How to start an HVAC business in 5 proven steps

This article was updated on July 15, 2022

If you’re looking to start a heating, ventilation, and air conditioning (HVAC) business, it’s an opportune time to do so. In fact, the HVAC industry is projected to grow to $367.5 billion by 2030. While HVAC businesses may face a few more challenges than other industries, due to seasonal offsets and high competition, it’s no reason to set you back.

When determining how to start an HVAC business, you’ll want to create a business plan, come up with a marketing strategy, get the correct licensing and insurance, and create operations for sustainable growth.

If you are an HVAC professional looking to run a successful business in HVAC contracting, this blog post is here to help. Let’s dive in.

Steps:

Create an HVAC business plan
Calculate start-up costs
Get the correct insurance and licensing
Create a marketing strategy
Launch your HVAC business

Step 1: Create an HVAC business plan

A business plan is a detailed document that allows you to plan your business’s operations and potential expenses, ensuring your business runs smoothly for years to come. It will outline the products and services you’re offering, the cost of providing said services, and your goals and objectives.

If you want to start your own successful HVAC business, you have to properly prepare a business and marketing plan. Most often, business plans are created to gain investor interest and funding. However, it’s also a great tool to help formulate your business model and keep your business on track.

According to the U.S. Small Business Administration (SBA), an effective HVAC business plan should include the following:

Executive summary – This section should serve as a high-level overview of your business, your goals, and how you plan to achieve them. You’ll also want to include your company’s values, as well as your business name and address. Generally, this section is less detailed than the rest of your business plan.
Company description – This section is where you can get into the details of your company. Include the challenges your company is predicted to face and how you plan to overcome them. You’ll also want to include your target audience—whether it’s homebuyers, corporate offices, or both—and your competitive advantage in the HVAC market. Do you provide plumbing services in addition to HVAC installation and repair? Do your technicians have certain certifications that other technicians in the area do not? Think of the ways your HVAC business would stand out and address them in the company description.
Products and services – Include a brief description of each product or service you will be providing, in addition to pricing, product lifespans, and how your products/services will benefit your future customers. If you’re buying and selling air conditioners or heaters, you’ll also want to include manufacturing information and buying processes.
Market analysis – Determine who you want your customers to be—is it homeowners looking for a quality, family-run repair service or corporate offices looking for quick fixes? Once you’ve determined your ideal customer base, analyze your competitors in that market. Note any advantages you or they may have when operating your business. You’ll also want to understand the industry as a whole to account for possible growth opportunities or seasonal offsets to help you create your marketing plan.
Marketing strategy – Using industry insight and competitor information, you can craft an HVAC marketing strategy that keeps your customers engaged all year long. In this section, you’ll want to determine how you’ll advertise your services and when.
Organization and management – Note the structure of leadership in your company. Will you be the sole small business owner, or are you partnering with another HVAC technician? In this section, you’ll want to note the job title and role of each of your employees, as well as the expertise they bring to your company. You can include CVs or certifications as well to bolster your company’s value.
Financial planning – This section is where you include your company’s financial projections. You can also include any funding requests here if you’re reaching out to investors. As a new business owner, securing an HVAC business loan can be difficult as you may not have a well-established financial history. Consider contacting local banks or credit unions for financing as they may have more flexibility to invest in your venture than large national banks. Your business plan is the perfect way to show why investing in your business is worth the risk. Generally, financial planning should include any income statements, balance sheets, and cash flow statements from the last five years. You’ll then want to predict your projected expenses by including projected statements and budgets.
Budget – Outline the specific dollar amounts allocated to each aspect of your business, including staffing, equipment, and marketing expenses. Most HVAC companies experience a lull in the off-season, meaning you may have to use lines of credit for payroll. It’s important to account for this in your budget plan.
Appendix – The appendix is where you can store any supporting documentation, such as certification papers, employee CVs, credit histories, insurance, licensing or HVAC certification information, and other legal documents.

Step 2: Calculate start-up costs

You may be wondering, “How much does it cost to start an HVAC business?” The answer depends on your business’ specific operation plans.

When planning your projected expenses for your new business, you’ll want to understand the full extent of the HVAC service you’ll be providing. Most often, you’ll be working with heating, ventilation, air conditioning, and, sometimes, refrigeration services.

Luckily for you, most brick-and-mortar establishments need at least one of these services to provide a comfortable environment, whether it’s a local school or a supermarket.

By calculating your start-up costs, you’ll be able to predict the amount of funding you’ll need, attract potential investors, and estimate when your business will start to generate a profit.

According to the SBA, it’s essential that you calculate your expenses before you launch your business. Most businesses fall under three categories:

Brick and mortar
Online
Service provider

Most often, HVAC businesses cover two or more of these categories. While some HVAC business owners operate out of their homes and travel to locations with a company vehicle, others choose to set up a brick-and-mortar office where technicians can come together during the workday.

No matter your approach, you’ll want to consider the following expenses in your financial plans:

Office space
Equipment and supplies
Communications
Utilities
Licenses and certifications
Insurance
Lawyer and accountant (if applicable)
Inventory
Payroll
Advertising and marketing
Market research

Step 3: Get the correct insurance and licensing

The area in which you establish your HVAC business will determine what types of insurance and licensing your company needs.

Each state has its own licensing requirements. In some states, like Alabama, you’re required to take an exam to be qualified and must have an apprenticeship certification. However, in other states, like Arizona, you only need to show four years of experience within the HVAC industry to acquire a license.

