Business Plan for an HVAC Company: How to Write One and Keep It Fresh

Business Plan for an HVAC Company: How to Write One and Keep It Fresh


When you’re running an HVAC company, you’re on board for all the ups and downs that come with owning a high-demand, seasonal business. A carefully crafted business plan for an HVAC company is the first step to manage those peaks and lulls so your profits stay healthy year-round. If you didn’t create a heating and cooling business plan when you started your business, it’s not too late to build one now or to give your original plan an update.

As an HVAC business owner, you’re part of an expanding U.S. industry worth $96 billion, according to market research firm IBISWorld. Over the last five years, the industry has seen 2.9 percent growth in revenue, 3.1 percent growth in the number of businesses, and 4.2 percent growth in the number of employees, IBISWorld reported.

The steadiness of the industry’s growth doesn’t necessarily translate to the experience of operating an HVAC company. The heating, ventilation, and air conditioning business tends to run hot and cold. Demand heats up during the summer and winter when customers need their HVAC systems repaired for relief against the heat and cold; service calls drop off when milder weather arrives.

Your heating and cooling business plan will include a financial forecast that anticipates the impact of the slow seasons, as well as ideas and resources you intend to use to keep your cash flow from grinding to a halt during those times.

Read on to learn how to write a business plan that will keep your HVAC business profitable through every season and ready to improve its bottom line year after year.

Writing a Business Plan for an HVAC Company

Think of your heating and cooling business plan as a road map to guide you through the early years, management, and growth of your HVAC business. That’s how the U.S. Small Business Administration (SBA) described the general purpose of this document.

A solid business plan will also back up your case for seeking funding for your business. It will educate lenders and investors about your business and its financial situation, show them that you have carefully thought through your mission and goals, and make a compelling case for how funding will contribute to your business’s success.

A business plan for an HVAC company is such a detailed document that the process of creating one can sometimes seem overwhelming. To make it easier, start by familiarizing yourself with all the parts of a typical small business plan. Then, tackle each section one by one or in manageable groups, providing the information required in each section.

The SBA listed the following as standard elements of a traditional business plan:

  • Executive summary
  • Company description
  • Market analysis
  • Organization and management
  • Service or product line
  • Marketing and sales
  • Funding request
  • Financial projection
  • Appendix

Here’s a basic breakdown of each section:

Executive Summary

The executive summary is a brief overview of your business. In this section, you will outline what your company does, where it operates, who leads it, and how many employees you have. You should also summarize your business’s financial projections and any funding requirements. Though the executive summary is the first section in your business plan, it’s often easiest to write it last. You’ll have a better understanding of what you want to highlight in this section after you’ve written the others. Remember to keep the executive summary concise, under two pages if possible.

Company Description

In this section, you’ll go into greater detail about your company. You’ll define your company’s mission, clearly explaining your company’s purpose and problems it seeks to solve, your target market and customers, and your unique selling proposition (what makes you stand out from the competition). You should also talk about your company’s management team and how you define and measure success.

Market Analysis

Preparing for this section is one of the biggest homework assignments required to write a business plan for an HVAC company. You’ll research your intended business market — looking for trends, sizing up your competition, and figuring out how your business can do things better or address an unmet need. This research involves gathering information from market research companies, reviewing trend stories in industry trade publications, and reading reports in general business publications. Then, in the market analysis section, you’ll summarize the results.

Organization and Management

Here’s where you’ll describe the legal structure of your company (sole proprietorship, partnership, LLC or corporation) and its organization. The SBA suggested including an organizational chart to illustrate who is in charge of what, and the relationship between those roles. You might also include resumes or CVs of key team members in this section.

Service or Product Line

This part is pretty straightforward: You’ll describe the products and/or services your business sells and how they benefit your customers.

Marketing and Sales

In this section, you’ll describe what you envision as your marketing strategy. As the SBA noted, you should be prepared to adjust this strategy as your needs evolve. You also will describe your sales process.

Funding Request

If you intend to seek funding for your business, this section will state how much money you will need to operate the business over the next five years and exactly how you will use the money. You’ll also specify whether you’re seeking debt or equity funding, and list your ideal terms for the loan or investment you’re requesting.

Financial Projection

This section presents your five-year financial forecast. If your business is still in its early stages, the income statements, balance sheets, cash flow statements and capital expenditure budgets you present will, of course, be estimates. An established business will include its financial statements from the last three to five years. Feel free to include charts or graphs in this section to help illustrate your business’s financial picture.


This section might include supporting documents like credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents and other contracts.

