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Remodeling business plan for starting your own building company
Whether it’s about increasing one’s property value or boosting one’s lifestyle, remodeling is the way to go. Remodeling is a type of business that can be started with simple services at the residential level. And can be expanded to performing complicated renovations needed by commercial buildings and businesses.
No matter how large or how small your startup is, you would have to create a remodeling business plan for remodeling. Creating a comprehensive business plan before you open a remodeling business will help you in:
- Recognizing the latest trends
- Acquiring the right expertise
- Avoiding troublesome situations
- Efficiently manage finances
- And more.
To help you in creating a business plan that covers all the essential aspects, we’re providing a sample business plan of a startup ‘Model-It Solutions’.
Executive Summary
2.1 The Business
Model-It Solutions will be a registered, licensed, and insured remodeling business startup based in Buffalo, New York. The business will comprise expert contractors, architects, and engineers to enhance the aesthetic and comfort level of residential as well as commercial structures.
Simply put, we build what you dream!
2.2 Management of Remodeling business
As a business owner, you can’t rest after setting up a remodeling company. You have to be proactive in organizing and analyzing various business operations. In the case of a remodeling business, you need efficient management to complete given projects in time. To make sure that clients get the work done according to their expectations, you have to properly manage communication, finances, and resources among various channels.
2.3 Customers of Remodeling business
Exploring who are going to be your customers is extremely important. Before you search for how to start a remodeling company, you should identify your customers.
The target customers of Model-It Solutions will be the homeowners, construction firms, contractors, and government agencies. To turn them into our potential customers, we will be taking effective steps.
2.4 Business Target
Our major targets are:
- To maintain a customer return rate of 20% throughout our service years
- To maintain a CSAT score of above 85%
Our financial targets to cover our expenses and investments through the profits earned are summarized in this table.
Company Summary
3.1 Company Owner
Anna Huston will be the owner of Model-It Solutions. Anna is an MBA. After completing her education at Stanford University, she started working in Skanska.
But 5 years into the service, she decided to start a remodeling business of her own.
3.2 Why the remodeling business is being started
Anna always remained a woman of creative ideas. After serving in a multinational firm, she decided to move to her hometown and serve people with her talent. She realized that the remodeling business has never-ending scope in the years to come as people keep thinking of bringing improvement to their property.
3.3 How the remodeling business will be started
Step1: Plan your business
As the first step, Anna studied various business plan examples for remodeling company to make a business plan for remodeling. From analyzing the market shares to creating a financial plan, Anna put everything on her business plan.
Through this remodeling business plan sample you can study the business’ requirements, balance sheets, personnel plan, and other aspects of Model-It Solutions.
Step2: Define your brand
The second step after creating a remodeling business plan is to get your business registered. You will have to acquire the required licenses and permits. Moreover, this is the time when you have to physically establish your business office.
Step3: Hire the staff
The third step is to conduct interviews and tests to hire the most competent employees.
Step4: Get ready to promote & market
The next step is to promote your services and competitive aspects to reach your target customers. This step also involves the strategy you will adopt to gain and retain your client base.
Step5: Establish a web presence
In this age, people use Google to find the right service provider whenever they need any service. Therefore, it has become essential that you establish a strong social media and web presence.
Anna decided to hire a professional IT expert to create a website for Model-It Solutions. The website will also enable users to make online bookings. Moreover, the website will also keep a record of repeat customers so that Anna could evaluate her business performance time-to-time.
