How to Start a Flooring Installation Business

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Quick Reference

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 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.

Startup Costs for a Flooring Installation Business

Here are 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
  • Initial marketing such as Facebook ads or search engine optimization for your website $500 -$1000

Steps to Starting a Flooring Installation Business

Step 1: Write your 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
Free sample business plans

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 a 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.

RelatedComparison of Business Entities

Step 4: Select your Location

You may choose to run your business 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 business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

A flooring installation business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a flooring installation business include 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

Step 9: Get Insurance

A flooring installation business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

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.

Insurance policies will vary. 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: Hiring Employees

You will need employees to help you run your flooring 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 accounting for your business

How Much Can You Potentially Make Owning a Flooring Installation Business?

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.

Things to Consider Before Starting a Flooring Installation Business

Running a flooring installation business or any business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

Marketing and acquiring customers will be your biggest challenge and an ongoing expense.  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.

The right insurance is also critical to protect you if anything is damaged during the course of your work.

You will be risking money opening a flooring installation business. It will take time and hard work to see a profit.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other flooring installation businesses to see what they offer and what prices they charge.

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