How Much Does it Cost to Start an HVAC Business?

There are many financial decisions for those interested in starting a business in this industry. To help you better understand what steps to take to launch your new HVAC company, we’ve put together a brief overview of costs to expect when starting up.

Licensing and Permit Expenses

States and local governments often have specific licensing and certification requirements for HVAC professionals to obtain to run their businesses. From professional training to general business permitting, the cost to cut through this red tape can add up fast. The good news is that many of these initial expenses are a one-time deal, but do your research to plan ahead for those that recur.

Commercial Space Costs

If you’re planning to initially work solo and use your garage as the primary location of your operations, you’ll enjoy a lot of money savings. However, plan on your business expanding quickly and needing to accommodate this growth. A dedicated commercial workspace has many benefits, but you’ll need to decide if you want to lease your new headquarters or buy it outright. Any space you choose will need to accommodate your many tools, equipment, and work vehicles, at a minimum.

Cost of HVAC Equipment

One of the downsides to starting any business is the initial upfront investment in tools and equipment. In HVAC, this is a major expense that might require financing to afford it all. One of the most significant expenses with starting an HVAC business is equipment cost.

You’ll also need to consider how much spending to expect each month for maintenance and repairs. To provide the best service experience for your clients, your HVAC tools need to be up to the task.

Insuring Your HVAC Company

Another important cost your HVAC company will need to shoulder is business insurance. Now, you may be able to cut costs on equipment and tools by purchasing them refurbished, but don’t skimp when it comes to protecting your business.

As a contractor, you take on significant liability when mistakes happen. You’ll often be on-site at a client’s residence or commercial property. If someone trips over an electrical cord you’re using or you damage a building’s HVAC system, it’s on you to make things right.

Insurance helps to cover the burden of these costs and can defend your business when injuries, property damage, theft, and other perils threaten your company. Below are a few of several policy options that you should consider purchasing:

General Liability Coverage

When an employee damages a client’s air conditioning unit or a customer trips over an extension cord and gets hurt, these are third-party claim situations. General liability policies are perfect for these scenarios, including:

  • Bodily injuries
  • Property damage
  • Slander, libel, and defamation

Keep in mind this protection only extends to your company in cases where someone other than yourself or an employee suffers a loss related to your services.

Professional Liability Insurance

Your HVAC skills result from quality training and obtaining certifications to perform your work. When you make a professional mistake, such as installing a new air conditioning system incorrectly, this policy will cover the damage caused and defend your good name in court. This insurance goes further than general liability, which only protects your company against third-party claims not related to professional performance.

Workers’ Comp

Nearly every state in the U.S. requires employers to carry workers’ compensation coverage for their employees. As an HVAC business, you’ll likely need to expand and hire additional technicians to keep up with demand. If they get hurt on the job or become sick, this insurance will cover a wide range of expenses, including:

  • Employee medical expenses
  • Disability benefits
  • Negligence claims (including defense costs)

Commercial Auto Policy

When first starting out, you may think your personal auto policy will cover you when traveling to different HVAC appointments. The reality is this isn’t true at all. Your state probably requires you to have commercial-level insurance coverage for your vehicle if it’s being used for business in any capacity.

Commercial policies provide a higher level of protection for you and those involved in car accidents involving company vehicles. Some of the benefits of this insurance include:

  • Injuries
  • Property damage caused by your vehicle
  • Vandalism and theft

Tools and Equipment Insurance

What happens if your workspace suffers catastrophic storm damage and your tools and equipment get damaged? Can you afford the cost of repair or replacement out of your own pocket?

Tools and equipment coverage is a must-have for any HVAC business to protect this expensive investment. These policies typically cover claims under these circumstances:

  • Equipment is newer (less than five years old)
  • Equipment is usually transported between job sites
  • Involves small tools

If you know you need coverage, but understanding insurance costs for an HVAC business seems a bit overwhelming, always reach out to a knowledgeable representative with your insurer. They will have all the answers you need and can make policy recommendations based on your industry.

HVAC Advertising Costs

For your HVAC business to succeed, you need to draw in customers. This requires testimonials, online reviews, and advertising. Marketing your company can put a huge dent in your bottom line if you don’t have a well-thought-out strategy. Consider the best channels to reach out to your ideal audience and be clear on who you’re trying to reach, so you maximize your brand presence and spend your budget effectively.

Planning is crucial to get the most results for your money if you decide to use social media ads at first or invest in billboard signs and radio jingles.

Employment Expense

You probably don’t want to do all your HVAC work alone and plan to hire extra help at some point. Recruiting, onboarding, and training new employees can be quite expensive. Consider working with a professional recruiter to save money and ensure you hire the best candidates. They can help you narrow down the job role requirements you need, the level of education required, and the compensation package you’re willing to offer for the right team members.

HVAC Businesses Have a Bright Future

Despite the initial investment to be made, starting an HVAC company is a smart career and business choice. Taking time to plan out how you plan to run your operation will go a long way in cutting down on unnecessary costs and help you prioritize those that are most important, like your business insurance.

Knowing the perils your business could potentially face can help you maximize your coverage and ensure you have the exact coverage needed. If you’re worried about the cost of premiums, think about how much more an uninsured claim could be and the financial devastation it could cause. Protecting your venture’s best interests means you never have to worry about the unexpected ruining your livelihood.

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