Model business plan

Ray_Frechette

I am considering obtaining hvac licences and opening up a business.

I have been interested in this for years and I am seriously thinking of pulling the trigger.

I am 51 and have rental income that covers my living expenses as they are all paid for. My thoughts are that it would be a handy sideline tof the rental properties. I had owned a boat building business as a sideline but it proved to be more hobby and craft than financial boon. Satisfying to see a boat come alive but hard to bill more than 25 an hr for handcrafted wood boats.


My son is 24 and a maintenance tech for a large national retailer. He is interested in the possibilities of Segway into hvac as well and taking over as I wind down....

I could see myself working a few days a week after 65 and helping get your son out on his bigger projects...

I asked Dan but he punted to The Wall as that is where the business savvy contractors are...


I am wondering how long on average it takes for a single man business to be viable. Wondering about what reasonable investment in tools will be a rough cost of overhead such as insurances and advertising, and how cash flow might be expected to increase...

Any guidance would be very much appreciated.

Harvey Ramer

First of all, do you have technical knowledge of HVAC systems? It takes a while to learn the stuff as it covers a vast field. The only way you can learn it in a short time is if you are passionate about it, and then it will consume your life.

If you can do the above, you may expect 5 years of dedication to the trade before you are in a desirable profitable position. As with most businesses, the first 5 years determine the winners and the losers. The winners are the ones who applied themselves and didn't give up.

As far as overhead costs and such, that varies wildly based on the individual and geographical location. Right from the start you will have to keep accruate records on time worked, profit and loss per job and so forth and so on. This will give you a track record to adjust your charge rate and become solvent and profitable. Watching your bank account tells you literally nothing about what's going on with your business.

If you want to do it short term for some extra cash, forget it. If you want to do it long term, you must be prepared to dedicate yourself. The rewards are great but the battle must be fought.

Paul Pollets

Read Ellen Rohr's book, " Where did the Money Go". It will give you some great insight into the business world of contracting.

Robert O'Brien

What Harvey said. I'm hoping I don't need a Segway to segue into retirement!

Ray_Frechette

Darn auto correct.. I missed that one before sending.


I know that to make money with apartment houses it is helpfully to have deeper pockets than your arms are long...

I guess my biggest question is how long gone before one is likely to be busy enough.... 3 months, a year?

3 years?

Ray_Frechette

I have high mechanical aptitude, have been ABC certified as a marine electrician and taught marine electrical at Wooden Boat school.

I read Siggys book cover to cover and designed and species out my boiler in my house and worked with a frI ended who is a master on setting it up.

I am fairly comfortable with oil and gas, and have no doubts as to my ability to learn AC refrigeration as well however that is an area I would have most to learn.

EBEBRATT-Ed

I tried it for 5 or 6 years. My accountant told me at the start that my hourly rate had to be 3x what I wanted to pay myself. Thought he was nuts...he wasn't! That was 30 years ago. After 5 years hit a recession so I got out. Don't know if the #s have changed much.

Insurance is a big deal. You estimate how much business you think your going to do and the ins. co sends you a bill. At the end of the year you did more business.....you pay more money.

Workmans comp is costly. Your going to have to incorporate to protect your other assets (apartments etc) so you can't duck WC

File yearly corporation reports etc.

Then put out a lot of money, tools, trucks etc. do some work and wwwwwaaaaiiiittt to get paid.

And this is after you work in the business for 3years minimum (probably more) to get experience.

If you really want't to do it get a license and get trained. Work for someone to learn the business.

Maybe you can find an owner retiring in 4 or 5 years and you can buy him out.

No to discourage anyone, I have 44 years in the business (1 more to go !!!!!!!) and have always worked but ......not sure I would come in cold at 51

hot_rod

Viable or profitable?

Assuming you get the tech skills down.

Suppose you want $70,000 salary, before taxes
Maybe you want to work 45 weeks a year, 40 hrs. per week, so 1800 hours per year. I think all knowledgeable tradespeople deserve 100K or more, personally.

$70,000
1800 = $38.00 per hour just to cover your salary!

Now add into that your truck, tools, licenses, insurance, advertising, etc

Also of that 1800 hours, probably 1/3 is billable. You have bids to work on, jobs that you bid and don't get, parts to chase, call backs, days when the phone doesn't ring etc.

Typically most one man shops end up working 2500 or more hours a year just to stay ahead, and probably end up paying themselves more like 35- 40K.

My wife teaches basic business for small contractors, a shameless plug... She has a "weekend business plan" book or download at her site. Her books are also available here at heatinghelp in the Bookstore.

Maybe spend a day or two and crunch some numbers.

www.ellenrohr.com

L Thiesen

I have almost 30 years in the plumbing side of the business as a one man business and I would say Hot Rod gave you some very good advice. I would agree with all of it especially the number of hours you can actually bill and the number of hours you will work.
Run the numbers before you start this.

JUGHNE

Call backs because customer doesn't understand Tstat when changing from heat to cool etc.
Would you charge them a call if they just paid you 8-9 K for a new system........???? I don't and it costs me, I should have included something extra for these situations.

Sunday 3 AM call that "your" new system isn't heating, who is going to go?

Wrong parts that could have been returned stay on your shelf because you are too busy to sort that out....the return window closes and we all have some white elephants.

Some one shops your price around and tries to bargain you down. You need the work maybe and have to make a decision???

When you hang up a new shingle, those people come out from under a rock who no one else will work for. They are professional rip-off artists who seem very honorable. The promises of payment seem to evaporate as the work progresses. You may be the 5th lien against the property with little hope of payment.
Being in a small town we know who these people are, a city may be a different story.

But, don't let us discourage you from doing it!!

Larry Weingarten

Hello, I'm all for self employment and have been for many years. Still, I'd consider going to work for a good shop and learning the ropes from that relatively safe environment. Trying to learn both the trade and business sides of this at the same time sounds like a recipe for stomach aches!

Yours, Larry

GW

Ray, Best of luck with your pursuits. I'm similarly aged

It's like anything under the sun, you have to want to learn. I am a poor fisherman because I don't want to invest myself in how fish act and think. I'm good at heating and cooling because I'm always eager to learn.

In the beginning you're gonna get your buttocks handed to you here and there. It looks so easy until you get in a jam. After 28 years of doing this my eyes drift towards "can this install bite me" it's rare that the answer is yes but it still happens. On service calls I'll make an effort to say "if this doesn't fix it we need to them do xyz and that cost is bla bla.

Business plan- never had one. Yet I was fortunate enough to be young and under the roof of loving Grandparents when I began. I leaned by the seat of my pants. It seems like you're also in a "no pressure" situation so that helps immensely.

Everyone has their own unique ability to thrive (or not). If you're highly skilled but have low self esteem, you'll gonna "get by". If your skills aren't high but you have high self worth, you'll probably get by. If you think you're good and you are, you'll make more dough.

Business plans don't address psychology. Business plans don't give you a good personality to interact with the public. Business plans don't tell you how to deal with a problematic customer. I'm not anti planning but I never did and came out the other end ok.

If you're sloppy with bill paying then that's not good. I am serious, many start up people will get a quick infusion of cash but don't see the downturn coming,

How much money to start with? Are we talking with or without a place of business and vehicle(s)? It can be nothing ( well a few hundreds $ in tools would help), to tens of thousand of you want to get the horse running when the gate opens.

How long it takes to make money, not sure there's an answer to that. Hopefully sooner than later

Good luck, there's so much to learn. Get a combustion analyzer and get a little training.10 or 15 years ago we all had excuses to not have one, but now it's expected.

I could blather on and on, hope this helps

Gary