You're sitting in the company van after another long day, calculator open on your phone, wondering if you could actually do this on your own. Learning how to start a heating and air conditioning company isn't rocket science - it's planning the right things in the right order so you build a profitable business instead of buying yourself an exhausting new job.
By the end of this guide, you'll have an itemized startup budget, proven tactics to get your first customers, and the honest timeline of Year 1. No sugar-coating, no generic checklists - just what works for skilled technicians making the leap to ownership.
Starting an HVAC business involves 8 key steps
First, create a lean business plan and define your niche. Second, build an itemized startup budget and secure funding. Third, complete all legal registration, licensing, and insurance. Fourth, set up your Day 1 tech stack, tools, and van. Finally, launch your marketing plan to get your first customers.
Real talk first: is starting an HVAC business worth it?
The upside is real. You get true control over your schedule, your pricing, and how you run things. The financial potential is significantly higher than working for someone else - employed HVAC technicians earn a median wage around $57,300 annually according to the Bureau of Labor Statistics, while successful business owners can clear six figures. You're also building a salable asset. Even from Day 1, successful owners think about their endgame - whether that's building a business to sell later, passing it to family, or just designing work you enjoy.
Year 1 is genuinely stressful. You're trading one boss for dozens of customers, each with their own demands and expectations. You'll work 60-70 hour weeks initially. There's immense personal financial liability if things go wrong. The pressure of every decision falling on your shoulders can be overwhelming.
Common fears are completely normal. "Am I crazy for being this scared?" No. The fear means you're taking this seriously. "What if I lose everything?" That risk exists, but proper planning and starting lean minimize it significantly.
The critical mindset shift you need to make: You're not just becoming self-employed. You're building an HVAC business that can eventually run without you. That distinction changes everything about how you plan and execute.
Real Talk from the Field
Many new owners ask: "Am I crazy for being this scared?" The answer is no. The fear means you're taking this seriously. Successful owners say the anxiety never fully disappears, but you learn to act despite it. One owner shared: "I was terrified for six months. Then one day I realized I had 30 regular customers, money in the bank, and I'd never work for someone else again."
And if you're still searching for your perfect idea, read our guides with small business ideas and service business ideas to get your creative juices flowing.
Starting a heating and AC company quiz
There are many ways to start an HVAC business - from solo service work to managing full installation teams or building a premium brand.
Take our quick quiz to discover the best way to start your HVAC business, based on your experience, goals, and how you like to work.
Your result shows the HVAC business model that fits you best - now it’s about taking the next step.
Step 1: create your HVAC business plan (the lean way)
Traditional business plans are overwhelming. They involve executive summaries, detailed market analysis, and lengthy financial projections that take weeks to complete. For a first-time founder, that complexity often leads to paralysis.
The lean alternative works better for starting an HVAC business. A lean canvas is a one-page business planning template designed for speed and focus on the essentials: problem, solution, customers, and how you'll make money. You can complete it in under an hour.
Why you still need some plan: It forces you to think through your niche, pricing strategy, and how you'll compete. Rather than searching for an hvac business plan example to copy, start with our one-page template designed specifically for HVAC businesses. It asks the right questions: Who are your customers? What problem do you solve for them? How will you reach them? What will you charge?
Unlike generic business templates, this HVAC-focused version covers the specifics that matter for your trade: seasonal income patterns (summer AC rush vs. winter heating calls), equipment-heavy startup costs, customer segments (emergency calls vs. planned maintenance vs. installations), and the unique challenges of managing both residential and commercial clients. It asks HVAC-specific questions like "What's your plan for the slow season?" and "How will you handle emergency calls while maintaining work-life balance?"
When you need the full traditional plan: If you're applying for an SBA loan, banks will require it. The Small Business Administration offers a traditional business plan template if you need one later, but don't let that stop you from starting with the lean approach today.
Step 2: define your niche and services
In a market with established competitors, picking a specialty – focusing on a specific market segment or service type to stand out from generalist competitors – helps you command better pricing.
The biggest decision: residential versus commercial HVAC. Commercial HVAC means servicing heating and cooling systems for businesses, offices, and large properties, requiring different skills, equipment, and often separate licensing from residential work.
Residential pros: Lower barrier to entry, consistent year-round demand, faster payment cycles.
