Do You
Need to Be Licensed and Insured to Start a Foreclosure Cleanup Business?
By Cassandra
Black
I get this question a lot as the owner of a foreclosure
cleanup company. New business owners are pumped with energy and excitement
about getting into the hot new industry of foreclosure cleanup. The more
formalized property preservation label for large contractors that in the
past have primarily handled this type of work has been casualized
to the foreclosure cleanup phrase. This new crop of business owners has
become the right arm to larger HUD M&M (management and marketing)
contractors.
The reality is often new foreclosure cleanup entrepreneurs are short on
cash and look for ways to lessen the initial dollar outlay in an effort to
just get the doors of their new business open. Many of the new foreclosure
cleanup entrepreneurs have been in similar businesses for years on a
grassroots level (lawn care, painting, debris removal, etc.), but the
overwhelming demand for foreclosure cleanup services via larger
contractors has demanded they formalize their credentials to get work on a
subcontracting level.
There are many areas in which new entrepreneurs can reign themselves in
on spending when opening a new business, but licensing and insurance ain't
one of 'em.
Do you need to be licensed and insured to start a foreclosure cleanup
business? The answer is a resounding yes, yes, yes. Absolutely! You need
licensing and insurance to be taken seriously in the foreclosure cleanup
industry. Competition is growing each day by leaps and bounds. Getting
your ducks in a row credentials-wise will set you apart immediately from
the competition.
Why do you need the license and insurance when you can just start? New
foreclosure cleaning business owners should realize they will be pitching
professionals (realtors, brokers, lenders, larger contractors) with their
foreclosure cleanup services. These professionals, especially realtors,
have taken the time to get licensed and insured and will have little
patience with business owners who are not.
When a realtor or broker asks a business owner to provide proof of
their license and insurance so they can consider their bid on a job, they
are submitting that paperwork on to the bank. In almost all scenarios, the
powers that be at the bank are looking at not just the one
estimate, but often several estimates. As a new foreclosure cleanup
business owner, you won't even be in the drawing if you don't have the
proper credentials. Not having the proper license and insurance in this
industry can cripple a new business before they even get started. When
they ask for it, have it, simple. If you want to set yourself apart from
the masses and be looked upon as a professional, viable business, you
simply cannot bypass this step. What type of license? The type of business
license you get will really depend on the type of services you choose to
offer in your foreclosure cleanup business. Services can run the gamut,
from basic cleaning, to painting, repairs, trashouts and more. If you are
offering extensive repairs (i.e., electrical work and the like), you will
need the proper certifications and licensing. If you are offering just
janitorial-type services, an occupational business license may do,
depending on your county.
What type of insurance, how much coverage? At minimum, you will need
liability insurance coverage for your business and you will need coverage
for your automobile(s). If you have employees, you will need to carry
workmen's compensation. But each area of the country is different, each
county has its own policies and procedures, so make some calls to your
county clerk's office, your local Small Business Administration ("SBA")
and insurance agencies that service your area to make ensure you are amply
covered with insurance and properly licensed. When starting your
foreclosure cleaning business, you DON'T have to run out and buy a big
shiny truck for hauling; you DON'T have to buy a 16K dumpster for your
backyard; you DON'T have to purchase a bush hog for clearing properties;
but you DO need be properly licensed and insured to be taken seriously,
and to protect you, your workers, your property, and to grow your
business.
Go to the Small Business Administration's (http://www.SBA.gov)
website to get more information on business licensing. Visit websites like
the Insurance Information Institute (http://www.iii.org)
to get answers to basic business insurance questions. Good luck!
Cassandra Black is the author of How To Start a
Foreclosure Cleanup Business, "How to Market Your Foreclosure Cleanup
Business: A Step-by-Step, Shoestring Marketing Guide for Foreclosure
Cleaning Business Owners," and the Owner of
Foreclosure
Cleanup LLC, Atlanta, GA.
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