How to Start a Demolition Business

Ready to start demolishing? Demolition companies do everything from tearing out interiors and clearing spaces for renovation to total demolition of homes and buildings. The demolition industry is worth billions and expanded 25% in the last decade. It’s also set for future growth, thanks to the US’ trillion-dollar infrastructure bill. 

If you have some experience and are able to invest in heavy equipment, you could start your own demolition business and make a great living while providing valuable services. 

But first, you need to build up your business knowledge. Luckily, this step-by-step guide will provide all the information you need to break ground on your successful demolition business. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a demolition business has pros and cons to consider before deciding if it’s right for you. 

Demolition industry trends

Industry size and growth

• Industry size and past growth – The US demolition and wrecking industry is worth $7.5 billion in 2022 after expanding 3.7% annually the last five years.((https://www.ibisworld.com/industry-statistics/market-size/demolition-wrecking-united-states/))
• Growth forecast – The US demolition and wrecking industry is projected to see slight growth in 2022.
• Number of businesses – In 2021, 4,368 demolition and wrecking businesses were operating in the US.((https://www.ibisworld.com/united-states/market-research-reports/demolition-wrecking-industry/))
• Number of people employed – In 2021, the US demolition and wrecking industry employed 22,968 people.

Trends and challenges

Trends in the demolition industry include:

• The US’ $1.2 trillion infrastructure plan calls for the destruction of bridges and other structures, which will boost the demolition industry in the coming years.
• Some 90% of demolition debris is now being recycled rather than going to landfills, which takes additional work and does not generate additional revenue, but is increasingly expected by customers.
• Robotic demolition machines are entering the market, making demolition jobs safer and reducing the need for laborers. 

Challenges in the demolition industry include:

• Demolishing buildings that contain asbestos or other hazardous materials represents a potential health risk, making insurance important. 
• As demolition technology evolves, particularly with robotics, demolition companies may need to buy more expensive equipment.

Demand hotspots

• Most popular states – The most popular states for construction workers are New Hampshire, Connecticut, and Washington.((https://www.zippia.com/construction-worker-jobs/best-states/#connecticut))
• Least popular states – The least popular states for construction workers are Arkansas, Virginia, and Mississippi. 

What kind of people work in demolition?

• Gender – 6.2% of construction workers are female, while 93.8% are male.((https://www.zippia.com/construction-worker-jobs/demographics/))
• Average level of education – The average construction worker is high school educated.
• Average age – The average construction worker in the US is 38.9 years old.

How much does it cost to start a demolition business?

Startup costs for a demolition business range from $280,000 to $660,000. Costs include excavation equipment, trucks to transport the equipment, an office/equipment storage facility, and a labor and operating budget. 

If you’re unfamiliar with the demolition process, the best way to learn is to work for a demolition company to get hands-on experience. Your state probably requires you to have a certain amount of experience to get a demolition contractor’s license. You probably also have to pass an exam. 

You’ll need a handful of items to successfully launch your demolition business, including: 

• Excavators
• Crushers
• Conveyors
• Bulldozers
• Scaffolding
• Jackhammers
• Grinders
• Concrete cutters
• Cutting torches
• Pry bars
• Sledgehammers

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Business licenses and permits	$100 - $300	$200
Insurance	$100-$300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Excavation equipment	$200,000 - $500,000	$350,000
Trucks to transport equipment	$50,000 - $100,000	$75,000
Labor and operating budget	$25,000 - $50,000	$37,500
Office.equipment storage space	$5,000 - $10,000	$7,500
Total	$281,550 - $664,100	$472,825

How much can you earn from a demolition business?

Prices for demolition range from $5 to $17 per square foot of the structure. These calculations will assume an average price of $12. Your profit margin after labor and overhead should be about 20%. 

In your first year or two, you might demolish one 1,500 square foot structure every other week, bringing in $468,000 in annual revenue. This would mean $93,000 in profit, assuming that 20% margin. As your business gains traction, you might demolish one 2,500 square foot structures a week. With annual revenue of $1,560,000, you’d make an outstanding profit of $312,000.

What barriers to entry are there?

There are a few barriers to entry for a demolition business. Your biggest challenges will be:

• The high startup costs of heavy machinery and other excavating equipment
• Competing with established companies in your area
• Meeting the requirements for a demolition contractor’s license

Step 2: Hone Your Idea

Now that you know what’s involved in starting a demolition business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research demolition businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a demolition company that does debris recycling, or a commercial demolition company that demolishes buildings rather than homes. 

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You can decide if you want to specialize in a certain type of demolition or do a variety. The demolition of large buildings using explosives is rare, but it’s something you could offer if you have the expertise. 

How much should you charge for demolition?

Demolition prices range from $5 to $17 per square foot of the structure. Check prices in your area to make sure you’re competitive. After the costs of labor and overhead, you should aim for a profit margin of about 20%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market could be homeowners who want to tear down and rebuild, but it will most likely be development companies that are going to tear down existing structures to build new ones. You can find development companies on LinkedIn, Google and Yelp and reach out. 

