Flooring Business: How to Start, Profit Margins, & Ideas

If you’re looking for a business opportunity in the home improvement industry, a flooring business is a good one to investigate. Every building needs flooring, so it makes sense it would be a profitable sector of the industry.

ProSource Wholesale has been in the flooring industry for more than 32 years. Our parent company, CCA Global Partners, is also home to brands such as Carpet One, Flooring America, and The Floor Trader. We’re an industry leader, and this is our guide on how to get started on how to open a flooring store.

Key Factors in Starting a Flooring Business

If you are new to starting a business, you need an outline of key considerations that lead to a revenue-positive outcome, also known as your business plan. If you have already owned a business, you’ll know this document is always fluid; elements of it can change, but the goal remains the same: a profitable venture.

The information we are going through here will help you in preparing a flooring business plan, and we’ll also provide examples of how we do it at ProSource. Specifically, we’re going to cover:

• Defining your niche: how you will differentiate yourself in a competitive marketplace.
• Products and services: deciding on suppliers for all product lines, plus narrowing down on the required and optional services you provide.
• Operations: considerations on staffing levels, elements that impact operating costs, and flooring business specifics
• Marketing: a look at marketing and advertising strategies.
• Administration: what you need to ensure an efficiently run business.

The purpose of your business plan is to be an advisory tool that tells you if you are on track, exceeding expectations, or not meeting your revenue goals. Keep that in mind as you generate your flooring business ideas.

Your Niche and Your Competition

There are several ways to own and operate this kind of business. You can establish a flooring store or combine flooring with another aspect of a current business. You can target a certain price point in flooring, focus strictly on residential or commercial customers, or choose something that has mass appeal. Your niche in the market will be based on the strength of your competition and the type of flooring customer you want to pursue.

The Competition

Competition is not a bad thing because it lets you know there is a market for what you’re doing. However, you still need to differentiate yourself when running a flooring business, and to do that, you need to know as much about your competitors as you can.

For those interested in opening a flooring business, here are a few things to take into consideration.

• What are their strengths and weaknesses?
• If you were running their businesses, what would you do differently?
• Who is their customer, and why?

Strengths might include longevity in the region and an excellent location. Weaknesses might be holding a lot of inventory or not offering a payment plan.

Create a profile of each competitor — the more information you can gather, the more you can refine your niche. You’ll start to see where you can shine. When you have enough unique characteristics, you have a niche.

How We Do It at ProSource

The ProSource niche is we offer a wholesale showroom targeting a specific customer demographic – the home improvement trade professionals. We research each territory to ensure the trade pro demographic supports a ProSource showroom.

We are a diversified flooring franchise in that we also support kitchen and bath remodels, outdoor living projects, and we carry various sundries trade pros need to finish their projects. The showroom is available 24/7 to trade pro members through ProKey access so we surpass all the retail competition’s hours while our staff work regular office hours. That means better availability for our customers and a great work-life balance for our employees.

Since we aren’t consumer-focused, our showrooms are not in the high-rent districts. Each franchise owner has an annual customized business plan for their showroom, supported by our national office team.

Product and Services

There are hundreds of flooring options available, and you have to decide on the options you’re going to offer. Will you choose more unique products that your competition doesn’t offer, or will you go head-to-head with other flooring businesses and rely on stronger customer service and marketing to win your customers?

You may or may not be able to choose brands that are also carried by your competitors, and that may help define your niche even further. Know your product minimums, payment terms, product availability, and delivery times. You also want to know any incentives or rebates you can benefit from with each potential supplier.

Also, you will need to offer measuring and installation services, and you can provide those in-house or through an outsourced contractor. You have more control over in-house installers, but it’s not an easy job to fill, so you may be constantly recruiting. With outsourcing, you’ll pay a premium and your standards are in their hands. Make this decision carefully.

How We Do It at ProSource

Two major benefits of the ProSource franchise are:

• buying power when it comes to negotiating with suppliers, and
• not having to provide measuring and installation services.

With more than 150 franchisees in our network, we have more flexibility in securing suppliers and pricing than an independent flooring business. Each showroom carries over 50,000 products in the flooring, kitchen and bath, sundries, and outdoor living categories. Trade pros order on-demand so franchise owners aren’t responsible for the massive inventory that normally accompanies a retail operation.

Also, the trade pro provides the installation services, so that element isn’t part of running a flooring business with our model. That means you don’t have the staffing and scheduling headaches, nor are you tied to the quality standards of outsourcing. The installation is not your responsibility in any way.

Your Operations Plan

Employees are a major expense in your flooring business, yet you need the right number of people in the right roles to run the business profitably. The staff you need will be based on your hours of operation, the services you provide, and how you plan to drive sales.

We cannot stress enough that, in a consumer-focused retail business, flooring customers want you to spend time with them. You can staff that in one of two ways. First, you can have multiple salespeople who follow the customer through every step of the process. Second, you can have salespeople who close the sale and then hand the customer over to the customer service people who continue with them the rest of the way. The flooring business is a sales business — spend your time and people accordingly.

How We Do It at ProSource

The ProSource Wholesale franchise can operate with six people, and our average unit volume is $6.5 million. Included in our staff complement is a designer who can assist trade pros in setting up options for their customers, stay current on trends, and offer suggestions. Each trade pro also has a designated account manager — the same person all the time.

Our franchise owners receive a complete operations manual and are assigned a field business consultant as their direct contact with the national office.

Marketing, Advertising, and Lead Generation

Marketing your flooring business is a critical element in generating revenue. When you’re launching your business, marketing drives interest and anticipation and maintains that excitement while you get established. As you continue in the business, marketing serves as a reminder to customers that you have what they need and want.

