The pandemic fueled a surge in home renovation projects since many homeowners missed their activities before the pandemic. People started setting up pools in their backyards, entertainment centers in the basement, and even mini-bars inside the den.
Home improvement sales in 2020 reached $419 billion despite the slowdown in the economy. With this, entrepreneurs looking to start a business can consider setting up a home renovation business. But before fully entering the industry, they should take into account several things to increase the chances of succeeding in the business.
Gain Experience as a Subcontractor
The first thing to do when joining the home renovation industry is to gain experience as a subcontractor. The home renovation market is enormous and is still growing. And to become successful in the industry, an entrepreneur should have the expertise to work on big projects.
To gain this experience, the entrepreneur should work as a subcontractor for a bigger company. Aside from gaining experience, the entrepreneur will learn the different processes and procedures within the industry. This includes the tricks of the trade and other information they do not usually get from formal education.
Additionally, working as a subcontractor also allows the entrepreneur to build a network of contacts that will help them in the future. These contacts will prove helpful when the entrepreneur will start to work on bigger projects. If the contractor’s work is good, clients will approach them, and they will not need to advertise their services. They may even get referrals from the clients of the construction company.
Organize the Finances
Gaining experience and building a network is great for the business. But the entrepreneur should also make sure the finances of the business are well-organized. While the capital needed for a home renovation business is lower compared to a construction company, it’s still a significant amount.
Similar to other business ventures, the entrepreneur should plan the budget of the business. A plan is vital since the entrepreneur will need to hire people, acquire equipment, and source out materials in the future.
The entrepreneur should take into account the capital and operating expenses, including the wages of the workers and staff, along with the materials needed for each project. Moreover, the entrepreneur can also check potential sources of funding for the business. Aside from private banks, the entrepreneur can also explore the possibility of getting funding from government agencies. Some of these agencies can provide grants to small businesses as long as they qualify for the grants.
Find Reliable Suppliers
The next thing the entrepreneur should do is to look for reliable suppliers for the home renovation business. The entrepreneur can check the network they created while working as a subcontractor. Working from these contacts gives the entrepreneur an excellent place to start when looking for supplies needed.
Once the entrepreneur finds a reliable supplier, they should have the funds ready to pay them. While they can work out payment terms, the entrepreneur should also stick to the terms they agreed on. This allows the entrepreneur to build a good relationship with the supplier.
Ensuring that the suppliers are paid on time also gives the entrepreneur a preferred status among the businesses these suppliers are working with. This preferred status ensures that they will get the supplies they need for the company, especially the materials that are hard to come by.
Having suppliers for the materials needed in the business is excellent at the start. But if the company is thriving, the business owner may consider producing their materials by acquiring an injection molding machine from a reliable supplier. This machine ensures the business will have a ready supply of scarce materials that the entrepreneur needs for the projects.
Get the Necessary Licenses
Before the entrepreneur starts working on home renovation projects, they should get the necessary licenses. They can visit the local office of the Small Business Administration to get the necessary information about starting the business.
The government agency can provide the requirements and even give the entrepreneur information that can help them start the business. The entrepreneur should also register the business. Registering it as a limited liability company (LLC) may be a good idea since it separates the assets of the entrepreneur from the business. If the business fails, only the company’s assets are used to pay off any loans the business has.
Additionally, the entrepreneur can register the business at the local government agency that regulates the industry. At this point, the home renovation business can already get a license to operate.
The current market for home renovation businesses is big. Due to this, an entrepreneur will have a good chance of succeeding in the industry.