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22 Jun

How to Start an HVAC Business
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(Last Updated On: June 22, 2022)

With a background in HVAC and an aptitude for business, you can start your own HVAC services company. Begin with a serious assessment of the costs and potential earnings. Then, take care of small business basics like creating a business plan, setting up your company’s website, and defining a marketing strategy. You’ll also have some regulatory hoops to jump through to operate an HVAC company.

This article discusses all those topics to help you get started on the path to creating your own HVAC business.

How Much is the HVAC Business Industry Worth?

In 2020, the HVAC services market was valued at $57.8 billion. With a projected growth rate of 6.1% for the next four years, the industry should be worth $82.5 billion by 2026.

A significant reason for this positive outlook is an expected increase in commercial and residential buildings as the construction industry rebounds from its recent downturn. While not growing as rapidly as the HVAC industry, the residential HVAC industry is expected to sustain a 5% annual growth.

With impressive growth statistics and an ever-increasing need for HVAC services, the HVAC industry is on an upward trend, one that a new HVAC business owner could capitalize on.

How Much Revenue Does an HVAC Business Generate?

Trade organizations that track the HVAC industry estimate that typical HVAC company revenue ranges from $580K to 1.25M a year.

While generating revenue is a key part of an HVAC business’s success, after paying for labour, equipment, marketing, and other expenses, the business owner will earn only about 6% of the company’s revenue, at least in the first couple of years. That works out to a fairly meagre salary – a new HVAC business bringing in $1 million would earn an owner’s salary of just $60,000.

Even if you can maximize revenue early, a new HVAC business should not expect revenue to exceed the above estimates. So, with a firm revenue ceiling, it’s up to the HVAC business owner to turn that 6% earning rate into a 10% or 12% earning rate. Owners who save their company money by purchasing used equipment, taking advantage of low-cost marketing opportunities, and reducing overhead in every conceivable way will increase their revenue share over time.

Later in this article, we’ll get into more details about how owners can transform revenue into profit and enjoy the prosperity their well-run HVAC business brings.

Should You Start an HVAC Business?

The decision to start your own HVAC business should involve an honest assessment of your desire and aptitude. A business owner must have the entrepreneurial drive required to run a company – a do-or-die approach that will help them endure the inevitable early struggles and growing pains.

In addition to this baseline requirement, an HVAC business owner should have a background in the field. Many states require completing an HVAC certificate program that an accredited school administers. Technicians must pass certification exams for different types of HVAC work. There are separate certifications for working with high-pressure systems, air conditioning, heat pumps, gas heating, and other specialized HVAC systems.

While it’s reasonable to assume that anyone considering starting an HVAC company has to have experience as an HVAC technician, you should consider such experience an absolute requirement. Prospective HVAC business owners should assess their trade experience and be willing to update their knowledge and obtain the certifications required to perform all the HVAC work the company will handle.

If you have a solid HVAC background, a strong desire to be your boss, and are eager to build a business, your plan to start your own HVAC company is a good one.

How Much Does It Cost to Start an HVAC Business?

Trade reports and HVAC industry analysts estimate the startup cost for an HVAC business at $2,000 to $10,000. The amount of money required depends on whether you already have a truck, suitable workspace, and some required equipment. An HVAC pro starting their business from the ground up could easily spend as much as $100,000.

The equipment used in HVAC work includes a wide range of conventional power tools and hand tools, electrical testing and diagnostic gear, and specialized sheet metal tools used for duct fabrication. There will be licensing fees and safety equipment to purchase, and you’ll want your technicians to wear work shirts with your company logo.

Some of the costs you’ll encounter are regular small business expenses unrelated to the HVAC industry. You’ll have to pay for liability insurance, worker’s compensation insurance, and marketing while ensuring enough money in your startup budget to cover initial operating expenses.

It will only take a few projects before your revenue funds the business’s daily operation, but you must ensure there are sufficient startup resources to get you over that first hump.

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How Can You Start an HVAC Business?

Figuring out the services you will offer is a major first step in starting your HVAC business. Still, you’ll also need to decide on your company’s name and logo, create a business website on WordPress, and plan how you’ll attract customers. There’s a lot to do in the beginning. The sections below describe four of the most important startup steps.

Get an Eye-Catching HVAC Business Logo

Your HVAC business’s name and logo will be crucial elements of the company’s identity. They should memorably represent your HVAC expertise.

