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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on May 20, 2021
Investment range
$7,550 - $22,100
Revenue potential
$80,000 - $370,000 p.a.
Time to build
1 - 3 months
Profit potential
$60,000 - $150,000 p.a.
Industry trend
Growing
Commitment
Flexible
Key considerations to keep in mind when opening your plumbing business:
Your journey towards becoming a top plumbing business owner starts by grasping the ins and outs of the industry.
When you’re in startup mode, it makes perfect sense to know the pros and cons of owning a plumbing service.
The US plumbing industry shows no signs of slowing down, thanks mainly to increased residential construction. Also, higher per capita disposable income should enable consumers to upgrade existing systems, including Energy Star-certified and eco-friendly products.
Here are some trends that will shape the plumbing industry in the coming years.
Challenges include:
The minimum cost of starting a plumbing service is around $1,500 if you’re running your business from home and up to $30,000 if you’re renting space and have a van.
These funds will go toward the following:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | 175 |
| Business licenses and permits | $100 - $300 | 200 |
| Business cards and brochures | $200 - $300 | 250 |
| Used truck | $2,000 - $5,000 | 3500 |
| Tools and supplies | $3,000 - $5,000 | $4,000 |
| Plumbing certificate | $1,500 - $8,000 | $4,750 |
| Insurance | $100 - $300 | 200 |
| Website setup | $1,000 - $3,000 | 2000 |
| Total | $7,550 - $22,100 | $15,075 |
A master plumber running a one-person operation could charge $50 per hour. At 8 hours per day, six days a week, you’d make $124,000 in annual revenue and maybe $80,000 in profit, depending on your margin.
In your first year or two, you could work from home for 6 hours per day and five days a week, bringing in $80,000 in annual revenue. This would mean around $60,000 in profit, assuming an 80% margin. As you gain more clients, your billable hours could double to 12 per day and you could work six days a week for a higher fee of $100 per hour. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 40%. With annual revenue of $370,000, you’d make a tidy profit of almost $150,000.
A typical plumbing business pays its plumbers $20 to $40 per hour, according to the Bureau of Labor Statistics. This means hiring a professional plumber can cost your company about $50,000 to $75,000 per year, including insurance and other benefits.
While hiring plumbers reduces your profit margin significantly, it also enables your business to scale.
The plumbing industry has few barriers to entry. But, as a new business owner, some of the challenges you’re likely to encounter include:
Now that you know what you’re getting into and the possibilities, it’s time to trim down your business concept.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Identifying your competition can help you determine what you need to do to stand out and attract the right customers. It will also enable you to develop a competitive pricing structure and respond to rival marketing campaigns.
Competitors in the plumbing industry include franchisees of a regional or national plumbing firm that often do repair work, local companies dealing with small to medium plumbing jobs, and large residential and commercial companies working on large projects.
You can pinpoint your competitors by checking with your local business directories, Chamber of Commerce Directory, or searching the internet for terms such as “plumbing companies near me.”
Plumbing includes the following tasks:
Plumbing work schedules are typically 9 am to 5 pm. However, the schedule may change depending on the task and a client’s availability.
Plumbers charge by the hour or by the job. Here’s a breakdown of the standard rates.
Plumbing prices vary depending on materials needed for repairs or installation, location, and the plumber’s experience.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
The key to starting a flourishing plumbing business is knowing who your customers are and what motivates them to buy. Potential clients for a plumbing service include:
Getting a new plumbing business off the ground is all about forming quality relationships. Teaming up with a reputable contractor, for instance, can generate quality plumbing leads and referrals. Getting to know the best contractors in your area makes good business sense.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to plumbing services.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your plumbing company will shape your taxes, personal liability, and business registration, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a plumbing business.
Starting a plumbing business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your plumbing business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
Plumbing software such as Housecall Pro, AroFLo, and Marketing 360 can help with bookkeeping and invoices, managing cash flow, tracking projects and hours worked, and even managing social media campaigns and SEO optimization.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your services meet their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your plumbing business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a plumbing business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been a plumber for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in plumbing. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a plumbing business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
To run a successful plumbing business, be ready to work during weekends and past regular working hours. A leaking pipe is an urgent matter that needs to be addressed immediately to prevent damage to a home and the growth of mold. So if a client calls you to fix a leaking pipe late at night, you’d have to go to work. Of course, that would mean a higher rate.
Besides providing excellent work, it’s also important that you think like a businessman and keep track of your costs. You’re now ready to launch your plumbing business! Good luck!
Start by getting certified. Look for an established plumber and serve as an apprentice to gain industry knowledge. Next, decide whether you want to work as a commercial or residential plumber. After that, follow the above steps on how to start a plumbing business, and you’re good to go.
Yes, it is. For starters, plumbing is a $110 billion industry which means that there’s enough money to be made. However, turning your plumbing startup into a success story depends on your marketing prowess and ability to deliver excellent results consistently.
The truth is, it is hard to launch a plumbing company with no budget. At the very least, you’ll need to have a certification, essential equipment, and relevant licenses to start. Still, you can cut down costs by starting your business at home with a lean marketing budget and scale as your business grows.
A plumber installs pipes, fixtures, valves, pumps, water treatment systems, water meters, and drainage systems as part of their work.
The most common plumbing problems are clogged drains, leaking pipes, dripping faucets, running toilets, water heater issues, and low water pressure.
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