There are over 588,000 home remodeling businesses in the US. The rate of home remodeling businesses has steadily grown year over year, as 91% of homeowners report that they need some form of renovation. Are you interested in learning how to start a home remodeling business? In this article, we will cover the necessary steps to starting your business and the proper home remodeling business insurance you need to protect your income.
Before learning how to start a remodeling business, it is important to learn how much it costs. Suppose you plan on being a part-time renovation business. In that case, you may only need between a few thousand dollars and $50,000, depending on what you invest in. A full-time renovation business will require $100,000 or more to start up front because you must pay for your subcontractors and major project costs up-front, like your material costs.
|$1,000 to $3,000
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This next section will cover the essential steps to take when learning how to start your own remodeling business. You must create your business name, register your business as a legal entity, and figure out what customers to appeal to.
The first step to figure out when learning how to start a remodeling company is your DBA or “doing business as” name. Some tips for choosing your DBA include:
Make it memorable: Your business name should be easy to remember and spell so customers can easily look you up and recommend you to friends. You want to choose a name that is unique enough but still gives a solid image of the function and benefits of your business. Something like “High-class Remodels” is a name that lets customers know what you do and that you strive for quality.
Think of the future: You should take your time in choosing a name. Once the name becomes official, it will be hard to change. You want to choose a name you will still be proud of in a few years and when your business expands. Try to make your name timeless and still relevant, no matter the size of your business.
Keep it simple: Your name should be simple, easy to pronounce, and not hard to spell. This allows your business name to be searched online and easier to spread. Your business name should sound good when spoken aloud so that when people talk about it is pleasing to the ear of your potential customers.
When learning how to start a house renovation business, the next step you need to accomplish is registering your business as a legal entity. Once you start doing business under your business name instead of your personal name, you must be officially registered in the area you operate in. Some business structure options for your business include:
Sole proprietorship: A sole proprietorship allows you to be the sole owner of your company. You will retain all the profits your business makes but will also be personally liable for business debts. Sole proprietorships are extremely simple and inexpensive to start. They also allow you to avoid the corporate tax requirements of a corporation's business structure.
Partnership: A partnership is similar to a sole proprietorship, but two or more partners own it. Like a sole proprietorship, these partners are personally liable for business debts but also shoulder the burden with each other. Partners also share the profits of a business.
Corporation: A corporation is a distinct legal entity that shareholders own. As a shareholder, you are protected from business debts and liabilities. A corporation is taxed twice, once on its profits and a second when its shareholders collect dividends. Corporations are more expensive to start and have stricter rules and regulations to follow. One major benefit of a corporation is that it can raise capital by issuing stocks and equity.
Limited liability company (LLC): An LLC combines the best aspects of a sole proprietorship with a corporation. Your LLC protects you from business liability but has pass-through taxation. This means you will not suffer the double taxation requirements of a corporation.
A critical decision to make when researching how to start a home renovation company is deciding what customers to appeal to. There is a common saying in marketing that says, “When you speak to everyone, you talk to no one.” This saying illustrates the importance of focusing on a specific customer demographic and solving their needs instead of trying to appeal to everyone. Some typical customer groups for home remodeling businesses to consider include:
Customers with older houses: Houses in America are getting older. It is estimated that 92% of US homes were built before 2000. These houses will eventually need minor and major remodeling to update systems to the modern era. Also, older homes must be remodeled to adjust their floor plans to accommodate modern sensibilities.
Customers with disposable income: For most people, a house renovation is something they need to save money for. Targeting disposable-income customers makes them more likely to convert to your services. These customers are more willing to pay a professional to do the job than try to do it themselves.
Homebuyers: People shopping for homes in the housing market might look for home remodeling contractors to fix up a house they have their eye on. Sometimes homebuyers will save money by buying a house that needs work for less money on the expectation that they can use that saved money to pay for a remodel.
Before you can do certain activities like opening a business bank account and hiring employees, you must acquire an employer identification number (EIN) from the IRS. This number identifies you as an employer and helps you make business tax returns. The steps to get an EIN include:
Apply: You can apply by visiting the IRS website, fax, or mail. Applying for an EIN is free.
Fill out the form: You must answer questions about your business activities and give the IRS your address, business name, and other related information.
Pay attention to guidelines: If filing online, you must complete the form without 15 minutes of inactivity, or you will have to start again.
Record your EIN: After you have submitted your application, you will have access to your EIN. File this number away and keep a copy of the completed form in your business records.
In our digital age, creating a website and having a presence online is required to succeed. 76% of customers will look up a company online before deciding to visit them. The steps to starting a website include:
Acquire a domain name: You can buy a domain name from a domain registrar like Google Domains or by purchasing a name from a domain holder. Try to match your domain name with your business brand.
Find a web host: Web hosts are responsible for allowing web traffic to your site and storing your website data on physical drives. Without a web host, people can’t access your site. Popular web hosts include GoDaddy and BlueHost.
Design your site: You can use a service like Wix or Square Space to design your website based on a template. Your business may also want to pay a professional web designer to create your website from scratch if you want custom features like a forum for your customers to discuss home remodeling topics.
Fill your site with content: Your website must contain relevant content for your target searchers. By posting reviews of your business and articles about home remodeling topics, your customers will discover you naturally through search engines.
One benefit of having a legally recognized business is having access to business bank functions. A business bank account allows you to process customer transactions and take out business loans. Some common types of business bank accounts include:
Business savings: You can deposit business earnings into a savings account to earn interest over time.
Business checking: Your business checking account is a way to separate your business expenses from your personal expenses. It also allows customers to send their payments to an official sounding account instead of your personal bank account.
