So, you’re thinking about diving into the garage door business? This industry offers plenty of opportunities to those willing to roll up their sleeves and get to work. In this guide, we’ll walk you through the nitty-gritty: what the industry looks like, steps to starting a garage door business, and answers to common questions. Let’s get started!.
A garage door business offers sales, repair, replacement, and installation services of garage and overhead doors. Some businesses specialize in residential garage doors only, and some work with commercial overhead doors. A residential specialty would have a higher volume with a lower price point, while a commercial business would have a lower volume but a higher price point. Some garage door businesses do both.
Related Business Idea
The garage door industry is a relatively stable one, often insulated from economic downturns because, let’s face it, when a garage door breaks, it needs fixing, recession or not. With approximately 140 million homes in the U.S. and over 70 percent of these homes being more than 20 years old, there is a ton of opportunity for garage door replacement.
According to IBIS World, the garage door installation industry generated $327.2 million in 2022, and over the last five years grew at an average of 1.4% each year. With technological advancements like smart garage doors driving consumer interest, the industry is expected to continue growing.
Checklist To Start A Garage Door Business
Starting a garage door business can be an exciting and profitable venture. However, it requires careful planning to navigate the process of launching a successful garage door business. With this checklist, you will have a clear roadmap to start with confidence.
Step 1: Research the Market
You’ve got the ambition and the skills, and you’re eyeing the garage door industry as your next big move. But hold on, let’s not put the cart before the horse. The first step in building your garage door business, or any business for that matter, isn’t buying equipment or even drafting a business plan; it’s researching the market to gauge demand.
Why? Because this step helps you gauge the potential of your business idea before investing significant time, effort, and resources. Market research serves as a reality check. Even if you’re an expert in garage door installation and repair, you won’t get far if there aren’t enough customers in your target market.
There are several ways to research whether there’s enough demand for a garage door business:
- Competitor analysis: Look at existing garage door businesses in your area. Are they thriving? Take note of their service offerings, prices, and branding to see where you might fit in or stand out.
- Real estate and construction data: Connect with local real estate agents, the building permit office, or local economic development agencies. They can provide insights into the local demand for new homes, demand for renovations, and new businesses coming to the area which could lead to garage door installations.
- Public records: Check local public records for information on housing trends. More houses often mean more garages, which could mean more demand for your services.
- Social media and online forums: Platforms like Facebook, Reddit, or Nextdoor can provide insights into what local residents are saying about garage door services. Are customers generally happy with existing providers? If not, you’ve found a gap you can fill.
Market research won’t offer guarantees, but it will give you a clearer idea of what you’re diving into. Think of it as reducing your business risks. Once you’ve got this feedback, you’ll be better positioned to make decisions about your garage door business with a clearer understanding of the marketplace.
Step 2: Write a Business Plan
After researching the local market and having a better idea of whether an opportunity exists, the next step in starting your garage door repair business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, strategies for beating competitors, projecting sales and expenses, and more. You’ll also need to do some research to calculate exactly what your startup and ongoing expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Related: How to write a business plan
Step 3: Source Funding
You’ve assessed the market and fine-tuned your business plan, and now it’s time to talk money. The reality is, that even a relatively low-cost startup like a garage door business needs some financial juice to get rolling.
Your first stop in the funding journey is often your own pocket. Personal savings are a straightforward way to finance your startup. It’s your money, so there are no interest rates or repayment terms.
But what if your savings don’t cover all the startup costs? That’s when you turn to outside sources. Popular types of funding include:
Banks: Traditional lending is a common route for many business owners. Banks and credit unions typically require you to invest at least 15% – 25% of your personal funds into the business, have a strong credit score, and offer sufficient collateral. If the bank considers the loan risky, they might resort to a Small Business Administration (SBA) loan guarantee to secure the loan. This basically means the SBA assures the bank that they’ll cover a portion of the loan if you default, making the bank more willing to lend to you.
