Simple Steps for Starting a Home Improvement Business

Starting your own business, of course, entails taking on a certain amount of risk. This is true regardless of what field your new business venture is in. However, the good news is that home improvement is quite a stable sector of activity.

Forbes estimates the annual revenue generated in the home renovation industry at over 450 billion dollars annually. And it continues to grow.

As long as people have home, those homes will age, and they will need renovations, remodeling, and repairs. Another bit of good news is that thanks to technological advancements that place everything from marketing and accounting to recruitment and project management accessible right at everyone’s fingertips, we see a boom in entrepreneurship.

If you are looking to start your own business, you’ve picked a good time to do it. And if you’re looking to start your own business in the field of home improvement, you’ve picked a healthy and stable market to venture into.

Now comes the simple yet important question of ‘How?’ How do I go about starting my own home improvement or home renovation business?

Here’s more good news for you - I’m going to take you step-by-step through the process.

The Logistics - Creating a Recognized Legal Entity

Naturally, there is a certain amount of paperwork, filing, and processing fees involved if you want to operate as a legally recognized business. These procedures depend on where you register, the specifics of the economic activity you will engage in, and the legal structure of your business.

Decide what type of structure your business will have

You will need to decide what legal form your business will take. Select the type of business best suited for the scope of your activity, its reach, expected size, and anticipated profits. The most common types of business entities are:

Limited Liability Company (LLC)

This type of structure separates you, in a judicial sense of the term, from your business. With a limited liability company, in case of a lawsuit, your personal assets are protected. Additionally, if your LLC accrues debt, your creditors cannot come after you and your personal assets, as you and your LLC are separate entities.

It is recommended you form your LLC in the state where you reside and from where your LLC will operate. Otherwise, you will also need to register as a foreign LLC in your home state. The overwhelming number of home improvement companies operate within a limited geographic scope and, thus, only need to be registered in the state where their activity is carried out.

If, however, your business will have a physical presence in multiple states, then you will need to register as a foreign LLC in various states regardless. In this case, it may be advantageous to register in one of the states with more favorable tax laws, such as Delaware, Wyoming, South Dakota, or Nevada.

Some states, such as Texas, have high formation fees but low corporate taxes. In addition to initial formation fees, you will also need to pay annual or biennial filing fees. These serve to keep the state informed of any changes in your company, and the fees must be paid whether there are any changes or not. Two states, Alabama and Ohio do not require regular filing fees.

For specifics, contact the Secretary of State of your home state or the state you wish to register in. For your convenience, check out this directory of secretary of state offices and websites.

Sole Proprietorship

In contrast to an LLC, a sole proprietorship does not separate the business from its owner. In fact, in a sole proprietorship, often, the owner is also the only employee. He or she is responsible for filing any profits as income in their tax declarations.

Sole proprietorships are easier and more cost-effective to set up, but they are generally reserved for freelancers and/or hobbyists who anticipate working with only a few select clients and anticipate making relatively small profits.


With low start-up costs and minimal paperwork, partnerships are perhaps the simplest form of business to start and maintain. In contrast to a sole proprietorship, a partnership is generally entitled to a larger line of credit, and often securing a loan is easier and more cost-effective. However, unlike an LLC, a partnership does not separate you and your personal assets from the business. In this case, should your business incur debt or a lawsuit, your personal assets and personal credit line will be at risk.

Partnerships are better suited for smaller businesses, businesses with multiple owners, businesses with low costs and low profits or businesses that are not the primary economic activity of their owners.

There are, of course, fees associated with registering your legal entity. These fees vary depending on the type of structure you want your business to have and where you file. However, these fees rarely exceed $300 and are often significantly less.

Visit the U.S. Small Business Association for the specific requirements of your location and the form of business structure you want for your company.

Register for an EIN (Employer Identification Number)

Even if your home improvement business has no employees (other than yourself), you will still need an employer identification number. This is true for all the types of structures discussed above. The EIN serves to identify your business to the IRS (Internal Revenue Service).

The process for obtaining an EIN is relatively simple. You can apply online or by post (even by phone if your business was formed outside the US and its territories).

You should apply for an EIN only after your business has been legally formed.

For more specifics, visit the IRS website dedicated to the subject.

Open a Business Bank Account

Even if you’ve formed a limited liability company, opening a separate business bank account is an essential step to ensure that your business and your personal assets are legally separate. Additionally, with a business bank account, it will be easier for you to obtain a line of credit for your business, and it will help when it comes to filing taxes and other forms of accounting.

