How to Start a Plumbing Business

The US plumbing industry is worth a massive $124 billion and growing steadily at 4% in 2021, which means there are opportunities out there for experienced or even novice plumbers looking to strike out on their own. 

Of course, starting any business required dedication and hard work. Fortunately, you’ve come to the right place, as this step by step guide will help you move patiently through the development and launch process until you are running our own successful plumbing business!

Let’s begin your entrepreneurial journey.

Step 1: Decide if the Business Is Right for You

Your journey towards becoming a top plumbing business owner starts by grasping the ins and outs of the industry.

Pros and cons

When you’re in startup mode, it makes perfect sense to know the pros and cons of owning a plumbing service.

Plumbing industry trends

The US plumbing industry shows no signs of slowing down, thanks mainly to increased residential construction. Also, higher per capita disposable income should enable consumers to upgrade existing systems, including Energy Star-certified and eco-friendly products.

Industry size and growth

• Industry size and past growth – The US plumbers market is worth $134 billion, after seeing a steady 3% annual growth since 2017.((https://www.ibisworld.com/industry-statistics/market-size/plumbers-united-states/)) 
• Growth forecast – Demand for plumbing services is expected to accelerate over the next five years to 2027 because of a resurgence in commercial and residential construction activities.((https://www.ibisworld.com/united-states/market-research-reports/plumbers-industry/)) 
• Number of businesses – Nearly 130,000 businesses provide plumbing services in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/plumbers-united-states/)) 
• Number of people employed – The industry employs more than 560,000 people.((https://www.ibisworld.com/industry-statistics/employment/plumbers-united-states/))

Trends and challenges

Here are some trends that will shape the plumbing industry in the coming years.

• Smart Plumbers – Today’s homeowners want to work with plumbing services that offer high-tech solutions such as water leak detection using smart devices, giving rise to tech-savvy plumbers.
• Plumbers will do more than just fix leaking pipes, install water heaters, or unclog toilets. More plumbers will look to expand their trade by taking on waste management and HVAC systems installation.
• Expect to see robust digital marketing and social media campaigns as plumbers jostle for clients online.

Challenges include:

• Finding qualified workers
• High prices of materials
• Risk of injuries

What kind of people work in plumbing?

• Gender – More than 96% of plumbers are male.((https://www.zippia.com/plumber-jobs/demographics/#gender-statistics))
• Average level of education – 53% of plumbers hold a high school diploma. No need for a college education, but professional certifications are required.((https://www.zippia.com/plumber-jobs/education/))
• Average age – The average age of a plumber in the US is 42 years old.((https://www.zippia.com/plumber-jobs/demographics/#age-statistics))

How much does it cost to start a plumbing business?

The minimum cost of starting a plumbing service is around $1,500 if you’re running your business from home and up to $30,000 if you’re renting space and have a van.

These funds will go toward the following:

How much can you earn from a plumbing business?

A master plumber running a one-person operation could charge $50 per hour. At 8 hours per day, six days a week, you’d make $124,000 in annual revenue and maybe $80,000 in profit, depending on your margin. 

In your first year or two, you could work from home for 6 hours per day and five days a week, bringing in $80,000 in annual revenue. This would mean around $60,000 in profit, assuming an 80% margin. As you gain more clients, your billable hours could double to 12 per day and you could work six days a week for a higher fee of $100 per hour. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to around 40%. With annual revenue of $370,000, you’d make a tidy profit of almost $150,000.

A typical plumbing business pays its plumbers $20 to $40 per hour, according to the Bureau of Labor Statistics. This means hiring a professional plumber can cost your company about $50,000 to $75,000 per year, including insurance and other benefits.

While hiring plumbers reduces your profit margin significantly, it also enables your business to scale.

What barriers to entry are there?

The plumbing industry has few barriers to entry. But, as a new business owner, some of the challenges you’re likely to encounter include:

• Plumber certification takes 8 months to 2 years 
• Competition from established plumbers

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Step 2: Hone Your Idea

Now that you know what you’re getting into and the possibilities, it’s time to trim down your business concept.

Why? Identify an opportunity

Identifying your competition can help you determine what you need to do to stand out and attract the right customers. It will also enable you to develop a competitive pricing structure and respond to rival marketing campaigns.

Competitors in the plumbing industry include franchisees of a regional or national plumbing firm that often do repair work, local companies dealing with small to medium plumbing jobs, and large residential and commercial companies working on large projects.

You can pinpoint your competitors by checking with your local business directories, Chamber of Commerce Directory, or searching the internet for terms such as “plumbing companies near me.”

What? Determine your products or services

Plumbing includes the following tasks:

• Installing pipes and plumbing fixtures
• Clearing sink drains and toilet obstructions
• Troubleshooting problems in equipment 
• Estimating installation and repair costs
• Scheduling and dispatching employees

Plumbing work schedules are typically 9 am to 5 pm. However, the schedule may change depending on the task and a client’s availability.

How much should you charge for plumbing services?

Plumbers charge by the hour or by the job. Here’s a breakdown of the standard rates.

• Per hour – $45 to $150
• Flat rate – $75 to $250 for smaller jobs; $500 to $800 for bigger tasks
• Per fixture – $100 to $600
• Apprentice plumber – $14 per hour

Plumbing prices vary depending on materials needed for repairs or installation, location, and the plumber’s experience.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

The key to starting a flourishing plumbing business is knowing who your customers are and what motivates them to buy. Potential clients for a plumbing service include:

• Homeowners
• Real estate agents
• Businesses such as food outlets and manufacturers.
• Hospitals
• Property and facility managers
• Contractors such as electricians, roofers, and builders.

Getting a new plumbing business off the ground is all about forming quality relationships. Teaming up with a reputable contractor, for instance, can generate quality plumbing leads and referrals. Getting to know the best contractors in your area makes good business sense. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “plumbing” or “plumbers”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Bakery” over “Jim’s Cookies”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your services in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to plumbing services. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your plumbing company will shape your taxes, personal liability, and business registration, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a plumbing business.

Step 8: Apply for Licenses/Permits

Starting a plumbing business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your plumbing business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

Plumbing software such as Housecall Pro, AroFLo, and Marketing 360 can help with bookkeeping and invoices, managing cash flow, tracking projects and hours worked, and even managing social media campaigns and SEO optimization.

Accounting 

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Book Now.” This can sharply increase the number of clients.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include: 

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as a special discount for the first customer on a holiday.  
• Signage – Put up eye-catching signage at your store and website. 
• Flyering – Distribute flyers in your neighborhood and at industry events. 
• In-Person Sales – Offer your products/services at local markets, trade shows. 
• Post a video – Post a video about your plumbing services. Use humor and maybe it will go viral!
• Seek out referrals – Offer incentives to generate customer referrals to new clients.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Create infographics – Post infographics and include them in your content.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your services meet their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your plumbing business could be:

•  Success guaranteed or your next job’s free!
• Fastest, most reliable plumbers around 
• The most advanced and efficient tools and methods 

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a plumbing business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been a plumber for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in plumbing. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a plumbing business would include:

• Plumbers
• General Manager
• Marketing Lead 

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

To run a successful plumbing business, be ready to work during weekends and past regular working hours. A leaking pipe is an urgent matter that needs to be addressed immediately to prevent damage to a home and the growth of mold. So if a client calls you to fix a leaking pipe late at night, you’d have to go to work. Of course, that would mean a higher rate. 

Besides providing excellent work, it’s also important that you think like a businessman and keep track of your costs. You’re now ready to launch your plumbing business! Good luck!