Friends and family: If you’ve got friends and family who believe in your venture, they might be willing to chip in. But tread carefully here; mixing business and personal relationships can get messy. The golden rule is to put all agreements in writing, outlining repayment terms or equity stakes to prevent misunderstandings down the line.
Microloans: Not able to secure a traditional loan? Microloans could be your answer. These are small loans often provided by nonprofit organizations. The good news is some of these organizations offer business training alongside funding, which can give you additional tools to succeed. These loans are especially useful if your funding needs are modest or if you’re not eligible for traditional credit.
Investors: While venture capital isn’t typically the go-to for a garage door business, you may find local individuals interested in investing. These are typically individuals with a high net worth interested in supporting local businesses. However, securing investment can be challenging, as many investors seek high-growth, scalable businesses.
Step 4: Register the Business
You’ve got the drive, you’ve done your homework, and you’ve even secured some funding. What’s next? It’s time to make your garage door business legally sound. Each state has different regulations. but here is a general overview.
Choose a business structure: First things first, you need to decide on a business structure. There are four main types: sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Your choice impacts your taxes, liability, and even how you raise capital.
- Sole proprietorship: This is the easiest and least expensive structure to set up. However, there’s no separation between you and the business, meaning all liabilities fall on your personal assets.
- Partnership: If you’re going into business with someone else, a partnership is an option. Similar to a sole proprietorship, each partner shares the profits, losses, and liabilities.
- Corporation: Unlike the first two, incorporating offers liability protection, but it’s more complicated and costly to establish. Plus, there are additional regulations to stay on top of
- Limited Liability Company (LLC): An LLC offers the liability protection of a corporation with the operational ease of a sole proprietorship or partnership. This means your personal assets are shielded from business debts.
Sole proprietorships and LLCs are popular choices for a garage door business. Sole proprietorships because they are easy and inexpensive to start, while LLCs offer liability protection without the requirements of a corporation.
Related: Comparison of business structures
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Obtain business licenses and permits: You will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located. Some common local, state, and federal registrations a garage door business may need include a business license, sales tax permit, and an Employer Identification Number if you plan to have employees.
In addition, some locations will require a local contractor’s license. The need for a contractor’s license varies on the town where the work is being done.
Step 5: Purchase Equipment & Set Up Shop
You’ve got your business plan, secured funding, and done all the legal paperwork. Now comes the part where your vision takes physical shape. It’s time to set up your shop and equip your business for the day-to-day grind.
Setting Up Shop
Even though a garage door business is often on the go, servicing clients at their locations, having a base of operations is essential. It’s not uncommon to operate from the owner’s personal residence, but a larger space may be needed. This space could serve as an office, a meeting spot for employees, a storage area for equipment, or even a showroom if you plan to sell doors. Before committing to a location, ensure you have secured sufficient funding, as there could be unexpected delays or denials in the funding process.
Additionally, verify that the property is zoned for your type of business to avoid any legal issues.
Purchasing Tools and Equipment
You might already own some of the necessary tools, so take stock of what you have. Identify gaps in your inventory and purchase the remaining equipment. Since you’ll be offering installation and perhaps repair services, you’ll need a variety of specialized tools and possibly a vehicle to transport them.
Step 6: Find Suppliers & Determine Pricing
Now that the shop is coming together, finding suppliers to provide parts and doors is an important step. Most suppliers won’t even talk wholesale pricing or set up an account until your business is officially registered. So, if you skipped that step, go back and make sure your paperwork is in order. Once that’s out of the way, you have several avenues for finding suppliers:
- Research reputable manufacturers: Start with identifying reputable manufacturers in the garage door industry. Major suppliers to the garage door installation industry include garage door and opener manufacturers like Clopay, Chamberlain, Raynor, Wayne Dalton, etc. Also, for small quantities of hardware and materials like springs, rollers, brackets, sealants, openers, etc., hardware/building supply stores like Home Depot and Lowe’s are good options.
- Industry trade shows: These are gold mines for making contacts. Not only can you assess a range of products, but you can also network with suppliers face-to-face.