Banks are always looking for new ways to entice small businesses to open an account with them. You’ll have to do your due diligence to determine which bank best suits your specific needs. But you can get a general idea by consulting this ranking of the best banks for small business bank accounts.

Obtain the Necessary Licenses and Liability Insurance

Most home improvement businesses may operate in the United States without additional federal licenses. However, if you foresee needing to operate heavy machinery, or if you intend to conduct operations on federal land, then you will need to apply for federal licenses. Additionally, some states require liability coverage even for a small home repair business.

You should check the U.S. Small Business Administration for license requirements associated with your location and the specifics of your activity.

The Plan - Researching the Market and Assessing the Value You Can Add

The good news about starting a home improvement business is that it is a relatively stable market. And while it is not an oversaturated market, when it comes to home remodeling services, home renovations, interior design, deck-building, and the like, there is considerable competition.

By researching the specific needs of homeowners in your location, you will get a sense of any gaps there might be in the market or any products and services that are not yet being provided.

Some questions you may want to ask yourself before constructing a business plan include:


  • What is the average income of the homeowners in my location?

    This information will help you set the prices for your services, and it will help you determine what products and services might be viable in your specific location.

  • What services are my would-be competitors providing, and at what cost?

    This information will help you understand what the market already bears, and if there are any products or services you may be able to provide at a lower cost or at a higher quality.

    Additionally, it will be helpful to read reviews of construction companies and remodeling businesses in your area to get a sense of the needs and priorities of your prospective clients or customers.

  • Do the reviews emphasize cost or quality or customer service?

  • Are your prospective clients or customers used to paying an hourly rate or are they used to being billed according to the project?

  • What kinds of projects are receiving the most reviews?

  • What demands are not being met?

    By researching the kinds of services already being provided and the level of satisfaction of homeowners with the contractors or businesses in your area, you will get a sense of where in the market you and your business can fit in. This will give you a better idea of what kind of service you can provide at a better price or with better quality, depending on the concerns of your prospective customers.

    A good place to start your research might be Statista. They have compiled comprehensive data on the home improvement market in the US, consumer behavior and spending habits, as well as top retailers in the sector.

    The Capital - Getting Off the Ground

    More good news - it doesn’t necessarily take a lot of start-up capital to get a remodeling business or a home improvement company off the ground.

    As stated above, the start-up costs, business licenses, and liability insurance are relatively low. And, while you may need money to buy supplies for a project, it is not unheard of for a construction business or a remodeling business to expect a portion of their fee to be paid upfront.

    Some experts in the field have estimated the cost of starting a home improvement or home renovation business at around $50,000. This includes liability insurance, administrative fees, professional tools, and a work vehicle. However, there is no shortage of successful start-ups that have gotten off the ground with significantly less.

    More start-up capital means more flexibility. But having little to no initial capital should not prevent you from getting your business entity off the ground.

    Additionally, the US Government is particularly keen on seeing a rise in entrepreneurship. (That means more businesses for them to tax.) Consequently, programs have been set in place to facilitate small business loans. Check out the U.S. Small Business Administration for specifics on the loan possibilities at your disposal.

    The Brand - Forming Your Identity

    When you start a home improvement business, typically, a significant portion of your customers will come by word of mouth. Your prospective customers will want to deal with a small business they can trust, one that has come recommended to them.

    In the early stages of your home business, it might be difficult to get referrals, as the number of projects you’ve worked on will be minimal. This is where effective branding can really make or break a business.

    What’s in a name?

    The ability for your prospective clients to identify with your business and understand the service you provide and the value you bring starts with your company’s name.

    Make sure to choose a name that speaks to the values and priorities of the prospective customers in your area. Create a brand that they can identify with.

    Some tips when it comes to branding:


  • If you plan to operate locally, play to community pride by selecting a name and/or mascot that speaks to local tradition or to specificities of the region. For example, small businesses operating in Michigan will often include the words ‘great lakes’ in their branding: Great Lakes Plumbing, Great Lakes Towing Services, etc.

  • If you plan to operate nationally, play to national pride by selecting words that speak to the nation as a whole: words like ‘American’ or ‘National’, ‘Jefferson’ or ‘Eagle’.

  • If your research identifies a particular priority among your prospective clients, integrate that priority in your name. For example, if speed is the overriding concern, you could go with something like ‘Quick Cabinets’. If budget is the primary concern, you could go with ‘Cost-Saving Cabinets’, etc.

