How to Start a Plumbing Business: 10-Step Guide [2024]

1. Get Licensed

Most states and counties require plumbing companies to hold specific licenses to ensure customers' safety.

Earning plumbing certifications gives you the skills and knowledge to deliver quality plumbing services. They are also a great way to prove your expertise and experience to skeptical customers.

Although licensing requirements differ from state to state, the essential licenses you’ll need to become a licensed plumber include:

• An educational certificate: Get a high school leaving certificate or a general education diploma (GED). Then, proceed to a college or trade school to acquire specialized plumbing knowledge about repairing plumbing systems and understanding plumbing plans, math, and building codes.

• Apprenticeship experience: Become an apprentice to a licensed or master plumber in your area. This will give you the on-the-job skills and network needed to succeed as a plumber. Depending on your state's requirements, apprenticeships can last two to five years.

• Journeyman plumber certification: With an apprenticeship under your belt, the next step is passing your state or local government plumbing examination to become a journeyman plumber. You can then choose to join a plumbing company or start your own.

Some regions may require you to periodically renew your journeyman license and obtain a master plumbing license before starting your own plumbing company.

Read this article to find your state’s plumber contractor license requirements.

2. Decide Your Niche And Services

Picking a niche helps differentiate your plumbing company from others. This increases the likelihood of potential customers picking your company in the face of severe competition.

Also, niching down lets you build expertise and experience in a specific aspect of plumbing. This helps you deliver quality services, build trust with potential customers, and gain word-of-mouth referrals.

Generally, there are two types of plumbing services you can offer: commercial and residential plumbing services. Both share some similarities but have significant differences beyond just their customer base.

Commercial plumbing systems are complex and require specialized knowledge and heavy-duty equipment. On the other hand, residential plumbing systems are less complex and often require a generic plumbing toolbox.

Pick a type of plumbing service that requires tools you can afford and matches the knowledge you gained during your apprenticeship.

After picking a service, select a specific plumbing niche.

What do you want to be known for? What part of the plumbing job did you love during your apprenticeship?

Here are some examples of plumbing niches:

• Drain cleaning

• Slab leak detection

• Water heater installation

• Backflow testing and repair

• Water filtration

• Trenchless sewer repair

• Green plumbing

3. Create a Plumbing Business Plan

Creating a business plan can help you attract investors and serve as a roadmap document you can occasionally consult to track and measure your progress toward achieving business goals.

Typically, plumbing business plans have eight sections:

• Cover page: Include your company name, contact information, brand assets (logo and taglines), mission statement, and values.

• Executive summary: Give a brief business overview that piques the reader's interest. What services do you offer? What are your revenues and new customer goals? What differentiates you from competitors?

• Brief description of the team or your biography: If you're seeking funding, use this section to sell your team's capability and experience. You can mention your business licenses, high school diploma or GED, and years of plumbing experience.

• Business overview: Give a detailed breakdown of your company. Mention your reason for starting a plumbing company, unique selling proposition, startup costs, and the types of service you offer. Also, specify the legal entity you'll use to register your business.

• Market analysis: Find the size and demographics of your target audience and the number of local competitors. Pick each competitor, noting their pricing strategy, services, strengths, and weaknesses. Use the result of your analysis to create a differentiator.

• Risk analysis: Describe the potential risks and how you plan to mitigate them. Examples of risks could include an economic downturn and lawsuits.

• Sales and marketing strategy: State how you plan to reach potential clients. However, keep it brief, as you’ll expand on it in the last section.

• Financial projection: Using insights from competitor research and marketing strategy, forecast your revenue and cash flow for the first five years. Include your sales target, profit and loss predictions, and wage bill.

Remember, the more specific your business plan, the better equipped you are to handle any challenges you may face.

4. Get Financed

Starting a plumbing business is capital intensive, requiring resources for purchasing tools and equipment, business insurance, and marketing campaigns.

In the absence of sufficient savings to support your plumbing business ambition, consider the following funding options:

• Small business loans and grants: Approach financial institutions and lenders like banks and investment companies for loans. 

• Credit card: If you're starting, use a low-interest small business credit card. However, ensure you pay your balance monthly to avoid high interest rates and penalty fees. 

• Loans from friends and family: Request a line of credit from friends and family members. However, to protect the relationship, explain that investing in any business is risky and that they might not see a return. Also, get a lawyer to write an agreement stating the repayment terms.

• Government funding programs: The federal government offers different funding programs through the Small Business Administration (SBA). Consult experts in your local SBA branch to learn the funding program you’re eligible for and how to craft a winning application.

• Crowdfunding: Use crowdfunding platforms like GoFundMe, Patreon, and Kickstarter to raise funds.

5. Register Your Business

Registering your business gives you legal recognition and helps build trust with prospective customers. It also ensures you secure ownership of your business name before someone else does.

Run a trademark search on the United States Patent and Trademark Office website to start the business registration process. If the name’s still available, pick a legal structure to register your business under—partnership, sole proprietorship, limited liability company (LLC), or corporation.

