Starting an HVAC business is an appealing idea to many technicians. Once you have the skills and certifications to install and maintain heating and air conditioning systems, the idea to set your own schedule and be your own boss seems like a natural next step.
But as with starting any business, there are both obvious and hidden costs to consider. We want to help you understand not just the practical expenses of starting up, but the long-term costs and investments to run a profitable HVAC business that can sustain you for years to come.
How Much Does It Cost to Start Up an HVAC Business?
Starting up an HVAC business costs an average of $2,000-$10,000, according to the Small Business Chronicle. Those costs include expenses like:
- Hand tools, power tools, and safety equipment
- Inventory of parts and new machines to sell to customers
- Storage space for tools, parts, and inventory
- A dedicated truck for work use
- Insurance for property damage and work-related injuries
- Marketing and a website
If you’re looking to buy into an HVAC franchise instead of building your own business, the costs for a franchise start closer to $50,000. This may offset costs associated with marketing, inventory management, and equipment, but can also limit some of the desired freedom that inspires you to start your own business to begin with.
Is HVAC a Profitable Business?
HVAC may be a profitable business in the long run, but this depends on many factors. Let’s examine average HVAC business profit margins. For every dollar an HVAC business owner makes, here is how the expenses break down on average:
- 20 cents for technician wages
- 35 cents for equipment and materials
- 10 cents for office staff
- 10 cents for marketing
- 9 cents for vehicle fuel and maintenance
- 5 cents for rent, office supplies, and other equipment like computers
- 5 cents for insurance and benefits
That leaves only 6 cents left over for the business owner!
This should give you a good idea of how your expenses will flex based on the staff and overhead your business needs. It might sound tempting to skip hiring office staff or technicians, but your business will not be able to grow if you can’t meet client expectations for customer service, billing, emergency service requests, specialized experience, and more.
Based on these numbers, even the owner of a million-dollar HVAC company will only take home a $60,000 a year paycheck (before taxes). These numbers should not scare you away from starting an HVAC business but we do hope they inspire you to use technology and work more efficiently from the beginning, so you can keep as much of the money you earn as possible.
Act on Your HVAC Business Plan With Acumatica
Acumatica is a field services software platform designed to help HVAC business owners achieve operational efficiencies from day one. Technician-focused features like scheduling, centralized client history, real-time inventory insights, and on-demand warranty information integrate seamlessly with back office and customer-facing functions. Invoicing, service reminders, and making online payments all happen in the same platform. With a tool like Acumatica integrated into your operations, you will rise to the top of the market and work smarter, not harder, while also keeping more money in your pocket. Contact Circle City Software Solutions today to schedule a demo and learn more about what makes Acumatica the fastest-growing ERP software on the market.