Merchant services: A merchant services account allows you to process debit and credit transactions for clients with a small transaction fee.
Depending on your project and business scope, you may need to hire employees. Some common types of workers you need for a home remodeling business include:
Subcontractors: A subcontractor is someone you hire for a project for their expertise. For example, you may hire a plumbing contractor if a home remodel project involves a house's water pipes.
Bookkeepers: Your bookkeepers keep track of your business debts and obligations and help balance the flow of money going in and out of your business.
Business assistants: A business assistant supports your business by managing daily tasks like ordering supplies and answering phone calls for clients.
It is highly recommended that you implement an advertising and marketing strategy for your business. When starting out, you want to quickly increase your brand’s exposure to as many potential customers as possible so you can generate ledes and start your business on the path to profitability.
You can build instant brand loyalty and trust by associating your brand with a popular influencer on social media. Influencer marketing has a high return on investment, and influencers are highly trusted among younger generations. A downside of influencer marketing is that if the influencer's reputation takes a hit, it will also affect your company’s reputation.
An email campaign is among the highest return-on-investment options for marketing. LinkedIn estimates you can receive $40 for every dollar you spend on email marketing. You can deliver a personalized message to your target audience through an email campaign and open a direct line of communication with them.
Pay-per-click ads are a quick way to increase your brand exposure online instantly. You can adjust pay-per-click ads in the middle of your campaign, making them a good way to test out marketing strategies.
Instead of paying for ads, you can utilize search engine optimization (SEO) to increase organic, high-value traffic to your website. Producing content on your site targeted towards your customer’s keywords will allow your website to rank higher on a search engine. People searching for home remodeling-related topics in your area will be more likely to discover you and hopefully use your services.
The equipment you need for your remodeling business will vary based on the project you are working on and its scale. Below are some common types of equipment you will need on various projects and their cost.
|Protects your head, eyes, and limbs from danger
|Powers tools like nail guns and sanders
|Clean messes and picks up debris like nails and dirt
|Holds tools like hammers, screwdrivers, fasteners, and tape measures
|Used to make accurate measurements when making cuts and figuring out space in a room
|Drive nails into a house and pull old nails out
|Metal hardware like bolts and screws allow you to secure different objects together.
|$5-$50 per box
|Necessary for digging through dirt and demolishing old walls and structures
|$200,000-$600,000 for a new model
|Allows you to reach high places like a client's roof or facade exterior on a higher-level floor.
|With a ladder, you can access higher areas in the interior and exterior of a home.
|Lets you patch holes in a home by applying wood filler and drywall.
|Used to straighten and strip wires together and otherwise manipulate different wires into position.
To protect the income of your home remodeling business, you must purchase adequate insurance protection. Your business may one day encounter a lawsuit from a client or a devastating weather event that damages all your equipment. Without a good insurance policy, an event like this can potentially bankrupt your business. The following policies are required to boost your take-home income and ensure it doesn’t go to paying legal bills and equipment repair costs.
General liability insurance protects you from third-party claims related to bodily injury, property damage, and advertising injury. For example, suppose a customer gets hurt due to your remodeling services. In that case, this policy protects your business if they sue you.
Thimble is an excellent choice for buying general liability insurance. They provide short-term general liability insurance options that you can choose the duration of. You can set the policy period down to the month, day, and hour. This allows you to pay for only the needed coverage during a project. Thimble has an A+ score from the Better Business Bureau.
Professional liability insurance covers the consequences of errors or oversights you make in your business. For example, you may fail to provide the agreed services to a client who decides to sue you. Hiscox is our pick for professional liability insurance. They allow you to save money when you bundle multiple policies together. Hiscox offers a 14-day refund guarantee if you are unsatisfied with your insurance policy. They have an A rating from AM Best.
Commercial property insurance protects your business building and equipment from physical damage. It typically covers events like fire, theft, vandalism, wind, lightning, water damage, and explosions. CoverWallet is an online insurance platform that is an excellent place to buy commercial property insurance. You can choose from over ten top-rated partners like Hiscox, Markel, Progressive, and Travelers. They allow you to get quotes quickly without committing to buying a policy. The Better Business Bureau gave CoverWallet an A+ rating.
Your commercial auto policy protects business-owned vehicles when you use them for work-related activities. The policy provides accident liability protection and can help you repair damaged vehicles. Tivly is our pick for commercial auto insurance. They offer customers a selection of over 200 insurance partners. Tivly narrow your choices through a quick phone call until you are left with the perfectly matched policy and insurance provider for your needs. You can purchase commercial auto policies with gap insurance, rental reimbursement coverage, and more.
Workers’ compensation insurance is required in most states when bringing on employees to assist you with your remodeling services. This policy protects your employees by paying for medical treatments for work-related injuries and illnesses. It also provides income when a worker cannot work due to an injury. The Hartford offers workers' compensation insurance with many extra benefits. They employ nurse case managers on your policy that help employees determine the logistics of getting treatment so they can recover quicker. The Hartford allows your employees to access a network of over 65,000 pharmacies to access the prescriptions they need.
A business owner's policy (BOP) is often considered one of the most comprehensive business insurance options. It combines multiple types of coverage into one convenient policy. BOPs will typically include general liability and commercial property coverage. NEXT is our top pick for a business owner's policy. Their BOP offers the same protection as their general liability policy but with the added benefit of commercial property insurance. NEXT offers transparent pricing on their policies, so you don't have to worry about hidden fees eating away at your costs. They have an A- (excellent) rating from AM Best.
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Lonnie Bell Insuranker
Policy Type: Business Insurance
Company name: Employers Insurance
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
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