If you’re skilled at home remodelling and want to be your boss, starting a home repair business may be an ideal career; it offers you the chance to use your skills to improve people’s homes.
There’s usually no shortage of customers for home repair businesses. Plenty of homeowners want to make their homes more comfortable or spruce them up for sale. Of course, starting a home improvement business takes some legwork.
Your remodelling business might be a one-person show where you personally complete kitchen, bathroom, bedroom remodels or additions to homes and businesses. In another business model, you could serve as a general contractor and hire employees or subcontractors to help complete jobs in a more efficient manner.
We have a wide range of property maintenance Melbourne services at Hitch Property Constructions.
What are the costs involved in opening a remodelling business?
Suppose you are offering up your skills and time as a part-time remodeler. In that case, the startup cost will be around $50,000 to $75,000 as you will need a complete set of tools, a vehicle for transporting tools and supplies, and the proper licensing and insurance in order to operate in your state and locality. If you are looking to enter the business world offering major renovation services, expect to have startup capital of $250,000 to $500,000 as you’ll need to be able to purchase your first few orders of materials and hire staff before your customer pays you for the completed job.
What are the ongoing expenses for a remodelling business?
You will need to maintain accounts with material suppliers, pay your crews on a regular basis, and maintain vehicles and tools. Fortunately, your office space can be fairly minimal.
Who is the target market?
Home and business owners who are seeking to have their property professionally renovated and are willing to pay a fair price for labour and materials. Large businesses that need renovating may have more space, allowing you to charge more for your work.
How does a remodelling business make money?
Your remodelling business generates income by charging your customers for labour and materials for their renovation. You are responsible for providing your tools as part of your trade. However, paint, hardware, lumber, flooring, and other supplies are purchased by you at wholesale prices, and then you charge your customer for them at a premium price. Your hourly labour costs will be determined by the level of expertise, the type of job that is being completed, and local competitive rates.
How much can you charge customers?
Your rates will vary depending on the size and complexity of the job. Rates vary from $45/hr to $85/hr and can be lower or higher. You will want to complete an extensive competitive comparison to ensure your client is getting a good value—the average renovation project costs between $3,000 and $15,000.
How much profit can a remodelling business make?
The typical markup on materials is 15%. Income for a one-man company can be around $20,000 a year working part-time while a large contractor with multiple crews can see income in the seven-figure range when they complete multiple large jobs over the year.
How can you make your business more profitable?
Ensuring quality work that completely satisfies your customer is the number one means of generating more business, and therefore additional profit. You will need to ensure the quality control and customer service are always of top priority for your successful remodelling business.
How to Start a Home Renovating Business from Scratch
Start as a Subcontractor
Although the workload in the housing market is growing, the beginning will be all but simple. If you want to begin your business successfully, get ready for a multi-step process. First, start as a regular worker in a home renovating business or a bigger (re)construction company. It will help you make connections in the field and gain some precious experience.
Then, learn the tricks of the trade regarding the financial side. As time goes by, start developing an exit strategy. For instance, start doing some less-challenging home renovation projects on your own as an extra job. If you’re good, you’ll get recommendations from your clients. As your workload keeps growing, hire assistants and increase the number of work hours. Finally, when your side job becomes your main source of income, leave your current position and launch a brand-new home renovation business.
Calculate Your Budget in Advance
As opposed to construction businesses, which are usually huge enterprises, home renovating ventures are managed more easily in financial terms. Nevertheless, don’t think it will be smooth sailing. With many entrepreneurs doing the same thing as you, the most important step is to ensure that you have enough budget to cover your initial expenses.
This budget should include your workers’ wages (direct labour), overhead expenses (the total cost of all the means you use to carry out the work) and direct materials (pretty self-explanatory)–read more about it here. When you’ve calculated all those initial expenses, it’s time to see what financing models you can apply for. Make appointments in several banks and check if they can offer you some affordable business loans. Also, do some research on government grants for small businesses. Even if you don’t qualify for one at the moment, it’s good to know what options you can count on in the future.
