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Step 1
Find out the cost of homes in the area you are considering. This will give an idea of the customer base and affordability of the items you sell in the small home improvement business. Look at the property taxes over the last five years for property value stability.
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Step 2
Determine what type of entity the future small home improvement business will fall under. Whether it will be an LLC (Limited Liability Corporation), a sole proprietor, corporation or an S-corporation is something to be considered. You should also consider the tax status. Corporations provide protection for individuals against creditors and lawsuits, but other entities provide some or no protection. Personal protection against lawsuits is important, especially in a small home improvement business.
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Step 3
Call insurance companies. Check for the cost of business insurance. Once you make a decision on an insurance company, purchase business insurance. It is important that you choose a good insurance company to ensure you are covered in the event that a customer decides to sue you. Get insurance whether the small home improvement business is a retail outlet or service related.
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Step 4
Decide on a company name and apply for a fictitious name, a federal tax ID and business licenses such as state occupational license, county and city license, employee tax permit and sales tax permit. If you go to the IRS Website, they will give all the directions needed to apply for these licenses and the cost. The link is provided in the Resources section, and you can get all your answers about the financial implications of a small home improvement business. .
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Step 5
Survey all the wholesale prospects and costs. Set up accounts with wholesalers in your area. Some wholesalers will require up-front payments, while others may give you a line of credit. Even service-related home improvement businesses will need some inventory (such as fertilizer, weed killer and lawn seed), and it is much more profitable to purchase it wholesale.
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Step 6
Establish your marketing technique. It's wise for home improvement businesses to target wealthy home owners, real estate agents who may refurbish homes, and other related businesses where references can be given back and forth. Some choose to send flyers, postcards or a note with a Website address that provides relevant information to allow your customers to patronize your business.
