Start a plumbing business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your plumbing business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
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 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.
Who 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.
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.
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.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your plumbing business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
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.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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.
STEP 5: 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.
STEP 6: 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.
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.
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.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: 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.
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.
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.
STEP 9: Establish your 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.
Start A Plumbing Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
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 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 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.
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Take the Next Step
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.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
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 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.