Owners of a flooring installation company can make good money even with a small business in its first few years. However, starting a flooring business is more than about simply making money. It’s going to be hard work and a lot of responsibility. Nevertheless, it’s ultimately a lucrative and rewarding enterprise when executed well.
In order to achieve success, you must first lay down the groundwork. Before even setting up a business plan, you must first consider what it will be like working for yourself.
In order to convert your idea into a successful business, you’re going to have to consider what it takes and what you’re willing to put into your enterprise.
Working for yourself can bring freedom, improve your financial situation, and allow you to create value for customers. However, starting your own business may not necessarily provide you with more time for yourself. In fact, founders usually find themselves working harder, at least for the first few years.
While you don’t have a boss, you suddenly become the boss, and that role comes with responsibility for every aspect of your business. If you haven’t considered the impact of making company decisions, you’re not ready to start a flooring business. Before you continue, ask yourself the following questions:
- Do you have a solid plan?
- Are you dedicated?
- Are you skilled?
- Do you have a basic knowledge of accounting and economics?
If you still feel ready, let’s get started!
How to Start a Flooring Business
Now that you’ve considered all factors, it’s time to discuss the steps needed to start a flooring business. The following list of steps is the process you need to take in order to start a flooring business. Some steps can be done before or concurrently with others, but the very first step should always be making a business plan.
Step 1: The Business Plan
Before you dive into building your flooring company, you’ll want to understand the basics of how to plan for and launch a business. A business plan is a document that outlines the goals of your company, the risks of starting a business, and the resources you’ll need to succeed. A business plan consists of four parts: a business plan outline, a marketing plan, a management and personnel plan, and a financial plan.
Read on to learn more about how to create a business plan and establish your flooring company.
The outline is the first section of your business plan, and it’s often the most important. It consists of an executive summary, a description of the company’s
general goals, and a description of what the company will offer to customers.
The executive summary is a brief overview that sums up your company and its goals in just a few sentences. This portion should include what products or services you’ll be offering and how you will differentiate from competitors. This part will also be where you’ll describe any risks that may affect your business and how you plan on mitigating those risks.
One of the most important parts of your marketing plan is understanding your target market. The more you know about your target market, the easier it will be
to design marketing campaigns that speak to their needs.
You’ll need to know who they are, how old they are, where they live, what they do for a living, and how much money they make. It will also be helpful to know your target audience's personal preferences and hobbies, if this information is available. Once you know all of these pieces, you can create an advertising campaign that will resonate with them and encourage them to contact you for services.
Management and Personnel
A management and personnel plan should outline the roles of managers and employees. A flooring company needs three key types of people: sales, marketing, and production.
- Salespeople are responsible for selling your products or services to potential customers.
- Marketing specialists are in charge of promoting your company and its products through various channels like social media, TV ads, and flyers.
- Production people are in charge of actually making your flooring products.
Of course, at the early stages, you’re probably going to have to do a lot of these roles yourself, so factor in the training and experience needed for you to do them effectively.
The financial plan is a detailed analysis of the company’s finances, such as its earnings, cash flow, and financial projections. This plan also includes an estimate of the amount of money needed to start the business and grow it over time, as well as how much money needs to be available at all times in order to continue operations.
Take into account the extra tools and equipment you’re going to need to hire or buy for the job.
From this simple business plan, you’re going to know how much money you need to get started. Although you might be entering this project with little-to-no money of your own, that doesn’t mean you can’t get hold of some funding!
Step 2: Funding
Startup capital is essential in the early stages of a company. It’s going to be very difficult to grow your business into what you want it to become without sufficient seed funding. Raising enough money can be time-consuming and quite difficult if you’re looking in the wrong places, so figure out how much you want and from where you’re going to get it.
You’re going to save a lot of time if you know what it takes to raise capital for your startup before approaching potential investors or lenders. Another reason why it’s important for founders to consider the sources of capital carefully is equity. Ideally, you want to get as much capital at as little cost, while maintaining as
much equity as possible.
If a person invests in your company and buys some equity, they will own a percentage of that company, which means less control for you as an owner. It's important to keep this aspect in mind when raising capital: make sure you're getting enough equity back from any type of investment, so that you maintain total control over your business.
Here are the most common ways to source funds:
Bootstrapping is a form of self-financing that maximizes the equity percentage retained by the founder. Bootstrapping can be done in many ways, but the most
common way is putting in your own savings. However, if you really are starting with little to no money, bootstrapping may not be suitable without taking on a second job.
The risk in this strategy is that you may end up with no money left over to grow your company. Bootstrapping is a great way to retain ownership, but it also limits
the speed of growth. This technique may be good when you’ve got a very small budget and you have the “sweat equity” available to put most of the work in yourself.
Loans are an excellent way to fund from a bank or other financial institution, and they’re often the most traditional method of raising capital. The benefit of a loan is the instant injection of large amounts of capital. With that said, there are some serious drawbacks to this method as well.
The main drawback is that taking out a loan requires you to pay back whatever amount you borrow plus interest – even if your company doesn’t succeed. This aspect can be a problem for some startups who might not be able to afford the higher payments over time.
The other downside is that lenders can seize assets, which could include equity in your company, if your company does not perform as expected. Furthermore,
taking out a loan can involve a time-consuming and complicated application method.
Investors are an excellent way to raise capital if you are looking for outside funding and you don’t mind losing some equity. With this option, the investor will
invest money with the expectation they’ll get back at least what they invested, if not more. However, you’re under no obligation to pay the money back if the company fails.
Picking the right funding method or methods will affect the direction of your company and the speed at which it can grow. There are pros and cons to each strategy, so consider them wisely!