Where? Choose your business premises

You’ll need to rent out an office space with a facility to store your heavy machinery and other heavy equipment. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Demolition Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “demolition” or “building demolition”, boosts SEO
• Name should allow for expansion, for ex: “Knockout Demolition” over “Interior Demolition Experts”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Demolition Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A concise summary outlining the key aspects of the demolition business plan, including its purpose, goals, and potential for success.
• Business Overview: A brief description of the demolition business, its mission, vision, and the specific niche or focus within the demolition industry.
• Product and Services: Details on the range of demolition services offered, such as building demolition, site clearing, and environmental remediation.
• Market Analysis: Examination of the demolition market, identifying target customers, market trends, and potential growth opportunities.
• Competitive Analysis: Assessment of competitors in the demolition industry, highlighting strengths, weaknesses, and strategies to gain a competitive edge.
• Sales and Marketing: A plan for promoting the demolition services, including pricing strategies, advertising, and sales tactics to attract clients.
• Management Team: Introduction of key personnel involved in the business, outlining their roles and expertise in the demolition field.
• Operations Plan: Detailed information on how the demolition business will operate, including equipment, processes, safety measures, and partnerships with other stakeholders.
• Financial Plan: A comprehensive overview of the financial aspects, including startup costs, revenue projections, and a break-even analysis.
• Appendix: Supplementary materials such as permits, licenses, resumes of key team members, and any additional documents supporting the demolition business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to demolition businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your demolition business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a demolition business. Demolition companies do have the potential for high growth, so at some later stage of your business, you might be able to attract angel investors or venture capital. 

Step 8: Apply for Demolition Business Licenses and Permits

Starting a demolition business requires obtaining a number of licenses and permits from local, state, and federal governments.

You may need a demolition contractor’s license depending on the requirements in your state. Demolition permits are generally required for each job. 

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your demolition business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as HCSS, PROCORE, or FieldWire, to help manage your projects, costs, billing, and scheduling.

Accounting 

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

For your demolition business, the marketing strategy should focus on showcasing your expertise in safely and efficiently handling demolition projects. Emphasize your commitment to safety, compliance with regulations, and your ability to manage projects of all sizes with precision.

The goal is to establish your business as a reliable and professional choice for clients needing demolition services, from small residential tasks to large-scale commercial projects. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should communicate strength, reliability, and professionalism. This includes your logo, business cards, equipment branding, and company attire.
• Direct Outreach: Network with construction companies, real estate developers, local government agencies, and contractors to introduce your services and explore potential collaborations or subcontracting opportunities.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a comprehensive website that outlines your services, showcases past projects, and provides information about your safety standards and certifications. Optimize your site for search engines using keywords related to demolition services, construction, and site clearance.
• Social Media Engagement: Utilize platforms like LinkedIn for B2B networking and Facebook or Instagram to showcase your projects, share insights about demolition work, and post updates about your business.

Content Marketing and Engagement

• Industry Blog: Share blog posts about the demolition industry, project case studies, advancements in demolition technology, and safety practices.
• Video Content: Create videos showcasing your team in action, the precision of your work, and the scale of projects you handle. Videos can be a powerful tool to demonstrate your capability in managing complex demolition tasks.
• Email Newsletters: Regular newsletters can keep your clients and potential customers informed about your latest projects, company news, and industry trends.

Experiential and In-Person Engagements

• Industry Events and Trade Shows: Attend construction and real estate trade shows to network with potential clients and showcase your services.
• Safety Demonstrations: Offer safety workshops or demonstrations to construction companies and contractors, positioning your business as a knowledgeable leader in demolition safety.

Collaborations and Community

• Partnerships with Construction Firms: Establish strong relationships with construction firms for regular subcontracting opportunities.
• Community Engagement: Engage in community redevelopment projects or sponsor local events to build brand recognition and demonstrate your commitment to community development.

Customer Relationship and Loyalty Programs

• Referral Programs: Implement a referral program that offers incentives to businesses or individuals who refer new clients to your demolition service.
• Repeat Business Incentives: Offer competitive pricing or value-added services for repeat clients or long-term contracts.

Promotions and Advertising

• Targeted B2B Advertising: Use platforms like LinkedIn and industry-specific publications to reach businesses and professionals that may require demolition services.
• Local Advertising: Utilize local newspapers, radio stations, and construction-focused community boards for advertising in your area.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your demolition business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your demolition business could be: 

• Down to the studs – complete interior demolition services
• Reliable and safe, full and partial demolitions
• Go green — we demolish anything and recycle everything

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a demolition business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in demolition for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in demolition. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a demolition business include:

• Heavy Machinery Operators – perform demolition services
• General Construction Laborers – assist with demolition and cleanup
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Demolition Business – Start Making Money!

Demolition is a big and growing industry, and it can be quite profitable. For some people, it can also be great fun — taking out aggressions on inanimate objects and watching buildings fall to the ground. If you’re able to invest and commit to providing great service, you could build the go-to demolition company in your area!  

You’ve got the business scoop now, so it’s time to bust out that sledgehammer and get your successful demolition business off the ground.