Home Remodeler Business Plan, Marketing Plan, How To Guide, and Funding Directory
The Home Remodeler Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Home Remodeler business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.
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Home remodelers are generally able to generate very substantial profits in two different ways. First, these businesses are often considered to be contracting businesses and they can render their services to the general public. This is basically the same operating capacity as a general contracting business wherein a homeowner or real estate investor will hire the firm to complete a massive renovation to an existing home facility. Typically, the fees that are associated with doing this type of work are trained from the tens of thousands to hundreds of dollars depending on the scope and scale of the project. The gross margins typically generated from rendering the service the general public are approximately 40% to 50% depending on whether or not a large number of sub- subcontractors are going to be involved with the work. For most home remodeling businesses, a number of subcontracted companies are held on retainer given the expansive nature of these projects. Two, many home remodeling firms will make substantial additional profits from the acquisition of properties that need to be rehabilitated. This can become one of the most major revenue streams for these types of companies although it does carry a higher financing risk. In these scenarios, a home remodeling company will purchase a dilapidated property with the intent to rehabilitated for sale or rent. Generally, the gross margins made from this type of activity range anywhere from 60% to 70% of the total home value. The worse condition that the home is in the higher the gross margin. One of the nice things about owning and operating this type of business is that the operations can be scaled down depending on the current economic climate. As such, there’s really only a six month risk as it relates to completing a home renovation job or acquiring a property that is in need of substantial rehabilitation.
Given that this is a business that deals with contracts and real estate, almost all financial institutions are willing to extend credit in the form of a line of credit for a loan in order to carry out these activities. Of course, a home remodeling business plan is going to be required if an individual is going to need capital in order to start this type of business. This business plan should include a three year profit and loss statement, cash flow analysis, balance sheet, breakeven analysis, and business ratios page that focuses on statistics relating to general contracting businesses, real estate rehabilitation firms, and real estate investment firms. One of the most important things to discuss within the business plan is going to be the timeline of how long each contract will take or how long it will take to remodel any specific home that is done on speculation.
Usually, contracts for a complete home remodeling project range anywhere from three months to four months while can be expected that the acquisition of a property for rehabilitation will take approximately six months from acquisition to sale. As such, this should be discussed thoroughly within the business plan so that a bank can understand how a dramatic increase in interest rate or a change in the real estate market would impact the company’s ability to repay any type of debt obligation. Beyond the information pertaining to operating procedures and protocols, a demographic analysis that focuses on median family income, median household income, and the property values with any specific local or regional market should be included as well. This will provide the owner operator as well as any type of financial partner with an understanding of how much margin of safety there is when operating this type of business.
Beyond the business plan, a home remodeler marketing plan should be developed as well. First, it is imperative that the owner operator have a substantial number of connections with area real estate brokerages, real estate agents, and we’ll see investment firms that may acquire properties from the company upon the completion. This will allow for any speculative property rehabilitations to be divested very shortly after the completion. As it relates to offering the services to the general public, a proprietary website that showcases the previous work of the business, contact information, and the types of projects that are undertaken should be examined on this platform. It is important that there are a number of images of the previous work of the firm so that a potential homeowner that is looking to have their house remodeled can have an understanding of what they will expect as they progress with the company. A presence on social media can also be a valued asset to the site to companies given that many people will now seek recommendations for contractors on FaceBook, Twitter, and Google+. As such, it is important that the social media profiles can be easily found and sourced by people on these websites so that referrals can be made very quickly.
A home remodeler SWOT analysis should be produced as well. This analysis discusses the strengths, weaknesses, opportunities, and threats that are normally faced by these types of home remodeling and contracting companies. As it relates to strengths, home remodeling companies have very high barriers to entry given that many states require that the owner is licensed as a general contractor or specialty subcontractor. The startup costs are considered to be moderate and most home remodeling businesses can be found for as little as $50,000 was much as $200,000 depending on the initial scope and scale of the business. For weaknesses, these businesses are subject to fluctuations in the economy and housing market prices. However, these risks can again be ameliorated by the fact that a home remodeling business can quickly scale down its operations in the event of an economic recession. For opportunities, these companies can often expand by acquiring additional lines of credit or bank loans to carry out property rehabilitations on speculative basis. Also, there is the opportunity to acquire other home remodeling companies or general contracting businesses that have already established a strong brand name within any given local or regional market. For threats, the real estate market within the United States is one of the most free market oriented industries. As such, anyone that is buying or selling a property is a potential competitor to the business. Relating specific to competitive threats regarding other contractors, once a home remodeler developed a strong reputation in a local market there able to always remain in business with a large amount of revenue and gross profits being generated. The biggest primary threat faced by any type of contracting business it – including home remodelers – is a substantial and unexpected rise in interest rates given that this affects other people’s ability to borrow for home remodeling projects and related property acquisitions.