How To Start A Remodeling Business [10 Steps]

Editorial Team

How To Start A Remodeling Business

The renovation sector is valued at more than $110 billion and has increased by more than 50% in the last decade. Renovation abilities are very important, and starting your own remodeling firm allows you to put those skills to use and cash in on a slice of that multibillion-dollar industry.

If you merely give your skills and time as a part-time remodeler, the start-up cost will be roughly $50,000 to $75,000 because you will need a set of tools, a car for transporting tools and materials, and the necessary licensing and insurance to operate in your state and locality. If you want to establish a business delivering remodeling services, anticipate having $250,000 to $500,000 in start-up money because you’ll need to be able to purchase your first few orders of materials and hire workers before your customer pays you for the completed job.

These processes will ensure that your new firm is well-planned, legally compliant, and registered:

1. Discover Your Specialty Or Niche

Remodeling is a subset of general contracting; a remodeling contractor is a general contractor that specializes in renovating existing structures. There is a multitude of niches within this expertise. Finding one will help you compete with clients who require contractors with your talents and interests. Some remodelers specialize in bathrooms solely, while others specialize in kitchens or basements. Others may specialize in boosting a home’s sustainability through natural materials and energy efficiency upgrades.

You can also specialize in one area, such as lighting, plumbing, or flooring, and engage subcontractors to complete the remainder of the work. Finding the correct specialty entails combining the needs of your clients with your skill set. This phase will, in turn, assist you in developing a distinct brand and obtaining word-of-mouth recommendations from prior clients.

2. Make A Business Plan

A well-thought-out plan is essential to an entrepreneur’s success. It will help you map out the specifics of your company and discover some unknowns. You’ll need to keep track of your material suppliers’ accounts, pay your workforce on time, and keep your vehicles and tools in good working order. Fortunately, your office space can be kept to a bare minimum.

What Is The Target Market?

Home and business owners who want their property professionally refurbished and are willing to pay labor and material costs. Large businesses that need to be renovated may have more room, allowing you to charge a higher rate for your services.

How Does A Remodeling Business Generate Revenue?

Your remodeling business earns money by billing consumers for labor and materials used in their refurbishment. As part of your trade, you are responsible for providing your tools. However, you buy paint, hardware, lumber, flooring, and other goods at wholesale costs and then charge your customers a premium. Your hourly labor costs will depend on your level of skill, the type of project, and the area’s competitive rates.

Starting Small

It’s okay if you’re not ready to take on Chip and Joanna yet. You might begin by taking on initiatives that are within your wheelhouse. As a result, you may already possess the tools and abilities needed to get started.

It’s also okay if you’re still learning. If you’re a great carpenter but don’t know much about plumbing, try to obtain experience by finding an entry-level job on a construction site. Work your way up the ladder, learning new abilities in every room of the house.

Another strategy to put your small business on the right track is to carve out a specialty for yourself. Assume you have a talent for creating mudrooms. Your first client requests that you construct a practical mudroom for their growing family. The new mudroom quickly becomes the talk of the neighborhood, and everyone wants to hire you. You expanded your business without even trying!

Going Big

If you believe you are ready to start a significant home improvement company, it is important to create a comprehensive business strategy. It will help you set goals and learn everything there is to know about starting and maintaining a business.

When it comes to how to start a renovation firm, you’ll also need money to get started. If you don’t have enough money upfront, you could need a loan, which is why you’ll need that business plan. Lenders will typically want a business plan that outlines precise objectives.

3. Make It Official

The next stage in launching the business is to establish a legal entity.

Choosing a Business Name

You’ve determined your objectives. It’s now time to think of a business name. While this is an important assignment, it is also time to have some fun. After all, you’re in the business of fulfilling homeowners’ fantasies! Choose a name that will inspire potential clients and catch their attention.