Residential cons: Emergency calls disrupt family time, more price sensitivity from homeowners, lots of competition.
Commercial pros: A commercial hvac focus can offer larger contracts and business hours only.
Commercial cons: Longer sales cycles, requires more capital upfront, often needs different licensing, harder to break into established relationships.
Industry research shows that most successful new HVAC owners start with residential service and maintenance, then expand into their chosen specialization as they grow. This "man in a van" starting point lets you prove the business model with minimal investment.
High-margin specialization opportunities to consider later: geothermal systems, smart home integration, high-velocity systems, commercial refrigeration. These require additional training and investment but command premium pricing.
Step 3: calculate your real HVAC startup costs (budget template included)
The biggest question aspiring owners ask is about hvac business start up cost – and most guides fail to give real numbers. The typical "$10,000 to $50,000" range is useless. That gap is enormous and doesn't help you plan.
The actual breakdown for two scenarios:
The "Man in a Van" lean startup ($8,500-$12,000 total):
- Used van or truck: $3,000-$5,000
- Essential tools and diagnostic equipment: $2,500-$3,500
- Initial business insurance (General Liability + Commercial Auto): $1,200-$1,800
- Business registration, licenses, and permits: $800-$1,200
- Website and basic software (first year): $500
- Initial marketing materials and budget: $500
The "small crew" scenario ($25,000-$35,000 total):
- New or newer vehicle: $15,000-$20,000
- Comprehensive tool set for multiple techs: $5,000-$7,000
- Insurance (including Workers' Compensation): $2,500-$3,500
- Business setup and licensing: $1,000-$1,500
- Professional website and software: $1,000-$1,500
- Initial marketing and branding: $1,500-$2,000
- Operating capital buffer: $3,000-$5,000
Hidden costs often forgotten: Fuel and vehicle maintenance ($100-200/month), bonding requirements in some states ($500-$1,000), uniforms and branding ($200-$500), accounting software and supplies ($300-$600 annually).
According to the Small Business Administration, most service-based businesses require less startup capital than product-based businesses, making HVAC one of the more accessible trades to enter. Still, having accurate numbers prevents undercapitalization – the number one reason new businesses fail in Year 1.
Step 4: fund your new business
Understanding funding options is crucial for how to start an hvac business without depleting your emergency savings.
Personal savings (bootstrapping): The most common path for "man in a van" startups. Pros: No debt, no applications, full control. Cons: Limits your size initially, puts personal finances at risk if things go wrong.
SBA 7(a) loans: An SBA loan is a small business loan from a traditional lender that is partially guaranteed by the Small Business Administration, reducing lender risk and improving approval odds for qualified borrowers.
The Small Business Administration's 7(a) loan program offers $5,000 to $5 million for qualified applicants. What lenders look for in loan applications: credit score 680+, detailed business plan, collateral, and personal guarantee. Timeline is typically 60-90 days from application to funding.
Equipment financing: Specific loans or leases for vehicle and major equipment purchases. Pros: Preserves working capital, vehicle serves as collateral. Cons: Higher interest rates than general business loans, adds monthly payment obligations immediately.
Building supplier credit: Often overlooked but critical - supplier credit is a line of credit extended by HVAC parts distributors, allowing you to purchase materials and pay on net-30 or net-60 terms instead of paying upfront. This dramatically improves cash flow, which is the movement of money in and out of your business. Establish these relationships early by starting with small orders paid on time.
Step 5: handle legal, licensing, and insurance requirements
Understanding legal requirements is a critical step in how to start a heating and air conditioning business. This is the most confusing and high-stakes part, but breaking it down makes it manageable.
Business structure decision: Most new owners choose an LLC (Limited Liability Company) – a U.S. business structure that separates personal assets from business debts and liabilities, offering protection while maintaining simpler tax treatment than corporations. The alternative is a Sole Proprietorship, the simplest business structure with no legal distinction between owner and business. While a sole proprietorship is easy to set up, it offers no personal liability protection. The Small Business Administration provides a detailed comparison of business structures to help you decide, but consult with an attorney or accountant about your specific situation.
