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 welding 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 welding business?
Startup costs sit around $10,000 to $50,000. These costs include a metal fabrication shop, which has a rent of about $3,000 per month. These costs also account for insurance, tools, electronics, mobile service options, and personal protection equipment. Minor equipment can be purchased for as little as $1,000, but you’ll need to expand your inventory as more projects are approached.
Read our welding business purchasing guide to learn about the materials and equipment you'll need to start a welding business, how much to budget, and where to make purchases.
What are the ongoing expenses for a welding business?
Employees will be paid between $45 and $65 per hour. Additionally, raw material will need to be purchased. Typically, this raw material will be marked up by about 50 percent when it’s used.
Who is the target market?
The best clients and customers are those with ongoing welding needs. While you can conduct single projects, you’re better off engaging clients who manage commercial machinery. Among your many clients, several will be incredibly profitable. The best jobs a welding business scan undertake are mega yacht repair, marine equipment fabrication, architectural iron modification, aircraft repair and remanufacturing, cruise ship service, and restaurant equipment repair.
Because commercial providers need to meet certain industry standards, they’re incredibly profitable. Welding clients can extend to farm equipment owners, other welding shops, silo tank providers, and even steel dairy equipment providers.
How does a welding business make money?
Most welding businesses make money by performing small projects. They can, however, make a lot of money by engaging long-term projects. Because a welding company’s best providers are normally marine equipment providers, a lot of service is needed to prevent rusting and water damage.
A welding company also makes money by making metal modifications and repairs. If a company’s machinery breaks, a welding business will be called to examine the surrounding problems. It may also contact a separate repair team—taking charge with metal repairs and needed fabrications, itself.
How much can you charge customers?
Welding services can be charged in two ways. First, they can be charged on a per-job basis. They can also be charged at an hourly rate. Typically, per-hour rates are between $30 and $70 per hour. A well-established welding company may offer higher prices for special jobs and work needs.
How much profit can a welding business make?
A well-established welding service provider can gain yearly profits of about $70,000. A highly successful welding business, meanwhile, can make six figures easily.
How can you make your business more profitable?
Every period of work time should be budgeted. A poorly drawn business plan is believed to be the number-one cause of welding business failure. Know what you can afford, and prioritize your customers. Don’t buy personal toys—welding equipment—before you need it. Focus on getting the business in the door, and find the best customers who need your services. From start-up independent jobs to multi billion-dollar contracts, you’ll need to be a good face-to-face negotiator.
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 welding 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.
Federal Business Licensing Requirements
Certain state permits and licenses may be needed to operate a welding business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In business where services are provided on an extended basis, a services contract is often put in place outlining terms and conditions of service.
Welding businesses should require clients to sign a services 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. An example of a service contract can be found here.
Labor safety requirements
It is important to comply with all Occupational Safety and Health Administration requirements.
Relevant requirements include:
- Employee injury report
- Safety signage
Certificate of Occupancy
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 a location:
- 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 welding business
- 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 a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your welding business 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 welding business
Market directly to businesses. While cold-calling tactics are difficult to pull off, you’ll need to become good at them to find high-quality clients. Market to any business related to marine services, and try to get hired by big companies. If they’re part of a business network, fish for opportunities there.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Hiring an ongoing welding service provider is a long-term commitment. For this reason, customer retention can be difficult to obtain but easy to maintain. Your best retention tool is to ensure high-quality, quick services. As with any contracting job, companies will stick to providers which ensure reliable services.
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 Welding Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
A welding business should be run by individuals who’re experienced in metalworking, welding, and fabrication. It’s a solid business plan for workers who love excavating projects, fixing mechanical items, and performing general maintenance. A lot of welding projects are custom, giving project managers a lot of control over the services performed. A high degree of investment takes place, too, making it a good business for individuals who enjoy completing ongoing repairs, installations, and upgrades.
What happens during a typical day at a welding business?
A welding business owner must perform a number of activities. Among the many responsibilities a welding business owner has, understanding local laws, sales needs, and self-starting requirements is important. Welders assist with dump truck box repair, aluminum tank restoration, blade welding, lift welding, silver brazing, and fabrication projects. Other activities include ongoing research, metal repair, plasma cutting, and machine maintenance.
As an owner, you’ll need to conduct research on local market needs, effective sales strategies, management, and finance. You’ll similarly need to protect your team’s tools from damage, maintaining a healthy supply of metal-cutting tools to ensure high-quality services.
What are some skills and experiences that will help you build a successful welding business?
The skills a welding business provider must have are numerous. First, you’ll need to be able to read blueprints quickly and easily. You’ll also need an awareness of safety standards. Concentration, customer service skills, a detail-oriented work ethic, good eyesight, knowledge of metallurgy, tool knowledge, dexterity, and in-depth knowledge of different welding techniques are also important.
A successful welding business can service a wide array of projects. They handle jobs quickly, and they’re capable of meeting a high variety of client needs. Lasting welding businesses are committed to their work, ensure all aspects are completed correctly and have a sharp eye for new potential.
What is the growth potential for a welding business?
Welding businesses have a lot of potential. They can either be a niche welding business or a general welding shop. Understandably, niche welding businesses have a tight market area. They’re able to grow quicker, as there is less competition.
General welding shops, meanwhile, face a lot of competition. However, they do have a lot of services available. If a general welding shop advertises correctly, it can offer fabrication services for most jobs, though it will need to advertise across multiple industries and have a wide range of services and equipment.
TRUiC's YouTube Channel
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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 welding business?
Develop a business plan quickly. A lot of welders think business plans are a time-sink, but a solid business plan can help you map out your business’s needs and expenses.
How and when to build a team
Once you’re spending over 40 hours a week fabricating and welding, you’ll need to hire more employees. Working this much is a good sign, as it proves you’re becoming a successful business. As a business owner, however, you’ll need to manage between three and five additional workers with care. They depend on you for their financial survival, and they’re typically paid more than average employees.
Read our welding business hiring guide to learn about the different roles a welding business typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.