The key to a successful HVAC business is smart financial planning. When starting your own HVAC business you need to analyze the costs of running an HVAC business. A large percentage of your initial financial plan is going to be your startup costs. HVAC business owners underestimate the up-front costs required to open and run the business for the first year.
Depending on location, HVAC company startup costs range from $2,000 to $100,000. This is a significant range, but where your business lies in this range depends on several factors. We will help guide you through the essential upfront purchases, as well as, additional costs to consider.
Refer back to your HVAC business plan and the financial planning section when evaluating your startup costs.
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Essential HVAC Start-Up Costs
- Registration, Licensing, and Insurance
- Hiring HVAC Technicians
- Tools and Equipment
- Marketing and Sales
- HVAC Management Software
1. Registration, Licensing & Insurance
After securing your HVAC license, you need to register your business and get HVAC business insurance.
Types of HVAC insurance you should consider include:
- General liability insurance
- Commercial auto
- Workers’ compensation insurance
- Tools and equipment
- Commercial property damage
HVAC insurance protects you, your employees, your customers, your customers, and even your equipment from inevitable accidents. Accidents will always happen even with the most highly trained HVAC professionals. Insurance ensures that when accidents happen your company assets are protected and you can avoid costly lawsuits and legal fees.
Estimated Total Cost: $500 – $5,000 per year
2. Hiring HVAC Technicians
Hiring high-quality HVAC technicians from the start will set the tone for your company’s reputation moving forward. Setting quality standards and a structured hiring process will help finding the right candidate much easier.
The average annual salary of an HVAC technician, dependent on experience, is $31,000-$62,000 across the United States.
Additionally, you may want to train your technicians on skills and customer service specific to your company. This involves additional courses or time spent that contribute to this expense.
Estimated Total Cost: $47,000 (avg.) per year, per technician
3. Tools & Equipment
The tools and equipment you need will depend on the HVAC services you outlined in your HVAC business plan.
Most heating, ventilation, and air conditioning businesses will need basic and specialty hand tools, safety equipment, and repair parts. Small businesses may ask their technicals to supply their own tools and safety equipment. This can help your business save money up-front but also may create a barrier to entry for your technicians.
Lastly, major equipment such as heating and cooling systems should be factored into your expenses. Oftentimes HVAC companies require upfront payment from the customer for this equipment. However, you will need to decide the markup to cover the costs of ordering, shipping, and labor.
Estimated Total Cost: $300 – $2,000 for basic tools and safety equipment
4. Marketing and Sales
How will you promote your services to generate a strong customer base? Consider all marketing and promotional materials you might need as you plan your start-up costs. These could include business cards, a website, digital advertising, sales tools, branding, and more.
Consistently track the return on investment on your marketing efforts to make optimizations when it’s not producing results. Analyze your conversion rates to ensure your sales process is both effective and efficient.
Over time, you can expand your marketing efforts and grow your sales team. However, implementing high-quality marketing and sales basics will set you up for success.
Estimated Total Cost: $30,000 – $100,000 per year
5. HVAC Management Software
There are many operational issues you will run into that software can solve for you. Software can be helpful in keeping your business running smoothly while focusing on what you do best.
Common types of software that you might consider include accounting software, such as QuickBooks, payroll, scheduling, proposals, and more. The price of these tools individually adds up quickly. However, Payzerware is an all-in-one HVAC software for helping you manage your business.
Payzerware handles scheduling, invoicing, payment collection, reporting, custom flat rate price books, and more. You can easily see the benefit Payzerware can have on your bottom line by utilizing the ROI calculator.
We offer 3 different pricing tiers based on your business needs. Our HVAC management software pricing ranges from free to $2,499/month.
Additional HVAC Start-Up Costs
The five costs above are necessary to invest in before starting your HVAC business. However, there are other tools and resources that may help starting your business, easier.
Additional HVAC start-up costs to consider include:
- Company vehicle for transporting tools and equipment
- Additional advertising (print, swag, radio, commercials)
- Office for administrative employees
- Storage facility for tools and equipment