Renovation services to home owners and businesses can be lucrative to a skilled professional with experience working with contractors. Most types of renovation work are regulated, and some specializations require licensing at local, state, and federal levels. In addition to a license from the Maryland Home Improvement Commission for the owner and any staff member, any kind electrical, plumbing, HVAC work, or tree removal requires additional licensing. Handling toxic chemicals, such as asbestos and lead paint, need to be certified by the Environmental Protection Agency.
The various licenses that may be required will be the biggest start-up costs before doing business, but the cost of materials used for services will be the biggest monthly cost. The materials cost will vary depending on the services offered and demanded. Many contractors do not require separate facilities and may need to operate only out of the home. They should however be bonded and insured for the protection of the business as well as the customer. An assistant laborer is also recommended, who should also be licensed, bonded, and insured.
The tables below depict the common issues and costs associated with operating a renovation business.
| Political | Labor laws – ensuring that staff is eligible to work in the US. Maintaining a safe work environment and compensating legally | ||
| Economic | Housing market – renovation adds value | ||
| Can be partially seasonal, between indoor and outdoor work | |||
| Social | Neighbors seeing renovation occurring often will ask for the same services | ||
| Technological | Handling money using different software applications | ||
| Electrical and plumbing advancements – can create a need to subcontract to specialists | |||
| Advertising online/Using social media | |||
| Environmental | Waste disposal | ||
| Supply storage, if any | |||
| Legal | Licensing at local, state, and federal levels, depending on services provided | ||
| Licensing for specializations, including handling asbestos and lead; tree removal; HVAC | |||
| License from the Home Improvement Commission to provide services in Maryland | |||
| Paying into Guaranty Fund during licensing and renewal | |||
| Zoning considerations depending on renovations desired | |||
| Bonding and insurance | |||
| Critical Success Factors | Acquiring the appropriate licensing for services offered | ||
| Bonding and insurance is strongly advised to compete | |||
| Major Activities | Associated Costs | Cost Driver | |
| Painting, repairing drywall | Supplies | Square footage to be repaired | |
| Building and repairing stonework | Supplies | Square footage to be repaired | |
| Installing paneling | Supplies | Square footage to be repaired | |
| Installing light fixtures | Supplies | Number and type of fixtures | |
| Installing tiles/grout | Supplies | Square footage to be repaired | |
| Installing linoleum | Supplies | Square footage to be repaired | |
| Installing and removing carpet | Supplies | Square footage to be repaired | |
| Repairing and installing hardwood floors | Supplies | Square footage to be repaired | |
| Projected Expenses | |
| Employee Costs including benefits | Year One Cost per month |
| Owner | $ 3,500 |
| Book Keeper – Outsourced | $ 800 |
| Legal – Outsourced | $ 800 |
| Laborer | $ 2,400 |
| Wages Subtotal | $ 7,500 |
| Taxes, Fees | $ 1,125 |
| Subtotal | $ 8,625 |
| Supplies/Stock | |
| Tools | $ 100 |
| Materials | $ 4,000 |
| Subtotal | $ 4,100 |
| Office/Facility | |
| Facility Expense (deductible part of home) | $ 500 |
| Internet/Telephone | $ 100 |
| Office supplies | $ 25 |
| Computers/Hardware | $ 100 |
| Subtotal | $ 725 |
| Marketing Costs | |
| Web site hosting and advertising | $ 200 |
| Web site updates | $ 100 |
| Business Cards, Pens, Swag | $ 50 |
| Subtotal | $ 350 |
| Bonding and Insurance | $ 300 |
| Subtotal | $ 300 |
| Projected Monthly Costs | $ 14,100 |