If you’re thinking about starting up your own remodeling company, you may be confused at how you should get started. In the world of remodeling, there’s always room for one more good contractor; however, if the company isn’t launched the right way, your company could quickly become one of the many remodeling companies that fail within the first five years.
Since many new owners don’t know how to run a successful remodeling company or even know what to expect when launching one, let’s explore some steps you should take to make sure your business is as successful as possible:
Ask the Right Questions
If you’re thinking about starting your own remodeling business, you’re going to want to ask yourself a few questions to make sure it’s an industry you want to get into. These questions include:
- How much money will I need to get started?
- How much money do I have on hand? What will I need for financing purposes?
- What kind of experience do I have with running a business?
- As for remodeling, what kind of experience do I have?
- Am I willing to work long hours throughout the week to sustain a company that’s profitable?
- What kind of jobs am I interested in working with?
- What kind of customers to I want to work with?
Research Your Numbers
One of the most common problems among new remodeling companies is that they often don’t price their work high enough. At a minimum, experts recommend that your markup is at least 50 percent or more. If your markup rate isn’t high enough, you may risk becoming unprofitable.
In the construction industry, there are a lot of costs that you have to keep in mind, including:
- Sales Tax
- Cleanup Fees
- Office Equipment and Management
As you can see, the overhead and miscellaneous fees can add up relatively fast. Industry experts note that you should be prepared to have a minimum overhead of at least 28 to 35 percent.
Remodeling is going to be a lot more than heading to someone’s home and throwing down a new floor of tile. Since there are so many jobs available, you will first have to understand what demographic and niche you want to target. For example, TampaExteriors.com decided to work with the door, siding and roofing industry.
With a remodeling company, word of mouth advertising is eventually going to be your best way to land new clients; however, before your doors open, obtaining those first few customers is going to be a whole another story. Be sure to develop a detailed marketing plan and budget to determine how you’re going to get your first few jobs.
Selling is probably one of the hardest parts of running a remodeling business. Since most people won’t hire you over the phone, they are going to want to meet you in person to see what you can do. During these negotiations, be ready to show the client what you can do, how it’s going to be done and what you’re going to charge. At first, selling might seem hard, but as time goes on, you can master it if you learn from your mistakes and read the right training materials.
With most remodeling jobs, you’re not going to be able to do most on your own. With that being said, hiring outside help is going to be must. Before you even consider starting up a job, it’s important to have a team of experienced contractors who will be able to help you on the job. When hiring new help, keep in mind that hard workers are going to be hard to find, so it may take you some time until you’re able to hire someone you’re comfortable with.
Lastly, running a remodeling business will need a lot of paperwork and customer service skills. If you want to do the dirty work, it’s really going to be up to you. On the office management side, don’t forget that you’re going to deal with customer relations, collecting money, paying the bills and being the main administrator.
Starting a comapny in the remodeling industry is doable if the right steps are taken. If you’re aspiring to become a new owner, keep these tips in mind to make sure that your business succeeds for years to come.