How to Start a Remodeling Business: Step by Step Guide

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Starting a remodeling business can be daunting, but it is not impossible! Remodeling is one of the most in-demand home improvement services, and there are clear advantages to starting your own company.

In this blog post, we will discuss how you can start a remodeling business from scratch. First, we will cover how to decide on a business idea. Then, you can read about how to start making money in the remodeling industry!

For more information about how much it costs to start a remodeling company, keep reading this blog post until the end. We also have additional resources for continuing your research at the bottom of the page.

a remodeling contractor up on a ladder finishing ceiling drywall

What is Remodeling?

Remodeling is a home improvement service that focuses on renovating, repairing, or remodeling your existing house.

The most common types of jobs in the industry include kitchen renovations and bathroom upgrades. However, it’s important to note that there are many other services offered by professional remodelers! 

Some companies will specialize in roofing repair while others focus on giving your home a new coat of paint. If you are looking to get started in remodeling, you must have the right tools and team members for each job! 

You may need an electrician or plumber to help with some projects – not everyone knows how to wire up lighting fixtures! It’s also crucial that you understand the basics of residential construction before starting your own company.

Remodeling is one of the most in-demand home improvement services because it provides homeowners with personalization and customization options that they won’t find at any big box store! 

With remodeling, you can create a space that truly reflects who you are as an individual or family.

What is a Remodeling Business?

A remodeling business, in its simplest form, is a company that performs home improvement services. However, there are many different types of companies and each one has unique advantages! 

Starting your own remodeler will require you to have the right tools for the job as well as an understanding of what your customers want.

How to Start a Remodeling Business: Step by Step Guide!

Now that you know what remodeling is and how it works, we can discuss the basics of starting your own company. Below are all of the steps required to get started in this exciting field – we will review each one in detail below!

an illustration of a remodeling contractor holding a level

Step #01: The Decision

The very first step to starting a remodeling company is deciding if the business idea is right for you. Rest assured, there are many successful entrepreneurs in this industry!

However, just because it’s possible doesn’t mean that your life will be easy from day one – so it’s important to do some research before diving headfirst into your business idea.

As you’re thinking about what type of remodeling company to start, here are a few factors that may be important to consider:

  1. Do you have enough capital? Remodelers require tools and materials in order to get jobs done! If this is going to be your first time starting a construction or home improvement company, you may not have a large enough budget to purchase all of the necessary equipment. This is important because it means that your initial investment will be relatively low!
  2. Are there potential clients in your local area? The first step towards starting any business is researching the market and finding out if there’s demand for your product or service. Remodeling is in extremely high demand around the United States, so it will be relatively easy to find job leads in your area!
  3. Is this a business that you like? The best thing about remodeling companies is that they provide you with creative freedom. You can help homeowners design and build their dream home
  4. How amazing does that sound? This is definitely a business that will allow you to follow your passions and interests, so it may be a good idea to look into starting one if this is something that you’ve wanted for a long time.

Before making the final decision of whether or not to start your own remodeling business, we highly recommend doing some additional research on the industry as a whole. In particular, in the area that you plan to target as your initial market. We wrote an entire comprehensive kitchen remodeling guide that also talks about the timeline, schedule, and steps. If you’re not entirely familiar with the process of remodeling, or if you want to start creating a good process for yourself, this is a great start.

Step #02: Choosing Your Business Type/Name

Once you’ve decided to start your own company, it’s time to get serious about picking out what type of business structure to start as well as a catchy name!

Business Type:

There are three main business types that you can register for, and they include Sole Proprietorship, Limited Liability Company (LLC), and Corporation.

Sole Proprietorship

This is the easiest type of company structure because it doesn’t require much paperwork. It’s also the cheapest to start since you can do so by using your personal name! This is an excellent choice if this is your first time starting a construction business – it’s simple and cost-effective.

However, keep in mind that there are some limitations when registering for sole proprietorship status; most notably that you will be solely responsible for all debts and liabilities incurred by your business.

Limited Liability Company (LLC)

This type of company has many benefits! The first is that it provides the owner with limited liability protection, which means that you won’t be held personally responsible if anything goes wrong.

