Starting a heating, ventilation, and air conditioning (HVAC) business can be exciting. After all, HVAC services are in high demand as people want to ensure their homes and businesses maintain comfortable temperatures. However, launching an HVAC company requires thorough planning and preparation. You must consider some key things before starting an hvac business.
Develop a Strong Business Plan
The first step is to create a detailed business plan. This will force you to evaluate if starting an HVAC business is viable and outline goals for its growth. Essential components to include in your HVAC business plan:
Financial Projections
Create financial projections estimating costs to start and operate the business for the first few years. Factor in expenses like:
- Buying or leasing warehouse space, vehicles, tools/equipment
- Licensing and permits
- Insurance (general liability, workers’ comp)
- Marketing and advertising
- Professional services (legal, accounting)
- Staff salaries and benefits
- Ongoing overhead (rent, utilities, supplies)
Also, project sales revenue based on serving a target number of customers. This helps determine how much financing you’ll need to start an HVAC business.
Marketing Plan
Detail how you will promote the new HVAC company. Key marketing activities should be outlined, like search engine optimization (SEO), print/radio ads, direct mail, social media, and cultivating community partnerships.
Operations Plan
Describe day-to-day processes for managing staff, delivering services, customer service protocols, and general administration. This helps prove you can operate the business efficiently.
Executive Summary
Summarize the main points of your plan. This overview section hooks potential investors and lenders.
A well-thought-out business plan demonstrates you have seriously considered what it takes to launch and grow an HVAC company. It’s essential for securing financing.
Research Licensing and Regulations
The HVAC industry involves working with complex electrical, gas, and ventilation systems. As such, HVAC businesses must comply with regulations for safety reasons. Be sure to research and obtain:
Trade Licenses
Most states require HVAC businesses to hold trade licenses demonstrating professional competency. There are separate licenses for working on electrical (e.g., air conditioners) versus gas systems (e.g., furnaces, boilers). Licensing exams test HVAC system knowledge.
Business Licenses and Permits
Check state and local municipality requirements for general business licenses/permits. Your city may have zoning regulations on operating warehouse space from a commercial location.
Insurance
Carry adequate insurance coverage like:
- General liability – Covers property damage and bodily injuries caused by your business.
- Workers’ compensation – Pays for staff injuries/illnesses related to work.
- Commercial auto – Protects against damages if your work vehicles are involved in accidents.
- Professional liability – Defends against claims of professional errors or subpar work.
EPA Certification
Technicians must get Environmental Protection Agency (EPA) certification to purchase and handle refrigerants when servicing cooling systems legally.
Review all HVAC industry regulations thoroughly, so your business is fully compliant. Being properly licensed and insured helps build credibility with customers, too.
Read Also: Different types of business finance
Acquire the Necessary Equipment and Vehicles
Significant startup costs will be acquiring HVAC equipment, tools, and work vehicles:
HVAC Equipment and Tools
At a minimum, you need vacuum pumps, refrigerant recovery machines, acetylene torch kits, pipe cutters, coil cleaning sprayers, multimeters, and combustion analyzers to cover fundamental HVAC repairs. Quality name-brand tools are worthwhile investments for your technicians.
Service Vehicles
Branded trucks or vans of equipment portray professionalism and convenience when visiting customer sites. They should have adequate storage space for tools/parts, vehicle racking, and the business logo/contact info on the exterior.
Warehouse or Shop Space
A central warehouse or shop stores excess equipment, parts inventory, and supplies. This gives technicians a home base location to start each day.
When getting required equipment and vehicles, factor in maintenance and insurance costs in your financial plan. Also, see if there are small business financing programs to offset startup equipment expenses.
Assemble an Expert Team
An HVAC company is only as good as the team behind it. Here are some tips on building a skilled staff:
Hire Licensed Technicians
At a minimum, you need one top technician with several years of HVAC experience and all necessary licenses and certifications. This person can serve as the lead technician overseeing the quality of all HVAC work performed.
Train Apprentice Technicians
Consider hiring less experienced candidates as apprentice technicians who can be trained over time. This allows you to mold their skills and save on payroll costs initially.
Dispatch/Scheduling Coordinator
A key support role is a dispatch or scheduling coordinator who routes technicians to customer appointments and manages call volumes.
Sales Representatives
Dedicated sales reps can follow up on leads to sell new HVAC equipment installations and service agreements. They should be personable, organized, and well-versed in your services.
Bookkeeper
Even if outsourcing official accounting and tax filing, a bookkeeper is vital for tracking day-to-day finances, generating invoices, and managing payroll.
As the business grows, you may need to add roles like dedicated marketers, additional technicians, HR, and administrative assistants. Build a stellar leadership team early to set your HVAC company up for success.
Define Your Services
Determine which HVAC services to offer based on technician expertise, equipment, and local customer needs. Common options include:
HVAC Installation
I am installing new HVAC systems in homes and businesses. This may involve extending ductwork.
HVAC Repair and Maintenance
It is fixing issues with existing HVAC systems related to airflow, refrigerant levels, motors, control boards, etc. This includes preventative maintenance like replacing air filters.