Avoid Unregistered Work
Future home renovators should never work without proper licenses. When you’ve decided it’s time to pave your business path, pay a visit to the local Small Business Administration office (e.g. on your way to the bank). Tell them about your business plans and get all the information that might be useful for the initial stage of your professional development.
Here you’ll also have to decide how you’ll to register your business. If you already know you’re going to hire employees soon, registering as a limited liability company (LLC) is the most practical solution. The greatest benefit of this business model is that your assets will be treated separately from your business finances.
Also, you have to check with the authorized local government agency whether you need only to register as a home renovation office or you also need to get a license. The rules are different even from state to state, let alone from country to country.
When you’re at the beginning of your home renovating business adventure, try to narrow down the number of tasks your business performs. If you go too wide, you’ll lose focus, which might lead to issues such as missing deadlines or being late with payments. Wise entrepreneurs in the home renovation industry start from strictly limited work.
For instance, offer only bathroom renovation or only carpentry work at the beginning. Also, make your business visible for your potential clients. You can register on one of those contractor databases and become available through the mobile home remodel search. That way, it’s more likely that new customers will spot your venture and hire you for their remodelling work.
Suppliers and Collaborators
People who supply you with the materials that you need for your home renovating business and your collaborators need to be treated like your family members. Although it’s a business collaboration, it should be based on mutual trust and support.
The most important principle you should always stick to is paying your suppliers and collaborators on time. Your business will depend on them, as much as it will depend on your skills. For instance, you could use online invoicing to speed up the payment process and accelerate the workflow of your business. In addition to the workflow, those practical tools also ensure easy cash flow, which will result in smooth and fast business cooperation.
The home renovation market can host many new businesses. While it will take a lot of time and sweat to become an established business owner in this field, it offers a lot of space for (both home and professional) improvement. Therefore, take the plunge and launch your very own home renovation business.
Steps For Starting a Home Repair Business
First of all, it’s a good idea to make certain that you have the makings of a home renovation business owner. Bill Cahill, president of Beacon Plumbing, said you should ask yourself the following questions.
Looking for comprehensive services on property maintenance? Look no further! Hitch Property Constructions has you covered.
Are you ready to be on your own?
“This is not a reflection of your character or skills, but your overall threshold for risk and uncertainty,” Cahill said. “Being self-employed, while highly rewarding and enjoyable if done correctly, can be equally disastrous for others. Just because you want to be self-employed, doesn’t mean you’re cut out for it.”
Are you a self-starter?
Can you motivate yourself easily and move forward without any direction? Or are you motivated by getting assignments? If it’s the latter, starting your own company may not be a good idea.
How is your financial outlook?
Do you have emergency savings put away for startup costs and the slow first months or year? Are you able to refrain from buying unnecessary items until you have a nest egg? If you have a hard time refraining from overspending, opening a house renovation business may not be in your best interest. There will be months, if not years, of belt-tightening needed in order to make a profit and be successful eventually.
Determine Your Specialty
A well-thought-out home repair business plan takes into consideration the specific services you’ll be offering. There are many options when it comes to this.
“Determine what types of renovations you’ll be doing,” McHugh said. “What aspects will you do yourself, and what will you subcontract? How large of jobs will you take? You can’t be everything to everyone, everywhere. Trying to be a jack-of-all-trades to win jobs will eventually land you in a bad situation because you overpromised and underdelivered.”
Cahill also agreed that prospective business owners should narrow down their specialty.
“What, specifically, are you going to offer to the market? In-home renovations and services, many contractors are well-versed in a lot of skills. Just because you know how to do a variety of things, doesn’t mean you’re great at all of them,” he said. “Find where you excel and see if there’s a place for that in the market. Look for a specialty that will separate you from existing vendors.”
For instance, if you’re located in an area where the property values are rising, perhaps homeowners are interested in upgrades like higher-end siding and upscale front doors. Or maybe you’re near the ocean, where homeowners might need weather-resistant decking.
“Put some thought into your business and narrow down your options,” Cahill said. “And whatever specialty you decide on, ensure that it’s something that excites you because if all goes as planned, you’ll be offering those particular services indefinitely.”
