Do you want to start a new business?
If yes, then the HVAC industry is an amazing choice for you. Its market size value in 2022 is a whooping USD 210 billion! And it is expected to grow at a CAGR (Compound Annual Growth Rate) of 6.6% from 2022 to 2026.
With such fascinating statistics, you shouldn’t miss out on the opportunity to start your own HVAC business.
Now, your next question will be how to start an HVAC business.
To help you out, here, we have discussed some key steps to start an HVAC business.
1. Create An Effective Business Plan
Before you start investing or hiring for your HVAC business, you need to come up with a detailed business plan which will include everything from market research to staffing and financial plans. A detailed business plan is the first step toward a successful business.
It is necessary to document your business plan in a proper format. For that, google business plan templates in google, and you will find 1000 business templates to choose from.
Market research is a crucial component of your business plan. It is useful for making informed decisions and avoiding unnecessary risks. Market research should answer questions about your potential customers, their buying habits, the size of your targeted market, your competitors, and their strengths and weaknesses.
It can also help you understand emerging trends in the HVAC industry and project revenue. You can conduct market research by following these steps:
- Determine the reason for conducting market research in the starting stage, it may be for external reasons like obtaining funds but eventually, you will have to conduct market research to improve the daily functioning of your business.
- You have to research the state of the industry you have chosen, in this case, HVAC. You should map out a detailed outline of the industry using metrics like size and the scope for growth in the industry.
- Identify your targeted audience by looking at factors like who is the decision maker. For an HVAC business, the targeted audience can be homeowners or decision makers for a residential area, and for commercial buildings like corporations, theaters, banks, etc it can be CEOs or managers.
- Look at your competition and conduct a thorough SWOT analysis of each one, put yourself in the place of a customer, and note the factors that will make them choose your competitors over you. Rank your competition from most to least threatening to conduct a regular SWOT analysis of your top competitors.
Analyze the data you have gathered and divide it into sections like purpose, competition, and target market for reference.
2. All About Funds
After conducting market research, you know that there are plenty of opportunities for you in the HVAC business, but now comes the time to put your plan into action. And it starts with finance.
To plan your budget efficiently, you need to understand fixed and variable costs. And you need to know what they are for an HVAC business.
Fixed costs include one-time expenses and recurring costs for a business like rent, vehicle, and stationery. You can calculate them using straightforward calculations as they will hardly fluctuate.
However, most business owners don’t consider the variable costs while making decisions, as they vary with each project. It includes the cost of labor and the price of materials. Failing to factor in these costs can leave you finally stranded financially.
The average startup cost for an HVAC business is up to $10,000, but it can easily exceed $100,000 if you buy everything upfront. Some common HVAC startup costs include the price of tools and equipment, a vehicle for transportation and storing your equipment, marketing costs like advertising your business and the salary for the employees you will hire, and the cost of registration and insurance.
Now that you know the initial expenses for your business, it is time to find out ways to fund your HVAC business. You can use the following methods to get funds for your business:
Bootstrapping: Bootstrapping is also known as self-funding. In it, you invest in your business from your savings or borrow some capital from friends and family. It is the safest method of funding your business as there is less cost of raising, and friends and family are flexible with the interest rate.
Business Credit cards: You can use a different credit card for your business, separate from your personal credit card because there are many benefits of using a business credit card like cashback on frequently visited places and a 0 % introductory rate for a limited time. You can use credit cards without justifying your spending. But the amount of cash you can borrow will depend on your card limit, which will be lower than the loans you can get from banks.
Bank loans: Bank loans are a great way to obtain the fund required to start your business. You can take the amount you require with the intention of paying interest and principal back within a given timeframe.
However, a loan from a bank is a lengthy process as you will have to show the bank that you have a history of paying back debt and also show them your business plan. Banks will only give you a loan if they are convinced, and in some cases, you’ll need to have collateral if you are unable to repay the loan.
Business line of credit(LOC): Business LOC allows you to withdraw money from an available pool of funds where the credit limit is set by the lender. You won’t incur any interest on the loaned amount until you make a withdrawal.
The benefits of using business LOC are the flexibility of withdrawing amounts according to your needs and making payments when possible while you continue using the line of credit. Business LOC is the flexibility of withdrawing amounts according to your needs and making payments when possible while you continue using the line of credit. The interest rate is also lower than credit cards.
However, to obtain a business LOC you need to have a clean credit score and collateral for a secured business LOC
Angel Investors: These are the individuals who will invest in your business. If they like your idea, they will invest in return for an equity stake. You have to present your business plan and a road map for the future of your business.
They will scrutinize your business plan and raise many questions about it. You’ll need to have a strong case if you want them to invest in your business.
