How to Start a Home Service Business From Scratch: Everything You Need to Know
You've always had a knack for fixing things, and now you're ready to turn that talent into your own home service business.
Starting a new business is an exciting but daunting endeavor. It can be difficult when you don't know where to start.
This comprehensive guide will walk you through everything you need to know before opening your doors for business!
We'll discuss how to pick a trade (like plumbing or carpentry), how to pick a specialty niche within that trade (like bathroom remodeling or flooring installation), what tools or equipment you might need, how to market your new business and find customers for it, and much more!
Read on to start making a plan for your new home service business.
What Is a Home Service Business?
A home service business is a type of small, local company that provides services at homes and other personal spaces.
Providers can offer their expertise in an area that is specific and unique to them. Examples include plumbers, electricians, handymen and cleaning services.
The owner may have been trained through technical or vocational training programs or they may be self-taught.
Many people are inspired to start a career as a contractor from watching others do it for years. And many apprentices decide to become entrepreneurs after getting a taste of the trades.
Some providers offer a broad range of services, like handyman businesses, while others specialize within one trade, like plumbing or carpentry.
Thinking of offering general repair services? Read this: The Ultimate Guide: How To Start A Handyman Service From Scratch
How to Choose a Trade
One of the first steps to starting a home service business is choosing your trade.
The most important thing to remember about picking a specialty, like plumbing or carpentry, is that you should not try to do too many things at once. It will be much easier in the long run if you stick with one area and focus on it.
Once you have more experience and know what type of work suits you best then branching out into other areas might make sense. But for now stay focused!
To help determine what trades are right for your skills, consider what you like to do in your free time. Do you enjoy physical work or are you more of a thinker? Do you already have experience in a type of trade?
Different trades suit different people and skill sets, so it’s important to identify who you are as an individual before picking the trade for yourself.
If this step feels intimidating, feel free to ask friends, family members or other tradespeople about their opinions on which trades would be the best fit for your personality type.
They might have ideas that can help point out some areas you may not have thought of before!
Picking a Niche Within Your Trade
A specialty niche can be great for building a reputation and bringing in higher paying clients.
That's the biggest benefit to specializing; you can provide a higher level of expertise to your clientele and have less competition in the market.
However, it’s also important to consider the pitfalls that come with specializing.
If you are too narrow-minded about what types of jobs you want to take on then you may not be able to make as much money or find enough work for yourself.
The best way to balance these factors is by looking at the pain points and needs within your market. This will help you decide what type of specialization is best for your company.
For example, if there’s a big demand in your area for landscaping then this might be a good trade to choose. You can either focus on just lawn care (the broad service) or take on highly specialized tasks like tree trimming (the niche). As a landscaper and arborist, you'll be able to offer things that others don't!
If someone enjoys doing woodworking they might want to specialize as a cabinet maker or furniture restorer, so their knowledge will be valuable both in terms of time and quality!
Choosing a niche can be difficult because it's really up to the person and their skills.
Once you’ve narrowed down your list of potential trades, pick an area that draws on skill sets from the trade, while also aligning with what interests you most.
Put a lot of thought into this decision and make sure you're offering a service that people need.
The Legal Side of Starting a Home Service Business
As a small business owner, you need to be aware of all the things that are required in order to start a legitimate home service business.
(Please keep in mind, I'm not a lawyer, but I am a small business owner and have gone through this process myself. But this should not be taken as hard legal advice. Make sure you consult with a professional.)
There are several steps you'll need to take in order to start making money legally. You'll need to register a business name, get an EIN number, open a bank account, and get a business license in order to make sure you're following the law.
The process for getting your business license is different depending on the state in which you live. It will require you to fill out forms, pay fees, and have a physical address for your business.
An LLC is the common legal structure for most small businesses because it's inexpensive and can protect your personal assets from liability or lawsuits.
You should also get any necessary insurance such as liability coverage because it will protect your personal assets if someone gets hurt on one of your jobs.
Finally, you need to understand how and when to pay taxes. You'll have to pay federal income tax, state taxes, plus the possible city or county business license fees, plus other associated costs if you plan to employ anyone.
If you're not an expert, then consult one before starting your company!
A professional accountant or tax preparer in your area can help you understand what's best for your situation.
They'll also be able to guide you on deducting certain types of expenses from your income taxes. Being registered as self-employed will allow you to write off things like vehicle maintenance, advertising costs, tools, office supplies, etc.
Getting Started With the Right Tools for Success
The best equipment for any job is essential; but when it comes to specific recommendations, it really depends on the trade that you choose.
If you're a plumber, for instance, it would be wise to purchase tools related to plumbing like pipe wrenches, cable snake, hole saw, pipe cutters, etc.
If you choose painting as your trade, then you might need to invest in a paint sprayer, pressure washer, rollers, brushes and scaffolding.
It truly depends on your industry and skill level.
Consult with someone who has experience in this type of field and can give you advice on the must-have essentials to get started.
In general, it’s smart to invest in the best tools for your job. Cheap brands will break, and it becomes an inconvenience that wastes time and money when you have to constantly replace them.
Quality name-brands can last a lifetime if taken care of properly. So investing in one quality tool is more economical than buying cheaper ones as they'll fail sooner anyway!
