How to Start a Remodeling Business




Why do people consider starting a remodeling business? Because it is a profitable business no matter what year it is or the specialty you choose in the niche. If you doubt this, just think about how lucrative it is based on the statistics showing that over 63% of American homeowners wanted to remodel any area of their homes, which led the home improvement business to be worth over $550 million in 2020.

But what leads people to invest in their homes despite inflation and other options of investments? Well, according to the study, 83% of homeowners agree that their homes are their largest investment, and it is the place where they want to make sure everything is perfect.

Now, how do they achieve this goal? This can be hard to believe, but over 87% of people believe professional remodelers are expensive and decide to skip the option. However, in the long run, over half of the percentage ends up looking for the services because they notice it is worth it to save the hassle of repairing or remodeling a room while also preventing things from going wrong.

With such a booming industry, it isn’t weird if you are considering starting this business or made the decision to do so. However, you will have to go through a lot to guarantee the process is a success.

After all, “starting a business is simple,” no one said ever. Luckily, we are up for the challenge of sharing the guide of how you can do it and ensure you get the basics yet essentials right.

Therefore, are you ready for the journey this blog will be? Take notes!

Decide Your Specialties

Remodeling can cover many areas, and although we were mentioning homes previously, there’s something you might be considering: Commercial properties.

If that’s the case, you will need to start by deciding whether your business will be focused on residential or commercial properties. Maybe both.

Next, keep in mind that all general contractors specialize in one or two services, then subcontract the rest. You should outline the services you will provide yourself and which services you intend to outsource to subs in your business plan.

You may be interested in bathroom remodeling, but not the tilework. The electrical, plumbing, and cabinetry work would have to be subcontracted or specific parts of the remodeling process, but this is also based on your commercial or residential choice.

The amount of work you can subcontract will determine how big or small projects you are able to take on. Although larger projects are generally more expensive, you could lose more if you need to subcontract a lot of work.

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That being said, we understand what you are thinking. “Isn’t remodeling a specialty already?” This is kind of right and wrong at the same time.

Following the previous explanation, every niche has sub-niches that you can use to determine what services and products you offer. They also determine your work style and profit margins.

Subcontractors typically make between 20-30% profit margins, but they have smaller contracts in this area that can lead, sometimes, to more income.

Since smaller projects take less time and people, it is possible for them to earn more in profits even though they have a lower percentage of earnings.

Each has its pros and cons. However, you should consider these factors when deciding on the area in which you want to specialize.

  • Which field are you most familiar with?
  • Which is most profitable, based on your time and resources?
  • What are the most popular remodeling services?
  • Which option will allow you to get started faster with your first client?
  • Which one looks more comfortable in the long run?

We know there are many things to consider. But we want it to be easy for you.

Although many remodeling companies can work in residential and commercial areas, the ability to finance projects and cash flow is what will usually determine your decision in the matter of residential or commercial, or maybe both.

For residential jobs, a deposit of 15% to 20% is required to start the job. You can submit your bid quickly to start projects, and there is less competition, so your close rates will be higher.

This niche has a problem because the projects are often smaller, and homeowners have different “feelings.” Because it is their home, they will be very particular and will require you to follow many things.

Commercial projects, on the other hand, are more expensive and come with higher contract values.

There is more competition and usually no upfront deposit. You will receive your monthly bill within 40-90 days after you start the job.

However, commercial remodeling can be more lucrative if you have everything it takes to get started.

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If you’re willing to finance both of these projects, and you have a wider audience and approach, you might think about how to bid on the residential option and then deal with the large commercial projects.

What are our recommendations? The residential specialty is a good choice for beginners. You can then go into commercial and/or both later on when you are more experienced and better handle the business.

Start Your Business Plan

A solid business plan is essential for any business, particularly in remodeling, where many factors like equipment, team, road, and other elements need to be considered.

Keep in mind this guide will help you understand how to succeed and establish your business without much difficulty or while avoiding the common yet game-changing mistakes.

The business plan should include the company’s goals and details about the financing and timeframe needed to reach them.

You should have a similar business plan with all the information you put in and remember that everything essential to the smooth running of your business must be included.

If you are doubtful of why so many people invest time in a business plan, these are some considerations:

  • Business plans are more than just a way for your company to communicate its vision. It can help you make sure that your core ideas are solid and can produce real revenue.
  • It will let you know exactly when, where, and why your business is being started and the steps you intend to take to make it happen.
  • The business plan outlines how to start your remodeling company and grow it.
  • It is a process that involves the creation, refinement, sharing with mentors and business leaders you trust, as well as making any necessary adjustments.
  • If you want to borrow a loan, you will need to have a business plan.
  • Addition: Most business plans are created using a template. This eliminates the guesswork.

