If you have any experience in the HVAC industry, then you know there’s money to be made.
In fact, the global heating, ventilation, and air conditioning (HVAC) market is projected to reach about 367.5 billion U.S. dollars by 2030.
So if you’re wanting in on a piece of the HVAC pie…
What does it actually take to get started in this industry?
I’m Ippei, and I’m a master of all things online business, passive income, and local lead generation…
And going to break down the 7 steps you need to take to start a successful HVAC business in 2021.
Plus we’re going to go over the average profit margins, potential revenue, and realistic startup costs for the heating and air business.
Let’s dive right into how to start an HVAC company.
How to Start an HVAC Business in 2021
Want to Start an HVAC Business in 2021? Here's What You Can Expect:
So you want some skin in the heating and air conditioning game? Before you can get started with your own HVAC business, you will need to write a solid business plan, obtain the required skills and certifications for this industry, and be prepared to invest in your equipment.
Start Up Costs
While this list is not a comprehensive compilation of everything you need to start an HVAC business, it provides a snapshot of what you need to add into your business plan.
Annual Revenue of Established HVAC Business
According to House Call Pro, the average annual revenue of this kind of business is: $580,000-$1,250,000
Profit Margins of Established HVAC Business
According to 3C Connect , the average Profit margin of this kind of business is: 2.5-3.5%
7 Step Quick Start Checklist:
1. Write Business Plan
Starting your own HVAC company is no small undertaking.
Even if you plan to start out with a home based HVAC company that you run out of your current work vehicle, without bringing on a crew yet…
Don’t underestimate the amount of work that lies ahead.
If you want to start a successful and profitable HVAC company, you need to be prepared to put in the work.
This starts with creating a strategic business plan that will help you map out your goals, plan for the future, and set realistic expectations for your business operations.
While writing out a detailed business plan may not be the most glamorous aspect of your new position as the CEO of a small business…
It will be one of the most crucial steps that you can take initially.
Here is a basic outline that will help you started when mapping out and drafting your first business plan:
Basic Things to Include in a Business Plan:
If you are hoping to apply for extensive small business loans, or seek the financial support of potential investors…
Then you should be prepared to create a lengthy business plan that is both detailed and formal.
However, if you are going to provide your startup capital yourself, then focus on creating a business plan that will serve your own practical needs as the business owner.
There is no way to fully predict the storms that your business will have to weather throughout the years, let alone even the first year!
But having a business plan in place can help you spot potential roadblocks before you hit them…
As well as set systems in place for when unexpected events do come.
2. Get Everything Nice and Legal
Many new business owners launch their businesses with the intentions of looping back around to the legalities portion of everything…
I highly recommend against this.
Not only can it create problems from a legal and tax standpoint…
But it also becomes increasingly more complex to backtrack for these important steps the further you go along in your business.
Plus, once you are busy with work…
The tedious task of registering your business and applying for a tax ID number is going to slip further and further down on your to-do list of business priorities!
Trust me.
Business entity structures don’t seem quite as demanding of your attention…
When you’ve got clients to worry about, equipment to maintain, and marketing campaigns dancing through your head.
Before you make a single sale…
You need to tackle this simple checklist to get your business legally ready to operate, before it’s forgotten about:
Establishing an LLC for your HVAC business will be important, because until you do so…
Your business will be automatically classified as a Sole Proprietorship.
The structure of a Sole Proprietorship doesn’t offer any legal protections for you as the business owner.
Whereas a Limited Liability Corporation minimizes the risk of personal liability…
By protecting you and your personal assets outside of the business itself in the unfortunate event of legal action being taken against your business.
Your EIN number serves as your business’s own personal social security number of sorts.
It will enable you to do everything from filing your business taxes to opening a business bank account and hiring employees.
While it might not seem like a big deal to run your business out of a personal bank account in the beginning…
This system gets messy quickly.
Start your HVAC company off on the right track by opening a separate business bank account before you deposit a single check or purchase a single piece of equipment.
You and your end of year tax accountant will be forever grateful.
When you are dealing with people’s homes, and a crew of employees…
Not having commercial business insurance isn’t an option.
Start with a solid, full-coverage general liability insurance policy, and go from there.
3. Required Skills and Certifications
While many blue collar businesses can be started without licensing or official certifications…
Starting an HVAC company isn’t one of them.
If you are planning to be an HVAC contractor and run your own business…
You will be required to hold an HVAC license.
When working as a technician for another company, you would typically need an HVAC tech license.
(Which is something that you should look for when hiring new employees in the future… but more on that later!)
However, as the owner of your own heating and air company, you will need to take things a step further and obtain a master’s license in HVAC.
Every state has a different set of licensing and certification requirements for the HVAC industry…
So you will need to go straight to source and contact your local industry authorities to learn the specifics of what is expected of you before launching your business.
