s further from the truth. The long-term success of your business will depend on your ability to complete renovation-related tasks and your administrative skills. Consider if you have what it takes to be a self-starter in the home improvement business or if you need to bring another party on board for an extra push. If you’re the boss, you’ll have no one to make you get your act together when you’re slacking but you.
3. Have a Reasonable Financial Outlook
Before looking for an office space for your new home renovation startup, you must set aside enough savings to cover the costs of opening and running the business. You should also be careful not to overspend, or you’ll soon encounter cash flow problems. You’ll need to tighten things for the first several months to even a year to drive in the profits you need to be successful.
4. Level Up Your Skills
Nobody starts out knowing everything there is to the business. Unless you already have years of experience under your belt, it doesn’t make sense to start off managing large home renovation projects from the jump. One of the best things you can do for your home renovation startup is to grow your skillset before beginning operations.
Some of the skills you need include painting, window and door installation, tiling, carpeting, flooring, masonry, concrete, plumbing and electrical work, drywall installation, and carpentry. As a general contractor, you’ll likely specialize in a few of these trades and outsource the rest to landscapers, electricians, local plumbers, an AC repair company, and other tradespeople. If you’re wondering what skills to develop first, carpentry is a great place to start since it comes into play in most home improvement jobs.
Other trades such as HVAC, plumbing, roofers, and electrical are also in high demand but take longer to perfect. Each trade has its state-specific certification and licensing requirements. The key is to stop thinking about it and start doing it as soon as possible.
The internet is a great resource for practicing different home improvement tasks if you’re starting from zero. After getting a rough idea of the basics, you can start searching for community colleges and trade schools that offer hands-on training. Another great way to level up your home renovation skills is to work as a subcontractor under a general contractor for some time.
Look for a reputable general contractor in your region and ask if they would consider hiring you as a worker or an apprentice. If you do get the opportunity, you’ll gain valuable first-hand experience. You may also be lucky to find a mentor to support you when you launch your home renovation startup.
5. Determine What Services You’ll Offer
Whether it’s appliance services or lot clearing, prioritize what you’re passionate about and give you the best returns. You likely already have a few things in mind. Some contractors offer comprehensive home improvement services, while others specialize in improving specific rooms.
For instance, most people in the business like making bathroom upgrades, kitchen remodels, and family room additions. You’re more likely to excel in the things you like doing. If you’re great at plumbing work, you might want to double down on that in your business.
The joy of doing something you love will give you the push you need to grow your business. Whatever specialty you choose, remember you’ll need to obtain the appropriate licenses, and each state has different laws. So, research your state’s specific laws before you promote or provide home improvement services.
6. Decide Which Homes You’ll Remodel
Choosing your customer base is one of the most important aspects of starting and running a successful home renovation startup. You want a customer base of people who want to renovate their homes and have the money to do so. As an entrepreneur, it’s easy to get caught up in doing what you love.
However, your business will fail if the service isn’t in demand or your customers don’t have the money. For example, single women who live alone will likely have the money to hire a competent, trustworthy professional to improve their homes. This is just one example; there are other consumer types you can target who can afford to pay for you.
It may seem like it shouldn’t matter, but you also need to think about the type of people you want to interact with daily. You’ll enjoy reporting to work when you like the people you serve. It’ll also push you to work harder.
After settling on a target market, you must determine which marketing strategy will yield the best results. This could be social media, online advertising, or even door-to-door advertising. Conduct intensive research on the shopping habits of your target customers and how they find information on home repairs and improvements so you know how to reach them.
7. Obtain the Appropriate Business Licenses and Insurance
Depending on the laws in your state, you’ll need a license and insurance coverage before embarking on home renovation projects, especially as the scale of the jobs increases. Having the right general contractor insurance is key to protecting your home renovation startup. A general contractor insurance policy may include general liability insurance, commercial property, tools and equipment, commercial auto, and workers’ compensation coverage.