Our startup expenses including costs of all the things we could need for the startup are given below:
| Start-up Expenses | |
| Legal | $254,000 |
| Consultants | $0 |
| Insurance | $35,000 |
| Rent | $30,000 |
| Research and Development | $28,000 |
| Expensed Equipment | $56,000 |
| Signs | $4,000 |
| TOTAL START-UP EXPENSES | $407,000 |
| Start-up Assets | $319,000 |
| Cash Required | $357,800 |
| Start-up Inventory | $54,000 |
| Other Current Assets | $209,800 |
| Long-term Assets | $230,000 |
| TOTAL ASSETS | $1,170,600 |
| Total Requirements | $1,577,600 |
| START-UP FUNDING | |
| Start-up Expenses to Fund | $407,000 |
| Start-up Assets to Fund | $1,170,600 |
| TOTAL FUNDING REQUIRED | $1,577,600 |
| Assets | |
| Non-cash Assets from Start-up | $1,543,600 |
| Cash Requirements from Start-up | $376,000 |
| Additional Cash Raised | $55,000 |
| Cash Balance on Starting Date | $34,000 |
| TOTAL ASSETS | $2,008,600 |
| Liabilities and Capital | |
| Liabilities | $29,000 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $47,000 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $76,000 |
| Capital | |
| Planned Investment | $1,577,600 |
| Investor 1 | $0 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $1,577,600 |
| Loss at Start-up (Start-up Expenses) | $355,000 |
| TOTAL CAPITAL | $1,932,600 |
| TOTAL CAPITAL AND LIABILITIES | $2,008,600 |
| Total Funding | $1,577,600 |
Services
Before exploring how to start your own remodeling business, you should decide your services. Deciding your services even before the launch can help you in identifying the ways through which you can facilitate your customers.
To give you a notion of services you can provide as a remodeling firm, we are enlisting the services provided by Model-It Solutions in this remodeling business plan template.
- Full House Remodeling: Our primary service will be to do the whole house remodeling. In this, we will work to redesign an old building to fulfill modern needs such as increasing the living space or making the interior/ exterior more appealing.
Depending on the clients’ needs we will remodel their kitchen, laundry, bath, deck, and more. We also install sidings, flooring, new windows and doors, cabinets, and whatever else our customers would need.
- Handyman Remodeling: This service will include doing minor changes in homes such as installing a modern lighting system, carpeting, painting the walls and cabinets, installing wallpapers, and doing small repairs.
- Historic Home Remodeling: Our third service will be to remodel historic and significant architectural buildings without affecting their historic aspects.
- Individual Structural Re-design: We will offer the services of adding/ removing the bathroom, room, kitchen, and laundry, installing a staircase, modern roofing, etc.
Marketing Analysis of Remodeling Business
Marketing analysis is an important part of a remodeling contractor’s business plan as it enables the business owner to keep pace with the demands of their customers. Through efficient marketing analysis, you can recognize remodeling domains that have high demand. Moreover, this part also gives you a clear idea of your customers before you open a remodeling business.
5.1 Market Trends
According to a report by IBISWorld, remodeling businesses have seen a growth rate of 1.7% in the past five years. More than 455 thousand remodeling companies are operating throughout the United States. The market size, according to the same outlet, is reported to be $97 billion.
The market stats are quite satisfying and the growth rate also indicates that there is still room for other startups to join the venture. If you want to ensure that you get customers from the very beginning of your startup, you should study the market trends of individual locations. That will help you locate an area where competition is low and people who need remodeling service are greater in number.
5.2 Marketing Segmentation
Identifying your customers before investigating how to write a business plan for remodeling is necessary. Dividing the wide populations into distinct groups can help you in recognizing their demands. And thus enabling you to plan ways to fulfill their expectations.
The groups that were identified by Model-It Solutions as potential customers are given below:
5.2.1 Real Estate Owners: Our primary customers will be the people who own any sort of building. They can need our services in two cases:
- They want to enhance the interior design/ exterior for themselves.
- They want to remodel the property to increase its value so that it could be sold at a greater price.
Note
In any of the cases, we’ll go to all extents to make sure they are happy and satisfied with our remodeling services. For them, we’ll provide full property remodeling services as well as individual services like installing new cabinets and remodeling the kitchen, etc.
5.2.2 Contractors & Construction Companies: The second group of our target customers will include contractors and construction companies. They will need our services whenever they get some project or even when they are building some structure from scratch.
