How to start an HVAC business in 10 steps
Thinking about starting your own HVAC business? Now could be a great time to start your own business if you’re a licensed HVAC technician. Due to the pandemic and increased environmental concerns, people value air quality and proper ventilation more than ever. And not only that, but well-working HVAC just makes everyone happier.
But even if there’s an increased need for HVAC services in your area, did you know that 50% of small businesses fail in the first 5 years? In this guide, you’ll discover step-by-step help to get your HVAC business started off right.
1) Choose the type of HVAC services you’ll provide
The first step to starting an HVAC business is to decide what sort of HVAC services you’ll offer.
If you’re currently working as an HVAC technician, you may already know the kind of services you’d like to provide. (If so, feel free to skip to the section on creating an HVAC business plan.)
But if you’re wondering how to become an HVAC tech or what kind of heating and air conditioning services to offer, take a look below.
Depending on your location, training, and licensure, your business’s services could include:
- Air conditioning (AC) maintenance and installation
- Heating system maintenance and installation
- Air-source or geothermal heat pump maintenance and installation
- Air quality services, such as allergen reduction or air purification
- Ductwork maintenance and installation
- Refrigeration repair and maintenance
- Generator repair and maintenance
Before we jump into creating a business plan, let’s cover some common questions.
Is becoming an HVAC tech worth it?
Yes! HVAC industry jobs are increasing at 4% per year, right on track with other jobs in the economy, according to the U.S. Bureau of Labor Statistics (BLS). The median yearly salary for HVAC professionals is $50,590—about half of HVAC techs earn less, and half earn more.
But those numbers don’t include the profits of owning an HVAC business, where you can increase your earnings through business growth.
Is becoming an HVAC technician worth the time and money?
Becoming an HVAC contractor doesn’t require a college degree (this can save you both time and money), but you do need HVAC certifications, including training and licensure.
However, you can earn a good living in the HVAC industry—even after the cost of training and licensure. This means it can be a great investment of your money and time. Working in HVAC is an essential skilled trade that helps people (and their homes!) stay healthy and comfortable.
Ready for the next step? It’s time to start putting your goals to paper.
2) Create your HVAC business plan
Planning can save you time, money, and frustration. (Just ask that frustrated homeowner who skipped the HVAC tune-up before the summer heat!)
Planning can also lead to long-term success—having an HVAC business plan is important, and writing a business plan is simpler than you might think.
Here are key sections to tackle when creating your business plan:
- Executive Summary: Describe your HVAC business. How will you measure its success?
- Overview: What's the background and legal structure of your business? What are the key things people should know about it?
- Industry Analysis: What does your research show about the competing services and opportunities in your area?
- Competitive Analysis: Who are you directly competing with for HVAC clients? What are the strengths and weaknesses of your competition?
- Marketing Plan: How will you reach new clients? Briefly outline your marketing strategy.
- Management: What unique licensure, skills, or years of experience do you bring to the HVAC business?
- Operations Plan: How will you manage the daily tasks of your HVAC business, such as making appointments for repairs, handling estimates, and more?
- Financials: What do you expect your HVAC company to earn? What will your expenses be? What HVAC business insurance do you need?
As you’re writing your business plan, you might have some questions about starting an HVAC business. We’ll address a few common ones below.
Is HVAC a good business to start?
Yes, it can be. Starting your own HVAC service means you’ll be providing an essential service to your community. Homeowners, commercial property owners, and property managers will always need licensed, expert HVAC professionals to help solve HVAC issues.
What are the benefits of starting an HVAC business?
The benefits to starting an HVAC business can include:
- Working for yourself on your own schedule as a licensed HVAC technician
- Creating jobs in your community
- Running a business that provides an essential service
- Ability to earn more than if you worked as an employee
- Growing your small business at your speed
- Specializing in your area of interest
- Building a business affordably and with a low initial investment
Read 5 Questions to Ask Yourself Before You Start a Business to know if building a business from scratch is right for you.
3) Identify the niche for your HVAC business
Everyone has their specialty—including you. You’ll need to pinpoint your niche, which is ultimately the area in which your HVAC business will specialize.