HVAC Replacement
They are replacing outdated, inefficient, or broken HVAC systems with new models.
HVAC Servicing
We perform routine inspections and tune-ups on HVAC systems to maximize performance and lifespan.
Duct Cleaning
Cleaning accumulated dust and particles out of existing ductwork.
Smart Thermostat Installation
They are installing programmable smart thermostats, which customers can control remotely via an app.
Plumbing and Electrical Services
If technicians are multi-skilled, offering basic plumbing and electrical repairs related to HVAC systems.
Equipment Repair Plans
Subscription service plans where customers pay an annual fee for priority response times and repair discounts.
Clearly outline your expertise in these types of services in your marketing materials.
Define Your Target Market
Focusing on serving specific customer segments with your HVAC company is strategic. A few core groups to target include:
Homeowners
Residential homeowners are steady sources of HVAC sales and service revenues year-round. Focus your marketing to appeal to homeowners in surrounding neighborhoods.
Commercial Businesses
There is significant potential in serving HVAC needs for offices, retail stores, schools, hospitals, and other commercial buildings, which typically utilize larger systems.
Contractors / Builders
Partner with general contractors and builders to install HVAC systems in new home construction projects and building developments.
Property Management Firms
Property managers who oversee residential/commercial rental properties have ongoing HVAC service needs you can fulfill via service contracts.
Delivering excellent service to a defined customer niche helps establish a solid local reputation and referral stream. You can diversify your clientele after getting set.
Price Your Services Competitively
Research to determine competitive and profitable pricing for the HVAC services you offer.
Labor Rates
Factor parts, salaries, vehicle/fuel costs, and desired profit margins into technicians’ hourly labor rate structure. Have different rates based on technician seniority level if you hire apprentices.
Parts Markup
Decide on a standard markup percentage over your equipment and parts cost to increase overhead and profits. Typical HVAC industry retail markups range from 30% to 100%.
Service Call Fees
Charge a standard fee per service call that covers dispatch coordination, driving time, and a base service amount before labor and parts. Fees often range from $59 – $99.
Financing Options
Offer financing plans through HVAC partners to help customers afford large equipment purchases and spreads costs over time.
Adjust rates as needed based on demand volumes and evolving expenses. To win their regular business, provide discounts for service plan members and multi-unit residential properties.
Create Branding and Marketing Materials
Developing branding and professional marketing materials helps make a stellar first impression and promotes your HVAC services:
Company Logo and Style Guide
Have a logo designed that represents your brand identity. Create letterhead, uniforms, signage, and templates adhering to brand colors, fonts, and stylistic guidelines.
Website
An HVAC website with your services, service areas, technician bios, project photos, and online contact forms is essential. Make sure it is mobile-friendly and easy to navigate.
Print Materials
Have brochures, flyers, and door hangers designed to highlight your services for technicians to distribute.
Vehicle Branding
Wrap work vehicles with eye-catching logos and contact information so they serve as moving billboards.
Social Media Profiles
Claim profiles on Facebook, Instagram, and other platforms. Share photos of team members and project examples to build an audience.
Professional branding boosts credibility and helps get the word out about your new HVAC business locally. Be sure branding is consistent across all marketing touchpoints.
Develop Customer Service Processes
A top priority for HVAC companies is delivering exceptional customer service. Some best practices include:
Response Time Guarantee
Pledge rapid response times to service calls and emergencies (e.g., within 2 hours). This reassuring peace of mind can win business.
Scheduling Convenience
Offer online and app scheduling features. Provide evening and weekend appointment times to accommodate working customers.
Technician Training
Train technicians on professionalism in customers’ homes, answering questions knowledgeably, and leaving sites clean and minimally disturbing belongings.
Follow-Up Surveys
Email brief post-service surveys to get customer feedback on their satisfaction with technicians and your overall service quality.
Rewards Program
Offer a rewards program providing points for referrals and credits towards future services. This incentivizes customer loyalty.
Delivering exceptional experiences is crucial for HVAC companies to retain clients and build referrals. Put customers at the heart of your processes.
Secure Financing
Sufficient financing is imperative when starting an HVAC business, given the significant purchases you must make upfront for equipment, vehicles, staffing, etc.
Personal Savings
Invest your savings if possible. This provides initial cash without taking on debt. Aim to put at least 20% down.
Business Loans and Lines of Credit
Bank small business loans, SBA loans, and business lines of credit are financing options. Be sure your business plan supports repayment ability.
Equipment Financing
Financing agreements through HVAC equipment manufacturers or banks allow you to pay off large purchases over 3-5 years.
Home Equity Loans
Use home equity loan funds if you have sufficient untapped equity in your home. This leverages a personal asset.
Business Credit Cards
Business credit cards provide quick access to funds but read the fine print on high-interest rates. Use responsibly.
Explore all potential sources of financing so your HVAC company has adequate capital to become operational. Grants and incentive programs may also be available in your state.