5.2.3 Government Agencies: Our third category comprises government agencies who will be needing us to remodel structures of historic, artistic, and cultural importance – in a way that their integrity and historic aspects are maintained.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Real Estate Owners | 54% | 53,000 | 56,000 | 59,000 | 65,000 | 68,000 | 10.00% |
| Contractors & Construction Companies | 31% | 27,000 | 28,000 | 31,000 | 33,000 | 35,000 | 10.00% |
| Government Agencies | 15% | 13,000 | 14,000 | 16,000 | 18,000 | 21,000 | 11.00% |
| Total | 100% | 93,000 | 98,000 | 106,000 | 116,000 | 124,000 | 10% |
5.3 Business Target
Anna set her business financial and other goals before starting a remodeling company. She realized that by doing so, she would be able to provide a direction to her resources and talent.
The business targets of Model-It Solutions are
- To earn a net profit of $24k per month by the end of the first year
- To maintain a customer return rate of 20% throughout our service years
- To maintain a CSAT score of above 85%
- To lower the costs of our operations by 5% by the end of the 3 years by improving our techniques and methods
5.4 Product Pricing
The prices of our services will be lesser than those of our competitors. It is because we want to capture as many customers as possible in the initial phases of our startup.
Marketing Strategy
A remodeling business plan is incomplete unless you include in it, the ways to capture the attention of your target audience. In this marketing plan for remodeling business we are enlisting the exclusive sales strategy plan of Model-It Solutions.
6.1 Competitive Analysis
Anna realized that hundreds of remodeling firms are already operating in Buffalo. Therefore, she decided to come up with distinct features to outperform her business rivals.
The competitive aspects of Model-It Solutions are:
- We are highly client-oriented. We will always be willing to amend the remodeling designs as per our clients’ wants and needs.
- Our workers are highly skilled and highly collaborative.
- We provide online booking and payment facilities to our customers.
- Our repeat customers will be offered several discounts.
- Our prices are lower than our competitors, so you can easily try our services for a minor/ major task.
6.2 Sales Strategy
To get introduced to our target customers, we will:
- Advertise our startup through local newspapers, Google Local ads service, and social media
- Keep our prices lower than our competitors
- Establish a strong web presence using SEO techniques
- Provide a 25% discount to our repeat customers on every second visit
6.3 Sales Yearly
6.4 Sales Monthly
6.5 Sales Forecast
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Full House Remodeling | 44,000 | 46,640 | 49,438 |
| Handyman Remodeling | 28,000 | 29,680 | 31,461 |
| Historic Home Remodeling | 13,000 | 13,780 | 14,607 |
| Individual Structural Re-design | 35,000 | 37,100 | 39,326 |
| TOTAL UNIT SALES | 120,000 | 127,200 | 134,832 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Full House Remodeling | $61.00 | $70.76 | $82.08 |
| Handyman Remodeling | $34.00 | $39.44 | $45.75 |
| Historic Home Remodeling | $45.00 | $52.20 | $60.55 |
| Individual Structural Re-design | $43.00 | $49.88 | $57.86 |
| Sales | |||
| Full House Remodeling | $2,684,000.00 | $3,300,246.40 | $4,057,982.97 |
| Handyman Remodeling | $952,000.00 | $1,170,579.20 | $1,439,344.18 |
| Historic Home Remodeling | $585,000.00 | $719,316.00 | $884,470.95 |
| Individual Structural Re-design | $1,505,000.00 | $1,850,548.00 | $2,275,433.82 |
| TOTAL SALES | $5,726,000.00 | $7,040,689.60 | $8,657,231.93 |
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Full House Remodeling | $58.00 | $61.00 | $64.00 |
| Handyman Remodeling | $31.00 | $34.00 | $37.00 |
| Historic Home Remodeling | $37.00 | $40.00 | $44.00 |
| Individual Structural Re-design | $39.00 | $43.00 | $47.00 |
| Direct Cost of Sales | |||
| Full House Remodeling | $2,552,000.00 | $2,845,040.00 | $3,164,057.60 |
| Handyman Remodeling | $868,000.00 | $1,009,120.00 | $1,164,049.60 |
| Historic Home Remodeling | $481,000.00 | $551,200.00 | $642,699.20 |
| Individual Structural Re-design | $1,365,000.00 | $1,595,300.00 | $1,848,322.00 |
| Subtotal Direct Cost of Sales | $5,266,000.00 | $6,000,660.00 | $6,819,128.40 |
Personnel plan
While writing a business plan for remodeling, you should also define your employees, their job responsibilities, and requirements. It will enable you to judge the applicants on a definite criterion when you are going through the hiring phase.