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Arrange Your Finances

Although business ownership can be very rewarding, it is not always easy, and we are sure we don’t need to tell you how expensive it can be.

For starters, you may have financial difficulties within the first few months or even years. This could lead to you having to spend a lot of money on your own. Many people fail to become entrepreneurs because it is financially impossible.

Before making major decisions, make sure you thoroughly research the process of starting a remodeling company. A healthy cash reserve and available capital are essential for any contingencies.

To get your business started, you can expect to spend at least $1,000. You will need to save a lot of money to cover your daily living expenses like shelter, food, and transportation.

In general, a remodeling business requires a lot of equipment, and logistics is involved.

Thus, take the time to go over how much you have, how much you can actually spend, and make sure you have more than a few weeks to survive while you work on your company’s lead generation and marketing strategies.

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Choose a Legal Entity

Most remodeling companies choose to use one or more of these types of entities. Each type has its pros and cons, so it is important to discuss these with your lawyer or CPA before you decide which one is right for you. Although there are more, these are the main ones:

  • Sole Proprietor.
  • LLC.
  • General Partnership.
  • C Corporation.

Although you might be tempted to create a sole proprietorship because it is the easiest to set up and has the lowest taxes, you should reconsider this idea since you will be placed with more expenses and responsibilities.

Instead, a Limited Liability Company (or LLC) is the best entity for both solo entrepreneurs and partners. This protects you from lawsuits, back taxes, or other judgments that may be brought against the company.

After you have learned how to start a remodeling business and have nurtured its growth, you might want to expand and go public.

In that case, you may want to consider a C-corporation. Although it is the most complex of business structures, it provides significant protection for businesses that produce a lot of wealth.

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Licenses & Insurances

You might find that your state requires that you obtain a contractor’s license if you Google how you can start a remodeling company.

This step may not be necessary if you are only doing cosmetic or finishing works. Still, you will need to obtain proper certification if you plan on making structural changes to your home or building, such as installing roofing or siding or doing electrical or plumbing work.

General liability insurance is also something you should consider. Although not required by all states, general liability insurance is a good investment to protect yourself in the event of an accident or if the business or homeowner takes responsibility.

If you remodel a bathroom and the pipes burst two weeks later, for example, you may be financially responsible for any damage.

General liability insurance can protect you from the financial burden of paying for an expensive heirloom if one of your employees robs a homeowner.

This is why it is crucial to set all the paperwork right and ensure you have the licenses to avoid any demands + the insurance you need.

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Create & Follow Your Marketing Strategy

While you may be the most skilled remodeling company in your area and capable of creating stunning remodels for homeowners or businesses, it is important to know how to market your services to maximize your potential.

Referrals are an important part of many remodelers’ business models. However, this can put your business at risk if you rely on past customers or colleagues to market your services since this will lead to inconsistent demand, which can cause feast-and-famine cycles in your business.

Thus, it’s important to create a solid marketing plan for your company and follow it in order to generate steady work.

How can you stand out among other remodelers in the area? This is part of the first questions you should ask yourself.

In the case your reputation is great, it won’t help to win work from customers who don’t know you.

How can you draw attention to yourself and make your brand memorable? It’s essential to build a strong brand for this. This includes a business name, a professional logo, and quality marketing materials.

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It’s also important to ensure that potential customers see your brand through advertising, sponsorships, and other guerrilla marketing tactics.

Some companies spend thousands of dollars every month to ensure their marketing efforts are being successful, but you don’t need to reach this point since marketing can be almost free if you work on the right plan.

Networking Is Key

Networking with other professionals in real estate is another great way to get work quickly and without sweating it.

But who is a good prospect for networking? Well, consider interior designers, architects, home inspectors, and insurance agents. They can help clients looking for remodeling services or, in the instance of insurance agents; they urgently need them. They will also know reliable remodeling professionals that do excellent work, and here is when you enter: You want to be the company or person they send their clients to.

This is important because your marketing and networking efforts will bring you more work and help your company grow. If you don’t hire reliable, skilled help, you will eventually hit a brick wall as well, so you might need to invest some cash on this.

Many remodelers end up working extra hours a week because they are unable or unwilling to hire skilled workers.

This is often due to the fact that they charge too much for their services, but you need professionals to help you grow.

If you don’t know who to hire, it can be key to ask your networking partners you meet for some recommendations or even hire them depending on their occupations or professions.

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Establish Long-Term Relationships

Another reason to hire top professionals for your business is that it will allow you to spend more time monitoring project progress and communicating directly with customers.