- Ask for recommendations: Asking for recommendations from industry associations or other garage door businesses (not competitors obviously) could provide you with trusted suppliers who have already proven their reliability.
- Consider local service range: It’s important to consider the local service range of the supplier. A supplier who operates in your area can provide faster delivery and better service. This allows you not to tie up as much cash in keeping inventory on hand.
Once you’ve got a shortlist of potential suppliers, you’ll need to focus on pricing. Most suppliers will offer tiered pricing based on volume. Some might offer a “break point,” which means if you order above a certain quantity, the price per item drops significantly. Be wary of going for the lowest price available; quality is just as important as cost, especially in an industry where product reliability can impact your reputation.
Step 7: Hire Staff
Many garage door businesses are solely owner-operated, while others will hire administrative staff, salespeople, or skilled technicians.
Before hiring, it’s essential to understand some legal requirements:
- Obtain an EIN: An Employer Identification Number is basically your business’s Social Security number for tax purposes. You’ll need it for IRS filings and to set up payroll.
- Verify employment eligibility: Ensure that every employee you hire is legally allowed to work in the U.S. You’ll typically use Form I-9 for this.
- State reporting: Each state has its own set of reporting requirements for new hires, usually involving filing with a state agency shortly after the employee’s start date.
- Labor laws: Familiarize yourself with both federal and state labor laws to ensure that you’re in compliance, particularly when it comes to wages and work hours.
- Worker’s compensation insurance: This insurance is pretty much required by every state if you have employees.
When budgeting for salaries, be sure to budget an additional 15% on top of salaries to cover payroll taxes.
Related: Hiring your first employee
Step 8: Create a Marketing Plan
Marketing your garage door service isn’t just about hanging a sign and hoping customers will come knocking; it’s about laying down a strategy to bring your services to the right people.
A well-optimized website is often potential customers’ first point of contact, acting as a virtual storefront. It should be mobile-friendly, easy to navigate, and include essential information about your services.
Claiming your business on relevant online directories should also be on your list, but it’s far from the only step. Google Business Profile is the popular kid on the block, but don’t neglect platforms like Yelp and Angie’s List. These platforms not only increase your online visibility but also allow satisfied customers to leave reviews, lending credibility to your business.
Social media platforms like Facebook and Instagram can serve as informal yet effective channels for showcasing your products and services. Before and after photos of garage door installations can capture attention and demonstrate your expertise. Paid online advertising through Google Ads or social media platforms lets you target specific demographics, ensuring your services appear in front of homeowners who might need a garage door repair or replacement.
Last, local community involvement also goes a long way. Joining the Chamber of Commerce can provide networking opportunities and increase your business’s visibility within the community.
Step 9: Prepare to Launch!
As you finalize your preparations for starting a garage door business, there are probably going to be several items to tidy up. Every business will have different needs, but here are just a few tasks to consider:
Business insurance: This is essential to protect your business from potential risks. Consider general liability insurance, workers’ compensation insurance, and commercial auto insurance.
Contracts: Contracts are necessary for outlining the terms of your services. These can include contracts for installations, maintenance, and any subcontractor agreements. Have these drafted by an attorney, or look at the free and inexpensive templates at RocketLawyer and Law Depot.
Bank account: Open a business bank account separate from your personal one. This helps in tracking your income and expenses efficiently.
Management software: Consider investing in industry-specific management software like ServiceTitan, Jobber, or Housecall Pro. These tools help manage customer relationships, scheduling, dispatching, invoicing, and more.
Industry Associations: Joining associations like the International Door Association (IDA) or the Door and Hardware Institute (DHI) can provide networking opportunities, industry updates, and training resources.
Common Questions When Starting A Garage Door Business
How much does it cost to start a garage door business?
Starting a garage door business typically requires an initial investment of between $4,000 and $20,000.
Let’s break down those costs:
Equipment and tools: Your initial equipment list will include a service vehicle, various specialized tools, and initial inventory for common garage door parts. Estimate around $2,000 to $10,000 for this category.
