There is always demand for home improvement services. Long-term forecasts suggest the industry will grow by 4% annually between now and 2032. If you can deliver quality work and run your business well, you’ll always be able to attract customers.
Small and mid-sized companies thrive in this industry. You might want to use your trade skills and experience to start your own company. There might be plenty of opportunities in this sector. However, launching a business might be harder than you think.
You need a methodical approach to increase your chances of success. This ensures you don’t miss any necessary steps to avoid problems or risks after you start.
In this article, we will explore how to start a home improvement business. You’ll learn important preparation and planning strategies. Then, we will help you understand the steps necessary to turn your plans into a real business. Finally, we’ll share tips you can use right now to start the process of creating your company.
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The Growing Demand for Home Improvement Services
Why start a home improvement business now? Long-term industry growth is steady, but demand could increase in the short term. Here’s what is driving this growth in 2024.
- Lower interest rates could give homeowners access to funding to use for projects.
- Real estate prices are high. Homeowners would rather renovate than try to buy a new home.
- Decreasing inflation gives homeowners more disposable income.
Also, homeowners in many areas have difficulty finding companies that provide quality services. If you can deliver good results, you will have opportunities to grow your business.
The Need for Services in Different Niches
Demand is high across the industry. But, you may find that it is higher in some niches or specialized areas. For example, some homeowners want to renovate exteriors to increase energy efficiency. Meanwhile, others need to add a home office for remote or hybrid work.
Other common areas, such as kitchen and bathroom renovations, are always popular. This is especially true for people trying to add equity before selling their homes. Attached and detached additions are also in demand for the same reasons.
Finally, people want to integrate new smart home features. These tech installations usually fall outside the realm of DIY. If you can handle these projects, you may find yourself in high demand.
Start Planning Your Services
Choosing a niche is only a part of the business planning process. Here are other steps you should take to define your business idea and decide if it’s realistic.
- Write down your business vision and goals. Decide what you want your business to be. What services do you provide? What are your niches and specialties? Who are your clients? This general vision will help guide the next steps of business planning.
- Define risks. You should also consider what could go wrong. This step can help you plan for worst-case scenarios. If you mitigate risks early, they won’t do as much damage if they occur.
- Calculate cash-flow needs. Home improvement businesses need healthy cash flow. The revenue from previous jobs can help fund your next materials purchases. Calculating your expenses will help you see how profitable your business could be.
- List the expertise you need. What skills do you need to deliver high-quality results? Decide what you can do yourself. Then, see if you need subcontractors or specialized employees. This step helps you define your company’s structure and how you will work on projects.
This first step gives you a broad view of your business. Next, you need to fill in the details.
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Initial Steps to Starting a Home Improvement Business
The next phase of business planning is to turn your vision into a well-defined strategy. You might think about this as formalizing your ideas or giving them structure.
Here are the five most important steps during this stage of the process:
- Conduct market research. Find out if people in your area want your services. See what types of improvements they make to their homes. Also, find the price range for these projects. This step defines your ideal client and target audience for marketing.
- Define your competitors. Find out who already provides the services you plan to offer. Figure out how your company will be different. What will you do that will set you apart?
- Plan funding for your business. Who will pay the startup costs? You could decide to pay out of pocket or get a business loan. Another option is to find investors to fund you in exchange for equity in your company. Also, consider how you will cover expenses until your business becomes profitable.
- Choose a business structure. Choose a sole proprietorship or limited liability company (LLC). These simple options are easy to set up but do not allow you to issue shares. If you have investors and need to issue shares, you can form a corporation. You need to register your business with your state before you begin operations.
- Understand the legal requirements. Find out about permitting and licensing laws near you. Also, look at insurance and bonding rules for home improvement companies. Make sure you meet all federal, state, and local requirements before starting.
Use the ideas from these steps to craft a detailed business plan. The business plan will be your road map for setting up your company.
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Setting Up the Operations for a Home Improvement Business
After you handle the financial and legal details, it’s time to work on your operations. These steps involve getting laborers, tools, and materials. You must also build a project management framework to deliver good results.
- Get the right tools and equipment. Find the equipment you need to deliver your services. Make sure you buy tools that can stand up to daily use. Professional products might be more expensive. However, they can provide better value because of their lifespan.
- Recruit employees or skilled subcontractors. Find employees or contractors who meet your standards. You may be able to train some staff members, but you will also need experienced pros to ensure high-quality work.
- Build relationships with suppliers. You need excellent materials at good prices. This will ensure you can offer quality while also earning profits. Suppliers can provide bulk pricing or other discounts. Start building connections that lead to good pricing early.
- Come up with a project management framework. You need a plan to manage each job. It helps to follow the same steps every time. This will ensure quality and help with time management. It will also allow you to schedule workers and contractors more easily. Use your previous experience to detail this framework. Then, review it after each project and make improvements if needed.
You should also consider administrative systems. For instance, find software to handle invoicing and accounting. Set these tools up before you start to limit the time spent on paperwork.
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Marketing and Growth Strategies Tailored to Home Improvement Companies
Quality work can help you find clients via word-of-mouth recommendations. But you also need marketing strategies to ensure your company continues to develop. The following ideas can help your company continue to grow after its launch:
- Define a unique image and selling points. There are 781,646 home improvement businesses in the US. You need to do something to stand out. Define what makes your business unique. Find the characteristics and offers that you have that other companies can’t copy. Then, focus your marketing on these areas.
- Create an online marketing strategy. You’ll find some clients via word-of-mouth. However, many will come from online. Make sure you have social media, a website, and a method for reaching people online. Also, fill out a Google Business Profile. Use the same phone number, name, and marketing text on each listing.
- Form partnerships with other professionals. You can work with contractors offering different services. Also, build relationships with real estate agents or architects. These pros can be a steady source of business for you.
You might also consider targeting different types of customers. For instance, you might offer your services to businesses in addition to homeowners.
Top Takeaway Tips for Starting a Home Improvement Business
As you can see, there are many details to consider when starting your business. You need to go step by step to ensure you don’t miss any vital elements. But you can get started with small, simple steps that won’t cost you anything. Here are four ideas you can do today to begin your business planning:
- Define what you do well. What trade and project management skills do you have? What are you interested in learning? These insights can help you decide what niches and services you might consider.
- Search for businesses in your niche. Go online to search for companies in your specialties. This step helps you see if there is a need for such services in your area or if the market is already saturated.
- Get insights from friends and neighbors. Ask friends what services they need. See if they express interest in the services you have the skills to provide.
- Research prices in your area. See what other firms charge for services you want to provide. Can you compete with them in price? Or decide if you can offer more quality or different services that add value.
With these steps, you can lay the groundwork to take the next steps to launch your company.