However, an LLC does require more paperwork than a sole proprietorship and is more expensive to start. This structure also has the added benefit of allowing you to retain a certain amount of control over your company while still enjoying some tax benefits!

Corporation

This type of business structure provides owners with even more protection than LLCs since you will be responsible for debts only up to the point that your company was registered. This type of structure is more expensive to start and requires a lot more paperwork on the back end, but there are many benefits that you would enjoy as an owner of a corporation.

There are definitely pros and cons to any choice that you make, so we suggest researching further into each option before making your final decision.

Business Name:

Most states require that your business have a name that includes wording such as “Remodeling & Construction” or in the case of a corporation, something along the lines of “ABC Corporation.” This is to help consumers easily identify what type of products/services you are providing, so be sure to adhere to these guidelines when naming your business.

Here’s a helpful article that we found online that discusses how to find and register a business name, check it out!

Step #03: Choosing Your State

After you’ve been able to pick out the type of business structure you want as well as a catchy name, it’s time to move forward and pick out the state that you plan on registering your business in.

Every state has different requirements for what is required during the registration process as well as fees which you will need to pay; some states may even require a physical presence before allowing you to register!

Therefore, it would be wise to check with your local Secretary of State office to see what those requirements are, as well as any fees that you’ll need to pay. This site has a search function which you can use to find your Secretary of State office.

Step #04: Choosing the Right Federal Identification Number

Once you’ve decided on the state that you plan on registering in, it’s time to choose the right federal identification number. This is highly dependent on whether or not you plan on hiring employees, and if so then you’ll need an Employer Identification Number (EIN).

If this is just going to be a one-man show where you’re the only employee, then we suggest using your Social Security Number as the federal identification number.  For more information on how to go about doing this, check out this article: How to Use Your Social Security Number as an Employer Identification Number (EIN).

Step #05: Filing for Federal and State Tax IDs

Okay, we’re almost done with setting up your company! Hooray!!

The last step is filling out the proper paperwork so that you will be able to file for both a federal tax ID as well a state tax ID.

If your company is just going to be a sole proprietorship, then you’ll only need one EIN. But if you plan on incorporating, then you’ll need an EIN for each location that your company will be operating in. In addition, you may also need to file for a state tax ID if the state that you’ll be registered in requires this before they allow registration.

To learn more about how to go about filing for a tax ID, check out this helpful article: How to Get a Federal Tax ID Number.

Step #06: Getting Licensed/Insured

Now that you have your business structure, federal tax ID number, and state tax ID all squared away, it’s time to focus on the products/services that you plan on offering. 

For example, if you plan on doing roofing work, then be sure to contact your local Better Business Bureau office as well as the state-level licensing board to verify if you need any additional training/certifications in order to offer those particular services.

It doesn’t matter if you’re only going to offer one product/service at this time, as it is never a bad idea to include as many as possible so that your client base is larger and more diverse. This will help you in the long run, plus it might lead to new revenue streams; for example, maybe somebody wants a roof replaced but also needs their gutters cleared.

Once your company name has been established and you’ve decided what services/products that you’ll be offering, check with your local Chamber of Commerce office as well as any business networking organizations in your area to find out what the requirements are for licensing/insurance.

After contacting these offices, contact a local Insurance Agency (if you’re planning on using subcontractors) or an insurance broker (if you’ll be working by yourself). They can help you through this process and advise you on what type of insurance is needed, and what it’ll cost.

Step #07: Registering with the City and Getting a Permit

If you plan on working out of your own property, then this step is not applicable to you; but if you plan on using a commercial location as one of your work sites, then be sure to contact your local city hall as well as the public works department.

They’ll be able to tell you the steps needed for obtaining a permit/registration, as well as any additional fees that might be associated with this process (parking restrictions, etc.)

Step #08: Finding Jobs and Getting Paid

Now that you’ve registered your business (and started making your portfolio of work), it’s time to start getting some jobs and making some money!

To get started, we recommend using sites such as Craigslist, Angie’s List (now known as just Angi), and HomeAdvisor. These allow you to create a listing that potential customers can search through (to get an idea of how much work would cost) and then get in contact with you directly.

