Home Improvement Business Models
Home improvement is a broad term that encompasses any renovation, remodeling, upgrade or improvement of a home. The industry includes the sale of home improvement materials, appliances and decor as well as the services of contractors, tradespeople and other workers who help consumers build, install or modify their homes. The business has seen excellent growth results in recent years, especially during the COVID-19 pandemic when homeowners sought to make their homes more comfortable and functional.
There are a few certainties in life: death, taxes and if you’re a homeowner, home repair and improvement projects. Whether they’re caused by an unexpected leaky roof or the desire to add living space, these can be expensive and time-consuming. To avoid overspending or overpaying, it’s important to have a home improvement plan before jumping in.
A plan should include a clear description of the work to be performed as well as the type and brand of materials to be used. It should also include an estimated start and completion date, a payment schedule and an arbitration clause. It’s recommended that you choose a contractor with a good reputation and membership in a reputable professional association. Homeowners should also check the company’s license and insurance before hiring them for a project.
The home improvement industry has a wide variety of business models. Some are small, local businesses that typically provide a high level of service and personal attention. Others are national or regional chains that specialize in specific types of products or services. Many large companies use subcontractors to perform the actual work, but they usually remain responsible for quality control and customer satisfaction. These firms usually have a permanent address and stand behind their warranties.
Other business models include aggregators, which act as intermediaries between service providers and customers. They typically offer a range of home improvement services at a lower cost than traditional contractors. A reputable aggregator will perform background checks on contractors and maintain a database of verified consumer reviews. They’ll also offer a variety of financing options and may even match customers with contractors who offer discounts on their services.
Despite the economic slowdown, home improvement spending is on the rise. A new survey from NerdWallet finds that more than 3 in 5 Americans have taken on a home improvement project since March 1, with the most common improvements being replacing or adding windows and doors, repairing siding or trim and installing patios or decks. Consumers are also focusing on kitchen remodels, bathroom renovations and adding bedrooms or bathrooms to their homes.
While these projects can increase a home’s resale value, it’s important to remember that not all projects will pay off. Some upgrades will actually cost homeowners more than they’ll receive when it comes time to sell. Before you begin any major home improvement projects, consult with a real estate professional to learn which improvements will deliver the best ROI.