Sometimes, getting in contact with the right person can be frustrating…
Since the laws and lines of communication aren’t always as clear as they should be.
This is a helpful article that goes over the different requirements for the HVAC industry state by state:
https://www.nextinsurance.com/blog/hvac-license-requirements/
Keep in mind that obtaining a license in HVAC isn’t a short process.
It requires multiple years of experience in the field.
So if you’re just looking for a lucrative business opportunity, and you have no prior training or work experience related to the HVAC industry…
This probably isn’t the way to go for you.
But the good news for you is that there are so many other business models out there that can be just as financially lucrative (or even more so) than running an HVAC company!
I personally make over 50K per month from online lead generation, and it’s the business model that I absolutely swear by.
Plus, anyone can learn this skill!
If you’re interested in learning more about how you can get started with local lead generation and passive income, click her for more information: https://ippei.com/best
4. Invest in Equipment and Software
I’m going to go out on a limb here and assume that I probably already know exactly what HVAC stands for…
But just in case you are somehow still in the dark and are completely new to the industry, I’ll explain.
HVAC stands for: Heating, Ventilation, and Air Conditioning.
Why am I clarifying this?
Because before you can take steps to invest in equipment, you will need to make some decisions based around which areas you would like your business to specialize in.
That’s right, just because you run an HVAC company doesn’t mean you have to do it all!
In fact, specializing and niching your business down to one or two of these three categories that are contained with HVAC as a whole can be a great way to increase profits and generate more business.
And it will have an impact on the supplies and equipment that are necessary for you when first starting out.
So do your digging, and only invest in what you absolutely have to have to get the job done when you are first beginning.
Running a lean business operation, and minimizing startup costs will go a long way to producing a return on your investment sooner rather than later.
Here is a basic list that will help you get a feel for what you might need before you can start servicing clients as an HVAC business.
Basic Equipment and Tool List:
As your business continues to grow, you can consider adding more specialized equipment.
This will be especially true if you are looking to get into commercial HVAC work versus residential HVAC work.
If this is the case, you should consider saving up for things like:
In the beginning, you can get by with renting equipment like this, but once your business is thriving…
It might be worth it in the long run to invest in purchasing larger pieces of equipment like these.
Another thing that you can look into for your business that doesn’t technically qualify as “equipment” is HVAC software.
Yes, there is actually a wide variety of software programs that have been created that can help you run your HVAC business more efficiently.
These softwares are designed to assist you with everything from automating service agreements and managing marketing campaigns, to increasing sales and scheduling jobs.
This article offers a fantastic breakdown of some of the highest rated HVAC programs available on the market right now: https://www.capterra.com/hvac-software/
5. Sales and Marketing
First of all, if you can afford to hire a skilled sales person from day one…
Do it.
You aren’t going to get far in the HVAC industry without someone who is willing to get out there and hustle for some sales.
But hiring a salesperson is a horrible place to stop when it comes to a successful sales and marketing business strategy.
Especially if you don’t have a lead generation game plan in place to support your sales.
Fortunately, you’re in the right place.
I happen to specialize in local lead generation and creating a steady stream of new leads for small businesses.
If you want learn more about how we can help generate leads for your HVAC company, click her to learn more.
However, there are other important steps to take in addition to lead generation and sales when marketing for your new HVAC company.
The best place to start is to build a website.
This might seem like an obvious step…
But there are many businesses (especially in blue collar industries), that either fail to build a website at all, or their website is unprofessional and far from user friendly.
Having a well built, functional, and professional website will go a long way in establishing your business’s reputation and setting it apart from the competition.
Some of my favorite user friendly template-based website builders are:
From there you can work on setting up a Google My Business Page.
Not only will a GMB page help potential customers to find your business more quickly and easily within Google maps and localized Google search results…
But it will also help your website to rank higher within Google as well.
All of this further boosts your visibility online to potential customers!
Setting up a GMB page is relatively simple:
The hardest part is waiting for your passcode postcard to arrive in the mail to confirm your business’s location and finish the setup of your GMB page.
Once you’ve gotten those key steps taken care of, move on to setting up business social media accounts if you haven’t done so already.
Social media has a greater impact that ever before on commerce and business success…
But that doesn’t mean you need an account on every platform out there!
Focus on 2-3 social media platforms that your target market is using regularly, and pour your energy into posting consistently on those accounts.
Lastly, don’t underestimate the networking power of joining your local chamber of commerce.
Being a part of a local chamber will help to legitimize your business and establish trust within the community.
Plus, there’s nothing like having the support and experience of other small business owners in your area as you navigate running your own company!
6. Hiring Employees
It’s easy to get excited during a busy season, and hire a group of employees in preparation for your business to explode…
But the risk of hiring before you’ve spent at least a year in business on your own, is that you haven’t seen what sales and work will look like throughout all four seasons.
HVAC work is extremely dependent on sales.
