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How to Start a Flooring Installation Business

How to Start a Flooring Installation Business

Are you a flooring installer and tired of working for other people and not reaping all of the profits?  If you are skilled at it, it may be time to start your own flooring installation business. You’ll be in control of your time, make more money, and be your own boss.

Business Overview

A flooring installation business removes old flooring, installs new flooring, and performs flooring repairs, either for residential or commercial customers, or both.  A flooring company may offer many different types of flooring options such as wood flooring, hardwood flooring, laminate flooring, linoleum, vinyl, carpet, or tile floor, while others may specialize only in certain types of flooring.

Industry Summary

According to IBIS World, the flooring installation industry has a market size of $29.2 billion as of 2021 and is expected to grow 8.2% during the year.  From 2016-2021 it had an average annual growth rate of 5.7%.  There are approximately 123,224 flooring installers in the U.S.  The flooring industry is sensitive to economic fluctuations because it has a relatively high price point, so homeowners put off home improvements when they have less disposable income.

Industry Trends

The industry is expected to continue growing due to low mortgage rates and the number of new houses being constructed.   New residential construction is the largest segment in the flooring installation industry.  Post pandemic, home improvements to existing homes are expected to rise, and flooring installation is a large part of most home improvement projects.

Target Market

Your target market will be existing homeowners, new construction companies, housing developments, and commercial clients with flooring needs.

Skills, Experience, and Education Useful in Running a Flooring Installation Business

There are several specific skills that you will need to open a flooring installation business.

  • Experience.  Flooring installation cannot be learned overnight.  You must be an expert in the field and know how to install multiple types of floors. Certification is available to improve your skills.
  • Business knowledge and experience.  You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.

Checklist for Starting a Flooring Installation Business

If you’re thinking about starting your own flooring installation business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.

Step 1: Write a Business Plan

After coming up with the idea, the next step in starting your flooring business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related: How to write a business plan

Step 2: Name the Business

Finding the perfect flooring installation business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Related: Tips and ideas for naming a flooring installation business

Step 3: Form a Business Entity

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a flooring installation business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select your Location

You may choose to run your flooring service from your home, but if you choose to rent or purchase a shop, you need a location that is large enough for your tools and equipment and that is convenient for your employees.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

In some states and cities, a contractor’s license will be required for a flooring install business. Requirements vary, however many states require a certain number of years of experience before obtaining a license.

In addition to flooring-specific business licensing, there are some general state and federal registrations a business may need, including a sales tax permit and an Employer Identification Number.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a flooring installation business is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

Marketing and acquiring customers is often one of the biggest challenges for a flooring contractor.  You will face a lot of competition, so your marketing will need to make you stand out, and your prices will need to be competitive.  You’ll make a lot of bids on jobs, and you won’t get them all, so you’ll need to be patient and constantly work to get new leads.

Common marketing techniques for a floor installation business include handing out business cards at events, social media marketing and online advertising, as well as postcards and flyers.  Developing a website can be a significant expense, but it can also give your flooring installation business greater visibility online.

As you complete jobs, be sure to get lots of pictures and testimonials to display your skills and the quality of your work.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

There are several types of insurance to consider when starting a flooring installation business. A couple of these include:
– General liability insurance can help protect you from third-party claims of bodily injury and property damage.
– Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

The cost to insure a flooring business will vary depending on a number of factors. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hire Employees

You will need employees to help you run your floor installation business.  Make sure that you select people with appropriate experience.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your flooring installation business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

Estimated Cost: 5000 USD

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How much does it cost to start a flooring installation business?

Here are some of the typical costs you will face when you open a flooring installation business.
– Setting up a business name and corporation costs approximately $200
– Business cards, brochures, postcards for marketing $200 – $300
– Website setup $100 –$200 for a basic, do it yourself website, $1000 – $2000 for a professional site
– Tools including tile saws and other equipment – $5000 – $10,000
– Location if you choose to have a ship $1500 – $5000 per month
– Insurance $200 – $600

How much does a flooring installation business owner make?

For a small flooring installation business, the average revenue will vary, but jobs are priced by the square foot for both the flooring and labor. Due to the high cost per job, $75,000 – $100,000 is realistic to start.

Are there grants to start a flooring installation business?

It’s extremely rare to find a grant to start a floor installation business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.

What is the NAICS code for a flooring installation business?

The NAICS code for a commercial flooring installation business is 238330.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?