How To Start an HVAC Business in 2022 [Steps + Tips]

According to Intercoast, the HVAC business has had significant growth of 13 percent in recent years, and the year ahead appears to be promising as well. In other words, if you are considering starting an HVAC business, now is the moment to get started.

However, when it comes to establishing a successful business, you’ll need a failsafe plan to ensure your success.

This complete guide on how to start an HVAC business is intended for people who are considering starting an HVAC business or who wish to work as a full-time HVAC contractor in the HVAC industry. So, let’s move ahead.

What is HVAC Business?

HVAC is an abbreviation for Heating, Ventilation, and Air Conditioning. The HVAC business is a type of business that offers specialized services for heating and cooling equipment installation, such as central air conditioning units, furnaces, and water heaters.

Some of the services that HVAC businesses provide are

  • Gas/oil heating
  • Emergency
  • Air conditioning
  • Commercial
  • Air ventilation
  • Air distribution
  • Light commercial refrigeration

The HVAC business typically handles the climate control systems that are installed in our homes or office buildings. HVAC businesses quickly adopt the new innovative techs to enhance the performance of both HVAC firms and technicians.

How to Start an HVAC Business – Key Steps

After having a look at the basics of the HVAC business, it’s time to focus on the key steps to starting new HVAC businesses.

Step 1: Research and Estimate a Start-Up Cost

Research and estimate startup cost

The first & foremost thing to do before starting an HVAC business is to research and estimate a start-up cost. HVAC is one such business that is not cheap and has a higher average cost, spending ranges from $3,000 to $12,000. So, it’s essential for you to understand how to start a small HVAC business first.

However, if you are trying to purchase everything up front, it will cost you around $100,000. So, what you require and pay for the HVAC Business? Well, you will need: 

  • HVAC tools and equipment 
  • Company’s vehicle
  • Other essential suppliers
  • T-shirts with the company logo on it
  • Marketing strategies 
  • Worker’s salary

Also, as start-up cost is very crucial for an HVAC business, you can borrow money or get fund for your business venture. There are multiple methods like a bank loan, co-partner, private investor, government loan scheme, and contract with the franchise.

Step 2: Decide Which HVAC Service You Will Offer

A clear understanding of what service you are providing is essential for any business to be successful. There are several services that come under HVAC, including installation, maintenance, and repair of heating, air-conditioning, and refrigeration systems. 

So, before starting your HVAC business, do market research on different types of HVAC services. Also, do a survey about the other HVAC companies in your service area, what services they offer, and the number of houses where you are planning to start your HVAC business.

After this research, you will be able to decide on which HVAC service you want to offer to your customer. Hence, you will help your business stand out and make your venture successful.

Step 3: Write HVAC Business Plan

For starting a successful HVAC business, you must write an effective business plan. A business plan defines the complete roadmap of your running business.

If you plan to take funds from banks or investors, you need to create a solid HVAC business plan mentioning the complete and appropriate details about the working operation. It will help them know about your business goals, financial obligations, and also your own company.

You need to consider the following metrics in your business plan:

  • Cover page: It should contain your attractive logo, company name, roles & responsibilities, mission, vision, address, and contact details.
  • Executive summary: Here, you need to summarize your company information like income and expense forecast, required funding details, and what makes you different from other competitors.
  • Business overview: You can describe the details of your company like business type, trading name, and most importantly, the business structure.
  • Business description: As the business owner, you can mention your company information like goals (short-term or long-term), location, and services like furnace repair, air conditioning installation, and tankless water heater installation.
  • Market analysis: Make proper market analysis research on the running market and competitors to identify the target market’s age and income and their relationship to managing the HVAC services.

However, various business plan templates are available in the market, making your work easy to create proper planning.

Step 4: Apply for HVAC License and Business Registration

Apply for business registration

To get profitable success for your HVAC business, you need to make sure that you have applied the legal laws to operate your business.

A license is mandatory as it is related to regulating trades daily in the United States of America. Usually, there exist different types of licenses you can opt for based on your business location and expertise in HVAC.

Once you obtain a license from your state or government authority, you need to register your business. For registration, you need to make sure that the following items are available to you:

  • Your business name: The small business owners must select a name that sounds unique, and professional and describes the services you offer.
  • Contact information: You need to provide an appropriate business phone number and email.
  • Business address: You have to include your office’s address, whether owned by you or a rental property.
  • Business license and registration: Just provide the license number, tax number, separate bank account, and registration number to prove that you are doing legal operations.
  • Trade License: Many states need a trade license from a government authority to start a new HVAC business.
  • Business insurance and bonds (LLC): Having protection and separating personal assets is essential. Liability insurance and bonds do the same for you.

