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How to Start a Plumbing Business
The US plumbing industry is worth a massive $124 billion and growing steadily at 4% in 2021, which means there are opportunities out there for experienced or even novice plumbers looking to strike out on their own.
Of course, starting any business required dedication and hard work. Fortunately, you’ve come to the right place, as this guide will help you move patiently through the development and launch process until you are running our own successful plumbing business!
Let’s begin your entrepreneurial journey.
Step 1: Understand the Industry
Your journey towards becoming a top plumbing business owner starts by grasping the ins and outs of the industry.
Pros and cons
When you’re in startup mode, it makes perfect sense to know the pros and cons of owning a plumbing service.
- Low startup costs
- High customer retention
- Readily available market
- Work can be repetitive, risky and gross
- Training and certification required
Plumbing industry trends
The US plumbing industry has seen steady 3% annual growth since 2016 and market analyst IBISWorld expects an increase to nearly 4% growth in 2021, thanks mainly to increased residential construction.https://www.ibisworld.com/industry-statistics/market-size/plumbers-united-states/ Also, higher per capita disposable income should enable consumers to upgrade existing systems, including Energy Star-certified and eco-friendly products.
Here’s a breakdown of trends that will shape the plumbing industry in the coming years.
- Smart Plumbers – Today’s homeowners want to work with plumbing services that offer high-tech solutions such as water leak detection using smart devices, giving rise to tech-savvy plumbers.
- Plumbers will do more than just fix leaking pipes, install water heaters, or unclog toilets. More plumbers will look to expand their trade by taking on waste management and HVAC systems installation.
- Expect to see robust digital marketing and social media campaigns as plumbers jostle for clients online.
How much does it cost to start a plumbing business?
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 don’t have a van.
These funds will go toward the following:
- Plumbing certificate – $1,500 to $8,000 depending if it’s an apprentice course or associate’s degree
- Van/Truck – $5,000 used
- Office supplies – $2,000 (laptop, printer, cabinets, etc.)
- Plumbing stock and tools – $5,000 (fittings, pipes, valves, thermostats, crescents, grips and more)
- Insurance and permits – $500 per year
- Marketing – $500 per year
How much can you earn from a plumbing business?
A master plumber running a one-person operation could charge $50 per hour. At hours 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.
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.
What barriers to entry are there?
The plumbing industry has few barriers to entry. But, as a new business owner, some of the challenges you’re likely to encounter include:
- Plumber certification takes 8 months to 2 years
- Competition from established plumbers
What does running a plumbing business involve?
Plumbing includes the following tasks:
- Installing pipes and plumbing fixtures
- Clearing sink drains and toilet obstructions
- Troubleshooting problems in equipment
- Estimating installation and repair costs
- Scheduling and dispatching employees
Plumbing work schedules are typically 9 am to 5 pm. However, the schedule may change depending on the task and a client’s availability.
So, to run a successful plumbing business, be ready to work during weekends and past regular working hours. For instance, a client may call you to fix a leaking pipe late at night. Of course that would mean a higher rate.
Step 2: Hone Your Idea
Now that you know what you’re getting into and the possibilities, it’s time to trim down your business concept.
Identify your target 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:
- Real estate agents
- Businesses such as food outlets and manufacturers.
- Property and facility managers
- Contractors such as electricians, roofers, and builders.
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.
Where will your business be based?
You can start your plumbing service at home to save on rent as you find your first clients.
When choosing a location for your plumbing business, consider the rent amount and proximity to customers. Ideally, you want a site that allows you to service clients on short notice without burning through your wallet.
Start with an affordable location but make sure that it’s spacious enough to accommodate your staff and equipment. You can look for a bigger office as your business grows, but for now, you want to keep expenses as low as possible.
Who will be your competition?
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, often do repair work.
- Local companies dealing with small to medium plumbing jobs
- 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.”
How much should you charge?
Plumbers charge by the hour or by the job. Here’s a breakdown of the standard rates.
- Per hour – $45 to $150
- Flat rate – $75 to $250 for smaller jobs; $500 to $800 for bigger tasks
- Per fixture – $100 to $600
- Apprentice plumber – $14 per hour
Plumbing prices vary depending on materials needed for repairs or installation, location, and the plumber’s experience.
Step 3: Brainstorm a Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
- Short, unique, and catchy names tend to stand out
- Names that are easy to say and spell tend to do better
- The name should be relevant to your product or service offerings
- Ask around — family, friends, colleagues, social media — for suggestions
- Including keywords, such as “plumbing” or “plumbers”, boosts SEO
- Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step business name generator
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 at a web cataloging site such as NameChk. 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. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Step 4: Create a Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
- Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your services in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.
Step 5: Register Your Business
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!
Choose where to register your company
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 offer real advantages when it comes to plumbing.
If you’re willing to move, you could really maximize your business!
Choose your business structure
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 four main options:
- Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner: you get to keep all the profits, but you’re personally liable for all debts.
- Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses.
- Corporation – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly.
- Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.
Step 6: Register for Taxes
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.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
- Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
- SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
- Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
- Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
- Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
- Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.
Step 8: Apply for Licenses/Permits
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, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
License and permit requirements vary from state to state. But in almost all states, you must have a plumbing permit and a plumbing contractor’s license to operate as a plumber. You may also need state-level licenses and local county or city-based licenses and permits, 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.
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.
For peace of mind and to save time, 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 you to make sure you’re fully compliant.
Step 9: Open a Business Bank Account
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.
Step 10: Get Business Insurance
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:
- General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
- Business Property: Provides coverage for your equipment and supplies.
- Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
- Worker’s compensation: Provides compensation to employees injured on the job.
- Property: Covers your physical space, whether it is a cart, storefront, or office.
- Commercial auto: Protection for your company-owned vehicle.
- Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
- Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.
Step 11: Prepare to Launch
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. 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.
You can create your own website using services like WordPress, Webflow, 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.
Essential software and tools
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.
Some of your business will come from the casual passerby or online visitors, but still you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.
- Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
- If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Step 12: Build Your Team
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:
- General Manager
- Marketing Lead
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 or Facebook. You can also use free classified sites like Jobs and AngelList. 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.
Step 13: Start Making Money!
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets 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.
Some signature USPs for your plumbing business could be:
- Success guaranteed or your next job’s free!
- Fastest, most reliable plumbers around
- The most advanced and efficient tools and methods
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as a special discount for the first customer on a holiday.
- Signage – Put up eye-catching signage at your store and website
- Flyering – Distribute flyers in your neighborhood and at industry events
- In-Person Sales – Offer your products/services at local markets, trade shows
Build Affiliate Relationships
Affiliate marketing is advertising in which you compensate third parties (i.e. your affiliates) in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.
You’re now ready to start plumbing! But you might want to bookmark this page, and check out Step By Step’s business tips for additional insight and guidance.
Plumbing Business FAQs
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.