A remodeling contractor is a type of general contractor specializing in improvement projects. Their work may include room remodeling, home renovation, and building restoration. Remodeling businesses can help with design ideas, budgeting, and building code requirements as well as carrying on the actual improvement work.
Remodeling professionals can subcontract for others, but having a remodeling business allows you to maximize income and specialize in your chosen niche. In addition to developing technical skills, you need to take specific steps to set up and grow your business. You may choose to start work as an apprentice, and learn both technical and business skills from an experienced technician.
When you are ready to start your own remodeling business, there are specific steps that you need to take. Some of these tasks are legally required, while others will give you the best chance at success in a competitive industry.
1. Find Your Niche or Specialty
Remodeling itself is a specialization; a remodeling contractor is a general contractor that focuses on improving existing structures.
Within this specialization is a universe of niches. Finding your focus area can help you compete and find clients who need contractors with your skills and interests. Some remodelers only do bathrooms, while others focus on kitchens or basements. Others may specialize in increasing the sustainability of a home with natural materials and efficiency improvements.
You can also focus on one skill, such as lighting, plumbing, or flooring, and hire subcontractors to carry out the rest. Finding the right niche means matching your clients’ needs with your skillset. This step will, in turn, help you create a unique brand and get word-of-mouth recommendations from previous customers.
2. Create a Legal Business Entity
The next step to starting your business is to form a business entity. You can start as a sole proprietorship or limited liability corporation (LLC). If you have growth plans, you can opt to become a C Corporation.
Because of liability issues in the remodeling industry, you may form an LLC instead of operating as a sole proprietor. On the other hand, small businesses that are just starting out may not need the ownership and profit structures offered by the more-complicated C corp setup.
An LLC is easy to start, and it provides the necessary protection for remodeling professionals without being structurally complicated. To create an LLC, you choose a name, check it against state and national trademark databases, and file the appropriate paperwork. Most states require that you pay a filing fee.
3. Straighten Out Your Finances
The first financial step is to create separate accounts for your business and personal finances. You also need to apply for an Employer Identification Number (EIN). This number will allow you to separate business and personal taxes, hire and pay employees, and establish your LLC as a unique entity.
4. Obtain Licenses and Permits
The first step in opening a contracting business is obtaining a general contractor’s license. These accreditation steps vary by state, and some places require evidence of work experience or education. You typically need to take an exam and file paperwork with the relevant certification board.
Additionally, you may need professional certification to legally perform specific tasks, such as electrical wiring or plumbing.
Finally, a remodeling business may need to register with local authorities to operate in a county or town. Depending on municipal regulations, each job may require an additional permit.
5. Get Fully Bonded and Insured
The next step is to get bonded and insured. Most licensing agencies require proof of insurance when you apply for your general contractor’s license or register your business.
Coverage includes general liability insurance and workers’ compensation insurance. Being bonded adds an extra layer of protection if unforeseen damages occur that are not covered by your insurance policy.
6. Establish Relationships with Suppliers
As a remodeling contractor, you will need to work with materials suppliers on nearly every project.
You want to establish a relationship with these suppliers early because it can help you get the necessary equipment and materials at affordable prices. Such a connection can significantly improve your bottom line.
Your goal is to set up a mutually beneficial relationship where you get low-priced materials, and the supplier receives ongoing business from you.
7. Cultivate a Brand
Your brand is your company’s identity. Your name, niche, services, and employees or subcontractors all affect your business’s image.
To build a strong brand, you will have to find a way to differentiate yourself from the competition. One way to do this is to find a unique set of services that addresses a pain point for your clients but gets overlooked by your competitors. Another way is to stand out by offering specific services and higher quality than your competitors.
It would help if you also looked to attract talented employees or subcontractors to further your vision. If you can create a strong company culture, you can entice qualified employees. These skilled pros can, in turn, enhance your brand image and reputation for quality.
8. Start Small
One strategy for business growth is to do small, low-cost jobs at the beginning. This approach provides opportunities to build a reputation and gain repeat customers.
Smaller jobs will cost you less in terms of material and equipment and will also be easier to complete correctly. Taking on challenging jobs right off the bat is one of the mistakes that new companies make. The stress and potential poor reviews can make it more difficult to build a business. The better the quality of these jobs, the more likely you may be to get good reviews online or receive word-of-mouth recommendations.
9. Market Your Business
Marketing your business is necessary if you want a continuous flow of new business. Part of any remodeling contractor’s marketing strategy will focus on referrals from past clients. If you provide quality, clients will naturally recommend you to others. You can also sweeten the deal by offering discounts on future work for referrals that turn into business.
Invest in a strong web presence with a well-designed website and active social media profiles to generate new leads. If you have an ad budget, you can place ads on home improvement blogs or relevant YouTube videos. You can also consider having printed marketing materials available in the areas potential clients frequent, such as hardware stores.
10. Look for Ways to Grow and Improve
The journey doesn’t end once your business gets a foothold in the market. You can always seek to grow your company and expand your skillset. This may mean increasing your workforce, exploring new niches, taking on larger projects, and learning and getting licensed in different construction skills.
You could also expand your business to other locations. When you start operating in multiple places, you need to ensure that you meet these locations’ licensing requirements. As your clientele grows and business ramps up, expansion may be a logical step — and a sign that you have succeeded at creating a successful remodeling business.
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