You’ll also need to acquire the right insurance plan for your business structure. In addition to protection through standard liability insurance, HVAC Contractor Contractor insurance is designed to protect your business from accidents, injuries, legal fees, and vehicle damage that may occur while you’re on the job. Generally, heating and cooling insurance will cover:

General liability
Commercial auto
Workers’ compensation
Tools and equipment
Commercial property damage

When gathering your licensing and insurance information as an HVAC specialist, contact your regional regulatory office to ask them for a detailed list of every license qualification and insurance plan you’ll need to start operations.

You can also reference various online resources, including:

Step 4: Create a marketing strategy

As with any new business, it’s important to let your neighbors know that you’ll be up and running soon to attract new customers to your services. Because the HVAC industry is expected to grow in the upcoming years, it’s absolutely critical that you establish an effective marketing strategy to knock any competition out of the park.

Determine the demographic audience you want to target, then share your message in a succinct and engaging way. When marketing your HVAC business, you’ll want to share your business’s values and the services you offer, including any promotions or demographic-specific deals.

The world of digital marketing and advertising is vast, meaning your business can advertise its services through a variety of mediums, including:

Company website – Using a website, you can define your company’s brand and share your products and services easily with potential customers. Generally, you’ll want to make sure your website is designed with Search Engine Optimization (SEO) in mind, meaning you include popular HVAC keywords in the headings and text of your website. You’ll also want to make sure your website is visually appealing and easy to navigate. You don’t have to pay a lot either, there are many ways to set up a free website for small businesses. To appeal to customers’ ethos, include an “About Us” page to share your value propositions and company objectives. Gelinas HVAC, an HVAC business located in Scarborough, Maine, not only outlines their company values on their “About Us” page, but they’ve also created opportunities to increase new customer leads by incorporating client testimonials as well as clear calls-to-action (CTA) that stand out from the rest of the content on the page. As you enter this stage of business planning, scan your local competitor’s website to get a better idea of what designs might be effective and where there could be a weakness you could capitalize on when creating your own.
Google My Business and geofencing advertising – Google My Business shows your key business information; this free account allows you to get discovered on google maps and to rank well for people searching for local HVAC professionals. Geofencing advertising is another marketing approach that targets specific local demographics on their mobile devices, reaching users via SMS messaging or push notifications directly on their phones. As such, you can share specific promotions with your target audience and then measure their analytics, including sales or how long they stayed in your store. Geofencing provides business owners with a way to connect with local audiences—the ones you need the most to prosper.
Pay-per-click advertisements – Pay-per-click (PPC) advertising allows business owners to buy visits to their website, rather than through organic discovery. Most often, these appear as advertisements at the top of popular search results. You can also pay to display your advertisements on other websites as banners, images, or text ads.
Video marketing – For HVAC businesses specifically, video marketing is a way to connect with and educate customers about your business and the services you provide. You can opt to post a few promotional videos on social media to garner attention to your company.
Social media marketing – Social media platforms like Facebook, Twitter, and Instagram have large user bases that make them optimal for advertising. Like geofencing, social media allows advertisers to target specific demographics and interests so you know you’re reaching the right audience. You can also speak directly to customers through DMs or customer polls.
HVAC Strong Mechanical, an HVAC company servicing Surrey, British Columbia, harnesses the power of social media to share photos of project updates and uses industry hashtags to connect with a wider audience of customers. Think about what content could be beneficial for your business to share and post updates within your neighborhood on your Nextdoor Business Page.
Email advertising – Email advertising is more personalized than social media, allowing business owners to connect with their customers one-on-one. Through monthly newsletters, share business updates and make customers aware of future deals and promotions they can take advantage of to keep their homes comfortable.

Step 5: Launch your HVAC business

Be proud of the hard work that has gotten you to this point. Starting your own HVAC business is not for the faint of heart but can be extremely rewarding. At launch be sure to spread the word by telling all your friends and family, posting announcements on social media, contacting local news stations for a press release, or even sending out flyers.

Don't be afraid to start small and scale your business organically as you grow working capital, add on more services, and add quality employees that can spread the service quality your customers expect. It's important at launch to also consider what not to do in the months and years ahead of you:

What not to do after launch:

Don't try to expand too fast - Growth is good but make sure your growth is sustainable. It's a good idea to wait until you and your team are consistently overbooked to add a new HVAC expert. Also, rent equipment until you're sure a big investment will pay itself off within a reasonable timeframe
Don't overpay yourself - After expenses, the early years of your business may leave little for you to draw. While tempting to take a chunk for yourself after the first big job, it's best to look to the future and make sure you have enough working funds for equipment rentals and inventory for the next HVAC job.
Don't listen to naysayers - As an HVAC business owner, you may find yourself initially working long hours to reach your target market. It may take a couple of years before your processes are well established. Give it time and don't get discouraged; certainly don't let others get in the way of your business reaching its full potential.

Don't overextend your service offerings - Managing expectations with any potential customer is a big part of growing your business. It's best to establish your business as the go-to in a few key services and then add services slowly as you grow. Whether it's commercial refrigeration or a residential air conditioning service, focus on customer service and other services will expand naturally.

Get your HVAC business started with Nextdoor

Starting your own business is an extraordinary (but daunting) task. There’s a lot to consider, including your operations, future expenses, legal documentation, and marketing strategies.

Luckily, Nextdoor makes finding and securing paying customers easier. Once you establish your business, you can join the neighborhood hub to connect with other local businesses and nearby customers.

By claiming your Nextdoor Business Page, you’ll be able to share updates, ask for feedback, and build relationships with your neighbors to create a local foundation that will bolster your business for years to come.

Don’t let your HVAC career cool down before it starts to heat up. Join Nextdoor today.

Sources:

U.S. Small Business Administration. Write Your Business Plan. https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan

U.S. Small Business Administration. Calculator Your Startup Costs. https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs

Statistica. HVAC Industry. https://www.statista.com/topics/5225/hvac-industry/