Federal registration: You need an EIN (Employer Identification Number) – a free number from the IRS that acts as a Social Security number for your business. Apply for your EIN for free directly through the IRS website. It takes about 10 minutes online and you'll need it for opening business bank accounts, hiring employees, and filing business taxes.
State and local licensing: Requirements vary drastically by state. EPA Section 608 certification is federally required for refrigerant handling – this is non-negotiable nationwide. Beyond that, most states require hvac contractor licenses that involve proof of experience and passing trade exams. Some states handle licensing at the state level, others delegate to counties. Check your state's specific requirements through your state contractor licensing board or the ACCA licensing directory.
Required insurance policies:
Insurance Type | What It Covers | When You Need It | Typical Annual Cost |
General Liability | Third-party property damage and bodily injury | Day 1 | $800-$1,200 |
Commercial Auto | Work vehicle accidents and liability | Day 1 (when you buy van) | $1,200-$2,000 |
Workers' Compensation | Employee injury medical costs and lost wages | Upon first hire | $800-$2,500 (varies by state and risk classification – HVAC is typically moderate risk) |
Errors & Omissions | Claims of faulty installation or service | Recommended Year 1 | $500-$1,000 |
General Liability insurance covers you when, for example, your installation causes water damage to a customer's finished basement – a $15,000 claim that could bankrupt a new business without coverage. Commercial Auto insurance is necessary because personal auto policies don't cover business use. Workers' Compensation becomes legally required when you hire your first W-2 employee.
Step 6: build your 'Day 1' HVAC tech stack
The right HVAC software stack helps you compete with larger, established companies by automating administrative work. But what competitors won't tell you: You don't need expensive, complex software from Day 1.
The tech stack framework: Launch (Day 1) / Operations (Day 2) / Growth (Day 3)
Start lean, add complexity only as you grow.
Launch Stack (Day 1 essentials): While established competitors use complex Field Service Management (FSM) software – comprehensive, all-in-one software platforms designed specifically for trades businesses to manage every aspect of operations from dispatch to payment – your "Man in a Van" operation needs to stay lean. For your Launch stack, an all-in-one platform like Durable is the ideal starting point. It gives you an AI-powered website, customer relationship management (CRM) for tracking all customer information and service history, and invoicing in one place, replacing 3-5 separate tools and saving you $100-200 monthly compared to buying each separately.
Operations Stack (as you grow):
- Accounting software like QuickBooks or Xero for proper bookkeeping
- Supplier ordering platforms and apps specific to your distributors
- Basic scheduling tool (Google Calendar works fine initially)
Growth Stack (expansion phase): Dedicated FSM software like ServiceTitan, Jobber, or FieldEdge when you're managing multiple techs and dozens of daily appointments. Advanced marketing tools for email campaigns and call tracking. Fleet management and GPS for multiple vehicles.
Step 7: buy your essential tools and first van
Your hvac tools investment is typically $2,500-$3,500 for a lean startup toolkit. What you need versus what can wait:
Essential tool categories:
- Hand tools: Wrenches, screwdrivers, crimpers, pliers ($400-$600)
- Diagnostic equipment: Digital multimeter, manifold gauge set, refrigerant leak detector ($800-$1,200)
- Safety gear: Gloves, safety glasses, respirator, work boots ($200-$300)
- Power tools: Cordless drill, reciprocating saw, impact driver ($400-$600)
- Refrigerant recovery equipment: Recovery machine and tanks ($700-$1,000)
New versus used strategy: Buy quality hand tools and diagnostic equipment new – they're investments that last decades if maintained. Consider used for your van or truck and some power tools to preserve capital for operating expenses.
Van versus truck decision: An enclosed van protects equipment from weather and theft, looks more professional, and provides mobile workspace. Pros outweigh the higher cost for most HVAC businesses. A used pickup with a cap can work for lean starts, but plan to upgrade within 12-18 months as you establish yourself.
Phased purchasing approach: Don't buy everything Day 1. Start with essentials for service and maintenance work. Add installation-specific tools (torches, vacuum pumps, pipe cutters) as you land bigger jobs that require them. This preserves cash and prevents buying tools that sit unused.
Industry safety standards require proper protective equipment for all technicians. Don't cut corners on safety gear – it protects you and demonstrates professionalism to customers.
Complete categorized list with typical price ranges - print it and check items off as you acquire them. Includes recommendations for which items to buy new versus used, and which tools can wait until Year 2.