Join Industry Associations
Membership in HVAC industry associations provides networking, training programs, advocacy, and business development opportunities:
Air Conditioning Contractors of America (ACCA)
The ACCA has state and regional chapters offering advocacy, training, discounts, and networking events.
Plumbing-Heating-Cooling Contractors Association (PHCC)
This group provides education programs, apprentice programs, insurance, and networking specifically for plumbing and HVAC contractors.
North American Technician Excellence (NATE)
NATE provides HVAC technician certification and training on installation/service best practices across different equipment brands.
Better Business Bureau (BBB)
The BBB assigns business performance ratings and accreditation, which can improve your reputation.
Joining respected industry groups lends credibility while expanding your professional network and sharpening your HVAC skills.
Focus on Safety
Working with HVAC equipment, electricity, gases, chemicals, fumes, and confined spaces presents safety hazards. Make safety a top priority with policies like:
Safety Manual
Create a safety manual detailing protocols and precautions technicians must follow for operating vehicles, properly handling materials, using tools, wearing protective gear, and reporting risks.
Certifications
Get truck-mounted crane operator certification for lifting heavy units. Have staff get OSHA 10 safety training and first aid/CPR certified.
Protective Equipment
Provide technician uniforms, steel-toe boots, safety goggles, work gloves, respirators, and hard hats. Ensure they use them appropriately.
Lockout/Tagout
Use lockout/tagout procedures to turn off HVAC equipment power sources before repairs to prevent electrocution or machinery startups.
Compliance Audits
Routinely inspect worksites and audit technicians, adhering to all safety protocols in your manuals, training, certifications, and equipment usage.
A stellar safety record keeps technicians healthy, reduces work comp claims, and protects your business reputation. Make safety central to your HVAC company culture.
Obtain Quality Control Tools
Use technology solutions to digitize quality control processes on HVAC projects:
Scheduling/Dispatching Software
Sophisticated route planning programs like Jobber optimize technician schedules, provide customer ETAs, and track job details.
Equipment Monitoring
Sensors on HVAC systems can remotely monitor performance metrics and alert you to faults for preventative maintenance.
Mobile Work Order Apps
Mobile apps like UpKeep let technicians access/close out digital work orders and log work details/parts from sites.
Fleet Tracking
GPS vehicle tracking informs you of vehicle locations, speeds, idle times, and mileage reports to measure technician performance.
Customer Relationship Management (CRM) Software
A CRM centralizes all customer data and interactions for coordinated customer service and sales processes.
Advanced quality control tech ensures consistent service excellence across all projects and technicians. The data also aids future planning.
Master The Admin Side
Don’t underestimate the accounting, legal, and administrative facets involved with operating an HVAC business:
Accounting Software
Use small business accounting platforms like QuickBooks to centrally manage invoicing, payments, payroll, taxes, and reporting.
Contracts
Have sales contracts, employee agreements, and vendor contracts professionally drawn up to protect your financial interests and formalize terms.
Certifications
Get Minority or Disadvantaged Business Enterprise (MBE/DBE) certifications for bidding on public projects. Earn ENERGY STAR accreditation for environmentally sound HVAC work.
Intellectual Property
File trademarks on your company name, logo, and any proprietary processes. This protects your brand assets and competitive advantages.
Legal Counsel
Establish a relationship with a business attorney to assist with contracts, compliance, patents, incorporation, taxes, employment law, and other legal aspects.
While not the most exciting tasks, sound financial, vendor and employee management take an HVAC business to the next level.
Frequently Asked Questions
How much does it cost to start an HVAC business?
You should budget at least $50,000 – $100,000 to start an HVAC business when determining costs for vehicles, tools, equipment, licenses, insurance, marketing, initial staffing, and 3-6 months of operating expenses until steady revenues build.
What are the most profitable HVAC services to offer?
Installation of new HVAC systems generates high ticket revenues. Service/maintenance plans provide ongoing recurring revenues. Other lucrative services include the installation of ductwork extensions, smart thermostats, and equipment upgrades.
How do you get HVAC customers as a new business?
Start with friends/family referrals. Offer promotions for signing up for annual maintenance plans—network with realtors, property managers, and contractors who can refer clients. Advertise online and via mailers in your target neighborhoods.
Should you buy an existing HVAC business or start a new one?
Buying an existing business allows you to take over its equipment, customers, staff, brand equity, and processes. Starting fresh will enable you to build the business on your terms, but it takes more upfront work to establish.
What qualifications and experience do you need to start an HVAC business?
At a minimum, you or a top technician on your team should have 2-4 years experience, hold an HVAC trade license, and have EPA 608 certification. Business management experience is highly beneficial as well. The right mix of technical and business skills paves the way for success.
Conclusion
Starting an HVAC business allows you to capitalize on solid industry demand while being your boss. However, it requires thorough planning. It would be best to have adequate financing, the right staff, compliance with regulations, safety diligence, branding, and lead generation foundations in place. Focus on delivering professional, skilled service during the startup phase. If you gain happy customers and build community relationships, your HVAC business can grow into a prosperous venture. Use the tips in this article to determine if starting an HVAC company is right for you and how to set one up effectively.