Your marketing strategy should capture the attention of your niche market and drive them to become customers of your flooring business. Your strategy should include online promotional channels, including your website, social media, and email communications. It should also include offline promotions such as tradeshows, networking events, print advertising, brochures, and traditional advertising venues.

Your online and offline marketing materials are consistently branded with your logo, color palette, and taglines.

If you are not a marketing expert, consider hiring professional help. This role takes specialized knowledge because if you get it wrong, you will spend a lot of money without gaining any customers.

How We Do It at ProSource

ProSource provides an annual customized marketing plan for each showroom. Our national office has a dedicated marketing department that handles all the social media accounts and online marketing, so franchise owners don’t need to staff that position. Our team communicates with your trade pro customers to keep them current on incentives and promotions. You can track it all through our operations system so you know everything that is being done.

Another benefit of our niche market customer is that we can direct 100% of our marketing efforts to the trade pros, and there are fewer of them than there are consumers, so our marketing dollar goes further. If you think fewer customers is a bad thing, consider this: A consumer might update their flooring once every 10 years, but a trade pro does multiple flooring jobs in a single year.

Finances, Technology, and More

Every business owner will tell you how valuable administrative people are in running the business.

These are the people who look after a lot of tasks from accounts receivable and payable, technology troubleshooting, scheduling, and more. You don’t want your flooring business to suffer because you’re chasing payments, or you onboarded a new CRM system that doesn’t meet your needs.

This segment of the business takes a combination of good people and good processes to run efficiently. You have to hire good people, but you can often get good process information through business or industry networks. Your local chamber of commerce may offer seminars on how to use collection agencies, and your flooring association may have members with CRMs that work best in the industry. Your accountant or bookkeeper should be able to handle your government remittances, tax filings, and related financial deadlines while alerting you to anything that requires your attention as the owner.

As a last bit of advice, you should build a network of advisors — people you can tap for ideas and information. They can be people like paid advisors or other business owners who may be open to sharing best practices. If these groups aren’t available in your region, they may be available virtually.

How We Do It at ProSource

The administration aspect of a ProSource franchise is significantly easier because we have no accounts receivables. You don’t deal with credit — you get 100% of the cash before you get the bill from the vendor. We also provide the programs and processes for all your administrative tasks as part of our business model.

We are also very active at events such as The International Surface Event and other industry-led conferences that showcase products and services and provide important education. Our team attends these events and passes on key information to our franchise owners through weekly communications, regional meetings, and annual conferences.

You also have a network of 150+ other franchisees you can run ideas past, check information with, or pick up on best practices to save yourself time and money.

Keys to Ongoing Business Success

Starting a flooring business is one thing; maintaining and growing it is another, and that should be part of your business planning from the beginning. To support the five-year projection sheet of your financials, you need to show growth over these five years. How will you do that? With a long-term strategy.

Some of the elements of your business plan that help you focus on a long-term strategy will include:

Building Your Customer Base

As your business grows, you need to balance the customers you currently have with the customers you are working to attract. These two customer groups will require different marketing strategies, and the earlier you have that planned out, the easier it will be to implement once you’ve been in business for a year or two.

You should be regularly developing programs, incentives, and special events to reward loyal customers and capture the attention of new customers.

Becoming More Efficient

Always be on the lookout for ways you can become more efficient in your floor covering business. It might be in how you handle inventory, choosing the right vendors and negotiating your best pricing, or lowering your operating costs. As an independent flooring business, your buying power is limited, so you have to maximize efficiency with every opportunity.

If there is a way to save on the cost of goods or a loyalty program that drives more sales with less work, those are things you should look at from year to year.

Investing in Helpful Technology

The right technology is an asset to running a good business, so making good choices in your point-of-sale system, customer management system, and scheduling software will save you money and increase your revenue potential. Another option is having technology made for you, such as developing your personal flooring sample program or creating an app for people to track projects. These things are more prevalent now than they have ever been.

How We Do It at ProSource

ProSource franchise owners all have different goals for their businesses. Some want to build a family business, others want to grow their portfolio with multiple showrooms, and several are looking to build wealth with a specific timeframe in mind. Regardless of the goal, we work individually with each franchise owner on long-term planning.

Our team is forward-thinking in the areas of new technology, vendor relationships, diversified revenue streams, and operational support. We test new ideas with franchise owners and tweak them for a customized solution. We train franchise owners when new processes are announced. When we revisit the showroom plan with franchise owners every year, we tailor new efficiencies to their specific businesses.

We support your goals.

Consider Franchising with ProSource

As you consider how to open a flooring store, consider the ProSource Wholesale franchise opportunity. Our niche is unique, not only in our targeted trade pro demographic but also in elements of our business model, including:

• No installations
• No accounts receivable
• Low inventory requirements
• Multiple revenue streams
• No retail hours
• Strong cash flow with low operating costs
• Proven system and benefits of a network

Starting your own floor covering business is a very involved process in a highly competitive industry. Even once you get it up and running, operating as an independent is a very tall order. By joining ProSource, you can continue the goal of independent business ownership but enjoy the benefits of our franchise model.

For locations with only six people, our AUV is $6.5 million. As you put the financials together in your flooring business plan, you’ll see just how impressive those numbers truly are. We’re worth the time to explore as a proven path to entrepreneurship.

Have a Conversation About ProSource

Have a one-on-one conversation with our franchise development people about the ProSource opportunity and how it could be exactly the type of business you want. Our franchise owners are a diverse group, and they include people who were independent business owners themselves before joining the ProSource network.

We could be the opportunity that fits with your future. Let’s get started with a conversation today.