Now, let’s delve a little deeper into how a business plan for an HVAC company might approach the service/product, marketing and financial sections.

Choosing Your HVAC Service and Product Line

Your business model likely includes the repair, installation and maintenance of HVAC equipment, but the offerings you outline in your heating and cooling business plan don’t have to end there. For example, you might also sell heating and air conditioning systems.

If you’re in the first few years of business, you may opt to keep your service and product line simple for now. But if you are an established business in the process of revising your heating and cooling business plan, consider whether you are ready to add some complementary sales or services, such as plumbing, insulation, duct sealing, indoor air quality evaluation or system performance reviews.

Of course, you’ll also want to refresh your market analysis to get some solid indications of the customer interest and competition in those areas. Before sitting down to write the service and product portion of a business plan for an HVAC company, you’ll want to get up to speed on some of the latest trends, from ductless heating and cooling systems to HVAC systems that use renewable energy sources.

The growing interest in smart homes, in which heating and air conditioning systems can be controlled remotely, could be another potential opportunity for sales. According to the market research firm Statista, household penetration in the U.S. smart home market is already at 33 percent and is expected to reach 54 percent by 2023. A business plan for an HVAC company that intends to pursue this avenue needs to show a high level of knowledge about smart home HVAC products and consumer adoption.

Creating an HVAC Marketing Plan

When preparing to write the sales and marketing section of a business plan for an HVAC company, there are many factors to consider.

Your target market is a key aspect in determining how your sales and marketing strategy will shape up. Does your HVAC business cater to residential or commercial customers or both? What specific types of homes, businesses or other facilities do you serve? How wide is your geographic service area? You need to answer these questions to create your marketing plan.

You’ll also want to think about the methods you will use to advertise your business. For example, will you list your business on home improvement business directories like Angie’s List and HomeAdvisor? Do you anticipate placing television ads when your revenue reaches a point where that’s affordable? Do you have ideas for how to incorporate social media into your marketing plan?

When business is less hectic, it can be the perfect time to brainstorm creative methods for promoting your HVAC company as well. For example, you might try participating in home and garden shows, trade shows or other kinds of event marketing. Or maybe you’ll introduce a contest, a giveaway or a special financing arrangement to boost equipment sales. If the experiments pay off, you can formalize them as part of the marketing strategy you outline in next year’s business plan.

Seasonality is also likely to influence your sales and marketing strategy. When repair calls drop off during the slow season, it might be a good time to focus on selling things like maintenance agreements, indoor air quality products, energy efficiency upgrades or insulation. Thinking about what services you will promote and when can help you develop your marketing strategy.

For example, promoting maintenance services to existing customers during the slow season can help ease the peak season strain on your tech crew, as noted in Air Conditioning, Heating and Refrigeration (ACHR) News. Technicians can primarily focus on responding to calls from new customers, while your established customers stay happy as their HVAC systems hum along nicely thanks to proactive checkups. The marketing portion of your business plan for an HVAC company should include how you’ll advertise these types of services.

A business owner does maintenance work, a service outlined in his business plan for an HVAC company .

Building a Solid HVAC Financial Plan

Your market analysis and other research should turn up information like the average cost of running an HVAC business, the average earnings over a one- to five-year timespan, and perhaps some industry trends in your geographic area. This is the type of research that needs to be incorporated into the financial outlook of a business plan for an HVAC company.

ACHR News recommended creating a five-year plan for managing your business expenses. That may sound like a daunting process, but a good first step is to simply make a list of every possible expense you think your HVAC business will incur. Next, you can organize the list into categories and, taking one group at a time, begin to work out estimates for each cost item.

Your expense list will include wages (if you have or intend to have employees), vehicles, fuel, HVAC tools and safety equipment, office supplies, utilities and the cost of leasing or owning your business space. Your list should also include insurance, like the cost of a general liability policy and property and worker’s compensation insurance.

Additionally, HVAC businesses often must pay licensing and certification fees, so be sure to check out the specific HVAC licensing requirements in your state. HVAC Classes included a handy chart of the organization in charge of HVAC licensing in each state. For HVAC franchises, there is a one-time franchise fee and the payment of a cut of annual revenue to the franchisor to take into account.

Implementing your marketing strategy will cost money, too. You’ll need a budget for any print, online, radio or TV ads you place to attract customers to your business. And since having a website is a must for any business that wants to be competitive, include website development as one of the expenses in your heating and cooling business plan.

A business plan for an HVAC company also needs to incorporate an IT budget. Estimate the cost of things like onsite computer equipment, mobile devices for field technicians, cloud data storage and software. For example, you may need to acquire software programs for sales support, customer relationship management, project quote templates, scheduling and invoicing.