Vehicle: If you don’t already have a suitable vehicle, you’ll need to budget for this. Vehicle expenses can range up to $80,000, depending on whether you buy new or used and the type of vehicle you choose.
Business registration: You’re looking at roughly $100 to $1,000 for registering your business, securing a business name, and other initial legal fees. This varies from state to state and depends on the type of business structure you choose.
Insurance: General liability insurance and, in some locations, a contractor bond protects your business from potential damages or lawsuits. The initial cost of this insurance can be around $2,000.
Website: A professional-looking website can cost anywhere between $50 to $5,000, depending on whether you hire out the design or DIY.
Retail business expenses: These are the costs associated with running your business, such as office supplies, utilities, and rent (if you’re not operating from home). The costs can vary widely depending on your specific circumstances.
Marketing: Initial marketing costs can include setting up a website, SEO, and advertising. The exact amount will vary based on your strategy and market.
It’s important to note that these are just an estimate of the starting costs. Running a business involves ongoing expenses like insurance premiums, marketing costs, and maintenance. Also, as a general rule, it’s recommended to have three to six months of operating expenses on hand as a buffer to cover any unexpected costs or fluctuations in income.
How profitable is a garage door business?
Profitability in the garage door business can vary widely based on various factors such as location, the scale of operations, and marketing effectiveness.
As an example using industry data, consider the average earnings per square foot of frontage. On average, the price for a new garage door installation is $1,500. Therefore, if your business installs two garage doors a week, that comes to an annual revenue of $156,000.
However, it’s important to keep in mind that revenue does not equate to profit. The cost of goods sold averages close to 60% of revenue This covers materials, hardware, and parts purchased for installations.
Then there are overhead expenses like rent, insurance, fuel, marketing, etc., which on average is another 25%, leaving a 15% profit.
So, if you make $156,000 from installations and have a cost of goods of 60% and overhead of 25%, your profit would be $23,400. ($156,000 – $93,600 – $39,000)
Of course, there is a lot more to be made with repairs and this doesn’t account for any unforeseen expenses or downturns in business, but it provides a rough estimate. It’s important to adjust these numbers according to your specific circumstances and business plan, but these figures give you a starting point for your profit in the garage door business.
What skills are useful in a garage door business?
In the garage door business, skills range from technical know-how to soft skills that make interacting with customers a breeze. Let’s break them down:
Technical skills: You should know how to install, repair, and maintain various types of garage doors and garage door openers. Understanding different materials, mechanisms, and electronics is a must.
Mechanical aptitude: Being handy with tools and having a knack for figuring out how things work is invaluable. You’ll be dealing with springs, motors, chains, and other mechanical components.
Electrical basics: A basic understanding of electrical circuits and safety is crucial, especially when dealing with garage door openers and sensors.
Safety knowledge: Given that you’re working with heavy doors and electrical components, knowing safety procedures can’t be overstated.
Customer service: At the end of the day, you’re serving homeowners or business owners. Being polite, punctual, and respectful goes a long way in earning and retaining business.
Sales skills: You’ll need to sell your services, possibly door models, and upgrades. Knowing how to present your offerings in a compelling way is beneficial.
Communication: Being able to clearly explain issues, solutions, and costs to customers is crucial. Miscommunications can lead to unsatisfied customers and lost business.
Problem solving: When a garage door isn’t working as it should, it’s like a puzzle you need to solve. Quick and effective problem-solving skills are a major asset.
Administrative abilities: As a business owner, you’ll handle scheduling, invoicing, and perhaps inventory management. Basic software skills and organization are useful here.
Financial savvy: Knowing how to budget, manage cash flow, and understand basic financial statements will help you keep your business on track.
Time management: You might be juggling multiple service calls in a day, so planning your route and managing your time efficiently is key.
Combining these skills will make you a well-rounded garage door business owner, capable of tackling the myriad challenges that come your way.
What is the NAICS code for a garage door business?
The NAICS code for a garage door business is 238350, which is categorized as Finish Carpentry Contractors.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?