How to Start a Smart-Home Business

Start a Smart-Home Business by following these 10 steps:

1. Plan your Smart-Home Business
2. Form your Smart-Home Business into a Legal Entity
3. Register your Smart-Home Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Smart-Home Business
6. Get the Necessary Permits & Licenses for your Smart-Home Business
7. Get Smart-Home Business Insurance
8. Define your Smart-Home Business Brand
9. Create your Smart-Home Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your Smart-Home Business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

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.

What are the costs involved in opening a Smart-Home Business?

You may incur some educational expenses at first. Loxone provides training for installers who use its equipment; the company charges about $225 to $300. Competitors like Savant also offer classes. You'll have to spend money on the initial inventory, tools, office equipment, and any licenses required in your area. A reliable vehicle with cargo space proves necessary as well. You probably won't need a large truck since most automation businesses don't sell or deliver major appliances.

What are the ongoing expenses for a Smart-Home Business?

Marketing, office supplies, wages, fuel, rent, and utilities represent recurring costs. If you serve a sizable geographic area, consider adding a toll-free phone number for about $15 per month. This occupation also calls for liability insurance, and you'll need commercial vehicle coverage when using an automobile for any business purpose. On average, these two policies cost around $2,100 annually.

Who is the target market?

Smart-home products remain most popular among men under 50, but seniors desire professional installation more frequently. Older Americans tend to prefer subscriptions; young customers want one-time fees. Most buyers have relatively high incomes. The wealthiest clients thoroughly automate their homes while middle-income customers focus on certain devices.

How does a Smart-Home Business make money?

Many companies bill customers for products and installation. The total price should cover the cost of wholesale equipment while providing adequate compensation for setup labor and technical assistance. An alternative is to charge a flat monthly fee. Some memberships include long-term support, repairs, battery replacement, and security monitoring.

How much can you charge customers?

HomeAdvisor indicates that clients spend anywhere from $2,000 to $150,000 on custom installation. The average setup costs nearly $28,000, according to CE Pro. Pricing depends on how comprehensively you automate the home. For example, a low-end service call may only involve setting up a single device. Major projects entail automation of all appliances, electronics, fixtures, and HVAC equipment in a large house. You might boost sales by providing discounts when customers choose to automate multiple systems or devices simultaneously. Subscription-based services fetch about $83 per month on average.

How much profit can a Smart-Home Business make?

Home-automation installers achieve profit margins of 33% on average, according to CE Pro. The merchandise can yield comparatively high margins even if you sell it without installation.

How can you make your business more profitable?

Provide all of the desired products and services in one place to create more profit. People often pay extra for convenience. Seek customers with large dwellings. Greater per-project earnings will cut marketing and travel expenses. Offer detailed instructions, FAQ lists, and tutorial videos. These reduce the need for technical support and product returns.

• Promote your business economically by offering a small reward to clients who refer their friends or relatives to you.
• Consider outsourcing security monitoring services instead of investing in costly equipment, licensing, and training.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Smart-Home Business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

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

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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

Certain state permits and licenses may be needed to operate a smart-home business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

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.

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.

Is this Business Right For You?

This occupation suits individuals who understand technological concepts with ease. You should excel at complex projects and quickly adapt to changes. Smart-home experts also need the ability to patiently explain complicated systems to people with limited technical knowledge.

What happens during a typical day at a Smart-Home Business?

You can plan on regularly communicating with clients in person and by phone. The first step in selling a home automation system is to help the customer choose products. Next, you'll need to provide an estimate, deliver the equipment, and install it. After-sale support is also important. Clients will have questions about using and maintaining the system. Smart-home entrepreneurs must promote their businesses, order merchandise, and keep records as well.

What are some skills and experiences that will help you build a successful Smart-Home Business?

You can start learning by installing and using an automation system in your home. Professionals also profit from previous work experience with computers, networking, electrical wiring, security cameras, or HVAC equipment. The setup has gradually become less complicated, so you don't necessarily need computer programming skills. A training course could help you prepare while enhancing your credibility. Lowe's offers useful facts regarding certification programs.

What is the growth potential for a Smart-Home Business?

A minority of homes currently benefit from thorough automation, so this industry still has great growth potential. Some companies stay local while others expand into chains. For example, Vivint has locations in 49 states and 12 Canadian provinces. Multiple smart-home franchises exist as well. Another common path to growth involves providing related home services, such as heating, cooling, or electrical upgrades.