Form a Legal Business Entity
Before you can officially set up shop, you must decide what type of business structure is right for you. Changing the structure later can be problematic, so it’s best to do it right the first time. There are four main types of business entities from which to choose.
This type of business structure is ideal if you’ll be working alone or with a spouse. Sole proprietorships are inexpensive and simple to form. You may pay fewer taxes, as well, although you’re liable for all debt incurred.
Partnerships are formed when there are two people in business together who plan to share the profits, losses and responsibilities of running the company. You’ll be liable for half of the debt and assets. You need to file an annual tax return for the company and then pay your income taxes separately.
Limited Liability Corporation (LLC)
An LLC can feature one or more owners. With this type of business structure, the members of the company decide if they want to be taxed as sole proprietors, a partnership or a corporation.
A-C corporation is your best choice if you plan to grow the business and go public at some point. Corporations are the most complicated of business structures. The corporation is an entity on its own. Owners are shareholders and are protected from personal liability should the company go bankrupt.
Tips for Planning a Home Renovation
Ask Your Contractor Plenty of Questions
When planning your home renovation, don’t be afraid to quiz your contractor about every step of the process.
Find out their professional opinion about your:
- Other contractors
That being said, stick to your plans as much as possible. Don’t let a contractor force a more expensive product or service on you unless there’s a good reason for it. Just use their expertise to validate your choices and prevent serious mistakes.
Plan for Problems When Renovating
Even the most detailed home remodelling plans go awry. Don’t let it get you down. Be prepared for delays and issues by setting aside a chunk of your budget for unforeseen costs and allotting a few extra days in your project timeline. This will prevent stress and overspending during the renovation and will help you stick to your plan in the end.
Complete Structural Projects First
When you’re planning a home renovation, make sure you’re prioritizing any structural projects first. If your roof, foundation or an electrical system needs improvements, be sure to complete those before spending money on general cosmetic changes.
While a kitchen renovation might improve your day-to-day life, a leaky roof could destroy your new kitchen if it’s not addressed at the first sign of a problem.
Plan Ahead for Waste Removal
Don’t wait until your contractor is piling concrete in your driveway to think about waste removal. Include the cost of getting rid of debris in your budget and make sure you discuss plans with your contractor before the project begins. Decide who is responsible for finding a waste removal solution for construction debris, what it will be and where it will be located during the planning process.
Obtain Necessary Licenses and Insurance
Being properly licensed and insured is critical before opening your doors. It’s imperative that you have a license to do business – for instance, a contractor’s license and any other necessary certifications for your particular specialties. You’ll also need a business license for your city.
Insurance is also important. You’ll need to get general liability insurance, which covers you if someone falls and gets injured at a job site, or an employee damages a client’s home. Workers’ compensation is required by law and pays for employee medical bills should they get hurt on the job. Commercial property insurance covers your property, such as equipment and furniture. Auto covers all company vehicles. Nowadays, cyber/data breach insurance is also recommended, and it will cover you if there is a breach of any sensitive customer data you’re holding.
Choose a Company Name
Think about what you want to achieve with naming your business and your website, Cahill advised.
I could have named my business something personal like Cahill Creations, but would that have conveyed what I do as easily as Beacon Plumbing? No, it wouldn’t have. Although we usually want a business name to reflect so much about us, it can sometimes be wiser to pick the simplest of available options.”
Simple, straightforward company naming comes into play even more in the digital landscape.
Online, everything is based on keywords and rankings, so I’d encourage new businesses to keep that in mind. “Something like Seattle Home Builders would fare far better than Cahill Creations. Just be cognizant of the internet, because that’s the lion’s share of where you’ll receive your leads.
Check out Hitch Property Constructions for a huge range of Melbourne property maintenance services.
Establish Relationships with Suppliers and Vendors
Having a reliable supplier can make or break a job, which can make or break your finances.
When materials are delivered on time, it’s an opportunity for you to finish your work on time or early, he said – but “on the other hand, every delay or missed order can negatively impact upcoming jobs by throwing all your schedules out of whack.”
Establish relationships with your suppliers and vendors, including subcontractors. You need to have partners you trust supplying your materials. And as far as subcontractors go, those relationships are key. Your name is going on their work.