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 step guide to starting your sauna installation 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 sauna installation business?
Expect to invest up to $250,000 to get your company up and running. Initial franchise fees often run from about $25,000 up to $50,000 depending on the area. You will need about $200,000 to be able to order the sauna kits, lighting, and accessories. In addition, you will need to invest in marketing and transportation before your income starts to roll in. If you wish to operate a storefront or a display in a big-box store, you may need an additional $10,000 to $100,000.
What are the ongoing expenses for a sauna installation business?
Marketing and sales will always be a major cost for the business. However, you must have financing in place to be able to purchase the sauna kits for delivery on the client's schedule. Expect to carry $100,000 to $200,000 in inventory at any given time.
Who is the target market?
Your preferred clients will mostly consist of wealthy homeowners and corporations. These homeowners will generally live in wealthy suburbs or urban areas, and they will have extra money to invest on upgrades to their homes. Corporate clients that operate multiple spas or exercise gyms such as office towers, hotels, and resorts will also look for you to install saunas into their spa and pool areas. Corporate clients with multiple locations can provide a more constant stream of business for your company.
How does a sauna installation business make money?
Your business will make money by charging your clients for the sauna and for the installation service that your provide. Profit is made on the hourly rate charged for labor for the installation job. Minimal income is generated on sale of the sauna unit and a variety of accessories. New installations or upgrading existing units are the major source of income, as minimal maintenance is required for a sauna.
How much can you charge customers?
A typical sauna can be installed for as little as $3,000 while costs for larger units will can approach $25,000, depending on plumbing and electrical requirements.
How much profit can a sauna installation business make?
You will typically see a 10% profit on the cost of the sauna unit. Your real profit comes from installation fees. Experienced crews will complete the jobs faster, leaving more profit for the business. A successful sauna company can see net profits of $100,000 to $200,000 per year.
How can you make your business more profitable?
Time and consistent success will build your reputation as a reliable sauna installer. When your crew is kept busy installing units, and your marketing department continually shares your success stories, more interested customers will arrive and buy the next sauna, generating more profits.
What will you name your business?
Choosing the right name is very important. 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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your sauna installation business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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
Certain state permits and licenses may be needed to operate a sauna installation company. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
For 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.
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.
Sauna installation businesses should consider requiring 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, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your sauna installation 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.
Certificate of Occupancy
A sauna installation company can be run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease office space:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a sauna installation company.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build office space:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your sauna installation company will be in compliance and able to obtain a CO.
STEP 7: 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.
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 sauna installation business
While saunas are growing in popularity, many people still don't understand how they work or what the benefits may be. You will want to work at trade shows offering demonstrations of your available designs. Attend health conferences and sports medicine expos to connect with companies who may be looking to add saunas to their locations. Build your website using photos of completed jobs and reviews from happy customers. Marketing will be your main job, while your crew works on installing the saunas.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Many of your new customers will have used one of your saunas at their gym or resort. Make sure to provide sales brochures wherever your units are installed in public locales. Offer maintenance services for existing saunas, so they will call you for additional services when they wish to upgrade or renovate. Work with physical therapy offices to connect with patients who may benefit from installing a home sauna. You should always be looking for the chance to open a conversation with a potential client who may not even know what a sauna can do for them.
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 Sauna Installation Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
If you are passionate about the health benefits found after using a sauna, are a natural salesman, manager, and have some background in the construction industry, you may enjoy running a sauna installation business.
What happens during a typical day at a sauna installation business?
Though your level of involvement will differ based on the size of your team, the duties of a typical sauna installation business owner generally include:
- Providing sales information, installation costs, and time estimates to customers interested in your product
- Scheduling installation jobs and coordinating delivery of units and crews
- Working on installations yourself using construction, electrical and plumbing knowledge
- Working with customers on their sauna design, location and required size
- Receiving payments from customers and issue checks to suppliers
- Handling payroll responsibilities
- Hiring and training additional installation technicians
- Running a vendor booth at a trade show answering questions and generating sales leads
- Creating sales opportunities through networking within your community
- Maintaining proper licensing and liability insurance for a business that works in private homes and commercial locations.
What are some skills and experiences that will help you build a successful sauna installation business?
You are primarily selling the sauna experience and the units. However, other useful skills to operate your company will include:
- Basic accounting and business knowledge
- Excellent marketing, networking, and people skills
- Knowledge of the hiring process and payroll regulations
- Understanding building codes
- Knowledge of electrical design and function
- Basic knowledge of plumbing
- Simple construction experience
- Time management skills
What is the growth potential for a sauna installation business?
Your location will dictate the number of saunas you are able to sell and install. If you are located near a resort area, like near Florida beaches or near tourist attractions in Nevada, you will be able to grow your business much faster than if you work in a rural area. Before starting your business, it is imperative that you make sure there is enough of a market in your business’ area for you to make a profit.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
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 sauna installation business?
Becoming familiar with a limited number of top quality saunas and only offering those select designs will ensure that you and your crew are maximally educated about the proper installation procedures for each type of sauna you offer. It can help to install a few units at a steep discount to get your crew up to speed on the quirks of each type. The fewer challenges your crew faces during installation, the easier it will be to build your reputation as fast and reliable. You must be able to backup the installed product with stellar knowledge and service.
How and when to build a team
This will be one business where you will want to have a partner from the very beginning. This will be helpful, as one of you will be able to focus on managing the business and the other will be able to focus on managing the installation crew. The two of you will be able to locate the sauna kits you with to utilize, learn about your target audience, and develop a marketing plan and schedule before you find your first client. Hire your installation crew when you are ready to install a demo unit.