If you don’t like the idea of giving out your info to complete strangers, then there are other options. For example, if you live in/near a major city, be sure to check with local businesses to see if they have any outdoor advertisements or signs that need repair/replacement.

This is especially true for any business that specializes in roofing and painting services (ex: a sign for an auto body shop).

The key is to get the word out there in any way possible, so don’t be afraid to try new things. Some potential customers will find your business on their own, while others will need you to knock on their door before they are convinced that they are ready to hire you for their projects.

Step #09: Staying Organized

For any homeowner, it can be hard to keep track of everything that needs to be done around the house/premises. This is why we recommend that you use an online service like Google Keep or Evernote

These are great tools because they allow you to make checklists that can include due dates, costs of materials/services needed, and finally the task itself. For example, you might have a note that says “remodel the kitchen” with all of these items listed below it: Remove old cabinets Order new cabinets Install new cabinets Purchase countertops Insert hardware onto doors.

When you get money for each item on your list, be sure to cross it out and place the new due date (signifies when payment is due) so that your customer knows what needs to be done/paid in order for work to continue on their home.

Step #10: Maintaining Your Business

Once you’ve started this endeavor, there are a number of things that you’ll need to continually do in order to keep your business afloat.

Your first priority is to ensure that you have a steady stream of customers and work available for any of your employees/subcontractors. This means having a good reputation and word of mouth.

You should spend some time marketing yourself and getting the word out about what your business does and how you can help your customers. This means maintaining a website, social media presence, and an online portfolio of services that you provide for potential clients to see (before they even contact you).

Along with this, we also recommend that you spend some time learning/applying new technologies: tools that can help you run your business more efficiently. 

For example, there are tons of great apps/software out there that allow you to communicate better with employees and subcontractors (as well as complete customers). Examples include Trello, Slack, and Basecamp.

However, just like any other business, be sure to take time for yourself every once in a while. If you work so much that you have no time to enjoy the fruits of your labor, then you’ll burn out and lose business in no time flat.

Step #11: Maintaining Your Workforce

After hiring employees or subcontractors, it’s important for any good business to create/maintain a positive work environment for them. 

There are 2 more things that you can do to improve the morale of your workforce and create an atmosphere where people want to stay with your company (rather than moving on to something else):

First and foremost, be sure that you’re paying them at least minimum wage (and ideally higher than this). 1-year there are certain benefits that they receive while working for you (such as health care), then make sure they know what these benefits are and what they are entitled to.
And, be sure to have a good relationship with your employees/subcontractors. For example, if it’s appropriate, you might consider taking them out for lunch or coffee sometimes. 

This will allow you to not only get to know them better as people, but it also brings the team closer together and encourages loyalty towards your company or organization.

Step #12: Evaluate Your Business

Along the way, you need to constantly evaluate your business and see how it’s doing. This means taking a look at everything from marketing, customer feedback, project evaluations, etc.

Were projects done on time?
Did they stay within the allotted budget?
Are there any issues with your employees/subcontractors?
What can be changed in order to improve efficiency or results without spending too much money?

These are all questions that you will have to answer regularly as part of running your own remodeling business. While these things might seem daunting at first, don’t worry! 

As long as you’re willing to put in the work now, then success is just around the corner and probably right inside your very own home!

We hope that this guide has helped you on your journey to starting a remodeling business. Now, let’s move to the FAQ section.

FAQ

What business name should I pick?

When picking out a name for your company, you want to make it as memorable as possible. Try to include bonuses such as “remodeling” or “home improvement”. 

Another trick is to use the name of an already-well known remodeling company (such as Lowe’s or Home Depot) because this will immediately communicate everything that your company does to potential customers.

What marketing approach should I use?

There are so many different ways to market yourself! The most important thing is to pick one or two approaches, but don’t try to do them all at once. 

For example, you might want to start by advertising on your website and listing yourself in a business directory. After some time, you might want to try buying ads on Facebook or Google Ads (alone or in combination with your website).

What should my warranty be?