Communication is an issue for remodeling customers. A lack of clarity regarding schedules, costs, and remodeling challenges can cause customer dissatisfaction and lead to poor word-of-mouth.

Even if you are the most skilled craftsperson in the country, clients won’t hire you again or refer you to others.

Many remodelers are too focused on the job at hand instead of their clients. Listening is the first step to providing great service and long-lasting building relationships with them.

Thus, focus on the questions:

  • What are their reasons for remodeling?
  • What style do they like?
  • What is their way of living?
  • What could you do to improve their lives?

These questions will guide your design process. After you have a good understanding of their motivations, you can begin to discuss options and budgets.

Get to know your customer and then make it easy to remodel.

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Funding Is the Next Step

It is clear that you will need funding for a business, and it can either come from your own pockets and savings or from someone else.

In the case of starting your remodeling business, the expenses you will have are more than they seem.

You need to get your real property, hire workers, you will need to either rent or purchase the necessary equipment and supplies, and the list just keeps going.

Fortunately, you have a variety of financing options, no matter how large or small your needs are:

  • Small Business Loans.

SBA offers low-interest loans for small businesses, specifically tailored to their success.

Keep in mind that they are only available for business owners with a strong credit score and a good credit history.

  • Working Capital Loans.

Loans can be obtained for specific purposes, such as working capital loans to pay daily operating expenses like payroll and office utilities.

These loans are popular in highly seasonal industries, where most of the company’s revenues are generated quickly.

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  • Purchase Order Financing.

For industries that heavily depend on material sourcing, short-term financing options are available to cover initial costs.

Purchase Order Financing Organizations provide monetary advances to purchase orders. They usually charge between 1.9% to 6.6% per month.

  • Vendor Financing.

To finance materials, a financing agreement can be made with the vendor. Remodeling companies can negotiate a longer payment period without having to pay penalties or late fees.

Vendor financing is an option if the contract does not require payment by the customer.

  • Private Lenders.

You are more likely to find lenders that will lend money to you without following the same conditions as banks or similar institutions for your type of company. Those are private lenders you should definitely consider above other options.

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Common Questions: What to Remember for Your Business

To be more specific, we are sure you have any questions about how to start your remodeling business or how you can do it successfully.

This is why we decided to include some of the most common questions and, you know, answer them to help you the most:

  • How much does it cost to start a remodeling business?

Usually, it depends on your location and how big your project is in terms of logistics and the specialties you choose.

However, most remodeling companies start with about $1,000 to $5,000 by focusing on small services and expanding them over the years.

But something you must consider is that equipment, tools, and licenses are the highest costs. These can easily exceed the $10k-20k standard that we have set.

  • What are the ongoing costs for a remodeling company? 

Many of your ongoing expenses are job-specific. Materials and equipment will always be included in your bottom line.

Advertising and communication will remain important, as well as the maintenance and replacement tools and equipment.

Depending on your business’s specialty, you may need additional staff, a bookkeeper, or subcontractors to perform specific tasks like painting, plumbing, or HVAC installation.

  • Who is your target market?

Your target market is families and individuals who have enough assets to either build or repair homes. In the case of commercial services, you just move to the commercial part like offices or other properties.

Keep in mind that clients who have little money may become anxious about the amount spent on a project. They might be tempted to cut corners or delay completing the project.

No matter what the economy does, a customer’s bottom line must be sufficient to fund the project. Financial stability should be a part of your assessment of clients.

As you work on the project, consider them a part of your business.

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  • How can you make money?

Based on your clients’ agreement, you are paid to start, continue, and finish the project. Usually, money is given up front, but this can change for commercial deals, as we previously mentioned. In the end, it depends a lot on how you set your modus operandi.

Usually, after the customer has paid all bills and workers, the contractor will then bill the customer for any ongoing work or materials.

  • What can you charge to your clients?

Clients pay according to the job-specific rates. The job scope will also impact pricing.

You will also need to set an hourly rate and a salary for your team. This salary will determine your net earnings. Other costs include labor, materials, and intangibles.

Research other contractors in the area to establish a baseline price. Although you must be competitive, do not overprice your services or cut corners on them.

  • What’s the average profit of a remodeling company?

Most profits will be used to grow the business and ensure its success. It is therefore difficult to calculate this.

However, once a company is established, it can be very lucrative once your influx of clients starts to move. Companies can earn between $100,000 and $1 million annually. This could vary depending on the business, projects, and of course, general considerations.