Pricing your services:
For a profitable business, it is crucial to set a price that covers your expenses while also giving profits. There are three major pricing models you can follow:
- Hourly rate pricing model: In this pricing model, you charge your client by the hours you provide the service.
- Flat rate pricing model: In the flat rate pricing model, you set a definite price before starting a project.
- Labor and material pricing model: As the name suggests, here you charge your client for the labor you provided and the cost of materials you used.
3. Pick Your Niche/Decide Services You’ll Offer
After conducting market research, you may have realized that the HVAC industry is broad. And to stand out and make a profit, you need to get specific by choosing a service within the HVAC industry. Your choices are:
- Air duct maintenance
- Air duct cleaning
- Furnace Repair
- Air conditioner repair and installation
- Heat pump installation and repair
For instance, in your research, you find the two most popular services in your area are air duct cleaning and air conditioner repair and installation. Moreover, If you have more experience working with air ducts, you can choose air duct cleaning as your primary service along with other services. This way, your job will be more fun and rewarding to you.
4. Apply For A License & Business Registration
To start an HVAC business, you must obtain an appropriate contractor license from your city, county, and state. What type of contractor license you require may vary according to your expertise in the HVAC field and location. But, some common things you’ll need to obtain are:
- Minimum experience in the HVAC field as a journeyman, foreman, or supervisor.
- Passing a trade exam
- Passing a state exam
- Having a technician certificate under your state’s environmental laws.
- Compliance with insurance requirements.
- Passing a background check
Once you obtain the license, you need to register your business, and for that, you will require the following things:
- A business structure: sole Proprietorship, Partnership, Low Liability Corporation( LLC), or corporation.
- A unique business name
- Contact information; phone number and email
- Your business address
- A federal tax number ( Employer Identification Number) to submit tax forms and other important documents to the state or federal government.
- Contractor license
- Business Insurance
The process of obtaining a license and getting your business registered may take some time. But a new business must avoid legal problems down the line.
4. Insure your Business
To successfully register your HVAC business, you will have to get it insured. HVAC is not without risks, and it is a good decision to mitigate risk while protecting your business. The type of insurance you require may vary according to the size and requirements of your company. Some common types of insurance for HVAC contractors are:
Commercial general liability
If you want to obtain an HVAC contractor license, you are required to have at least HVAC CGLI. Commercial general liability insurance generally covers the following:
- Repair costs for property damage of the customers
- Physical injuries sustained on the field
- Problems during HVAC installation
- Moisture damage due to your work
Workers’ compensation Insurance
Workers’ compensation insurance covers your employees’ medical bills and salary. In case they are injured while working for you. This insurance is necessary to protect you from lawsuits related to job-site injuries.
Commercial Auto Insurance
For an HVAC business, it is crucial to invest in commercial auto insurance. This is required when you or your employees cause a traffic accident while driving the company’s vehicle. It covers:
- Damage to another driver’s vehicle
- Any property damage as a result of the accident
- Medical bills for injuries due to third-party
- Theft of the company vehicles.
Commercial property insurance
If you have bought or leased a place for your business, a commercial property insurance policy covers the value of the premise and the equipment damaged due to a fire accident or similar disasters or if the equipment is stolen from the property.
Errors and omission insurance
An E&O insurance policy covers the cost of any repairs and repairs in case of faulty work. And it also pays the legal fees for defense against customer claims of faulty work.
While it is not a part of your insurance, surety bonds are a way to ensure the work done by your company matches the professional standards and regulations for your area.
Many states require HVAC contractors to get a surety bond for a contractor license or permit. Surety bonds are essential as they assure customers that you’ll do a good job or they will be compensated by the bonding company for incomplete or unsatisfactory work.
5. Hire Talented Technicians
As your business grows, you will need to hire more employees to fulfill the increasing demand of your business. But you need to ensure that you pick skilled employees over those who are willing to work for cheap to increase the level of customer satisfaction.
Let us elaborate while hiring technicians for your business, you should certainly look at their certificates and experiences, but more than that, you should go back to your business plan and see what kind of company you want to build and if the candidate shares the core values of your business.
If the candidate’s qualifications and values match your requirements, you should hire them.
You can find plenty of talented employees in your area through job boards and social media platforms such as LinkedIn, So don’t be hasty while hiring and do an adequate screening process, meet multiple employees and only extend your offer to those who would be a good fit in your company.
Another part of creating an effective team is training. You will have to train inexperienced candidates on the job and teach them people management skills along with technical skills. Schedule regular training sessions for the employees, to teach them the latest industry practices.
6. Market Your Business Effectively
Perhaps the most crucial step to making your business a success is an effective marketing strategy because the demand for HVAC services may be high, but so is the competition.