You’ll also need to consider how costs are impacted by seasonality. A business plan for an HVAC company might factor in potential payments for additional work hours during peak seasons, additions to your truck or van fleet to accommodate the increased demand, and the general maintenance of your transportation fleet. You’ll also need to consider how you will retain or acquire enough cash to cover your business expenses during the mild weather slow seasons. Your goal should be to at least break even during the slow periods, as HVAC training director Mike Moore pointed out in Contracting Business.

In addition to detailing your projected expenses, the financial section of your heating and cooling business plan should also include long-term revenue goals and projections, which will help you determine the number of monthly billable hours, sales and service calls necessary to meet those marks. They will also help lenders and investors assess the financial outlook for your business.

Developing an HVAC Hiring and Training Plan

Since employee wages and other HR costs will likely be the biggest expense for any HVAC business that hires staff, we’re breaking this item out of the general discussion of financial projections and into its own category. Having adequate funds to hire and train salespeople, technicians, and marketing, communications and administrative staff is crucial to the survival of your business.

Consider the various employee training options available and what they cost. Will you handle training in-house or outsource it to a separate company? Will you provide onsite instructors, online learning or combine the two formats?

Think about the volume of business you expect to generate, not just at the beginning but over the entire year that your HVAC company will be operating under this business plan. Go back to your mission statement and consider the minimum staffing level you will need to meet the standards you laid out.

While it wouldn’t be cost-effective to hire more people than you currently need in anticipation of future demand, you might want to incorporate into your business plan some goals or projections for future staff growth and the steps you will take to increase your staff when needed.

There also may be some long-term recruitment strategies that you can begin rolling out even when business is slow. For example, you might work on cultivating relationships with area community colleges and trade schools, perhaps even serving on advisory boards that help design their courses and curricula. A budget for this type of outreach could be included in the financial section of your business plan.

Revisiting and Revising Your Heating and Cooling Business Plan

A business plan for an HVAC company can’t remain stagnant if that business is to prosper. You can’t just create your business plan and then forget about it. You need to know whether that plan is working and what adjustments you need to make if it’s not. You need to check the projections you made against the realities you’ve experienced while running your business. That’s why regularly reviewing and updating your business plan is so important.

When to Review the Business Plan

Business experts usually recommend reviewing your business plan at least once a year. In an Entrepreneur article, business planner and angel investor Tim Berry said you should be updating your business plan constantly, “when you’re alone in the shower, when you’re caught in traffic on the way to work, and when you’re walking alone.” In other words, you should think of business planning as an ongoing process, and always be ready to adjust it when significant changes occur.

According to the National Federation of Independent Business, there are eight events that should automatically trigger a business plan update:

  • The addition of a new partner or owner
  • A change or addition of locations
  • An advantage gain by a competitor
  • A financial decline
  • A missed goal
  • A change in your product or service line
  • A decision to seek financing
  • Rapid growth

The Review Process

Look at your mission statement, your product and service line plans, and your marketing strategy, and compare them to how your business has actually performed over the past year.

Have you been able to adhere to your original mission? Have there been new developments in your industry, unforeseen business opportunities, or other surprises that cause you to rethink what that mission should be?

Analyze your sales patterns, your customer feedback and your competition. Are customers buying the items or services that you predicted would bring in the highest sales? Are customers facing new problems that need solutions? Are you at risk of losing customers to competitors because they offer solutions that you don’t?

A business plan for an HVAC company should also undergo a periodic financial analysis. Since businesses usually generate monthly financial statements, Berry suggested reviewing this part of your business plan monthly as well.

Review your records from tracking your service calls, installation sales, service agreements and other sales, along with the revenue and profit for each category. If you fell short of your financial goals for the period, you might consider adjusting your sales and marketing strategy or your product and service line to generate more revenue. Or you might determine that slower growth is more realistic than what you originally envisioned, leading you to revise your financial outlook.

Time Well Spent

The early few years of your business are an exciting time, and it’s tempting to let pure enthusiasm direct your path forward. But if you want your new HVAC business to have staying power, you must step back and devote the necessary time to developing a business plan. And remember that a business plan for an HVAC company isn’t meant to be a static document. It’s a framework to guide the launch or revamp of your business that you can build upon and restructure as the business evolves.

Take a few steps now toward putting your business plan together, and soon enough you’ll have the document done so you can move closer to putting your plan into action.

Once you have your business plan in place, consider heating and cooling business loan options with National Funding.