By: Gary B. Xavier
The demand for HVACR professionals has never been greater than it is today. According to the United States Department of Labor, “employment of heating, air conditioning, and refrigeration mechanics and installers is projected to grow 5 percent from 2021 to 2031…about 40,100 openings for heating, air conditioning, and refrigeration mechanics and installers are projected each year, on average, over the decade.”
This demand will, of course, lead to many new business startups by both seasoned professionals and newly trained technicians who desire to become their own bosses. However, the term ‘be your own boss’ is seriously misleading. The reality is that business owners, whether their business is a one-person one-truck operation or a major company with many employees, work for their customers.
Remembering that a business is only as good as its customers is the first thing that anyone thinking of starting a service business must keep in mind.
Many experienced tradespeople, be it electrical, plumbing, or HVACR, often perform ‘on the side’ work for family, friends, and neighbors outside of their full-time employment. These side jobs may be lucrative and act as a bonus to the regular income of a technician or installer.
A common mistake, however, is thinking that one might survive on side jobs alone and leave their full-time employment to start their own business. Unfortunately, this usually ends poorly. When ‘side jobs’ that seemed so plentiful when done only on evenings and weekends are soon completed, the professional can be left with little work and no steady source of income.
Starting small is not bad, but it must be planned properly.
Existing companies, whether they are service companies such as plumbing or electrical, or sales companies like wholesalers and distributors, may consider adding HVACR services to their offerings.
Again, a common mistake can be overestimating the amount of this work available, so care must be taken to properly judge the consumer demand, competition, added capital expense, and overall operation of this additional group before investing time and money in what might be a futile venture.
Proper planning, whether for a brand-new small start-up or incorporation of HVACR work into an existing business, is critical to a business's success. As the adage goes, “plan your work and work your plan.”
These are some of the avenues that need addressing during the planning stage:
Depending on the potential business location, the local jurisdiction — state, city or county — may have rules regarding the licensing of the HVACR service businesses and professionals. Licenses may be required for the business as well as the individual technician, or both.
On the Federal level, the United States Environmental Protection Agency (USEPA) states in part that anyone who “installs, maintains, services, repairs, or disposes of appliances containing regulated refrigerants must be certified under Section 608 of the Clean Air Amendments of 1990 to purchase and use those refrigerants.”
Though some residential customers might ask for proof of insurance, commercial customers require it. Necessary insurance coverage may include liability insurance, worker’s compensation and job completion.
Starting a business without consulting legal advice is the same as buying an air conditioner with no idea of who might service it when it fails to run properly. The time to consult an attorney is before the business has started.
According to Brent Xavier, Esq., co-founder and partner of Pact Legal, LLC, potential business owners should consider the following things before turning the first wrench.
Legal Tip #30 © Pact Legal, LLC used with permission
According to a recent study by Fundera, 20% of small businesses fail in their first year, 30% in their second year, 50% by year five and 70% by year 10. In my opinion, the most common cause of business failure — in any business — is a lack of proper planning and implementation of that plan. Another issue that cripples start-ups is a lack of funding. Any HVAR business start-ups that implement proper planning will ensure there is sufficient capital available to keep the business operating for many years.