This can protect you financially if something goes wrong, and licensing agencies and project owners often demand it. Most general contractors also get a bond, which offers an additional layer of insurance on your coverage plan. Conduct some research to know what your business needs.
8. Develop Strong Relationships with Subcontractors and Suppliers
Establishing strong relationships with the relevant material suppliers will benefit your business. For example, you may get discounts from a tool rental business, which will lower your business expenditures. You’ll also be able to beat your deadlines as your suppliers will likely prioritize you when delivering materials.
9. Market Your Services
You may be offering the best cabinet install or local pest control services in town or have the best team of contractors, but without the right marketing strategy, you’ll be left wondering why no one is hiring you for their home improvement projects. In fact, most of your efforts should be geared toward marketing in the first few months of business. It won’t be easy; it’ll take patience and hard work.
When you’re not working on a home improvement project, you need to advertise the heck out of your business. So what is the most effective way of marketing your home renovation startup? You can use the internet, billboards, or hand out flyers to make people aware of your business. Some people recommend Craigslist, but free advertising won’t yield much results.
While you may attract some customers, they may not be able to afford your services. Online marketing offers a cost-effective way of attracting new customers. Most successful home renovation businesses obtain their leads by maintaining a solid social media presence and website.
However, even with a strong online presence, remember that word-of-mouth from delighted customers remains the best source of referrals for home improvement entrepreneurs. The best contractors maintain strong relationships with their clients, helping them get more and even bigger jobs. You’ll probably need to rely on your networks when you’re just getting started. There’s a solid probability that your initial clients will come from family, friends, and your neighborhood.
You may also need to offer discounts in the first few months. Doing this is a great way of sharpening your skills before scaling up your operations. It’ll also help you fill your social media accounts and website with projects and genuine, positive customer reviews.
Don’t forget to check in with your clients after every job to see whether they’re satisfied and to address any concerns. With your customer’s permission, take pictures before, during, and after each project. These images will speak volumes on your website and social media channels because seeing is believing for your potential consumers.
10. Understand Your Costs
As mentioned earlier, lowering prices is a great marketing strategy during the first few months of operations. However, note that by doing this, you’ll be cutting into your profit margins, leaving no room for error. The problem with this is, more often than not, you’ll make mistakes. When putting together an estimate, ensure you’ll be able to generate enough profits to cover the cost of a redo if the need arises.
11. Give Accurate Estimates
One of the most important skills you’ll need for your home renovation startup is the ability to accurately estimate costs for each job. While larger home improvement businesses usually have an in-house estimation department, you’ll probably need to do it yourself for some time or hire an estimator. To prepare a bid, you need a quantity takeoff, a table detailing, and itemizing material costs.
You can do this by hand or with the help of a software. It might be tempting to underestimate the cost of a job at first and start increasing it gradually as the job gets underway. However, doing this will only upset your clients because they’ll feel like it was all a scam. Instead, work closely with your clients to learn as much as possible about their needs, then give a solid, precise, and transparent estimate.
12. Keep Growing
As you cement your place in the industry, you can start recruiting more staff and take on bigger, more complex, higher-end jobs. Most seasoned general contractors hold certifications that impress clients, allowing them to get more jobs. NKBA, NAHB, and NARI offer highly acclaimed certificates for home remodelers and renovators.
A great way to make your business stand out is to focus on services that appeal to the type of homes in your area. For instance, if your base of operations is near an urban area with crowded apartments, offering small space design solutions will give you the best returns. If you reside near a beach, you can specialize in kitchen remodeling for vacation homes, deck building, or shed service. After completing projects, you can also offer maintenance services for improvements that require regular check-ups for an extra income stream.
With more people becoming homeowners, a home renovation startup is one of the most profitable business ventures in 2023. However, even with such favorable market conditions, achieving success won’t come automatically. You need to intentionally make an effort in how you conduct your operations. Use this read as a guide for running a home improvement startup, and you’ll soon be a successful business owner.