Step 3: Registering
Registering your own company is a landmark moment in any founder's life. By now, you've got your business plan and your funding secured, which means you're about ready to get out there and get your hands dirty. The next step of starting your business is registering it.
There are a few pointers to consider in order to make your company legit. Here are some of the steps to registering a flooring business that you will need to go through in order to avoid being fined.
Choose a Name
The first thing to do is to choose and reserve a company name. You will need to do this step before you can register your business, as it will ensure that when you get the certificate of incorporation, it is done in the name of your company. You can reserve a name for up to 12 months by registering it on the federal trademark database. From this point, you can begin forming your business entity.
Your company will typically be either an LLC or Sole Proprietorship. The difference between the two is that an LLC will protect your personal assets if any lawsuits arise, whereas a Sole Proprietorship will not.
Get Your EIN
Part of registering your company is acquiring a Federal Employer Identification Number (EIN). This number is used for tax purposes and will be needed to complete all other steps of the registration process.
Tax regulations vary by state, so make sure you know what is required of you before registering. For example, to register a business in California, you will need at least the following:
- A general business license for your state
- A sales tax registration certificate for your state (if applicable)
- A Federal Employer Identification Number (EIN)
- California State Tax Number (if you'll be making sales in California)
Your regulations may be more strict or lenient than the above, so it is important that you have the appropriate registrations for the state in which you are operating or else you will be fined heavily by the government and may face other penalties as well.
To be a legitimate business, you'll need to get the proper licenses and permits. In some cases, you may need to complete this step before registering the company, as many jurisdictions require certain types of businesses to obtain a permit before they are allowed to operate.
In this case, in order to register your business, you'll need to find out what type of permits and/or licenses your flooring company may need. For example, you may need a Contractor's License for Commercial Property Maintenance and Construction or a similar license issued by the state.
You can complete this step by either registering your company name yourself or hiring a lawyer or company to do so for you. Registering is the process of formally recognizing the existence of a trade name, trademark, certification mark, collective mark, or service mark by providing notice of its use.
Once all of your paperwork is in order and you’re fully registered, don’t forget to complete your annual filings! Renewing licenses and submitting taxes are all part of being self-employed, so set up a schedule and dedicate some time to that process in order to avoid insurance, tax, or legal problems.
Step 4: Source Staff and Equipment
This step is relatively simple if you complete it after all of the previous stages. By now, you should know from your planning and budgeting work exactly what you’re going to need for your business.
If you’re on a tight budget or you want to be as cost-effective as possible, it’s a good idea to do the work yourself where you can. Although doing your own work will save you a lot of money on staffing costs, note that it will limit the amount of time you have for everything else. However, that’s what you signed up for when you decided to start your own company, right?
Initially, you might be able to ask your friends and family to help you with your business. However, you should also look into hiring a part-timer who can do a majority of the laborious, time-consuming jobs while you put your expertise to use.
In regards to equipment, the tools you’ve used before should be sufficient. However, for larger jobs, it’s worth negotiating deals with hardware rental companies if you have assessed, based on your budget, that it’s cheaper to rent than to buy.
Remember, if you buy a piece of equipment, you also need to store and transport it. Storing and transporting equipment might not be so hard for nail guns and staplers; however, if you occasionally need to bring out the heat welder, it might be cheaper to borrow one than to own one.
Deciding whether to buy or rent will depend on how often you’re going to use specific gear and how much room you have for transport and storage, so it’s an important decision to make.
Regarding materials, you should make arrangements with local suppliers and shop around for high-quality, affordable products. You might be able to get discounts from local suppliers if you bring a lot of business their way, so see what you can arrange for materials such as laminates and linoleum.
Step 5: Finding Clients
Now, you’re officially registered, equipped, and ready to go!
Having a social media that links to your website is one way to get clients for your new business. Here are some other ways:
- Word of Mouth: Word of mouth is the cheapest, but possibly slowest, method of finding clients. At first, you should ask friends and family to spread the word about your business. However, word of your business will later spread to others if you do a great job for your first clients!
- Offer Discounts: Providing discounts is a great way to encourage clients to hire you. If you can handle the cost, work some jobs at a loss or break-even, so you can undercut the competition and build your reputation.
- Offer Referral Bonuses: Once you have a satisfied customer, offer them discounts for referred customers that they send your way.
Here are also some general tips for advertising:
- Develop an ideal customer profile: This process will involve learning about your customer base and finding out exactly what they like and what they need. Figure out their pain points and how you’re going to address them, as knowing this information will be invaluable for your marketing strategy.
- Make sure your physical media is up to date: Leave business cards with your contact information whenever you meet potential clients. Also, try to have a stylish and attractive portfolio to show your customers.
- Target your approach: Don’t just go around throwing your contact details at everyone! Try your best to attend events where you can expect to find clients. You can find these events by asking your friends and family, looking on Facebook, or networking online.
With all of these steps completed, you’ll be on your way to running your flooring business!
Starting a flooring business is hard work. It’s also complicated and legally risky if you don’t know what you’re doing. Start with a solid business plan, and work your way up from there. Without a plan, the company stands a good chance of failing.
With little-to-no money, you’re going to need to look for funding. Choose your sources wisely to give you the optimal rate of growth with the least risk, interest, or loss of equity possible.
Identify your target customers, and learn how to use marketing to reach them directly. Figure out how much your ideal customer is willing to pay and forecast your finances based on what you can charge. Make sure to factor in the costs of equipment and labor as well.
Then, get registered and make sure your paperwork is in order, before finally reaching out and making a splash. The key to a successful floor installation company is knowing your market, having a plan, and putting in the work. Good luck!