Maybe you prefer to work on a certain brand of HVAC equipment. Or perhaps you’re a night owl and use that as a competitive edge, providing emergency after-hours heating and air conditioning services. These are the factors that can define your business’s niche.
Next, research the local HVAC competition. This can help you decide what your niche is, based on how your training, strengths, and preferences can meet the HVAC needs of your community. Things to consider when deciding on your niche include:
- Equipment: What sort of HVAC equipment or brands do you prefer to work with? Will you specialize in oil, gas, or electric heating?
- Service area: What regions do you serve? Choose how much time you’re willing to travel.
- Languages: Are you bilingual? This can be a competitive advantage for your business.
- Residential or commercial services: Do you service home or commercial equipment? Are you able to service apartment communities?
- Environmental concerns: Are you passionate about physical or environmental health? Use those interests to the advantage of your business!
4) Uncover the Unique Selling Proposition (USP) for your small business
Next up: Think through your unique selling proposition (USP). This is what sets your HVAC business apart from competing businesses.
The clients you want to attract have many choices, so your business should focus on what it can offer that is unique to your service area.
For example, instead of advertising that you offer residential services for electric air conditioning and heating appliances, your business might have the USP of “environmentally conscious residential HVAC services, specializing in clean energy use and heat pump installation.”
Your USP targets your ideal customer directly. At any point, you can broaden or narrow your USP to better serve the needs of your local community.
5) Pick your HVAC business name
Now that you’ve pinpointed your USP, it’s time to come up with HVAC business names. (This is the fun part!) Choose something that represents your USP and niche, making them clear to customers.
For the USP example above, a name like “Clean Energy HVAC” or “Alex’s Green HVAC Experts” might hit the mark. Get out a pen and paper, brainstorm freely, and see what you come up with.
Once you’ve decided on a few favorites, do a quick check with the Secretary of State to make sure your chosen business name isn’t being used in your area. You can also ask for input from family and friends to make sure it represents your business well. Remember, your business name will be on everything from uniforms to social media marketing.
Ultimately, pick a name that you’re happy with and reflects your HVAC business. This name is what you’ll build your future HVAC empire on!
6) Choose the location and equipment for your HVAC business
When starting an HVAC business, you’ll need to invest in some initial equipment and decide where your office will be located.
Renting retail and office space can be a big expense—it’s okay to start small. You don’t necessarily need a location or office for customers to come to, since you come to them!
Once you’ve chosen the area you’ll service, you can start working from a home office. As you grow, you can invest in office space for a central place to run your operations.
As far as equipment goes, as any tradesperson knows, you’ve got to have the right tools to get the job done. (Remember, as you grow your business, additional HVAC contractors will also need a set of essential tools.)
You’ll need to invest in resources such as:
- A vehicle large enough to carry tools and HVAC equipment
- A well-equipped tool kit, including a cordless power drill
- Shears or snips for metal
- Voltage tester and natural gas detectors (if needed)
- Vacuum pump
- Refrigerant scale
- Reciprocating saw blades and saw
- Office equipment (such as a computer and printer)
- Scheduling and appointment apps or software
- Office phone
7) Create a financial plan for your HVAC company
Even if you have low start-up costs, don’t skip out on making a financial plan.
You already know you need the right HVAC tools, equipment, and marketing, but how will you pay for them? And how will you protect yourself and your business if something goes wrong? After all, HVAC is highly skilled and technical work. And the truth is all small businesses need small business insurance. (More on that below!)
In addition, think through your pricing. Price your services to cover your operation costs, stay competitive, and make a profit. And be sure to set up a separate bank account for your small business earnings to keep your business and personal finances separate.
How much does it cost to start an HVAC business?
The cost of an HVAC business start-up depends on your specialty, whether or not you already have the necessary equipment, and more. Overall, it’s estimated you’ll spend between $2,000 and $12,000 to start your HVAC business.