If you run out of ideas, ask your friends and family for suggestions. Compile a list of some of the most innovative and amusing contractor business names for your consideration. It’s usually a good idea to have a few options in case AB Construction is already taken.

Registering Your Company

Now that you’ve decided on a name, it’s time to register your company. There are several ways to establish your firm, each with its own set of advantages and disadvantages, as well as its own legal requirements and fees.

It’s a good idea to contact an attorney or business counselor before deciding on any business structure.

Sole proprietorship: A sole proprietorship associates you, the owner, with your business. This business structure is simple to set up, affordable, and gives tax advantages. However, it does not shield you from personal liability.

Corporation: A corporation model allows your business to manage as a separate entity, shielding you from personal liability. Corporations are frequently more expensive to establish than other structures, and they necessitate more extensive record-keeping, operational processes, and reporting.

Limited Liability Corporations (LLCs): For small business owners, an LLC provides a combination of tax benefits and liability protection. It is frequently the preferred method for getting started in the home renovation sector.

4. Acquire Licenses And Permits

These steps differ by state, and some areas require proof of job experience or education. You must take an exam and submit documents to the applicable certification body.

Furthermore, professional qualification may be required to legally execute some operations, such as electrical wiring or plumbing. Finally, a remodeling business may be required to register with municipal authorities to operate in a county or town. Depending on municipal rules, each job may necessitate a separate permit.

5. Register To Pay Taxes

Obtaining an employer identification number, or EIN is the final step before you can pay taxes You can get an EIN by applying online, by mail, or by fax. Remember that if you choose to be a sole proprietor, your EIN might be your social security number.

Once you have your EIN, you must select a tax year. Financially, your company will run on a calendar year (January to December) or a fiscal year, a 12-month term that can begin in any month. Your tax cycle will be determined by this, while your business structure will define which taxes you will pay.

6. Finance Your Business

The next stage is to secure financing, and there are numerous ways to do so:

Bank loans: The most typical way, however approval demands a sound business plan and a strong credit history.

SBA-guaranteed loans: Through an SBA-guaranteed loan, the Small Business Administration can act as a guarantor, assisting in obtaining that elusive bank approval.

Government grants: A few financial support programs help enterprises get started. Visit to find out which ones might be suitable for you.

Family and friends: Approach friends and family for a business loan or investment in your idea. Because SEC regulations apply, it’s a good idea to seek legal counsel.

7. Obtain Full Bonding And Insurance

The following step is to become bonded and insured. When you apply for your general contractor’s license or register your business, most licensing offices will need proof of insurance.

Many homes may not even let you in if you are not licensed and insured. There are too many variables that might go wrong, and a contractor who does not operate properly and legally raises a red flag for prospective clients.

Your insurance needs will be determined by the nature of your business. However, the bottom line is that you will almost certainly require home improvement contractor insurance to protect yourself and your company’s well-being. The last thing you want is to expose yourself or your company to risk or loss.

Insurance Against General Liability

The most popular type of coverage for home improvement contractors is general liability insurance. It covers the costs of third-party accidents, property damage, and bodily harm. In most states, general liability insurance is required to obtain a contractor’s license. In any case, it is risky for a contractor to operate without it.

Because let’s face it, anything can happen when you’re tearing down a kitchen or using a table saw. You may accidentally destroy a wall or injure a client. Let’s return to the kitchen demolition. Assume you swing your sledgehammer too far and strike a load-bearing wall. The structure becomes unstable and shows indicators of impending collapse. It was an unintentional error, but now there’s a significant fix for the project, and you’re on the hook for the cost of repairs.

The good news is that your contractor’s insurance with general liability coverage will most likely pay the cost of repairs up to the extent of your policy.

Insurance For Workers’ Compensation

It goes without saying that when you hire a crew and workers to help you with your business, the chance of unplanned incidents and mishaps rises. Your state may require you to obtain workers’ compensation insurance if you have employees, even if they are part-time or temporary. Workers’ compensation insurance can give much-needed security by preventing an employee from suing your home renovation company for workplace injuries.

