How to Start a Home Automation Business

by Contributing Writer; Updated September 26, 2017
Personal client--in-wall Windows XP-based touch panel

Starting a home automation business can be fun, exciting, exhausting, rewarding and anything else that you make it. There are so many things to do in order to prepare. So many possibilities to consider. Where do you start?

Step 1
Personal client--media unit before.

Write an executive summary (not a business plan; that will follow). As you dive deeper over the years, a business plan will write itself. With good practices in documentation, strategizing and a business-savvy mind, the business plan should be a substantial document by the third year. Prior to that, don't worry too much about it; however, you should write an executive summary. What are your intentions? Who do you see as your clientele, and what do you envision doing for them? What's the story behind why you're getting into this business?

Step 2
Personal client--media unit after

This next step will no doubt become the first elaborate part of the business plan. Figure out what the core products will be. Service is a product and it does need rates attributed to it, but, more importantly, figure out which control systems will be core to the company. You're going to need to begin a relationship with these firms and/or their distribution channels. The control systems have many other systems that can be integrated with them, but you need a base. Some example of leading control systems are Crestron, AMX, Elan Home Systems, Home Logic (now owned by Elan but still a separate system) and HAI (Home Automation Inc.).

While doing this, there are some things to consider. Are you selling to high-end people or low-end people? The companies above are listed from high-end to low-end. In the world of home automation (or "smart homes"), there are many flavors of installers/designers. The Crestron people make the most money on the least amount of projects. The scale slides down from there. Crestron is also the most difficult to install. It requires more of an engineering background (as oppose to an electrical or security system background) and actual programming. Although the programming environment is proprietary, it's similar to a C or C++ in that it's line by line code. The others (excluding AMX, which is very close to a Crestron) are more of a point and click interface to set up a system. They cost less, install quicker, require less maintenance and as a result demand less of a retail cost. You see security or electrical companies often get into the lower-end stuff. If you want to be a true home automation engineering firm, then you should choose between the Crestron and AMX brands.

Get set up with a distribution channel (if they require you to incorporate before handing over pricing information, then you may need to incorporate; if not, hold off on it). Know your pricing and configure some example hypothetical systems just to get familiar with it. A technical training class or two (usually offered by distributors) would be good as well.

Step 3
Personal client-network hub

Get clients. Forget about all the other things that come with owning a business. Just get a client. Remember: obtain the other things only as needed. A very prudent rule in business is to not spend time or money on something unless it demands that you do; otherwise, a company quickly turns into a company that is losing money. At this point in the new venture, it doesn't need much and there will be a ton of multi-tasking, meaning you won't have something (insurance for instance), need it, and then have to scramble fast to get it. That's the nature of the beast.

Let's elaborate. The first client is most likely (and should) be someone who already knows and trusts you personally. Maybe they've seen what you can do elsewhere and are willing to give you a shot. Once you have that person, you'll be accepting a check soon; now it's time to incorporate. Licenses, insurance, employees, etc. will follow similarly. Hold off as long as possible (within the law) in regards to anything that has to do with spending money!

Keep the first project(s) simple. Even if you're a go-getter, it's harder to keep it simple than to start designing too much of a home automation system. That's how one gets into trouble on a smart-home project. These systems are more complicated to design and install.

Step 4
Personal client--in-ceiling surround speaker

Always require half of the project upfront. Even if it's someone you trust. One thing you have to get used to as a business owner is that there are no variations in your business model. You need to stick to the plan. You're not in business to lose money. This type of company very much so falls under the umbrella of being a construction contractor. Needless to say, people will try to rip you off. Require half of the project's total up front. Design a timeline for the install of the project. The other two-quarters of payment should come at specific dates, not project points. Clients will always find a way to say you didn't complete something, but they can't find a way to say it's not a specific date.

Allow the client to retain 5 to 10 percent of the last quarter of payment. If discussion is fitting, you can express that this is the portion of your payment considered profit. That justifies the other money as covering your costs and gives the client something to hold on to in order to justify the quality of your work.

At the end of the project, documentation and bullet points (what the client views as still needs to be completed) should go hand in hand to signify when the project is completed and you collect the final portion of money.

Step 5
Personal client--discreate in-wall touch panel

A few other random tips that can be relative in starting a smart home business:

  • Wire pulling is crucial and most likely not something you'll be doing yourself. Begin a relationship with an electrical or security company that you can sub this to if needed.
  • Depending on the work you're doing, you may touch areas of your project that require licensing. For example, security is a popular home automation aspect. You need to be licensed to incorporate it into your project. Having someone that will "let you use their license" for a small fee is a good strategy, but you still need to make sure they check your designs and your finished work to make sure you follow(ed) code. Electrical work is another one that a lot of these systems touch; try to stay away as best you can. Even if you're simply changing light switches, as a business you can lose a lot by not following code/laws.
  • Document each day and what you did and have your workers do the same. This is an absolute necessity if you plan on winning a payment argument, which will surly arise.
  • Make sure you comply with insurance laws.
  • Surround yourself with good people. The hardest part of being in business is finding good people to work with/for you. It truly is an unintentional and deceptive task because without experience it's hard to see what someone is like. Even with it, it is hard. However, surrounding yourself with good people will no doubt help you be successful.

Photo Credits

  • Personal client