You need to perform each of the metrics mentioned above to start an HVAC business for the first time. No doubt, it’s going to cost you more during the starting stage but it is required.

Additionally, you can also contact an expert consultant or business advisor if you are stuck somewhere which helps you to understand the profit margins.

Once you have drafted your business plan, it is time to choose a distinctive name for your company that reflects your beliefs and registers your company name with the appropriate state authorities. If you have a limited liability company, a corporation, or a limited partnership in the U.S, you’ll need to register the business itself, which will also register your business name.

Step 5: Setup Accounting and Bookkeeping

Now, let’s come to the financial part of your HVAC service. For a better financial process in the HVAC business, it is a good plan to set up and keep accounting and bookkeeping organized. You can hire a professional or an accountant expert who can manage your accounting and financial records seamlessly.

Nevertheless, you can use cloud-based software that will help your HVAC business to handle accounting and bookkeeping tasks like expense tracking, invoicing, and payroll process.

Step 6: Create a Business Bank Account and Get Insurance

When you’re ready to start taking or spending money for your business, you should open a business bank account. 

A business bank account helps you stay legal and safe, and helps your customer’s and employees’ personal information secure.

Moreover, business insurance protects your business from the unexpected cost of running a business. Accidents, natural disasters, and lawsuits could run you out of business if you’re not covered with the right insurance.

Step 7: Market Your HVAC business

Marketing is an essential metric that helps your business to get more and more customers regularly. The HVAC business is not an exception.

There are different marketing methods that you can include in your business to enhance productivity and HVAC customer service to a great extent.

  • Building a robust website mentioning everything related to your services
  • Applying SEO establishes strategies for enhancing the target market
  • Creating a useful Facebook business page
  • Working with social media ads as a digital marketing strategy
  • Using email marketing for reaching more customers
  • Making use of word of mouth to connect with potential customers
  • Invest in flyers and business cards
  • Collect online customer reviews
  • Brand your vehicles using stickers
  • Upsell your HVAC services by marketing materials to clients onsite

Step 8: Hire HVAC Technicians

Hire HVAC technicians

Start hiring the best HVAC technicians for a profitable HVAC business. However, before hiring you need to keep in mind some key things:-

Here are the things that you have to ask before recruiting an HVAC technician

  • What are your training and experience?
  • What are your HVAC certifications?
  • If you manage a team, what standards are the HVAC technicians held to?
  • How do you determine and charge rates—fixed or hourly?
  • Could you provide references?
  • Are you experienced with this type of HVAC system?
  • What are your payment terms?
  • How do you determine a project estimate?
  • How are changes to the estimate handled?

Step 9: Use HVAC Business Software

The adoption of the best HVAC company software is crucial to keep the firm functioning effectively. It is possible for heating, ventilation, and air-conditioning (HVAC) companies to better serve their customers and enhance their overall experience and satisfaction by utilizing HVAC software.

FieldCamp is premier field service scheduling software for service businesses to automate operations, boost productivity, and increase profit!

  • Automate 90% of your daily operations
  • Save up to 95% of the time you spent on scheduling & reports
  • Keep track of technicians and crews with just a few clicks
  • Track and create reports in real-time
  • Gain complete business mastery with field service automation

Now that you’ve learned how to establish an HVAC business, it’s time to learn the Dos and Don’ts of starting a business.

Do And Don’t for Starting an HVAC Business

If you have begun or want to begin your own business, these highlighted dos and don’ts points will ensure your firm doesn’t fall into the status of a failing business.

DO’s

  • Having a solid business plan is breaking or making points into your business, so prepare your business plan smartly and make your goal realistic and achievable.
  • Send professional invoice that is efficient and accurate because they are a big part of field service management.
  • Seek professional help like a mentor, business consultant, or financial advisor that holds the knowledge of your business.

Don’ts

  • Avoid operating instinctively as you need to be prepared for circumstances. The technique will only lead you to insolvency and low profitability in the long run. 
  • Do not lower your service price just to match with your competitor. It will affect your business and eventually result in a poor client experience.
  • Never underestimate a good customer review because the customer still believes on word of mouth recommendation.

Now you know the dos and don’ts of starting an HVAC business, let’s see six important things to conder before starting an HVAC business. 

6 Important Things to Consider Before Starting an HVAC Business

There are some of the essential tips that you need to consider before you start your HVAC  business. Let’s discuss them in detail.

1. Choose a Specialization

Choose a specialization

First, you need to analyze the marketing scenario of your competitors and identify the services that they are lacking. It will give you a chance to concentrate on specific services and there exist more chances of getting customers in your business.