7.1 Company Staff
Anna will manage the business herself. However, she’ll hire the following staff:
- 1 Co-Manager
- 1 Architect to design/ remodel complicated projects
- 2 Contractors to implement remodeling designs
- 5 Field Workers to work as laborers
- 1 Accountant to maintain financial records
- 1 Technician to maintain the machinery
- 1 IT Expert to manage the company’s website, online record, and social sites
- 1 Driver to provide transportation
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Co-Manager | $16,000 | $17,600 | $19,360 |
| Architect | $14,000 | $15,400 | $16,940 |
| Contractors | $29,000 | $31,900 | $35,090 |
| Field Workers | $50,000 | $55,000 | $60,500 |
| Accountant | $9,000 | $9,900 | $10,890 |
| Technician | $7,000 | $7,700 | $8,470 |
| IT Expert | $9,000 | $9,900 | $10,890 |
| Driver | $7,000 | $7,700 | $8,470 |
| Total Salaries | $141,000 | $155,100 | $170,610 |
Financial Plan
In the last part of your business plan, you should analyze your estimated cash flows. Before you make a remodeling business plan, you should have a clear idea of how much amount you intend to spend on which aspect of your business. Moreover, you should also have a plan to achieve your business goals by optimizing your profits.
In this business plan sample, you can explore the financial projections, break-even analysis, business ratios, gross margins, and other financial estimations done by Model-It Solutions to gauge its progress and business value.
However, while you go through this financial plan, remember, its projections are based on the assumption that there will be no major recession in the coming 5 years.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 8.17% | 8.22% | 8.28% |
| Long-term Interest Rate | 8.41% | 8.42% | 8.44% |
| Tax Rate | 23.64% | 25.06% | 26.10% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5342 |
| Monthly Revenue Break-even | $134,100 |
| Assumptions: | |
| Average Per-Unit Revenue | $236.00 |
| Average Per-Unit Variable Cost | $0.67 |
| Estimated Monthly Fixed Cost | $161,300 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $5,726,000 | $7,040,690 | $8,657,232 |
| Direct Cost of Sales | $5,266,000 | $6,000,660 | $6,819,128 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $5,266,000 | $6,000,660 | $6,819,128 |
| Gross Margin | $460,000 | $1,040,030 | $1,838,104 |
| Gross Margin % | 8.03% | 14.77% | 21.23% |
| Expenses | |||
| Payroll | $0 | $0 | $0 |
| Sales and Marketing and Other Expenses | $125,000 | $132,000 | $139,000 |
| Depreciation | $2,230 | $2,300 | $2,350 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $3,000 | $3,100 | $3,200 |
| Insurance | $1,870 | $1,940 | $2,080 |
| Rent | $3,400 | $3,500 | $3,610 |
| Payroll Taxes | $38,000 | $40,000 | $42,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $173,500 | $182,840 | $192,240 |
| Profit Before Interest and Taxes | $286,500 | $857,190 | $1,645,864 |
| EBITDA | $286,500 | $857,190 | $1,645,864 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $57,300 | $171,438 | $329,173 |
| Net Profit | $229,200 | $685,752 | $1,316,691 |
| Net Profit/Sales | 4.00% | 9.74% | 15.21% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $57,000 | $61,560 | $66,485 |
| Cash from Receivables | $16,000 | $17,280 | $18,662 |
| SUBTOTAL CASH FROM OPERATIONS | $69,000 | $75,210 | $81,227 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $71,000 | $77,000 | $83,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $34,000 | $39,000 | $43,000 |