    Logo Design

    Much like the name you choose for your company, the logo that will be featured on advertisements, invoices and, potentially, your employees’ uniform and/or vehicles will go a long way towards helping your prospective clients identify with your company and understand the service and value you aim to provide.

    Much like the name you choose for your company, the logo should resonate with the values and priorities of your prospective clients. If you are aiming for a high-end clientele, you may want to opt for a more minimalistic logo design. If you’re aiming for something more trendy, your logo should reflect this ambition.

    Design firms can charge a lot of money for logo design. Depending on your means, you may feel the cost is worthwhile. However, in today’s gig-based economy, it is possible to hire talented graphic designers at a fraction of the cost. Platforms such as Fiverr or Upwork would be a good place to start. The results can be a bit hit or miss. But for the low prices you are likely to find on those platforms, it may be worth trying out a few options there before exploring more pricey options.

    The Marketing - Getting the Word Out

    This is potentially one of the more difficult steps in getting your business off the ground. The tactics to employ vary greatly depending on the region you’ll be operating in and the specific type of service you will provide.

    Invariably, it will be important to have an online presence. However, as stated above, you will get a significant amount of business by word of mouth. This is not exclusive to clients sharing their experiences with their friends and family. It also means establishing relationships with contractors and players in the construction business who provide similar, though not identical, services to yours and who will be able to recommend you to their clients.

    Put yourself in the shoes of your prospective clients. What steps would they take to find the service provider they are looking for? If, for example, you feel they are likely to go to a local shop to seek advice, make sure you introduce yourself to the workers at that shop. You could even propose a referral program.

    Since a lot of your business will come from referrals, incentivizing referrals is a good idea. For example, once you have finished a project for a satisfied customer, you could let them know about your customer referral plan where they receive monetary compensation for the business they send your way.

    Effective marketing requires creativity and out-of-the-box thinking. However, when starting out, a good place to get marketing ideas is from other companies that provide a similar service to yours. Imitation is the sincerest form of flattery. It also makes good business sense for new business owners.


    You may very well be setting out to run your own company. But being your own boss doesn’t mean that you will be landing contracts and completing projects on your own. In addition to whatever employees you may or may not decide to bring on board, you will also be working with suppliers, subcontractors, accounts, IT and marketing specialists, and a whole host of other professionals that will help you out along the way.

    When you’re starting out, prioritize getting to know the suppliers and subcontractors you are likely to be working with. Their experience and expertise will save you from making costly missteps. Additionally, their input will help you get a clearer idea of how much you should charge for your services.

    Home improvement may be a sector wherein you’re dealing with physical structures and physical materials, but it is also a sector where your relationship with other professionals is key to your success.

    Developing a good relationship with suppliers and subcontractors will help you to secure discounts and ensure that your business is not relegated to a low priority, thus avoiding costly delays. Additionally, suppliers and subcontractors are often a good source for referrals, and they can help you secure those all-important first contracts.

    Strength in Numbers

    There are a few associations that are worth looking into, whether to advertise with or simply to stay up to date on trends and innovations in the industry.

    National Association of Home Builders
    The NAHB operates on a local, state, and federal level, striving to help its members gain a competitive edge through knowledge, networking, expertise, and advocacy, as well as providing cost-saving opportunities through exclusive products and services.

    NAPAC (National Association of Professionally Accredited Contractors)
    Though membership in NAPAC requires a minimum of seven years of activity as a contractor, their website provides resources for pricing projects and keeping abreast of trends and innovations in the industry.

    NARI (National Association of the Remodeling Industry)
    Dating back to 1935, NARI has a long-standing tradition of connecting homeowners with qualified professionals in the home remodeling sector in an effort to ensure integrity and positivity in the field.

    If you don’t know how to start a home remodeling business (or any other kind of business for that matter), you don’t need to go it alone. SCORE is a non-profit network partnered with the U.S. Small Business Administration wherein business experts volunteer to mentor entrepreneurs and help them get their business off and running.


    As housing prices continue to climb, more and more homeowners who are dissatisfied with the state of their homes are looking more towards remodeling than towards moving. This factor, along with the wave of Millennials now entering the market and who are opting for lower-priced homes that already require renovation, makes starting a home improvement business a particularly attractive venture.

    Starting a home improvement business does require a certain amount of planning, patience, and tenacity. Alternatively, if you find the prospect of having all the groundwork already done for you appealing, explore our franchise opportunities available in the home improvement sector.


    Published: by Jill Hansen

    Category: Informational

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