Should you buy an existing HVAC company or start your own? If there was one single right answer to this question, the industry would be flooded. There are so many factors that go into the final decision about whether to buy an established company or start your own, and it’s your job to explore all angles before making a final decision.
What to Know About Buying an Existing HVAC Business
At first thought, it might seem like an easier task to buy an existing HVAC business than creating one from the ground up. In some cases, this is entirely true. In other cases, you could be inheriting someone else’s headache and paying them to do so. An HVAC business can be a smart investment, but there are quite a few factors to consider before diving in headfirst.
- Identifying Startup Costs
What is your initial investment going to be? Do you have the liquid assets to cover them or will you need to reach out to your loan institution for financing?
To decide whether startup costs are fair for an existing HVAC business, you need to calculate the costs associated with starting an HVAC business from scratch. This would include accounting for licensing fees, certification fees, equipment, marketing materials, hiring new staff members, and more. You also have to take into consideration the cost and time investment of building a reputation, building clients, and developing a team.
- Qualify the Existing Customer Base
One of the biggest perks of buying an established HVAC business is acquiring all of its existing clients. However, if this client pool is small or brand recognition within the community is low, this adds no additional value. In fact, it could actually complicate the process for you.
Take time to explore the best and worst-case scenarios of buying the business. If the owner is retiring, there’s a good chance all major accounts are happy and the overall reputation of the brand is in good standing, but if the sale seems sudden, it could be facing financial hardships. In either scenario, think about what you specifically can bring to a company to give it new life.
Aside from evaluating the current clients the HVAC company has, you need to also assess the potential. Within the geographic location of the company, are there areas of new construction? Are there other HVAC companies that pose a threat? How many middle or upper-income households are within the community?
Evaluating the market share within the community is essential to planning for your future success.
To make the initial investment into an existing HVAC company worth your time and effort, you need to be able to clearly establish a path for growth. Aside from the existing revenue you will inherit, explore what you can do to push the boundaries, and continue to build the company into something that you can be proud to own.
What to Know About Starting an HVAC Business
Every good HVAC company (or company in general) must be developed using a business plan. HVAC business plans serve as the roadmap to creating and running your business. Everything from defining your competition to developing your business structure is housed within this valuable document.
If you aren’t interested in creating an HVAC business plan or don’t feel inspired by it, then starting your own business is probably not the right choice for you. But, if you are motivated by the potential of being a business owner, get out your pen and paper and start developing your HVAC business plan template.
Once you have your HVAC business plan outlined, you can start to explore the nitty-gritty details of becoming a business owner.
- Determine Startup Costs for an HVAC Business
Similarly to when you acquire an existing company, there are startup costs associated with creating a new business from the ground up. The biggest mistake you can make when it comes to starting from scratch is not accounting for all business expenses.
Just some of the things included in your startup costs will be:
- Licensing and certification fees
- Trucks and equipment
- Liability insurance, workers compensation insurance, etc.
- HVAC tools and supplies
- Safety equipment
- Marketing materials (business cards, truck signage, uniforms, etc.)
- Website development
- And more
- Surround Yourself With Smart People
One of the most important aspects of starting any business is having qualified mentors. You need someone who has already paved the way for you and can help answer questions you may have along the way. The goal is to start a successful business, not just any business. Hire a team of professionals that are knowledgeable and bring more to the table to help grow the business.
It takes a village to run a business, so without the right people behind you, it will be challenging to find the success you’re after.
- Advertise Early and Often
Once you’ve made those initial investments to legitimize your business, you need to get the word out. Marketing and sales are going to be key when starting your business to grow credibility for your new business and to start generating revenue. Be smart about where you market your business and don’t overextend your reserves.
When starting an HVAC business from scratch it all comes back to your initial HVAC business plan. The more detailed you are, the more concretely you establish your goals and financial plan, the better prepared you will be to tackle those first few challenging years.
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Whether you make the leap to starting your own business or make the investment in an existing HVAC company, the goal is to use your money wisely. Make your marketing dollars work harder for you with a website that allows your customers to buy services online. Learn how simple it can be to sell filters, maintenance agreements, tune-ups, and fully-installed systems with Contractor Commerce.