It’s a good idea to offer at least a one year warranty for all of your workmanship and supplies used. While 60-90 days is standard, home improvement projects tend to evolve over the years into something that has long-term value for homeowners.

A warranty that covers everything from installation errors to new leakages or stress cracks can go a long way towards building trust between you and your customers so they know what to expect when working with you.

How much do average remodeling jobs cost?

On average, most renovations will range from $5,000-$25,000. This doesn’t include labor costs which are typically 50% of the total price.

How much should I charge for labor?

If you have a contractor’s license and know your way around most major projects, then you can probably charge about $25-40 per hour depending on the size of your company. 

If you’re just starting out in business with only one or two employees, then it’s best to take an hourly wage in order to be able to offer affordable services without having to invest too much money into overhead expenses right off the bat.

What website should I use?

If you want people to be able to find your company online easily, then make sure that they are searching using Google Images

Make sure that you have a business directory listing as well as a website at the very least, but these can also be combined with Google Adwords if you want to invest a bit more money into marketing your company right off the bat.

What should my company look like?

When it comes to any construction project, you want your business to look as professional as possible. In order to do this, you need a bright and open space that is inviting for customers. 

What’s more, it needs to be neat and clean at all times since potential customers will see it first-hand if they’re visiting your shop on the weekend or after hours!

Also make sure that there are no safety hazards on the premises such as exposed nails or electrical wiring, as this could scare people away immediately rather than leaving them with a positive impression of your company.

What happens after I file my LLC paperwork?

After filing your paperwork with the state, you will receive a confirmation letter from the Secretary of State. It will contain your LLC’s Federal Tax Identification Number as well as the date that your company officially becomes registered to do business in your state.

How can I make sure my workers are insured?

It is the responsibility of every employer to make sure all their employees are covered under some kind of insurance policy, either through a group plan or by buying an individual policy for them.

If someone gets injured on the job or if there is property damage that occurs during a project, you could be held responsible even if it was not entirely your fault!

For this reason, it is important to have liability coverage in case anything goes wrong while you’re at work.

What should my business cards look like?

Your business cards should contain all of your company’s important contact information on it. This includes not only your address and phone number but your email and website as well.

Make sure that you also include a logo or image that is representative of your brand so potential customers can recognize you when they meet you in person!

What should my bidding process look like?

Bidding out jobs is part of how you stay in business. If you’re not meeting demand, then it’s time to hire more employees or expand your construction company into a bigger area.

For this process to be as smooth as possible, you should always have an idea of what the finished product will look like once your workers are done with it. 

Be ready to answer any questions that customers might throw at you and make sure that they know just what is included in the price of their project!

How do I keep my customers happy?

The best way to ensure customer satisfaction is by offering them something better than they expected for their money. This means making sure the job is completed on time, or even ahead of schedule if possible so long as no safety precautions are being overlooked.

Your workers should always be polite and respectful of the customer’s property, making sure to clean up after themselves once they’re finished working for the day.

Are there any rules I should keep in mind?

Your business needs to be conducted with excellence even if it is just one person working for you. Make sure to set a good example for your employees since you don’t want any of them to miss deadlines or have an accident on the job site. 

Most importantly, keep up-to-date on all local construction codes and safety regulations so that you can stay out of trouble with the authorities.

What other factors should I consider?

There are a number of other things to take into consideration before starting a home remodeling company. Make sure to have a good working knowledge of how much customers typically spend in your area so that you can negotiate costs with them accordingly as well as understand what they expect from your services as far as quality goes. 

If you’re not absolutely confident in the work that is being done, then call in another contractor to check it over to avoid any lawsuits in the future.

What are some other skills I should have?

Some other skills that are helpful when working with customers include being able to take criticism well so long as it is constructive, staying organized, and being flexible when issues come up during the project. 

It is also important that you can anticipate what your clients want or need, even before they ask for it!

In the end, it’s important to keep in mind that this is a business, and you’re going to have to treat it like one from time to time. If you want your customers to be happy with the finished product, then you need to make sure that they can trust what you say and feel confident about giving their hard-earned money over to you.

If there are any other tips or suggestions for someone looking at starting a remodeling business, please add them in the comments section below!