How to Start a Home Renovation Business in 2025: Full Guide

Starting a home renovation business in 2025 can be both rewarding and profitable if you have the right skills, plan, and strategy. With demand for kitchen remodels, bathroom upgrades, and full-scale renovation projects continuing to rise, contractors and entrepreneurs have an excellent opportunity to build thriving businesses.

Recent data from Fortune Business Insights shows the global home renovation market was valued at nearly $2 trillion in 2024 and is expected to keep growing through the next decade. North America currently accounts for more than one-third of this market, highlighting strong demand and opportunities for renovation contractors in the region.(S

In this guide, we’ll cover:

• What a home renovation business is
• Skills, insurance, equipment, and profit margin considerations
• Step-by-step guide to launching your company
• Mistakes to avoid when starting your business 
• Profitability insights, FAQs, and free resources

What is a Home Renovation Business?

A home renovation business provides remodeling and construction services to residential clients. These services range from small-scale projects like painting or flooring to full-scale renovations such as kitchen remodels, bathroom remodels, or home additions. Many remodeling contractors specialize in specific renovation projects, while others operate as general renovation contractors covering all aspects of building and remodeling.

According to Joist, the renovation industry is one of the fastest-growing segments of residential construction, making it a promising path for small business owners.

A successful business owner in this field must balance construction expertise with project management and marketing efforts to build a steady customer base.

What To Consider Before Starting a Home Renovation Business

Skills

To succeed in the remodeling industry, you need a mix of:

• Technical skills: carpentry, plumbing, electrical work, demolition, and finishing.
• Business skills: estimating, scheduling, financial planning, and negotiation.
• Soft skills: leadership, customer service, and team management.

Insurance

Home renovation contractor requirements typically include:

• General liability insurance to cover accidents or property damage.
• Workers’ compensation if you employ staff.
• Bonding insurance for eligibility on larger or government-funded renovation projects.

For an overview, see our Need-To-Know Small Business Insurance Guide.

Equipment

Startup costs for equipment can range from $10,000–$25,000, depending on the scale of services. Essentials include:

• Power tools (saws, drills, sanders)
• Safety gear (helmets, gloves, harnesses)
• Ladders and scaffolding
• Vehicles for transporting building materials

Some contractors reduce the cost to start a home renovation business by renting or leasing larger tools until they build steady revenue.

Profit Margin

According to Next Insurance, the average profit margin for remodeling contractors is 15–25%. Margins increase when:

• Overhead costs are managed tightly
• Jobs are priced correctly
• Services focus on high-value areas such as kitchen and bathroom remodels

To put this in perspective, reports claim that national average remodeling project costs vary widely, and mispricing can quickly erode profits. New contractors often underestimate labor or material costs, which is why clear estimates and accurate budgeting are critical.

Use our Profit Margin Calculator to model your earnings potential and see how small adjustments in pricing or overhead can impact your bottom line.

Step-By-Step Guide to Starting a Home Renovation Business

1. Draft a Solid Business Plan

A residential renovation business plan is your roadmap. It should include:

• Executive summary: highlight your business model, vision and goals.
• Market research: identify competitors, target neighborhoods, and customer base.
• Marketing strategy and channels: detail how you’ll reach potential clients through content marketing, social media, and local advertising.
• Financial planning and projections: outline expected remodeling business startup costs, pricing models, and revenue forecasts.
• Business goals and growth strategy: short-term targets (for example; first 5 clients) and long-term expansion (adding staff, larger renovation projects).

Strong plans also highlight small business renovation ideas, such as offering eco-friendly remodeling projects or affordable bathroom upgrades to attract niche markets. 

Learn more about how to write your home renovation business plan.

2. Pick a Name and Get Registered

• Professional name: choose one that reflects trust (avoid gimmicks).
• Register: file with your state authority.
• Tax ID: apply for a federal EIN via the IRS.
• Online presence: secure your domain and social media handles to ensure consistency.

Pro Tip: Check name availability early to avoid rebranding costs later.

3. Choose a Business Structure

Options include:

• Sole proprietorship: simple but no liability protection.
• LLC: separates business and personal assets, often best for contractors.
• Corporation: suits larger firms with board of directors requirements.

Each structure has tax implications and affects personal risk. Check out our guide on How To Choose Your Business Structure: 2025 Step Guide.

4. Secure Necessary Permits and Licenses

Home renovation contractor requirements vary by state, but may include:

• General contractor license (needed for most remodeling projects)
• Specialty licenses (plumbing, electrical)
• Building and construction permits
• Local business licenses

Permit fees typically range from $500–$2,000. Failing to obtain the correct permits can lead to fines and project delays.

5. Nail Down Business Logistics and Resources

• Office setup: even a home office with reliable internet and filing system works.
• Software: use Invoice Fly or similar for payroll, invoicing, and financial tracking.
• Suppliers: build reliable relationships with lumber yards and material distributors to secure better prices.
• Scheduling tools: adopt project management software to keep timelines realistic.

6. Define Your Remodeling Business Brand

• Logo and materials: create a professional look for vehicles, uniforms, and proposals.
• Website: showcase completed renovation projects, before/after photos, and testimonials.
• Online presence: publish blogs on renovation projects and promote via social media to attract potential clients.

Pro Tip: Consistent branding makes you more memorable to clients shopping for multiple contractors.

7. Market Your Business

• Targeted marketing: invest in ads that focus on homeowners seeking remodeling contractors in your service area.
• SEO and content: publish blogs on kitchen remodels, bathroom remodels, and renovation projects to capture search traffic. Do a market analysis on the different marketing channels to find which works best for you.
• Networking: build partnerships with real estate agents, interior designers, and construction suppliers.
• Local visibility: list on platforms like Google Business Profile and Houzz.

See our article on Service Business Definition: A Simple Explanation for more insights.

8 Mistakes To Avoid When Starting a Home Renovation Business

1. Starting With Too Little Cash

• Remodeling business startup costs can exceed $50,000.
• Running out of money mid-project damages your reputation.
• Secure startup funding or a line of credit before taking on large jobs.

2. Underestimating the Competition

• The remodeling industry is highly competitive.
• Without research, you risk underpricing or missing niche opportunities like sustainable renovation projects.

3. Lacking a Solid Business Plan

• Skipping planning causes cash flow problems.
• Writing a business plan keeps goals measurable and investors confident.

4. Ignoring Customer Satisfaction

• Happy clients generate referrals.
• Poor customer service can quickly damage your business reputation.

5. Doing Everything Yourself

• Managing every remodeling project solo leads to burnout.
• Hire subcontractors or employees for efficiency and growth.

6. Setting the Wrong Price

• Mispricing cuts into profit margins.
• Use estimating software or an Invoice Generator to create accurate quotes.

7. Poor Project Management

• Missed deadlines frustrate clients.
• Invest in project management software to stay organized.

8. Focusing On Rapid Growth Too Early

• Expanding too fast strains resources.
• Focus on steady growth with realistic, achievable goals.

Get Renovating

Starting a home renovation business in 2025 is about more than tools and materials — it’s about running a solid, profitable company. The contractors who succeed are the ones who treat each renovation like a project and a business transaction. That means pricing jobs accurately, keeping overhead in check, and making sure every client walks away satisfied.

Need an invoicing solution for your remodeling company? Try Invoice Fly’s Invoicing Software — it’s free!