You’ll need to think through all the costs your business might have—not only the cost of tools and equipment. Depending on the type of services you offer, these could include:
- HVAC certification and licensing fees
- Small business insurance
- Wear and tear on your vehicle and tools
- Self-employment taxes
- Additional training
- Marketing costs for business cards, online ads, or a website
But don’t let the initial expenses stop you from starting your new business. You can finance start-up costs in several ways, including using personal savings, crowdfunding help from your community, family, and friends, or a business credit card or loan.
Insurance for HVAC businesses
Accidents can happen, which is why HVAC business owners must have the right business insurance coverages in place—especially in the highly technical field of HVAC work.
Below are insurance coverages to consider for your HVAC business:
- Workers’ compensation insurance: This coverage protects employees if they get sick or injured while working for your HVAC business. In the U.S., every state requires workers’ comp, and if you don’t have it, there are serious consequences—including having to shut your business down. See what you’d pay for workers’ comp with our 60-second workers’ compensation calculator.
- General liability insurance: This coverage can protect your HVAC business if you’re sued for a property damage or injury claim. Don’t let your HVAC company go out of business by not having this in place!
- Property insurance: This can protect all equipment needed for your HVAC business, including any tools, office equipment, and more. This coverage could potentially be included as part of a BOP (more on that below!).
- Business Owner’s Policy (BOP): A BOP is a packaged policy that can protect your new business from several kinds of liability or damages. It’s a bundle of small business insurance coverages and can include general liability insurance and property insurance coverage.
8) Get your paperwork in order
Once you’ve got a name and a business plan, it’s time to put your business to paper.
a. Register your HVAC business name with your state
Remember all the work you put into picking out a business name? Make sure to protect it! Register your business with your state and select your business structure (a sole proprietorship, partnership, or LLC).
b. Apply for your EIN
This step is quick and easy. Get your Employer Identification Number (EIN) to identify your business for tax purposes. You can do so here.
c. Obtain any permits or licenses required
Research to determine what permits or licenses, in addition to HVAC technician licensure, are needed to run a successful HVAC business in your community.
9) If needed, hire your first employees
If you’re starting your HVAC business in the busy season, you might need to hire help sooner than you think!
Make sure you have the appropriate liability insurance coverages in place (including workers’ comp coverage) first—and complete all your registration paperwork with your state before you get started hiring.
As your HVAC business grows, you might consider hiring an office assistant, additional HVAC contractors, and possibly a general manager to help manage employees. And as you scale your business, make sure you’re staying connected with your life, even during busy HVAC seasons. Check out 4 Ways to Stay Sane as an Entrepreneur to learn how.
10) Spread the word about your HVAC business with a smart marketing plan
Ready to start serving new customers? Now it’s time to market your business!
You can spread the word slowly as you build your customer base or, if you already have additional technicians to help, you can dive all-in to marketing to grow your business quickly.
Before you start carrying out your marketing plan, know who’s in your target market. Make a shortlist of who you consider your ideal customers, considering location, preferred payment methods, type of residence, or commercial building.
- Build your website. Buy the URL for your HVAC business name, whether or not you’re ready to build your website. You can use a user-friendly website service like Weebly or Squarespace to create one yourself.
- Create a business listing on Google and Yelp. This step is important for businesses like yours that focus on serving local customers. Build out your Yelp and Google My Business profiles to make sure you’re found when potential customers are looking to fix their heater mid-winter.
- Create your social media profiles. You’ll need a business social account on platforms where your target market is looking for HVAC help (like Facebook, so you can participate in neighborhood groups).
- Place brochures, flyers, and business cards at key locations. Where do homeowners or business owners gather in your community? Distribute brochures in your area.
- Use word-of-mouth buzz. Tell others about your HVAC company. Ask existing clients to provide reviews and testimonials that you can share.
- Provide discounts. Looking to grow your client base, and you already have satisfied clients? Offer loyalty or referral discounts to thank them.
Start your HVAC business on the right foot
Starting an HVAC business can be a great way to serve your community, keep indoor air quality healthy and comfortable, and grow your income. But you need to have a solid business plan and the right liability insurance in place first. (With Huckleberry, it takes only minutes for small business owners to get the insurance they need.)
At Huckleberry, we’re cheering your new HVAC business on! Get a quote for the business insurance you need today—it’s free, fast, and easy.