How to start a flooring business in 11 steps

One of the top items on most homeowners' improvements list is the floors in their houses. Whether a home currently has wood flooring, hardwood flooring, or linoleum flooring, having a professional flooring business repair or replace the floors can elevate a home's value tremendously.

Before we dive into how you can create your own flooring company, let's explore some of the most common questions new flooring business owners have when starting.

What are the pros and cons of owning a flooring company?

As with any business, owning a flooring company has advantages and disadvantages. What’s important is that you compare the positives and negatives to determine if it makes sense for you to start a business.

Here's a look at some of the pros and cons of being an entrepreneur in the flooring installation industry:

Advantages

Unlimited earning potential
Job growth for the industry is expected to grow over the next decade
No formal education is required
Avoid working in an office setting all day
Set your schedule
Choose which jobs you work on

Disadvantages

Higher levels of stress as a business owner
You are responsible for all business decisions and results
The job is very physically demanding and taxing on the body
Increased risk for injury while on the job site

What skills do I need to start a flooring company?

Even though flooring contractors aren't required to go to college to start their own business, you'll want to ensure you have the proper training and skills to deliver high-quality service before launching your company. Unfortunately, one or two bad jobs can significantly impact landing future jobs.

One way to obtain the proper skills and experience is to work as a floor installation contractor before opening your own shop. By working for another company, you'll have time to learn about different types of flooring while training under more senior installation contractors.

In addition to the physical skills, you'll also need to work on developing skills as a business owner. Below are some of the most important skills an entrepreneur needs when starting a new flooring company:

Project management
Leadership
Verbal and written communication
Basic understanding of accounting and finance
Marketing

What is the difference between carpet and flooring?

As a flooring installation business owner, you'll probably get asked this question multiple times a day. While most people understand the visual difference between carpet and other options like hardwood flooring, it's essential to discuss the other differentiating factors.

For instance, the price difference between carpet and hardwood flooring is significant. In fact, hardwood flooring can range between $12 and $20 per square foot, while the carpet is much cheaper at $6 to $12 per square foot.

Another important element of the carpet-versus-hardwood flooring debate is upkeep. Many people assume that carpet is easier to maintain—however, that isn't always the case. For example, when it comes to spills, you can clean hardwood floors with a damp mop—carpets can't. Instead, dust and dirt become trapped in the carpet fibers, making it difficult to truly clean.

How much does it cost to start a flooring company?

Many factors can affect the cost of starting a flooring company, including location, material price, and margins. However, most owners will spend anywhere from $10,000 to $30,000 starting their flooring company. This amount is generally enough to cover the rent for a small shop, purchase materials, and pay employees.

Are there grants to start a flooring installation business?

Currently, there aren't any grants specifically for entrepreneurs looking to start a flooring installation business. However, that doesn't mean there aren't options for getting the funding you need. Like other owners, flooring installation business owners have the opportunity to apply for general small business federal grants.

Some states also offer additional funding for small businesses. The best way to locate these opportunities is by contacting your state's small business resource center.

How do flooring companies make money?

Flooring companies make money by installing different flooring materials such as carpet, hardwood, and tile flooring. Even though some shops offer other flooring services like flooring repairs and refinishing, the best margins come from installation projects.

While many factors can affect the average amount of money a flooring company can make on a single job, most business owners can expect to change the following rates for a standard home:

Vinyl or linoleum flooring: $1,500
Carpet: $1,750
Hardwood flooring: $4,000

Again the above averages could vary depending on the square footage and the type of material the customer wants to use.

Now that you have a basic understanding of operating a flooring business, let's look at some of the most important steps to turning your flooring installation company into a success.

Step 1: Creating a business plan

One of the best ways to set your company up for success is to create a business plan. The business plan acts as a blueprint for your flooring business. It's also a common requirement for lending institutions before you can apply for financing.

As you sit down to write your business plan, you'll want to include the following sections.

Executive Summary: It might be good to save this portion of the business plan for last as it provides a detailed overview of what is to come in the document. You’ll want to write about your vision for the company and how you plan to achieve your goals.
Industry Analysis: Provide details on what you have learned about your market — include elements such as market trends, size, level of opportunity, and gaps.
Competitive Analysis: List out your competitors — discuss their weaknesses and strengths. Identify what makes your company different from the competition.
Marketing Plan: Make a list of your ideal target market. Identify what the audience looks like, their pain points, and how you plan to engage them.
Management: Note how you plan to run each project and the role that employees will play. Identify any possible gaps in your current team and what you need to do to fill those gaps.
Operations: Walk through your day-to-day operations and how you plan on running the company. List out the major processes involved in an installation and the steps you will take to ensure that projects are completed.
Financial Plan: Record your estimated startup and operating expenses. Discuss your business financial goals and financial projections for the first 5 years of operations.

Step 2: Selecting a business structure

While thinking through your business plan, you’ll want to consider the best way to structure your flooring company. Generally, there are 4 different types of business structures to compare before choosing. Those structures include:

Sole proprietorship
Limited Liability Company (LLC)
Partnership
Corporation

Each structure has its own set of rules that need to be followed. Carefully review each and select the one that makes the most sense for your future business goals.