Establish Relationships

Your choice of clients will impact how well your remodeling business does. It is the cornerstone of a peaceful and productive business model, whether it is the relationship with your clients, suppliers, or staff.

Your Group

You’ve scored a job, and need to find the right people to accomplish it. As the owner of a home improvement company, you are responsible for assembling a team of subcontractors to complete the job.

If you don’t already have a list of plumbers, roofers, and electricians you trust, organizations like Building Connected and AGC can help you identify competent and licensed tradesmen.

Meeting new subcontractors in person is always useful, to gain a better sense of their working style and communication skills. You may also need to hire an administrator to handle payroll or act as a contact with your clients.

Your Suppliers

These provide you with materials for your home improvement business. They are your colleagues, and they may even become like family to you over time. Long-term partnerships with suppliers and vendors are critical to a business and are usually the consequence of mutual trust and support.

Maintain an open channel of communication with your suppliers and vendors by paying them on time. It will go a long way toward fostering a strong partnership—even under challenging circumstances.

Your customers

When a homeowner hires you to alter their home, they expect you to make their vision a reality. Is there any pressure there? You can lay a solid basis for a successful redesign if you take the time to understand their demands and maintain an open line of communication. Even better, satisfied customers are more inclined to hire you again, refer you to friends, and provide five-star reviews on your website.

8. Advertise Your Business

Word of mouth is a terrific approach to getting new clients, but if you want to stay current and competitive, you’ll need to invest more time and effort in marketing your remodeling business.


To establish a powerful brand, you must find a strategy to set yourself apart from the competition. Finding a unique collection of services that tackles a pain issue for your clients that is missed by your competitors is one approach to accomplishing this. Another method to differentiate yourself is to provide more specialized services of better quality than your competitors.

It would be beneficial if you also sought out talented staff or subcontractors to help you realize your idea. You can attract skilled personnel if you have a corporate culture. These trained professionals may improve your brand’s image and reputation for quality.


One of the first questions a potential client may ask is, “Do you have any samples of your work?” Your website is a crucial marketing tool. It highlights the job you’ve done, the services you offer, and 5-star ratings from satisfied customers.

Making a website does not have to be a significant undertaking. With this post, we can get you up and running quickly.

There are numerous strategies to promote your business. Begin by considering who you want to reach, how much money you want to spend, and how creative you want to be.

A more traditional approach would be to place ads in local newspapers, send direct mail to people’s homes, or heavily promote your business on social media.

9. Invest Wisely

When restoration jobs are pouring in, it can feel as if success is guaranteed. However, for a renovation company, growth entails a great deal of danger. When you take on more jobs, your cash expenditure rises due to increased material purchases, labor, and mobilization costs. While you wait for payments, your business can swiftly become insolvent.

It should come as no surprise that cash flow issues are the leading cause of construction company failure. When trying to expand your remodeling firm, it is becoming increasingly crucial to regularly monitor your financial statements and keep an eye out for any gaps in your cash flow forecast.

10. Make Your Payment Expectations Known

It is important to establish clear pricing expectations. Use plain language and avoid industry-specific jargon when writing the renovation contract. Make numbers more understandable by including visuals and graphs. Also, be upfront and disclose all connected fees so that homeowners are not caught off guard. Having clear expectations from the outset makes the process go more smoothly and enjoyable.

Before you sell the task, ensure your clients understand what will happen if there is a disagreement. Inform them that you will file a lien if they do not make the agreed-upon payment.


Who knew renovating was such a big business? Over $110 billion is a staggering figure, and you may make a lot of money by capturing even a small portion of it with your remodeling business. You may run your business from home and get started with little money out of your pocket.

All you need are some tool skills and a desire to get your hands dirty to start a profitable business. Now that you’re a business expert, put on your tool belt and work on creating your new renovation company!