Step 8: get your first 5 customers (marketing playbook)
Understanding how to grow a heating and air conditioning business starts with getting your first customers through proven, HVAC-specific tactics - not generic marketing advice.
Before you spend a dollar: set up your Google Business Profile
Your free Google Business Profile (your business listing in Google Maps and local search) takes 30 minutes to set up and appears in local search results immediately. Set up your free Google Business Profile today. The verification process takes about a week, but this is the single most important marketing action for local service businesses. Customers searching "HVAC repair near me" see your business in map results.
Tactic #1: Google Local Services Ads
Google Local Services Ads are pay-per-lead (not pay-per-click) advertising with a "Google Guaranteed" badge that builds instant trust. This is the best bang for your buck for how to grow an hvac business in the first year. You pay only when someone contacts you – typically $15-$50 per lead depending on your market. Unlike regular ads, you're not paying for clicks from people who are just browsing.
Setup requirements: Background check, license verification, insurance proof, and maintaining good customer reviews. Once approved, you show up at the top of Google search results for local HVAC searches.
Tactic #2: build your referral network
Identify complementary businesses: plumbers, electricians, real estate agents, property managers, home inspectors. These professionals regularly encounter customers who need HVAC work. Create a simple commission arrangement (typically 10-15% of job value) or reciprocal referral agreement. This relationship-based lead generation costs nothing upfront and produces high-quality, pre-qualified leads.
Tactic #3: targeted neighborhood marketing
Create professional door hangers with an introductory offer ($50 off first service call, free system inspection, etc.). Focus on specific neighborhoods rather than scattering across your entire service area – this lets you track what works and build density. Include a QR code linking to an easy contact form on your website. Track which neighborhoods produce customers and concentrate efforts there.
The mistake to avoid: Don't waste money on generic Facebook ads or radio advertising before you've maxed out these high-return tactics. Those channels can work later, but they're expensive testing grounds when you're just starting out.
DOWNLOAD: The 'First 5 Customers' Marketing Playbook (Google Doc)
Step-by-step checklist for setting up Google Business Profile, LSAs, and building your referral network – with scripts and templates included. Includes exact wording for referral partnership proposals and sample door hanger copy that converts.
Your first step to getting customers is looking professional online. Instead of wasting weeks learning to code or paying thousands for a web developer, you can use an AI website builder like Durable to get a professional, trustworthy site online in under 5 minutes. This gives you a destination to send leads from your Google Business Profile and Local Services Ads – and lets you focus your time on high-value tactics for finding customers.
Step 9: set your pricing and manage finances
Understanding how to make money in heating and air conditioning business starts with pricing strategy. Your prices determine whether you build a profitable business or buy yourself a low-paying job.
The two main pricing models:
Flat-rate pricing means the customer knows the total price upfront. You capture value for your efficiency and expertise, not just your time. This works well for residential service calls and standard installations.
Time & materials pricing charges an hourly rate plus parts. It's more common for commercial work and large custom projects where scope is uncertain upfront.
What must be built into your prices: Don't just match what you made as an employee. Your prices must cover:
- Direct costs: Your labor, parts, vehicle costs (fuel, maintenance, insurance)
- Overhead: Business insurance, software subscriptions, marketing, office supplies (typically 15-20% of income)
- Profit margin: Minimum 15-20% - this is what grows your business and pays for slow periods
- Owner's wage: Pay yourself consistently, even if small at first. Don't work for free.
The critical mindset shift: Don't price to match the established company you used to work for. They can buy parts cheaper and spread costs across more jobs – you can't compete on price yet. Price for YOUR costs and the value YOU provide. Focus on service quality, responsiveness, and building relationships rather than being the cheapest option.
Simple financial management: Financial management best practices start with separating business and personal finances. Opening a business bank account is required if you formed an LLC and necessary for everyone to track business cash flow properly. Use accounting software from Day 1 – even simple tools beat spreadsheets for tracking income, expenses, and profit. Pay yourself consistently, even if it's small initially. This creates discipline and makes tax time much simpler.