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9 Tips to Start Your Remodeling Business

  • Consider your options when forming your company. Do you want your business to be a contracting one in the general remodeling sub-niche? Or do you want your company to expand into other areas?
  • Do continuous market research. It is important to conduct ongoing market research, even if it is not necessary initially. However, it is essential to do it over time to ensure your business remains competitive.
  • If you want to get off to a great start, don’t forget your business plan. However, don’t be afraid to stop if you have trouble with it. For starters, a simple outline can suffice.
  • Respect the rules and regulations of the remodeling trade. Focus on fulfilling laws and learning about them.
  • Be patient and consistent. Your goal is possible, and it is important to trust your abilities.
  • Open a business bank account, so you can apply for business insurance, business credit card and avoid personal requirements.
  • Consider search engine optimization for your marketing efforts and to have a successful business.
  • Be honest about how much money you can spend and determine whether you can rely on family angel investors before other funding options.
  • Use social media platforms for marketing your remodeling business after starting it.

The Local Lead Generation Process for Your Remodeling Business

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All right! So, everything is about building properties and generating leads. But how does the process actually take place? Are there other steps I need to know?

The steps I mention below are what students from our local lead generation program follow to generate leads for businesses like yourself. So I’ll help you see what we do. And how if you join our program, you can simply generate leads for your own business (unless you want to start a side hustle and build a laptop lifestyle business).

Essentially, our lead generation can be divided into four steps:

The first is prospecting. You need to take the time to do market research on a niche (industry) and determine how many phone-driven businesses are there.

Keep in mind that this is local research as you need to know how many companies need leads. For example, you may search for “plumbing services Youngstown OH.”

You will find dozens or even hundreds of businesses trying to get themselves in front of the customers by ranking on Map Listings, organic results, and even Ad.

The second step, building. When you find a niche (plumbing, tree services, a software company, real estate…), you will need to start building your digital properties. You don’t need to be an expert in HTML or coding. It can be easy with the right tools.

The third step is now taking time to rank your lead gen website. With the site done, you need to work on SEO strategies and start dominating those Google search results. If you’re new to SEO, it stands for Search Engine Optimization.

To keep it simple, it consists of the entire process of growing a company’s visibility on search engines like Google and generating organic traffic. And remember this, local lead generation is part of the strategies.

Moving on to step four, once you rank the site, you will start getting your ROI and profits. You only need to rent it out to a local business interested in the leads the site generates. You can offer a couple of free leads to their move on with the actual pay per lead.

To review steps 1-4 above, I described it to a normal student who is building a lead gen business to help local service providers generate more calls. But replace the student with you as the business owner. And replace sending the leads to a business to simply siphoning the leads to your personal business.

By the way, fun fact, about 20% of our students in our local lead gen program are actually business owners who went through the program. And they use the skillsets we teach to generate leads for their own business.

An Example of Lead Generation: Home Advisor

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You must be thinking, “if lead generation sounds so good so far, how come I haven’t seen any company?” That’s the thing; there are many out there. You just don’t know they are dedicated to it.

HomeAdvisor is one of the best examples you can find on the Internet as it is a top lead generation company that has spent millions building its brand but also earned even more zeros for this same reason.

They started small as everyone else but invested in building their brand awareness to make people who are looking for home services go to their website and find what they need. They are over 75% of people’s first choice when they need those services.

If you don’t get HomeAdvisor that much or need a refresh, users need to submit their information to request a service and get a professional or expert who can provide it.

HomeAdvisor’s job is to share your information, which makes you a lead, with local companies so they can contact you and offer the service you’re requesting. For sharing this lead information, HomeAdvisor gets paid by the companies. This happens for every single lead they send to multiple businesses.

Business owners who don’t have marketing skills or don’t even know how to have any online presence will always rely on those pages to list their services.  They will save time and effort, but companies like HomeAdvisor can make them spend lots of money as leads aren’t exclusive (one lead is sent to multiple companies after all).

Using Facebook Ads aka Paid Ad Platforms: Do They Generate Leads?

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They DO generate leads. If not, no one would use them.

However, you need to remember two facts:

  1. Paid ads or platforms can be expensive.
  2. They don’t generate “natural” leads.

Whenever someone sees or clicks in one of those ads, over 80% of them did it by accident or are trying to close/report it.

Why? Because they aren’t looking for those services. At least not at the moment.

What those ads do instead is interrupt their time on the platforms. Users aren’t there to find companies or businesses unless they are searching for a specific company’s user, and for that, there’s a search bar. This is why it is hard to convert them to actual customers who will show interest in the companies’ services. Also, you’re limited by a budget.

When using lead generation, everything is organic. You aren’t forcing others to pay attention to your business but rather being there when they need you. This is why Google’s organic traffic will always beat paid ads, and the reason companies continue investing in it, which is a lot cheaper as well.