In addition, there are some standard services that you can include in your business, like troubleshooting:

  • Heat pumps
  • Gas furnaces, or gas heating
  • Air conditioning units

You can also consult on ENERGY STAR appliances for homes or commercial buildings or specialization in other areas of expertise.

2. Create a Growth-Oriented Future Plan

The next thing you need to consider is how to expand your client base in the coming years. So, you can include the core services at a lower price or at a discounted price to attract lifelong customers.

Likewise, making a list of clients that can be quickly served, so it will increase the chance to reach your financial goals.  Also,  physical labor is included, you need to make sure that it does not overbook and provides high-quality services to its leading customers.

3. Pricing

One of the biggest and most complex considerations to keep in mind is to fix HVAC startup costs for starting a new HVAC business. You need to make a list of mandatory items like labor, essential consumables, and, most notably, taxes.

Consider the hidden costs or money upfront as it plays a vital role for the sales team to enhance your business productivity. Research, compare it with other competitors, and determine the price. However, ensure that it is not too high or low to affect your business.

4. Partner With Construction Firms

You need to be in contact with many construction small businesses as there are more chances of getting a customer base. So, you need to make them ready to become a partner with you by proving to them you are a dependable HVAC resource.

The biggest and best long-term leads that HVAC business owners can opt for are the commercial and residential building contractors. Also, the project managers involved in renovation purposes may require HVAC industry experts to determine if a heating or air conditioner unit should be repaired or replaced.

5. Tools and Equipment

Now, you need to get all the essential equipment that helps the workers to work on the job sites. You need to get started by making a list of all the essential HVAC tools that make HVAC work easier. They play an indispensable role in installing, repairing, and even replacing the systems. 

In addition to it, you can also include advanced equipment with the latest technology. However, some essential devices like drill machines, pipe wrenches, tape measures, staple guns, and more that you can include in your business.

6. Field Management Suite

Finally, you can include field service management (FSM) software in your HVAC companies. FSM software smoothly manages your daily business processes.

With its impressive feature to streamline field-based operations, you can easily make your hard work more comfortable managing and efficiently dealing with your business tasks.

FSM software is a boon for many home service businesses as it provides essential features like

  • Job schedule and dispatch
  • Work order management
  • Mobile access
  • Parts inventory management
  • Case, contact, and order management
  • Auto-invoice generation capabilities to prompt revenue generation
  • Automated customized reports
  • Push notifications
  • Seamless integration with the inventory control system

So, these were the essential tips that help HVAC companies generate more revenue and improve business productivity. After looking at the steps and tips, if you still have any questions related to the HVAC business or HVAC contractors, we have come up with a FAQ in the next section.

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FAQs

The HVAC industry includes average startup costs a bit higher as you need to purchase a used vehicle and work to keep your equipment costs low. On average, the price could easily reach $100,000 if you are buying everything.
For generating revenue, you need to be perfect in financial planning your business. Some of the best recommendations that you can do are:
  • Writing an effective plan
  • Add upselling into your marketing plan
  • Focus on customer service
  • Improve your scheduling and efficiency
  • Collect deposits
  • Improve your invoicing strategy
To find an HVAC technician, you can start by asking local contractors, suppliers, and other trade professionals that you work with. If you’re a member of the local union, contact them, as well hired technicians based on employee referrals.
Yes, the HVAC business is profitable as the HVAC owners earn at least $35,000 to $75,000.
The average and good profit margin for an HVAC company is around 2.5% to 3.5%. The margin can get to 10% or higher if you calculate the overhead expense, and labor cost and track job cost efficiently.
Use marketing strategies like approaching and attracting HVAC customers through social media platforms, search engines, flyers, and CTA.

Ready To Start Your Own HVAC Business

If you are ready to start your own HVAC business, apply the steps mentioned in this article, then you can easily start your own HVAC company with enhanced business growth. 

However, you need to be careful when creating your business plan, licenses, and other essential HVAC tools.

To automate and streamline your HVAC business operations, we recommend you adopt FieldCamp in your business. FieldCamp is software for scheduling and dispatching jobs that makes it easy for you to manage your HVAC technicians and improve your business productivity.

Author Bio
author

Gaurang Bhatt

Gaurang Bhatt is a techie in himself with an ability to solve problems technically and present solutions in the form of a product. He is one of the pioneers to curate FieldCamp with his 15+ years of knowledge and expertise in providing solutions to home service industries. Gaurang aims to overcome challenges faced by service business owners through software solutions and blogs.

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