Your Price Formula: Direct Costs (labor + parts + vehicle) + Overhead Allocation (15-20%) + Owner's Wage ($X/hour) + Profit Margin (15-20%) = Your Price
Step 10: plan your first hire (and when to do it)
Learning how to run a hvac business eventually means growing beyond solo operation. When and how to make that transition successfully:
When to hire: Base the decision on pain points, not arbitrary income targets. Hire your first technician when you're consistently turning away profitable work, spending more time on administrative tasks than billable work, or approaching burnout from 70-hour weeks.
What to look for: Technical skills matter, but for your first hire, culture fit and reliability matter more. This person will represent your brand to customers when you're not there. Look for someone who shows up on time, communicates well with homeowners, and takes pride in their work. You can teach advanced technical skills, but you can't teach reliability or customer service instincts.
Employee versus subcontractor decision: The IRS provides clear guidance on worker classification that you must follow to avoid penalties. Generally, if you control when, where, and how someone works, they're an employee, not a contractor. Using subcontractors works for overflow work or specialized jobs, but your core team should be W-2 employees.
New costs that come with hiring: Workers' compensation becomes legally required when you hire your first W-2 employee. This insurance covers their medical costs and lost wages if injured on the job. You'll also pay payroll taxes (Social Security, Medicare, unemployment) adding roughly 10-15% to their base wage, plus time invested in training and management.
The hiring process: Find candidates through trade schools, local HVAC communities, and yes, sometimes competitors who have good techs looking for advancement opportunities. Check references thoroughly – call and ask specific questions about reliability, customer interactions, and technical abilities. A bad first hire can damage your reputation and drain your bank account fast.
More Real Talk: "The hardest part isn't the technical stuff or even getting customers," says Maria, who started her HVAC business in Phoenix three years ago. "It's the mental game. Some days you're fixing someone's heat in a crawl space, other days you're doing spreadsheets and chasing payments. You have to be okay with wearing every hat. But when a customer calls you directly instead of your old employer – and you realize they're calling because they trust YOU specifically – that's when you know you made the right choice."
The first-year timeline: how to survive and grow
The first year of starting an hvac company is simultaneously the hardest and most important – you're building the foundation for everything that follows. What to expect:
The universal challenges: Cash flow stress hits hard during slow seasons. The weight of that personal guarantee on your truck loan keeps you up at night. You'll work 60-70 hour weeks – more than you did as an employee. The isolation of being solely responsible for every decision can be overwhelming.
The specific HVAC challenges: Summer heat exhaustion while everyone else is inside their air-conditioned homes. Emergency calls disrupting dinner with your family or weekend plans. The pressure to stay current on new refrigerants, technologies, and regulations while running the business.
What gets you through: Having 3-6 months of expenses saved (both business and personal) reduces panic during slow months. Building a support network of other trades business owners who understand what you're going through. Protecting some family time as non-negotiable, even when you're busy. Remembering why you started this in the first place – freedom, control, building something of your own.
When it starts getting better: Typically 12-18 months in, when you have a steady base of regular customers, systems and processes in place, and maybe your first hire taking some pressure off. The first year feels like drowning. Year 2 feels like swimming. Year 3 and beyond, you're finally enjoying the journey.
Small business research shows that most small businesses struggle in Year 1 but those that make it past 18 months have dramatically higher success rates. Your challenges are normal, not unique to you.
Real Talk from the Field
Many owners say the first 6 months felt like drowning, but by month 12, the pieces started coming together. The most common advice: "Don't quit in the valley – that's when most people give up, right before the breakthrough." One successful owner shared: "I almost gave up at month 8. I was exhausted, barely breaking even, and questioning everything. Then three referrals came in one week. By month 15, I had steady income and my first hire. Now I can't imagine working for someone else."
Ready to build your HVAC business?
You have everything you need to start:
- You have the numbers: Specific startup costs ($8,500-$12,000 lean, $25,000-$35,000 with crew), itemized budgets you can customize, and funding options with specific requirements.
- You have the roadmap: Legal setup with direct links to IRS and SBA resources, licensing requirements by state, insurance policies you need, and the tech stack that grows with you.
- You have the playbook: Google Business Profile and Local Services Ads for finding customers, proven referral network strategies, pricing formulas that ensure profitability, and honest expectations for Year 1.