In this digital age, people look for services through google, and you can ensure that homeowners become your customers with the help of HVAC marketing strategies to create awareness about your business.
Here are some effective HVAC marketing strategies to boost your business
Create An Eye Catching Website
There are many reasons why a website is necessary for your business. But the truth is, it is very difficult to market a business without a strong website.
You should build an HVAC website that reflects your business and displays all your services, as it is the foundation of your marketing strategy. You can design your website such that it is easy for visitors to contact you by placing your contact next to a strong call to action.
Use Google Ads
You can use google ad services to get more traffic on your website. It is a budget-friendly way to ensure that your business is at the top when anyone searches for your service. For instance, if we search for HVAC services in your area. The businesses who have availed the google ads will be on the top.
Google ads increase the chances of your business being noticed as PPC has a great return on investment (ROI) with a minimum charge.
Improve Your SEO
But if you don’t want to pay google and want to save money, your best bet to rank at the top of google search results is search engine optimization/SEO. SEO includes
On-page SEO: optimizing your website and web pages to rank at the top.
Off-page services: optimizing the activity outside your website to improve the ranking
keyword analysis: thoroughly researching the keywords people use on search engines and using that information for SEO.
Research and competitor analysis: Research the marketing strategy of your competitors.
SEO and keywords are very crucial for organically increasing your website’s ranking.
Focus on Local SEO
You can also improve your local SEO by optimizing your google my business page, enhancing your websites, adding your business to local directories, and ensuring that your business information is consistent throughout all platforms.
Step Up Your Social Media Marketing
Finally, social media platforms have become the default way for customers to interact with businesses. By having a strong social media presence, you can gain insight into the likes and dislikes of your customers and the things they want. You can greatly enhance the visibility of your business by choosing the right social media platform.
These marketing strategies will increase the online presence of your HVAC business, generate leads, and increase your potential clientele.
7. Use Software For Smooth Functioning
If you have seen some growth in your business, it is time to use technology to reduce manual efforts. Because as your business grows you will have to juggle multiple responsibilities like sending your team to the field, managing customer relationships, and sending invoices, commercial HVAC software can help you with that by:
Making Crew & Job Management Easier
Business management software for HVAC business makes the administration job much easier, it can
- Create new HVAC jobs that your company needs to help ease the flow of operations.
- The software can help you assign jobs to multiple crews at once, it can also notify them about any changes to the schedule and dispatch crew according to the client’s requirements.
- Business management software can also assist with employee management by recording their work hours, the current location of the technician, and the distance from the client.
Helping With Invoices & Payments
Another benefit of using business management software for your HVAC business is that it can help you manage your finances and transactions by
- Converting your rough estimates after initial inspection into precise orders and invoices.
- Enables you to accept all types of payments including credit cards, debit cards, and check payments.
- Making it easy to set up service plans that are preferred by the clients.
8. Tips To Get Clients for An HVAC Business
After you have successfully started your business, the real challenge is to gain new customers and keep your current clientele satisfied. These tips may help you get new clients
Friends & Family
Enlist the help of your friends and family to market your business as word of mouth is a cost-effective way to attract customers to your business. Ensure that you provide the best service to your close ones to give them other reasons to support your business.
Referral programs are a great way to keep your existing clientele happy while making new customers. You can run referral programs on your social media by offering discounts to customers who successfully recommend your service to others.
In today’s digital age reviews can help small-scale business to grow. And you can use it to your advantage. Getting reviewed on social media platforms can help increase the visibility of your business. Try to leave a link to reviews wherever possible and make it easy for customers to review you.
Also, treat all reviews the same, positive or negative, and don’t get too upset by the latter, take them positively as opportunities to learn and never blame the customers for any bad experience.
Network with other businesses
You can network with other businesses in the HVAC industry given that they are not your direct competitors. For instance, you can partner with an HVAC parts manufacturer and use their parts for your business in return for them to get their products installed by your company.
Social media platforms like LinkedIn and Instagram are excellent for collaborations and mutually beneficial posts.
Join Business Groups On Social Media
There is no right age for learning and joining business groups on social media platforms like Facebook and LinkedIn can help you learn so much about your industry. Industry leaders often offer helpful advice and tips on these groups that you can implement in day to day operations of your business.
These tips will gradually help you make new customers when they are combined with efficient marketing and social media marketing strategies.
You have already made the excellent decision to start an HVAC business. And with the right amount of effort, you will be able to keep it thriving for a long time. Remember, the key to a successful HVAC business is trusting your skills and striving toward customer satisfaction.
But following our advice on how to start an HVAC business may just be the push you need to take a step toward your dream.