What Is Local SEO?

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Don’t worry… I didn’t get it at first either. Following the short explanation, local SEO focuses on scaling businesses’ visibility on search engines. However, this is only for those who serve their communities face-to-face.

What does this mean?

Experts and professionals like painters, plumbers, and dentists (but not only them) offer their services to their local customers. Why? Because they can’t deliver them unless they are located in the same area of their customers.

To make sure those businesses get more leads, you need to rank them locally by claiming the business listing on Google to place them on Map Listings. Local SEO also involves online reviews, citation management, and how you manage your entire online presence in the local area.

If you are going to bet on lead gen, you need to adapt yourself to today’s world: The Internet.

Keep in mind that although traditional channels and methods like billboards, warm calls, and pamphlets still work, they aren’t part of your tools. Whenever someone needs a service, they go to Google and search for it.

“Dentist in Miami” or “plumbing services in Orlando,” etc. And you can keep coming up with services or professionals people need and look for. Thus, you need to make sure you’re using Google to get the companies in front of their clients.

Users will always click on the first search results (those near the top), and many of them will be either Ad links (people paid to place their websites there), Map Listing, and then you get websites. Almost all of them are your goal and where you should always aim to place yourself.

Can My Remodeling Business Utilize a Local Lead Generation Strategy?

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If you want customers, you better know you need it. Following the previous explanation, lead gen is all about placing businesses in front of their customers, choosing them over their competitors.

Put it simply – it’s all about closing deals and having clients for those companies to make money. The main difference with the usual methods companies use for this is how lead generation approaches different channels to get them in the right place of the market to get customers.

Those channels are all focused on the Internet as most people are searching for products but also services across the net. The issue is that the Internet is way too broad, and businesses don’t know how to place themselves. They usually try, but they get one common result: losing money and time.

How Powerful Are Organic Remodeling Leads from Google?

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For companies looking for customers, it’s everything. For you? Pretty much the same. When you build a business with digital properties, you get to make thousands of dollars a month.

This isn’t a “get started today and get rich tomorrow” thing, but it is HIGHLY scalable, and ROI + positive results are guaranteed. Learning a fairly decent and very needed set of skills to create your digital properties and start ranking them on Google is required.

I have invested in several online businesses over the years, and if there’s something uncertain, whether you will get your ROI or not, even more than the actual profit.

However, this business moved my earnings from five figures a year to a month in ONLY passive income while sitting comfortably at home.

On my laptop. Anywhere. Anytime.

You can look at one of the first sites I built back in 2016, and it continues making me over $1.000+ every month. The best part is that I don’t need to touch it or the rest I’ve built over the years, just like this digital property.

What Makes Lead Generation SO Alluring?

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Here it goes: you can work from home.

The main issue with regular business opportunities is how much you need to invest in staff, equipment, or rent to have a place to sell your products or offer your services.

We all know the hassles of traditional businesses that involve regular expenses, which are extremely high.  Can you afford it? I don’t think so, and even if you can, is it worth it? Now, it isn’t only about the money. You also need to put in a lot of work, and it isn’t only during the first couple of months or years. Usually, it is as long as you continue running it.

You can save yourself those headaches and bone-breaking tasks and expenses with lead gen since it is more about generating leads with digital channels—mainly websites.

Websites can be VERY cheap to build, and with many tools online, you get to do it in a couple of hours instead of days. Any virtual or digital business is scalable and won’t need constant maintenance.

So, let’s summarize this:

  • You save money in regular expenses with traditional and most online businesses as what you need is yourself and digital properties (websites).
  • You can bet on passive income.
  •  There’s no need to hire more people to get started.
  • You can generate leads in multiple industries, which allows you to work on any niche you want.

How Can I Get Started in the Local Lead Generation Program?

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Anyone can start and learn. That’s the beauty of this business model. I knew nothing about SEO, Map Listing, and everything I’ve mentioned so far. It is all about learning the skills, gaining experience, and deciding to take the step.

Remember that this business model will never get old as business owners are always looking for leads. They need to do business and scale their companies. Why not do the same while helping others and still making money?

You can start with this local lead generation course highly recommended for anyone wanting to grow in the business. It is a close training that will take you through each step and make sure you are able to get your ROI, profits and take control of your life.

You will be added to an incredible lead generation family ready to help you 24/7 when asking questions on the group. Anyone is welcome who’s willing to put in the work. Click here to watch the lead gen webinar.

Learn more about local lead generation below.

Take a sneak peek into our proven strategies to build a passive income by building a local lead generation business from your laptop...