Step 3: Choosing a business name

Choosing the perfect name for your company can be the difference between a successful floor installation business and one that struggles to stay open. Customers will typically search online to find businesses in the local area for service businesses like flooring companies.

If you choose a name that doesn't describe what your company does, there is a good chance that potential customers will skip your website and move on to the next on the list.

When selecting your business name, try to make it:

Simple to spell and say
Cohesive with your brand
Obvious what type of services your company offers
Easy to remember

Step 4: Identifying your audience

An easy way to save money on marketing and advertising is to identify your target audience. By asking yourself who your ideal customer is, you can create marketing campaigns targeting their specific pain points.

Try asking yourself the following questions to help identify what type of client you would ideally like to work with:

Do you want to work with commercial or residential clients?
Are you targeting homes within a specific household income?
What careers do your ideal clients have?
What type of business buildings do you want them to have for commercial clients?
Do you prefer new homeowners or homeowners who have lived at the residence for at least 5 years?
Are the clients married, single, or in a relationship?
Do families have children?
Will you work with any type of home, or do you want to specialize in farmhouses or Tudors?
Are your potential clients on social media? If so, which platforms do they use?
Why do your potential clients want to upgrade their floors?
Do they value function or design more?

While you don’t need to answer all of these questions, they will give you a good starting point when considering who you want to market to.

Step 5: Establishing a niche, unique value proposition, and branding

After selecting your target audience, it's time to think about establishing a niche, unique value proposition, and brand. Let's look at how you might approach each as a new flooring business owner.

Niche

When most people start a business, there are many things to think about, but developing a niche usually isn't one of them. However, investing time into creating a niche can be extremely valuable for a business.

For instance, if you start your flooring company and specialize in installing hardwood flooring, it's easier to earn a reputation and market to homeowners looking for your service.

However, that doesn't necessarily mean you need to niche down. Instead, you can focus on either your unique value proposition or branding to help stand out in the market.

Unique Value Proposition (UVP)

Every company has a unique value proposition, but most owners don't know how to identify it. The easiest way to determine your UVP is by thinking about what makes your flooring business stand out. Do you offer the shortest completion time for projects? Do certain groups, like members of the military, receive special discounts?

Whatever it might be, highlighting it in your marketing material can help you win business and capture market share.

Branding

After you work through a potential niche and your unique value proposition, it’s time to consider branding. A company’s brand can be one of the most important elements in determining success. Customers often look at your brand and decide whether they want to learn more about your product or service.

As you consider the type of brand you want to create, you should keep the following in mind:

Design aesthetics
Niche
Values
Managing style
Target clients
Color palette
Fonts
UVP
Mission statement

Step 6: Crafting a service list

Even though floor installation will be your company’s most often selected service, that doesn’t mean that you can’t offer other services too. For instance, you could increase your total revenue and attract new customers by adding any of the following services:

Polishing or refinishing current flooring
Emergency flooring repairs
Floor matching

The price point you set for your services will be dictated by your market. Conducting market research is often the easiest way to determine what customers are willing to pay in your location.

Step 7: Obtaining the appropriate equipment

Since flooring companies work with various flooring materials, you'll want to ensure that you have the appropriate equipment to complete any project. Here's a list of the most common tools you'll want to keep with you:

Floor scraper
Floor roller
Floor cutter
Sanders
Saws
Trowels
Levels
Tape measure
Rubber mallet
Tapping block
Spacers
Utility knife
Protective eyewear, clothing, and footwear

Step 8: Securing financing

While the barrier to entry for starting a flooring installation business isn't high, you'll still need to ensure you have the startup capital to keep the business running during the first few months. If you find that you need additional funds for equipment, materials, or marketing, then you can always look to one of the following options for financing:

Bank business loans
Business credit cards
Private investors or lenders
Partners
Friends and family

Step 9: Purchasing the necessary insurance

Having the right processes in place is a great way to set your company up for success. However, your hard work could vanish without the appropriate small business insurance if a customer sues your organization.

To ensure you have the appropriate protection to keep your business running smoothly, you should consider the following flooring installation business insurance coverages:

Additionally, if you plan on hiring employees to help with the installation process, you’ll need to purchase workers’ compensation insurance.

Step 10: Completing paperwork, licenses, and permits

One of the final steps in launching your flooring business is to ensure you have all the appropriate paperwork, licenses, and permits. Since there isn't a specific state requirement for flooring businesses, you'll want to check the general business requirements for the location where you plan to operate your business.
Most states will require you to obtain the following before you can legally run your company:

Employer Identification Number
General business license

It would also be good to open a business bank account, so your personal and professional funds don't cross.

Step 11: Crafting a marketing strategy

Now that your company is officially registered, it's time to start thinking about how you will attract new business. Critical components like creating a website and posting on social media are important, but most flooring businesses see most new customers come in from referrals and word-of-mouth.

One way to take advantage of both channels is to ask recent customers for testimonials once installation services are complete. It's also a good idea to have business cards on you — that way, you can pass your information along to potential leads.

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