Start a custom treehouse business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your custom treehouse business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a custom treehouse business?
Your knowledge is the biggest asset to the company. If you’re considering a career in tree house building, you likely have years of education and experience under your belt; something that no one can put a price on.
In addition to your own knowledge, one of your biggest expenses will be building a team of employees who can expand that knowledge base. Customers are entrusting you to ensure their investment is safe and will last for years to come; hire those you can entrust with your life and your livelihood.
Given the niche group of customers you’re catering to, a strong marketing strategy will be critical from day one. Partner with an individual or company experienced in marketing for more specialized professions. Invest in a website from the beginning and offer prospective customers insight into the entire process. Your site doesn’t have to be huge and interactive at first, but it will be an integral part of your marketing investment. For a simple website, budget for between $4,000 and $6,000, depending upon your location.
If there are any specialty tools you need, now is the time to purchase those as well. This will include a few trucks to haul all equipment and team members from site to site. Make sure your business name and contact information is prominently displayed on each vehicle. This is a great way to get your business’ name out in the community.
What are the ongoing expenses for a custom treehouse business?
Many tree house companies operate with very little overhead. Traveling is often required, which can be built into the overall price of the project. If you decide to have a storefront for people to visit, you’ll have your standard expenses stemming from that. The largest ongoing expense will come from your marketing efforts. If this isn’t your strong suit, you will want to team up with a company who is well-versed in online marketing campaigns.
Additionally, an insurance policy is critical for protecting your company, customers, and staff. Speak with a qualified agent to discuss the specifics of your business, as there are a number of factors that influence the annual premium. Due to the nature of your business, these policies can prove to be quite expensive.
Who is the target market?
Unfortunately, not everyone will have the funds to commission this sort of project. Your clients will be those who love the outdoors, who are kids or kids at heart, and who have enough money readily available to finance the venture.
How does a custom treehouse business make money?
A custom tree house builder designs and constructs structures based on their client’s vision. Customers are billed based on a number of factors including time spent on design, quality of materials required, location, and size and scope of the project.
How much can you charge customers?
Each project will come with its own price tag, based on the specifics of the model you and your customer have designed. Many tree house builders operate under a full service business model. During the initial consultation, you will evaluate the area for a potential new structure at a set hourly charge. In the design stage, the elevation, floor plan, and platform plan are drawn up, typically for a set fee. Once construction begins, the designer can either subcontract the work out to a building contractor or choose to do the work themselves. Cost of this phase of the project is dictated by a number of factors and will vary from house to house.
There are a number of additional items to consider when setting the price for each custom tree house. The amenities, such as running water or electricity, that your treeshouse has will affect which type of building it is classified as. The classification of each treehouse will affect which permits will be necessary to obtain for that structure to be built. Since each permit costs a different amount, it is important to consider the classicification of each treehouse so that you can charge your customer an adequate amount that will cover the costs of all permits needed. To learn more on this subject, click here.
How much profit can a custom treehouse business make?
Tree house builders are part of a highly specialized field. It requires a great deal of knowledge and experience to be successful. Therefore, there’s a small pool of builders for clients to choose from. Consequently, these custom structures come with a hefty price tag, with some going for over a million dollars. Your profit is directly tied to your marketing efforts, how many custom jobs you take on each year, and how much of the process you perform yourself. Pete Nelson, Treehouse Master’s host, is reportedly worth over $5 million, proving that the sky's the limit.
How can you make your business more profitable?
Some companies have reported higher earnings by integrating the following into their business plan:
- Focus your efforts on the design aspect, outsourcing the construction work to local construction businesses. By entrusting this stage of the job to a subcontractor, you’re able to take on more clients and grow your business faster.
- Offer tree house restoration services
- Offer tree house kit planning services. Custom design and sell blueprints and materials for the structure, leaving the construction aspect up to the customer.
- Sell standard tree house plans, along with all necessary materials
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your custom treehouse business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
When starting a custom tree house company, certain state and federal licensing requirements may be required. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information:
- Check with your town, city or county clerk’s office for information about local permits and licenses
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Custom treehouse businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your custom treehouse business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Although tree house safety is seldom regulated by state and local agencies, it is critical to uphold stringent safety standards to protect the wellbeing of your customers and their children. Some good tips on building safety can be found here. In addition, since constructing tree houses is an inherently high risk service, obtaining a good general liability policy should be a priority. Visit this link to more about insurance policies for custom tree house businesses.
Additional Legal Requirements
For conservation reasons, regulations may prohibit construction of tree houses supported by certain types of trees (sometimes known as a “tree preservation order”). It is important to become familiar with state and local laws in order to comply with such restrictions.
Due to the tree house not having plumbing or running water, it is considered a temporary structure which have the following restrictions:
- From ground level to the peak of the house, the maximum height restriction is 16 ft.
- Cannot build the tree house too closer than 20’ to a boundary line
If the structure is outfitted with permanent electrical lines or plumbing, the classification of the structure changes and has to meet a new caliber of safety qualifications. If the guidelines are followed, the structure should not require a permit to build. Learn more here.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a custom treehouse business
Your work caters to a small demographic. Therefore, it’s important to reach as many potential customers as you can. To gain valued clients, you’ll need a portfolio of your work. To accomplish this, your company will want to create a few tree houses free of charge or at a reduced rate. Ask your satisfied clients to write testimonials that can be shared via social media and on your website. You’ll need to have a healthy online presence, so a blog centered around your work is also a great idea.
How to keep customers coming back
If you choose to have a storefront, make sure it’s located in a heavily trafficked area. Build a company tree house that is visible from the road, attracting potential clients as they pass by. You could also hold special events that will attract prospects from miles around. Once they’re able to view your work it will, hopefully, speak for itself.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Custom Treehouse Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Individuals with a sound understanding of tree growth patterns, structural engineering, and a construction background are often a great fit for this type of business. Those who possess this knowledge and who enjoy being one with nature become the best candidates.
What happens during a typical day at a custom treehouse business?
While much of your time is spent in the actual construction of the tree house, there are a number of other tasks that will fill your days. Once you’ve gained a client, you’ll meet with them to get to know them on a more personal level. This helps you really understand their dream tree house and turn that vision into reality. While the customers have hired you, the tree itself is your most important customer. An inspection of the tree is critical to building a treehouse that is safe for everyone involved.
Once your meetings are complete, it will be time to design the custom tree house. Additional meetings will be necessary, until a contract for your services have been signed. At that time, construction will begin. Some tree house builders contract this aspect of the business out to a construction crew, while others jump in and get their hands dirty. Either way, your job as the owner will be to oversee construction from beginning to end.
What are some skills and experiences that will help you build a successful custom treehouse business?
Your job is to design a treehouse that is structurally sound and safe for both its inhabitants and the tree. Individuals seeking to start this type of business must have a firm understanding of mechanical engineering and construction principles. These skills are required for both the designing of the tree house to scale and being able to manage construction of the tree house. Carpentry is also a beneficial skill to possess in this line of work.
What is the growth potential for a custom treehouse business?
It’s important to remember that this is a highly specialized field. Each phase of the project will require your full attention. This will limit you in how many custom jobs your company can take on each year. However, the specialized nature of this career also affords you the opportunity to charge a high premium for your services, making it quite the lucrative business.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
Safety is the greatest concern in the custom tree house building business. You’ll need a knowledgeable team that consists of individuals experienced in dendrology, engineering, architecture, and woodworking. A majority of the work will take place in the trees, so everyone on your team should be cautious and respectful of this fact.