| Bill Payments | $18,000 | $18,000 | $20,000 |
| SUBTOTAL SPENT ON OPERATIONS | $55,000 | $58,000 | $63,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $57,000 | $61,560 | $66,485 |
| Net Cash Flow | $13,000 | $14,000 | $15,000 |
| Cash Balance | $26,000 | $26,000 | $28,000 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $282,000 | $315,840 | $347,424 |
| Accounts Receivable | $25,200 | $28,224 | $31,724 |
| Inventory | $4,000 | $4,480 | $4,900 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $295,000 | $330,400 | $371,370 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $18,050 | $20,216 | $22,743 |
| TOTAL LONG-TERM ASSETS | $22,000 | $24,640 | $27,720 |
| TOTAL ASSETS | $296,000 | $331,520 | $372,960 |
| Liabilities and Capital | Year 4 | Year 5 | Year 6 |
| Current Liabilities | |||
| Accounts Payable | $19,000 | $21,280 | $23,919 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $14,000 | $15,680 | $17,624 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $14,500 | $16,240 | $18,254 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $57,000 | $62,130 | $68,343 |
| Earnings | $198,000 | $215,820 | $237,402 |
| TOTAL CAPITAL | $272,000 | $296,480 | $326,128 |
| TOTAL LIABILITIES AND CAPITAL | $286,500 | $331,520 | $372,960 |
| Net Worth | $270,000 | $294,300 | $323,730 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 7.27% | 8.06% | 8.93% | 3.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 9.28% | 10.28% | 11.39% | 9.80% |
| Inventory | 5.42% | 6.01% | 6.65% | 9.90% |
| Other Current Assets | 2.11% | 2.34% | 2.59% | 2.40% |
| Total Current Assets | 150.00% | 152.00% | 152.00% | 158.00% |
| Long-term Assets | 11.64% | 11.74% | 12.10% | 12.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.73% | 4.77% | 4.81% | 4.34% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 0.00% |
| Total Liabilities | 7.32% | 7.38% | 7.45% | 7.38% |
| NET WORTH | 101.69% | 102.50% | 103.45% | 110.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.03% | 96.57% | 99.27% | 99.00% |
| Selling, General & Administrative Expenses | 93.29% | 95.81% | 98.49% | 97.80% |
| Advertising Expenses | 1.58% | 1.62% | 1.67% | 1.40% |
| Profit Before Interest and Taxes | 41.40% | 42.52% | 43.71% | 33.90% |
| Main Ratios | ||||
| Current | 36.8 | 38 | 39.5 | 32 |
| Quick | 33.2 | 35 | 35.875 | 33 |
| Total Debt to Total Assets | 0.21% | 0.19% | 0.17% | 0.40% |
| Pre-tax Return on Net Worth | 75.40% | 76.00% | 77.00% | 75.00% |
| Pre-tax Return on Assets | 93.49% | 98.16% | 103.07% | 111.30% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 32.29% | 33.29% | 34.32% | N.A. |
| Return on Equity | 55.66% | 57.39% | 59.16% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7.8 | 7.8 | 7.9 | N.A. |
| Collection Days | 100 | 100 | 100 | N.A. |
| Inventory Turnover | 31 | 32.55 | 33.7 | N.A. |
| Accounts Payable Turnover | 16.1 | 16.4 | 16.76 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 2.5 | 2.6 | 2.6 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | -0.03 | -0.04 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $234,000 | $247,104 | $260,942 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.84 | 0.86 | 0.88 | N.A. |
| Current Debt/Total Assets | 1% | 1% | 0% | N.A. |
| Acid Test | 28.03 | 28.5 | 30.5 | N.A. |
| Sales/Net Worth | 2.1 | 2.1 | 2.1 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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