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The plumbing business is a necessary business because consumers and businesses generally are incapable of maintaining their own plumbing systems. Plumbers ensure that potable and sewer water pipes are well-maintained and up to local building codes. Customers are usually living in residential properties. However, some plumbers obtain corporate or commercial contracts and work exclusively with businesses.
Who is this business right for?
This business is ideal for individuals who enjoy working with their hands, aren’t afraid to get dirty, and have flexible work hours. Some plumbers are called into a job site on emergencies and must work late or even work on weekends. Plumbers, and a plumbing company, may also have to work on holidays.
What happens during a typical day at a plumbing business?
Day-to-day activities of a plumbing company include checking customer logs, fixing and maintaining plumbing lines, and billing customers for services rendered. Some companies also spend considerable time designing and building new plumbing systems if they work on new construction projects.
Plumbers also spend considerable time assembling pipe sections, tubing and fittings, using clamps, screws, bolts, cement, plastic solvents and caulking, solder and soldering guns, couplings, and welding equipment.
Plumbers also have to routinely do complex calculations on job sites which determine the safety and longevity of the plumbing they design, install, and maintain.
What is the target market?
Clients are usually either commercial or residential customers. Plumbers usually get business either through referrals or targeted marketing, like direct mail. The easiest way for plumbers to get business is to buy a mailing list of individuals who have previously done business with plumbers or used plumbing services within the past 6 months to a year. Then, mail those people with an offer for promotional services.
How does a plumbing business make money?
Plumbing companies charge a flat rate (sometimes plus materials) for jobs. However, they may also charge per hour or premium surcharges for emergency, rush, or off-hours service.
What is the growth potential for a plumbing business?
A plumbing business can typically be started with one plumber. As demand begins to exceed the plumber’s ability, additional plumbers can be hired as employees or as independent contractors. Most plumbers maintain a local clientele, though some have managed to expand operations beyond their region.
What are some skills and experiences that will help you build a successful plumbing business?
Plumbing requires certification in order to practice on the professional level. However, many plumbers start out as an apprentice working under an established plumber. It helps you learn the necessary skills involved in plumbing. This is what most plumbers do before starting their own business. Plumbing businesses are more accessible startup options, as the amount of capital needed is moderate. Expenses will typically include transportation (like a truck large enough to carry equipment), drain snakes, and other basic plumbing equipment.
What are the costs involved in opening a plumbing business?
The costs involved in starting a plumbing business are minimal. A used van or service truck is usually necessary. These vans can cost several thousand dollars for a used vehicle, up to $30,000 or more for a new vehicle.
A certificate can cost between $1,500 - $8,500 and take up to 12 months to get.
Equipment like assorted pipes and fittings, a large bucket to store fittings, pipe wrenches, reciprocating saw, circular saw, whole hog right angle drill, cordless screw gun, propane torch, cast iron pipe cutter, extension cords, pipe dope or teflon tape, a laptop computer, office equipment, and mobile phone are also needed. The total cost for all this equipment can exceed $5,000.
Used equipment can cost less but may require extensive refurbishing and maintenance before it can be used.
What are the steps to start a plumbing business?
Once you're ready to start your plumbing business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your plumbing business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your plumbing business keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting a plumbing business?
Getting started in the plumbing business isn’t technically difficult, but entry is basically barred unless you get certified and/or work as an apprentice first. Because it is an established trade, with a union, there is an order and process involved before you can start a business.
Therefore, the best way to get into the plumbing business is to start as an apprentice so you can “learn the ropes.”
How to promote & market a plumbing business
Promoting your plumbing company usually requires a multi-pronged approach when first starting out. If you previously worked as an apprentice, you may have already made contacts in the industry. You will not be allowed to take your former employer’s customers with you, but you can entice new customers to do business with you based on your old employer’s reputation and the fact that you worked under a master plumber.
Direct mail is another way to get new business. By buying a mailing list of individuals and businesses that have previously paid for plumbing services, you can tap into a target market for your services. Mail them a promotion offer to introduce them to your new plumbing company.
Finally, ask friends and family for referrals to establish a customer base.
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How to keep customers coming back
Become known for something in your industry. For example, can you be the first plumbing company in your area that promises to arrive on time and clean up after the job is done? Plumbing companies have a bad reputation for being dirty, late, and having poor customer service. Be “the other company.”
You can also specialize. Become the plumber that works exclusively with certain kinds of businesses. Get to know their unique needs and budgets. Cater to them and they won’t want to do business with a “general plumber” ever again.
How and when to build a team
Most plumbing companies benefit from having at least a few employees when starting out. This enables them to quickly recover marketing costs and startup expenses. A team of 5 plumbers, for example, can be deployed to 5 different locations.
However, it usually makes sense to add more plumbers as soon as you can afford to do so, provided that you have a steady inflow of jobs in your local area.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain a plumbing contractor’s license, a plumbing permit, and/or a plumbing license. Certain other state permits and licenses may be needed to operate a plumbing company. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
Plumbing companies should require clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions and service level expectations.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your plumbing business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
How much can you charge customers?
Jobs can be priced per hour or as a flat rate. However, the average price for plumbing services tends to be between $160 and $430 for a typical job. This works out to an average per-hour rate of between $45 and $150. Customers are usually also charged a flat service fee regardless of the number of hours worked on the job. This is in addition to the hourly or per-job flat rate.
What are the ongoing expenses for a plumbing business?
Ongoing expenses in this business are minimal. Maintenance on vehicles, maintenance/replacement of materials/tools, insurance, and office expenses (rent, utilities, etc) are all that are required.
How much profit can a plumbing business make?
A master plumber running a one-person company making $45 per hour, working 8 hours per day can make up to $100,000 per year. If ongoing costs are between $10,000 and $20,000 per year, this leaves $80,000 as net profit. A typical plumbing company pays its plumbers between $20 and $40 per hour, according to the Bureau of Labor Statistics. This means each plumber costs the company roughly $50,000 to $75,000 per year in labor costs (including insurance and benefits). While this substantially reduces profits, it allows a company to scale.
Assuming the same $100,000 per year per plumber gross profit, a plumbing company could clear $25,000 to $50,000 per plumber, per year.
How can you make your business more profitable?
Making a plumbing company more profitable means scaling the business and possibly going into business with other tradesmen to offer comprehensive services. For example, a plumber might team up with an electrician to offer multiple services.
Profits can also be increased by contracting with construction companies. Remodels and renovations can become a major source of revenue for a plumbing company.