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How To Start A Small Home Improvement Business

How To Start A Small Home Improvement Business

There are as many small business ideas as there are people on the planet. Starting a small home improvement business is perfect for individuals who have experience in home remodeling or have worked as or for a general contractor or subcontractor. It is not uncommon for someone to gain years of experience in the construction industry to then strike out on their own with hands-on knowledge and existing business and customer relationships. Let's take a look at some additional information when looking to start a home improvement business for yourself.

Business Basics

As with any small or home-based business there is some initial groundwork necessary to operate in a legal capacity. Create a professional business plan which will outline specifics with regards to revenue projections, competitive market analysis, management structure, initial business financing, expected breakeven date, regulatory requirements and applicable insurances. Determine whether or not to incorporate or operate as a sole proprietor. Incorporation using an LLC, or Limited Liability Company, is recommended as it functions in a similar fashion to a sole proprietor but affords the same protections as a corporation. Purchase the necessary small business and liability insurance to protect yourself and your company from potential lawsuits should someone get injured during a project. Obtain an Employer Identification Number from the government which is used when seeking loans and filing taxes. There may be other requirements for establishing your small business so conduct research and speak with a professional if necessary.

Target Marketing

Consider who the target market is when looking to offer your services for home improvement. Ideally, expensive homes in affluent neighborhoods will be the perfect customer as they have higher disposable income and are likely to maintain or improve their personal property. As part of a competitive market analysis, examine which competition already exists and if there is enough existing business for a new entrant. Starting a small home improvement business may be dead in the water if there is already too much competition or too small of an existing customer base. That doesn't mean a home improvement business won't work but it may require finding a specific niche to satisfy an unmet need in the marketplace.

Find a Niche

Small home improvement businesses are normally either jacks of all trades which offer everything and anything under the sun or they focus on a specific area of expertise. In order to maintain a small operating budget with minimal labor expense it is best to focus on a niche market. For example, there are some home improvement companies which focus specifically on building fire pits and are the best at what they do. There are also companies which lay paver driveways or install custom ponds in backyards or modify garages for special use needs. Regardless of which niche you focus on, make sure competition for the same service is nonexistent or that the existing competition offers a substandard product or service. This will significantly increase your odds of being successful when you begin operations.

Wholesale Connections

Home improvement businesses are slightly different than most other endeavors with the possible exception of auto mechanics. Most projects will include a materials and labor component normally of equal value and it is commonplace for customers to provide 50% of the cost upfront to cover materials. Home improvement businesses can make significant revenue by having existing business relationships with wholesale building material providers. By purchasing project material through business connections, you can obtain significant discounts and make money even on materials. This may be one of the top determining factors because if you are unable to obtain building materials at a reasonable cost it will be difficult to make money or stay competitive going forward.

Friend of a Friend

It only takes one or two successful home improvement jobs to get the ball rolling when starting a home improvement business. Always have business cards available on your person and in your vehicle and leave it every existing or potential client. More so than any other industry, trades such as plumbing, electrical and landscaping are based exclusively on reputation and word-of-mouth. While there are Internet resources available which allow you to find experienced and qualified craftspeople, it is still commonplace to ask a friend or family member who they used to install their deck or paint their house. By offering exceptional customer service and top-notch work on a project it should be easy to turn existing projects into additional future work.