The plumbing industry can be lucrative. According to the United States Bureau of Labor Statistics, the average annual salary for plumbers is about $60,090, significantly higher than the median wages for other construction trade workers. The job can also be rewarding, as plumbing businesses work directly with clients to ensure their properties maintain optimal function.
For these reasons and more, many consider starting small businesses in the plumbing trade. You may have experience with plumbing but lack sufficient knowledge about owning a startup, more specifically how to own a plumbing business. This guide explains some of the most important aspects of starting a plumbing company.
1) Determine Which Types of Plumbing Services You’ll Offer
First, think about the plumbing services you’d like to provide customers. This decision will dictate your target audience and overall business plan. There are three main options — residential, commercial, or both.
Your choice depends on your skills and preferences. You also need to consider the local market. For example, if there are already many residential plumbing businesses in the area, offering commercial services can make you stand out. You don’t need to choose between the two; many successful plumbing businesses deliver both services.
Additionally, you need to consider if you want to become a plumbing contractor or journeyman plumber. A plumbing contractor hires plumbers to perform services on their behalf. A journeyman plumber has attained the necessary qualifications to perform plumbing without supervision. They're self-employed but not authorized to run their own business.
2) Establish a Plumbing Business Plan
Necessary for launching a startup in any industry is a business plan, also known as a business model. It will outline the overarching business goals of your new plumbing company and the strategies for making them a reality. It gives structure to your business and a direction for growth. What’s more, it shows potential lenders how serious you are about the enterprise and how it can produce a return on investment. A well-defined plumbing business plan will contain the following:
- Executive summary: Provides an overview of the business plan, including your mission and the types of services you’ll offer
- Business structure: Details the legal structure of the enterprise and discusses operational plans, such as location, personnel, plumbing equipment, and business license
- Marketing and sales: Explains the sales and marketing strategies the business will use to attract and retain client
- Market research: Considers the economic conditions of your target market and the size of the plumbing sector in your area to identify customer needs and evaluate market viability
- Competitor analysis: Establishes the competition and their strengths and weaknesses to pinpoint an area where your business is unique
- Financial projections: Indicates the possible profitability of the business and includes startup costs, funding needs, and hypothetical income statements, balance sheets, and cash flow information for the first few years of operation
3) Seek Licensure and Certification
To operate an official plumbing business, you’ll need a plumbing license. Being a licensed plumber means you comply with state and local guidelines for running a small business and plumbing operations. Licensing requirements differ depending on the state, so you’re advised to contact the office of the Secretary of State or licensing board for more information. Specific certifications for plumbing companies include:
- Journeyman plumber license: Allows a plumber to work independently on projects but not own a plumbing business
- Master plumber license: Enables a plumber to become a plumbing business owner in many areas
- Plumbing contractor license: Allows a plumbing business to bid on and supervise plumbing projects
4) Register the New Plumbing Business
Another step is to get your business registered. Registering a plumbing company involves three main components:
Establish the Company Name
Your business name should be unique and relevant to the services you provide. It should also draw in new customers from your target market. Once you settle on a name — and ensure no other plumbing company already has it trademarked — you can register it with the Secretary of State.
Create the Business Structure
You can choose from several business structures, such as sole proprietorship, partnership, corporation, or Limited Liability Company (LLC). Each has different implications for general liability. For example, becoming an LLC can act as liability insurance because it safeguards the business from being personally liable for legal concerns. Consider consulting an attorney to figure out which structure best suits your needs.
Manage Legal Requirements
A key legal requirement for plumbing businesses is securing an Employer Identification Number (EIN) from the IRS. Additional requirements vary depending on region, so consult the local Chamber of Commerce or Small Business Administration office for guidance.
5) Obtain the Proper Plumbing Equipment
Plumbing work can’t happen without the necessary tools and equipment. You want to invest only in the plumbing tools needed to perform your services. While new equipment is nice, consider used equipment where appropriate to save money. Above all, ensure the tools you choose are durable. The following are some tools essential for plumbing jobs:
- Pipe cutters, wrenches, and threaders
- Pipe and tubing benders
- Drain snakes and augers
- Inspection cameras
- Plungers
- Vehicle for transporting equipment and tools
6) Explore Financing Opportunities
Starting any small business requires a significant investment. For plumbing companies, just acquiring the necessary equipment can be costly. It’s why new plumbing businesses are encouraged to consider small business loans, such as those offered by U.S. Small Business Administration (SBA loans). Another option is to seek funding from investors, which is part of why creating a business plan is so important.
How Much Does It Cost To Start A Plumbing Business?
The cost to start a plumbing business can vary widely depending on the location, size, and services offered. On average, it can cost between $10,000 to $50,000 for a small or medium-sized plumbing business. Key expenses include obtaining licenses, purchasing tools and plumbing equipment, securing insurance, marketing, and setting up a business office or shop. Equipment costs can range from $2,000 to $5,000, while a business license and insurance might add another $1,500 to $3,000 to the startup budget .
Other factors to consider include vehicle expenses, which are crucial for a plumbing business. A reliable service vehicle may cost between $10,000 and $30,000. Additionally, marketing and advertising efforts, such as building a website or running local ads, can cost $1,000 to $5,000. Overall, having a well-detailed business plan and financial forecast is essential for managing these startup costs.
7) Market Your Plumbing Business
Marketing is critical for launching your plumbing enterprise, as it enables you to draw in potential customers and generate brand awareness. Since many consumers use digital platforms to investigate brands, it also ensures an online presence and establishes your business as credible among your customer base. Some marketing strategies to consider include:
- Social media and email marketing
- Pay-per-click (PPC) advertising
- Website and local search engine optimization (SEO)
- Referral programs and word-of-mouth marketing
- Print materials (i.e., flyers, billboards, and business cards)
- Digital materials (case studies, webinars, podcast or Youtube videos)
- Community involvement
Discover Next Level Field Service Management Software from Sera
Once your plumbing business is ready, you can begin offering services to customers. As your business grows, you may find that managing field work and office operations becomes more challenging. What’s more, if all tasks are completed manually, you may identify inefficiencies and errors that limit your success.
This is where plumbing service software comes in. At Sera, we offer field service management software (FSM software) to help residential plumbing contractors automate tasks like scheduling, dispatching, and invoicing. It helps contractors discover and correct gaps in efficiency to strengthen their bottom lines. In addition to plumbing businesses, we provide FSM software for similar home service companies, such as HVAC contractors and electricians.
Contact us today to schedule a 15-minute discovery call or 45-minute demo and learn more about FSM software.