Beyond tools and equipment, you might consider certain softwares to make your home service business more efficient, organized and professional. A few very affordable (or free!) examples are:
Toggl for tracking your time spent working on tasks
Trello for managing projects
Basecamp for collaborating with clients
Stripe or Paypal for taking credit card payments
There’s also comprehensive software built just for the skilled trades and home services, like Service Titan, Salesforce and FieldEdge. However these are costlier options and might not be feasible for startup companies.
Pricing Considerations for Your New Company
Pricing your service can be a challenge. You don't want to price too low or too high.
If you price too low, you'll have to work more hours just to reach your income goals. If you price too high, customers may not be able to afford the service and will hire your competition.
Pricing should take into account:
What it costs to start up this business (approximate investment)
General expenses (utilities, insurance, work space, etc.)
Taxes that need to be paid every year
Materials you need to complete each project when you're hired
Tools or equipment that might need replacing or ongoing maintenance
Courses or certifications to get better at your trade
Marketing to get more customers
Depending on your services, you can choose from two common pricing strategies: hourly or flat-rate pricing.
Those who choose the hourly (a.k.a time and materials) pricing strategy will charge by how long it takes to complete a project multiplied by your hourly rate, plus any associated material costs.
Those that prefer flat-rate pricing won't factor in labor hours, but instead offer one set price for a finished task.
Getting your pricing just right takes time. You may even need to test it out with a few of your customers before you find your perfect price.
Marketing Your Home Service Business
If you're just starting out, it might be tricky to know how to get your first customer.
Word-of-mouth is often the best avenue for lead generation for both new and established home service businesses.
You can start by doing work for family or friends. The key is getting your first few customers and growing from there.
Once you have some projects under your belt, it's much easier to promote your skills.
Get your business on Google My Business and ask satisfied customers to leave reviews. This will help you build a local reputation that's trustworthy to new customers.
The internet has made advertising your business more accessible than ever before. Platforms like Yelp, Angie's List, Nextdoor and Houzz connect potential customers directly to local businesses in their area.
Social media marketing is an excellent way to find new clients for free. You can create a business page to promote your services, talk about industry trends, or answer questions from potential customers.
You can also invest in paid social media advertising. Platforms like Facebook, Instagram and Twitter offer advertising options for small business owners.
If you need low or no-cost and time-saving ideas on how to promote your business on social media, click here: How To Manage Social Media With Limited Time And Budget
A good website is also a must these days. Your website should:
Be clean and easy-to-navigate
Showcase your service with high-quality pictures of your work
Answer common questions
Give potential clients a way to contact you, with phone numbers prominently displayed on every page
Highlight testimonials from happy customers
Feature social media buttons so customers can like and share your business with their contacts
You should also consider adding an advice blog to cover how-to articles about home maintenance topics for your service area.
A blog will help potential clients feel confident in booking an appointment because they know the work is something you understand well. You’re positioning yourself as an expert in your trade.
It also improves Search Engine Optimization (SEO), allowing you to show up easier in search results so customers can find you.
Not sure how to advertise your home service company? Explore these unique ideas👉 12 Strong Marketing Ideas for Your Home Service Business
Branding Your Home Service Business
A great brand is what people remember you by. It wraps up your service offerings, the personality of your business, and what you stand for.
One way to start building your brand is by jotting down the qualities, feelings and characteristics you want your business personality to represent.
This list can help guide decisions about what kind of company name, logo design or tagline best suits your entrepreneurial endeavor from day one.
Before we dive into brainstorming your new brand name, it's important to know that some states have special rules on how a company can be named in order to operate legally. You'll need to research the legality of that, as well as finding out if any other businesses in your area already have the same name.
Here are a few questions you should ask when coming up with a good company name:
Does the name describe what services I do?
Does it evoke an emotion in people, whether that be happiness, relief, sadness, fear etc.?
Is it easy to pronounce?
Does it have a unique spelling or sound?
Is a domain with your chosen name available for your website?
A catchy name is just one of many building blocks for your brand.
As you're coming up with how you'll market yourself online and offline, from social media accounts to email signatures and truck wraps, make sure everything ties back into what your company stands for.
Your mission statement and tagline are a big part of branding and go a long way in communicating who you are and how you solve your customers' problems.
An effective logo should also represent your brand and help explain what you do. It should be simple, memorable and timeless.
Don't rush the branding step. Take it slow and give yourself time to develop the right brand that you'll be proud of for years to come!
Growing Your Reputation With Customer Experience
The customer experience should be one of your top priorities. It can make or break a company's reputation, which means it needs to be meticulously planned and executed!
There's a lot of home service companies out there, and if you want to stand out from the competition, you need to provide a better customer experience then they do.
There are many ways you can do this. For example, make sure your employees are happy and know what they're talking about before servicing clients; ask for feedback after every job (and use it to improve); give discounts or bonus services when customers don't have any complaints; and remember that communication is key!
Here are more ideas on how to create an experience that customers will tell their friends, family and neighbors about 👉 Be A Contractor Customers Want To Work With: 11 Ways To Go The Extra Mile
I hope this was able to help you create a strategy for starting your home service business.
Remember, it’s never too late to become a business owner, and this guide should be helpful in getting you started.
Keep an eye out here on my blog for more posts about how small businesses can grow their customer base with digital marketing strategies such as SEO, email campaigns, PPC ads, and social media outreach.
Which type of trade do you plan to focus on? Let us know below so others can learn from your experience building up a new home service business!