When temperatures are mild… sales will naturally go down.
People are prone to make large purchases when the pressure is on.
So when the heat of the summer is hitting hard, and their current AC unit is working overtime with little success…
Closing a sale will be easy.
But during the milder months of the year, things will start to slow down.
The last thing you want is to hire 5 guys only to get hit with a dry spell a month later.
If at all possible, try to get through the first year on your own, or potentially with one other business partner/employee.
Then, once you’ve had time to evaluate your business’s growth over that year, as well as the busy and dry seasons of work…
You can make plans to hire on additional help as needed.
Remember that when you are hiring employees…
You are responsible for taking care of those people, even if work dries up.
Unless you want a bad reputation as an employer and a high employee turnover rate…
You will need to be prepared to either keep your people busy with work throughout the year, or be willing to continue paying them even when things slow down.
Leaving them high and dry isn’t an option.
This is why it is so important to set aside a portion of your profits every year as a safeguard and emergency reserves.
While this might not be realistic in year one, as your HVAC business continues to grow…
Putting aside cash for slow seasons will ensure that both you and your employees are protected if and when hard times hit.
7. Customer Service, Referrals, and Reviews
I’m going to let you in on a little secret.
The number one secret to running a successful business, actually...
Happy clients = a thriving business.
Is running a business more complex than this sometimes?
Absolutely.
But I can 100% promise you this…
If you don’t have happy clients, then you cannot have a thriving business.
Which is why the emphasis that you place on customer service will make or break your business.
Especially in an industry like HVAC that does rely heavily on word of mouth referrals and a great community reputation!
So on top of creating a seamless customer experience and coaching your crews on how to consistently serve your customers with top notch service…
Take time to develop a referral program that encourages your satisfied customers (which should be all of them!) to recommend you to their friends and family.
This can take the form of many different things, but most referral programs rely on incentives.
For Example:
An incentivized referral program can be as simple as offering a past client a gift card when they write a positive review online for your business.
Another way to go about incentivizing referrals is to offer a small percentage of your profit to any past clients who refer someone to your business who books your services!
Whatever you decide to do, remember that your past clients play just as important a role in the success of your business as your future clients.
Send them thank you cards at the end of a job, and follow up with them to ensure their overall satisfaction.
When you take care of all your customers, past, present, and future…
You will reap what you sow.
Pros and Cons
of starting an HVAC company
Pros
People tend to be pretty attached to their Air Conditioning, and this will definitely be working in your favor. The HVAC industry is thriving, and there is plenty of room for another company. Especially if you are willing to set yourself apart from the competition by excelling at your customer experience.
Another perk of excelling in the customer service department of your business is that you will more easily gain referrals. And the HVAC industry thrives off of referrals! Think about it, when you need someone to service your home, you ask someone you know who they’d recommend. This is exactly how much of your business as an HVAC company will originate from.
When you get further into the HVAC business, you will realize what a wide world it is! There is so much opportunity to specialize and niche down. The more you niche down, the easier it will be to market your services to a specific group of customers.
As you grow in knowledge and experience, you will be able to scale your HVAC company however large you want it! Just because you started out as a one or two man operation in your truck, doesn’t mean you have to stay there. Whether you want a whole fleet with several crews, or multi-state franchise… The sky’s the limit.
Cons
All the pros to this business model probably have you wondering why everyone isn’t starting an HVAC company. But the major barrier to entry for this business model are the certification requirements. You can’t wake up tomorrow and start an HVAC business! You need years of training and the appropriate certificates.
In addition to the educational requirements, the startup costs are nothing to sneeze at either. The equipment costs and the vehicle alone will be a large determining factor in whether or not this is a business model you feel equipped to start. It’s a significant initial investment.
Nonetheless, the HVAC business is a booming one, and if you want to be a player in this game… You will need to hustle to keep up with your competition.
Starting an HVAC Company Can Work, If You Know This First:
The HVAC industry is booming, and if you’ve ever wanted to start your own HVAC business…
Then 2021 is your time to shine, baby.
But here’s the thing…
Just because you are hoping to start a business in a thriving market, doesn’t mean you will be guaranteed success!
The competition will be steep, and you will face the same struggle as every other business that has gone before you down the entrepreneurship path:
The struggle to generate new leads.
So if you want to be successful with your HVAC business, then you are going to need a sustainable way to bring in new business leads.
Fortunately, I happen to specialize in local lead generation for small businesses.
In fact, when I left my 9-5 job over six years ago, I tried everything from affiliate marketing to drop shipping…
But local lead generation is what changed everything for me.
It took me from barely making 2K per month to making well over 50K per month thanks to online lead generation.
All while helping small business grow and thrive by creating a steady stream of new leads for them.
So if you’re curious to see how local lead generation strategies can change everything for your HVAC business…
Click here to learn more about how we can help you get started with online lead gen.