If you’re artistically inclined, you may design your logo, or you could hire a freelance graphic designer. Ensure that the logo represents HVAC work with a pleasing design. Rather than an image of HVAC-related tools or equipment, opt for an abstract representation of cold, heat, and air – a blue and red swoosh, for example.

When you decide on a logo for your HVAC business, ensure that it will look good on the banner of your website, on technicians’ hats and shirts, affixed to the side of your truck, and at the top of your invoice. Employing your logo in all those ways contributes to cohesive branding, indicates professionalism, and helps strengthen your business’s identity in customers’ minds.

Set Up Your Business Website

While an already established HVAC company may survive without a website, it’s a firm requirement for a startup HVAC business. A website will help legitimize your new business and be a vital marketing tool. Creating a website for your business is easier than you may think, and it won’t cost much either. Let’s look at what’s involved.

  • Choose a hosting provider and plan: You should look for a hosting provider that offers low-cost rates for shared hosting – that’s where one computer runs many websites. Shared hosting is the most affordable type of hosting and meets the needs of most small businesses. There’s a lot of competition among hosting companies, so expect offers that include free domain registration and a free SSL certificate. Some hosting providers add to that list of perks considerably, and the best of the best include world-class support and free training.
  • Register a domain name: Your domain name will represent your HVAC business online. There are hosting plans available that give you free the first year of domain registration, but you’ll have to pay an annual fee. Since domains are priced based on demand, you should choose the only one you want. For example, if your business name is Your Name HVAC Services, there’s a good chance you can get yournamehvac.com for a low price.
  • Design your site: Even if you have no idea how to design a website, there’s no reason to be intimidated, provided you opt for a WordPress hosting plan. WordPress is the most popular platform for creating and running a website because of its easy-to-use interface and countless professionally designed themes. There are even themes made specifically for HVAC company websites. Without learning to write code, you can add your content to a predefined layout and have a professional-looking HVAC company website with minimal effort.
  • Add content to your site: When a prospective customer visits your website, your goal is to engage them and provide details about your company. Ensure that your content clearly explains the HVAC services you provide, highlights what makes your service offering unique, and answers any questions visitors might have.

Your company’s website will serve as the hub of all your marketing activities, giving this vital component of your business the attention it requires. When you survey the hosting market, you’ll find providers offering WordPress-focused shared hosting plans at low prices, and among that group, there are some standouts. You can easily set up a professional HVAC company website if you choose a low-cost provider with great plan features, top-tier support, and free training.

Create a Detailed HVAC Business Plan

A business plan serves as proof of a business’s viability, and that’s crucial for an HVAC entrepreneur who plans to seek outside funding to help get the company off the ground. Even if you don’t need to sway investors, your business plan will be an essential blueprint for your company, outlining its mission, specifying your revenue goals and estimated profit, and documenting how it will operate.

Market research is one of the most important parts of creating a business plan. You’ll need to determine how many HVAC companies exist in your area, their services, and how much they charge. It’s also important to get data about the number of homes in your service area, impacting the number of potential customers you’ll have.

Your business plan should describe how your company will be structured and include a detailed breakdown of your target market. It should identify the service you’ll provide and outline your marketing strategy. The plan should also contain three or more years of financial analysis, addressing startup costs, operating costs, profit and loss estimates, and projected cash flow.

That’s a lot of detailed information to pull together, and creating formal documents is not how most HVAC pros want to spend their time. Remember, the details that make up your business plan are things you would have to figure out, even if you didn’t document the information. That distinction may not make creating your business plan any easier, but you can take comfort in the fact that all the work you put into it is crucial to the success of your HVAC business.

Promote Your Business

Marketing your HVAC business should be a high priority. The faster you get your first few customers, the sooner your business will have a positive cash flow. 

Your goal should be to get the word out to as many potential customers as possible. You should plan on using multiple marketing channels, potentially including print ads, online ads, radio ads, and social media. Target your outreach to customers most likely to need your services, like homeowners in older neighbourhoods.

One goal of your marketing efforts, regardless of the channels you use, is to drive people to your website, where they will be able to learn about the HVAC services your company provides. Customers may get your web address from your business card, marketing brochures, an ad, or off the side of your truck. You should also ensure that people can find your website by searching online. Your website content must contain the keywords prospective customers will use to search for HVAC companies in your area.

