If you are handy around the house, you may be interested in starting a remodeling company to make extra money. Remodeling work can be profitable, but there are several common pitfalls. It is important to focus on the administrative side of the business from the beginning to avoid numerous headaches later on.
Items you will need
- Business plan
Investigate business structures and licensing requirements. Starting a remodeling company is no different than starting any other type of small business. Contact your state and local small business offices to find out what paperwork you need to file. A business license and occupational license are required in virtually every jurisdiction. If you plan to hire employees, check into Workers Compensation laws.
Research the various types of business structure such as sole proprietorship, partnership and corporation, to determine which best meets your needs. Consider working with an attorney or the Small Business Administration to ensure that you meet all federal, state and local requirements. The Service Corps of Retired Executives (SCORE) is an excellent source of business advice.
Business insurance, including liability, may be required in your state and is a good idea for all remodeling contractors. A small accident or even a paint spill could wipe out your business and, depending on your business structure, you might be held personally liable for damages.
Determine the scope of your business. The word “remodeling” can refer to many different types of jobs. In some locations, you must be licensed to perform certain types of remodeling work such as roofing or plumbing. Check your state and local laws to determine what types of jobs you may legally perform.
Of the jobs that you are legally eligible to perform, decide which types appeal to you. Are you interested in interior or exterior painting? Do you want to install hardwood floors? Are you competent at laying tile? Do you want to perform rough carpentry? Are you good at finish carpentry such as installing trim? The scope of your business may change over time, but decide on a few basic job types at the outset to avoid becoming overwhelmed.
Write a business plan. Every business, no matter how small, should have a written business plan. Ask the Small Business Administration for advice or search the Internet for business plan templates. The plan need not be elaborate, but should specify your mission and vision statements, projected financial figures, the scope of your business and your five-year plan.
Search for customers. Advertising can be a catch-22 for new remodeling companies. Advertising costs can be high; so many established companies rely on word of mouth. Without a portfolio of completed projects, it can be difficult to find leads and even more difficult to close a sale. Consider using a lead generation service, in which you are matched with potential customers. Online lead generators have become popular, but make sure you read the fine print. You may pay a certain dollar amount per lead, or a monthly fee in exchange for a certain number of leads each month. Note that the lead generator only provides a potential customer who may be interested in having work done. It is up to you to bid the project and close the sale.
Start small. If you are fortunate enough to find them, commercial contracts and major whole-house remodels are tempting, because they are generally lucrative. However, these projects are usually on tight deadlines and may involve major coordination with other contractors. As a new remodeling company, take advantage of smaller projects for individual homeowners. Small jobs allow you to get used to running the company and provide more leeway for unexpected delays. They can also generate word of mouth referrals and repeat business. As you gain experience and confidence, you can move smoothly into more complicated jobs.