The fear of failure never fully disappears, but the regret of never trying is worse. The difference between those who succeed and those who don't isn't fearlessness - it's taking action despite the fear.
Your next three steps today:
- Download the Lean Startup Budget template and fill in your market's costs
- Apply for your free EIN through the IRS website
- Create your one-page lean business plan using our template
You have the technical skills. This guide gives you the playbook. Now, get the tools to make it happen. You can build your business plan, create your budget, and launch your official HVAC business website today with Durable's all-in-one platform – getting you from idea to open for business in hours, not weeks.
Thousands of technicians just like you have made this leap successfully. Your technical expertise is the hard part – you've done that. The business part? You just learned it. Time to build.
Frequently asked questions
Do I need a license to start an HVAC business?
Yes, but requirements vary significantly by state and even by county in some areas. At minimum, you'll need EPA Section 608 certification for refrigerant handling (federal requirement). Most states also require contractor licenses that involve proof of experience and passing trade exams. Check your state's specific requirements through your state contractor licensing board.
How much money do I need to start an HVAC business?
For a lean "man in a van" startup focusing on service and maintenance, expect $8,500-$12,000 total. This covers a used vehicle ($3,000-$5,000), essential tools ($2,500-$3,500), business registration and licensing ($800-$1,200), initial insurance ($1,200-$1,800), and basic software/marketing ($500-$1,000). If you're starting with a crew and new vehicle, costs jump to $25,000-$35,000.
Can I start an HVAC business with no money?
It's difficult to start with zero capital. However, you can minimize costs by buying used equipment, starting with service-only work (no installation inventory), and building supplier credit for parts. Consider working nights/weekends while employed to save your startup capital, or explore SBA microloans ($500-$50,000) designed for small startups.
How do I get my first HVAC customers?
Start with your free Google Business Profile, then invest in Google Local Services Ads (best bang for your buck for new HVAC businesses at $15-$50 per lead). Build referral relationships with plumbers, electricians, and property managers. Use targeted neighborhood marketing with professional door hangers. Avoid expensive generic advertising until you've maxed out these high-return tactics.
Do I need business insurance to start an HVAC company?
Yes, business insurance is essential from Day 1. At minimum, you need General Liability insurance ($800-$1,200/year) to cover property damage and injuries, and Commercial Auto insurance ($1,200-$2,000/year) for your work vehicle. When you hire employees, Workers' Compensation becomes legally required. Consider Errors & Omissions insurance ($500-$1,000/year) to protect against claims of faulty work.
Should I form an LLC for my HVAC business?
Most new HVAC business owners choose LLC formation because it separates your personal assets from business liabilities while maintaining simpler tax treatment than a corporation. If a customer sues the business or you have business debts, your personal home and savings are protected. Consult with an attorney or accountant about your specific situation, but LLC is generally the recommended starting point.
What's the difference between residential and commercial HVAC?
Residential HVAC focuses on homes and small buildings – lower barrier to entry, consistent demand, but more price sensitivity and occasional emergency calls. Commercial HVAC services businesses and large properties – larger contracts, business hours, better margins, but requires more capital, different licensing in many states, and longer sales cycles. Most new owners start residential and expand into commercial as they grow.
When should I hire my first employee?
Hire when you're turning away profitable work, spending too much time on administrative tasks instead of billable work, or approaching burnout. Don't base it on arbitrary income targets. Your first hire is critical – look for technical competence, but prioritize reliability and culture fit since they'll represent your brand. Budget for Workers' Compensation insurance and payroll taxes (adds roughly 20-30% to their base wage).
What if I can't compete with established HVAC companies?
The big companies have advantages (buying power, name recognition, marketing budgets), but they also have weaknesses you can exploit. Large HVAC companies often struggle with responsiveness – customers wait days for callbacks, get shuffled between dispatchers, and deal with techs who rush through jobs to hit quotas.
Your competitive advantages as a smaller operation: You answer your phone personally. You show up when promised. You take time to explain problems clearly instead of rushing to the next call. You remember customers' names and their system history. You can offer flexible scheduling for working families.
Focus on service quality and relationships, not price wars. Many customers will pay 10-20% more for reliable, personal service. One successful owner told us: "I can't beat Home Depot's installation price, but I can beat their follow-up service by 100%." That's where you win long-term customers and referrals.