Part of your promotion strategy should be to create a professional image for the company. Things like using a business email account instead of your account and setting up a business phone with professional voicemail ensure customers that yours is a well-run HVAC business. Trucks and uniforms that feature your company name and logo build brand awareness.

Finally, networking is an effective promotion tactic, especially for startups. The owner of a new HVAC company may be able to rely on existing relationships to find their first few customers.

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How Much Do HVAC Business Owners Make?

Trade organizations report recent survey data indicating that the median annual income for an HVAC business owner is $76,000. Many owners are achieving the minimum expected earning rate of 6%, turning $1,266,666 in revenue into a barely adequate personal income.

To maximize their income, HVAC business owners should concentrate on increasing revenue, but they should put even more effort into increasing their earning rate. Extending the example presented above, if a business earns $1,266,666 in revenue but the owner-managed a 10% earning rate instead of 6%, their annual take-home pay would increase to $126,666.

An HVAC business owner can increase their earnings by running the business at peak efficiency. Through careful management, owners can ensure that every job is completed with the right number of workers in the shortest possible time frame. Specialized software can help owners optimize the use of materials.

By taking control of every aspect of your projects, from charging the right price to finding the shortest route to the job site, you can see your earning rate jump to double digits, and you’ll enjoy the resulting increase in income.

How Much Can You Charge for the Service?

Many factors affect how much you can charge for HVAC services, like the cost of living in your area and the requested work details.

The average labour rate for HVAC repair jobs is between $85 and $150 per hour. The cost of the parts plus the labour charge will determine the customer’s final price.

For a furnace checkup that requires only routine maintenance, you may invoice around $120. For a more involved furnace job that takes more time, like gas burner replacement, you might charge well over $500.

In many cases, heat pumps, furnaces, and air conditioners over 12 years old need to be replaced, and the price for those jobs can be quite high. When you replace a gas furnace, for example, factoring in removing the old unit, you can charge between $2000 and $5000.

HVAC service can refer to many kinds of work, from complete HVAC system installation in a commercial building to installing a new thermostat in a residential home. Many HVAC business owners make a major mistake by charging the same labour rate for all their services. You must apply different pricing schemes that maximize the profit margin for each type of work. This approach also allows you to set more competitive pricing for the kinds of jobs you want more of.

What License Do You Need to Start an HVAC Business?

Given the serious safety and environmental problems that can arise when HVAC systems fail, state and local governments impose strict requirements to ensure that HVAC technicians are qualified. The county or city may also impose local licensing requirements. It’s important to note that state and local licensing applies to the work location, not where your business is located.

Every state is different, but most break down their HVAC licenses based on the type of work involved. There are often separate licenses for working with water-based heating systems and forced-air heating and cooling units. Additionally, the class of license you apply for dictates whether you can work in any building or only in single-family homes.

Unlike other trades with licensing requirements, HVAC businesses are typically required to obtain trade-specific certifications. Accredited schools are authorized to bring technicians up to speed and award certifications covering specific types of HVAC work.

The good news is that most licensing and advanced certification requirements only apply to the business owner and team leaders. An HVAC technician working under the supervision of a certified and licensed team member is typically authorized to assist in the work.

How to Get Your Business License for the HVAC Business

The best way to learn about licensing requirements for your HVAC company is to go straight to the source – get the information from the regulatory board that sets the rules.

The internet is your best resource for finding the information you need. A simple keyword search, “your state HVAC licensing,” will return a link to your State Board of Refrigeration Contractors, your State Board of Examiners of Plumbing, Heating, and Fire Sprinkler Contractors, or whatever agency your state tasks with regulating HVAC licensing.

You must learn about and comply with all the licensing and certification requirements for your HVAC business. As the owner, you are responsible for ensuring that your technicians have the proper training and knowledge to perform HVAC work safely.

Planning Now to Start a Successful HVAC Business

Getting a new HVAC company off the ground starts with a lot of planning. You have to assess costs and potential earnings, research the local competition, and decide on the best types of services to offer in your area. You need to learn about licensing requirements, set up a website, develop a marketing plan, and more.

This article provided an overview of what’s required to start an HVAC business, hopefully encouraging you to the next step. Start planning today to get on the path to creating your own HVAC business!

Tim Mattson

Tim is a freelance writer focused on helping people achieve their business goals through digital marketing.

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