Starting a plumbing business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful plumbing business.
Importantly, a critical step in starting a plumbing business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Plumbing Business:
- Choose the Name for Your Plumbing Business
- Develop Your Plumbing Business Plan
- Choose the Legal Structure for Your Plumbing Business
- Secure Startup Funding for Your Plumbing Business (If Needed)
- Secure a Location for Your Business
- Register Your Plumbing Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Plumbing Business
- Buy or Lease the Right Plumbing Business Equipment
- Develop Your Plumbing Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Plumbing Business
- Open for Business
1. Choose the Name for Your Plumbing Business
The first step to starting a plumbing business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your plumbing business.
2. Develop Your Plumbing Business Plan
One of the most important steps in starting a plumbing company is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your plumbing business.
- Company Overview – this section tells the reader about the history of your plumbing business and what type of plumbing business you operate. For example, are you a residential, commercial, industrial, or an emergency plumbing business?
- Industry Analysis – here you will document key information about the plumbing industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your plumbing business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your plumbing business make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Plumbing Business
Next you need to choose a legal structure for your new plumbing business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the plumbing business owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to open a plumbing business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a plumbing business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a plumbing business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your plumbing business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Plumbing Business (If Needed)
In developing your plumbing business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a plumbing business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a plumbing business that they believe has high potential for growth.
5. Secure a Location for Your Business
There are a few things to consider when choosing a location for your plumbing business. First, make sure the area is zoned for commercial use. You will also want to ensure enough traffic is in the area to support your business. Finally, you will want to ensure you are close to other businesses that your potential customers may frequent.
6. Register Your Plumbing Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your plumbing business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your plumbing business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
The licenses and permits you need to start a plumbing business will vary depending on your location. For example, in some states you may need a plumbing license from the state licensing board, while in other states you may only need a business license from the city or county. You may also need a contractor’s license, and if you plan to work with septic tanks, you’ll need a septic tank installer’s license. To find out what licenses and permits you need in your state, contact your local licensing board or business license office. You can also check with the National Association of Plumbing-Heating-Cooling Contractors for more information.
10. Get Business Insurance for Your Plumbing Business
The type of insurance you need to operate a plumbing business will vary depending on the state.
Some business insurance policies you should consider for your plumbing business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Plumbing Business Equipment
You will need a few basic pieces of plumbing equipment to start your business. Some of the most essential tools are a plunger, pipe wrench, and adjustable wrenches. You may also want to invest in a reciprocating saw to cut through pipes quickly and easily. You will also need a van or truck to transport your tools and equipment.
12. Develop Your Plumbing Business Marketing Materials
Marketing materials will be required to attract and retain customers to your plumbing business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your plumbing business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional plumbing business website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your plumbing business.
13. Purchase and Setup the Software Needed to Run Your Plumbing Business
The software you need to run a plumbing business depends on the type of plumbing business you want to start. For example, if you want to start a small residential plumbing business, you will need software for invoicing, bookkeeping, and customer management. If you want to start a commercial plumbing business, you will also need software for estimating, bidding, and project management. There are many software options available, so it is important to do some research to find the best software for your needs.
14. Open for Business
You are now ready to open your plumbing business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Plumbing Business FAQs
Is it hard to start a plumbing business?
There is no one-size-fits-all answer to this question, as the ease or difficulty of starting a plumbing business will vary depending on your skills, experience, and resources.
However, if you follow the steps above, you should be able to start your plumbing business without too much difficulty.
How can I start a plumbing business with no experience?
You can start your own plumbing business with no experience if you are familiar with water pipes, older homes and buildings, and general plumbing maintenance. You can also check out online forums for discussions relating to maintenance issues and advice from those already in the industry. Joining a trade union could also allow you to network with other professionals in the field. Finally, you may want to start small and gradually grow your business as you gain experience.
What type of plumbing business is most profitable?
The most profitable plumbing business provides more value to its customers than its competitors. This value could come from offering high-quality services, providing additional benefits like free repairs or maintenance, or charging low prices. Whatever strategy a plumbing business chooses, it's essential to focus on providing good customer service and meeting clients' needs. By doing so, a plumbing business can maximize its profits and build a loyal customer base.
How much does it cost to start a plumbing business?
Starting a plumbing business varies depending on the size and scope of the operation. There are many things you need to get started, such as plumbing supplies, a van or truck, and advertising. The cost of starting a plumbing business can range from a few thousand dollars to tens of thousands of dollars.
What are the ongoing expenses for a plumbing business?
The ongoing expenses for a plumbing business can vary depending on the size of the business, the services offered, and the location. However, some of the most common expenses include:
-Rent or lease payments
-Materials and supplies
-Marketing and advertising
How does a plumbing business make money?
A plumbing business makes money by charging for plumbing jobs. These projects can include anything from fixing a leaky faucet to installing a brand new water heater. Sometimes plumbing companies charge by the hour, while other times they may charge a fixed price.
Many plumbing business owners offer maintenance contracts. The business will come and inspect its customers’ plumbing systems regularly and will be able to catch any potential problems before they turn into huge issues. These regular inspections can save customers money in the long run and give them peace of mind knowing that their plumbing is in good hands.
Is owning a plumbing business profitable?
There are a few reasons owning a plumbing business can be profitable. First, plumbing is a necessary service that every household and business needs. The consistent demand for plumbers means you will always have work. Second, there are not too many upfront expenses, so you can start your own plumbing business with relatively little investment. Finally, plumbing services are typically priced reasonably, so you can make a good profit without overcharging your customers.
Why do plumbing businesses fail?
Plumbing businesses may fail because of a lack of planning. A company should have a business plan, marketing strategy, and financial plan. Without these things, it is difficult to make a plumbing business succeed.
Another reason plumbing businesses fail is because of a lack of cash flow. If a company can't pay its bills, it will eventually go out of business. A business should have a plan for generating cash flow and keeping it flowing to stay afloat.
Lastly, plumbing businesses can fail because of a lack of proper management. A company should plan for who is in charge of what and how to delegate tasks.