How to Start a Flooring Business

Starting a new business can be intimidating and overwhelming.  It inevitably will cost money but uncertainty and the possibility of failure will prevent most people from acting upon their entrepreneurial goals.  If your interest is to start a flooring business, this article will outline some of the first steps to take that some people fumble with when just starting out.  Things to consider: Location, competition, warehousing, inventory, vendors, wholesale/retail sales, import/export possibilities, ancillary products, financing, installation, etc.

Location

Choosing the right location for this kind of business is crucial.  You first need to decide if you want to be in the wholesale or retail flooring business.  Maybe you want to do both.  If you want to sell wholesale flooring products, a centrally located warehouse is best.  If you want to sell retail flooring products, you will need a showroom in a visible, high-traffic location.  Once you’ve found a showroom that you think might be in a good spot, you may want to contact your local Department of Transportation to see if they have any traffic statistics available.  This will give you an idea of how many cars are driving by the location per day.  The DOT may also have information as to which are the busiest intersections in your county.

Competition

Due diligence is critical when determining if a location is overly saturated with similar flooring companies.  Doing a quick search on Google Maps will give you a bird’s eye view of your competitors within close proximity to your location.  Opening a flooring business in an area where there are other already established businesses will work against you.

Warehousing

If you plan on being a wholesaler of flooring products, you can either rent your own warehouse or outsource warehousing.  Both have advantages and disadvantages.  Having your own warehouse gives you more control over your inventory but you may have additional expenses such as rent, employees, forklifts, etc.  If you keep your inventory in a fulfillment warehouse, you will only have to pay for the space your inventory occupies.  As your inventory shrinks, so will the monthly warehouse expense.

Inventory

In the flooring business, many of the companies that manufacture or distribute the products will be willing to give you showroom displays at no cost to you.  If they do charge for the display, it’s usually minimal.  Having a diverse selection of products will unquestionably create more of an opportunity for you to generate revenue.  In other words, don’t just sell marble tile, also consider porcelain tile, hardwood, vinyl, carpet, etc.  You may find customers want to put tile in their living room and kitchen but may want carpet or hardwood in their bedrooms.  Customers are lazy and would rather get everything they need from one place, rather than shopping all over town.

Vendors

It will be important to research where you can get your inventory from.  This will differentiate your operation with your competitors.  If customers want something cheap, they will go to the big box retailers.  If you have products that are unique and unobtainable elsewhere, they will come to you.

Wholesale/Retail

The profit margins in the wholesale business are usually less than the retail side but in some cases, the volume is higher in wholesale.  A wholesale flooring business is not as restricted to geographic location.  You can sell your products to retail stores anywhere that you are willing to deliver to, whereas a retail flooring showroom is only as good as the community that it is located in or around.  Wholesale margins are usually at around 30% while retail margins are at around 100%.

Import/Export

If you decide that you want to explore wholesale possibilities, it may require you to import flooring products from overseas.  Some of the most cost effective products are manufactured in China.  However, Chinese manufacturers have a different idea of what quality means than we do here in the western world.  This may require you to subcontract a quality control company in China to inspect the merchandise before it gets loaded onto the container.  There are third party quality control companies in China that do this for a reasonable price.  It is well worth it.  Without these quality control measures in place, you could end up importing a container full of garbage that would otherwise be considered unsellable in this part of the world.

If you are wholesaling your flooring products, there also may be opportunities to sell your products overseas.  This would require you to have sales representatives in other countries.  Some of these sales reps are willing to work on a commission-bases. 

Ancillary Products

Sometimes only selling flooring products isn’t enough.  You may find that customers who want to redo their floors also want to redo other parts of their house, such as their kitchen or bathroom.  Selling products like kitchen cabinets, bathroom vanities and plumbing products such as sinks, faucets, showers, toilets, etc. will give you an opportunity to capitalize on your existing customers.  This will apply especially to new construction projects.  There are vendors who can help you include all of these types of products in your showroom.

Financing

Home renovation projects are very costly. Some of your customers may come to you with a budget of $5000 who will get sticker shock when you quote them a price of $20,000.  Not everyone has that kind of money lying around.  However, there are consumer finance programs available that will lend your customers the money for home improvement projects.  These types of arrangements are ideal because the customer gets their house renovated, the bank gets their interest and you get paid.  The bank assumes all of the financial risk and it costs you nothing.  Even if the customer has the money to do the project, having the option to finance it may encourage them to do more. 

Installation

You will need a license to do any type of installation work yourself.  If you are already a contractor and have the necessary licensure, then you’re good to go.  If you don’t, you may want to consider the possibility of outsourcing installation or hiring someone who is licensed.  If you decide to subcontract a construction company to do your installation, make sure they are reliable and trustworthy.  If they do a bad job, it will reflect poorly on you and your company.

The flooring industry is a highly lucrative business and if done right has tremendous expansion possibilities.  If you venture into commercial projects by working with architects, interior designers, developers or construction companies, the volume can be much larger than that of residential projects.  Like any business, there are complications and unexpected problems that can arise.  However, with good planning an intuitive insight, you can position yourself strategically within the industry to expose yourself to interesting possibilities.  

 For more information on how to start or operate a flooring business, call Ashlar Consulting Corporation at 305-849-9399 or visit www.AshlarConsultingCorp.com.