Next, submit the necessary paperwork to your state’s business registration body—the Secretary of State's office, a business bureau, or a business agency. Also, visit your local government’s business registration website to ensure you have the proper permits, registrations, and operating licenses.

Obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) to simplify your tax filing. This applies if your business is a partnership or you plan to hire employees.

Recommended read: Check out this complete guide to business registration from the United States Small Business Administration.

6. Handle Finances & Accounting

Having a good handle on your finances is important as it helps you understand your cash flow. This gives you an idea of the amount to allocate to marketing efforts, expanding your service offerings, or hiring additional technicians.

Here are some sound financial management and accounting practices:

• Open a business account and credit card: Having a dedicated business account and credit card makes tracking your company’s financial growth and filing taxes easier.

It is advisable to use a bank with wide ATM and physical location coverage, high savings interest rates, low minimum deposit requirements, and a user-friendly online platform.

• Set up an accounting and bookkeeping system: Pick a cash-based or accrual accounting method and software. Then, decide on a schedule for supplier payments, bank deposits, and preparing financial reports. This keeps you organized and aware of your cash flow.

Bundled with ServiceTitan’s plumbing company software, the Accounting Platform lets you automate all accounting tasks, view accurate financial data, and track cash flow from a single hub.

Employees can automatically generate invoices from their mobile devices and post customer payments directly to your accounting system with the platform.

Front office staff can then track all invoices and payments from the platform. This allows employees to spend less time manually reconciling records or calling technicians to confirm financial transactions.

ServiceTitan’s Accounting Platform also lets you track outstanding customer payments using an Account Receivable Report, which you can configure the platform to generate on demand.

This helps you manage cash flow, track outstanding invoices, and reduce bad debts.

Finally, ServiceTitan’s Accounting Platform integrates with QuickBooks, Intacct, and Viewpoint Vista. This reduces data redundancy and allows employees to dedicate more time to more productive tasks.

7. Invest In Plumbing Equipment

An essential aspect of running a plumbing business is having the right tools. You’ll need a well-stocked toolbox to deliver your plumbing services efficiently.

Considering the cost of plumbing tools and equipment, opting for cheap, low-quality imitations of the originals can be tempting to save money. However, doing so can lead to shoddy plumbing work.

A better option is to purchase the essential high-quality tools and equipment you need to operate, then lease others you’ll need for specialized projects. This minimizes downtimes and helps you deliver quality work.

Some essential tools you’ll need in your plumbing toolbox are hand tools (wrenches, pliers, and pipe cutters), battery-operated equipment (drills and screwdrivers), and safety equipment (gloves, goggles, and heat shields).

ServiceTitan’s plumbing software has a built-in Inventory Management platform for maintaining optimal stock levels.

The platform gives you an overview of the materials and tools available, including their quantity, average cost per unit, description, and total value. You can also see where and how often an item has been used.

This inventory overview helps you keep track of inventory levels and accurately estimate each project’s running costs.

ServiceTitan’s Inventory Management platform also has a purchase order management feature. This feature allows you to create and send purchase orders to vendors in PDF or CSV format.

This minimizes data entry errors and lets you focus on other tasks.

Recommended read: Check out this guide to learn the 32 essential tools every plumbing company needs.

8. Decide on Your Pricing

To remain profitable, you must set prices that keep you competitive, cover overhead expenses, and generate a healthy return on investment (ROI).

To decide on your prices, find the average prices of similarly sized plumbing companies in your local service area. You can then check their websites, request a quote, or contact them directly.

After picking a price point, the next step is to choose a plumbing pricing strategy, which can be:

• Flat-rate pricing: Charge clients a fixed price upfront for a job, regardless of the time it takes to complete it.

• Hourly rate pricing: Charge customers according to the time spent on the project and the cost of the materials.

• Hybrid pricing: Bill a customer with both flat-rate and hourly pricing.

There have been arguments for and against each pricing strategy. Check out this complete guide on plumbing pricing strategies to decide which one is best for you.

9. Get Plumbing Business Insurance

Plumbing business insurance is a financial safety net, protecting your business from lawsuits, accidents, property damage, and theft. It’s a risk management tool that shields your business from financial losses that could otherwise shut it down.

Here are some types of insurance policies designed to safeguard your plumbing business:

• Commercial auto insurance: Pays for damages, repairs, and medical fees from accidents caused by the company’s cars, trucks, vans, etc.

• General liability insurance: Covers third-party bodily harm, personal injury, and property damage claims from your operations.

• Commercial property insurance: Covers your company’s property in the event of a fire, vandalism, theft, or natural disasters.

• Worker’s compensation insurance: Pays cash benefits to employees who suffer work-related injuries.

• Professional liability insurance: Protects you from negligence claims filed by unsatisfied customers.

10. Market Your Business

Effective marketing ensures homeowners and clients facing plumbing issues find your company, which helps your revenue and brand recognition.

As a new plumbing company, it’s advisable to initially stick to low-cost advertising strategies to reserve revenue for other operational costs. Here are some examples of low-cost marketing strategies:

• Social media marketing: Use social media platforms such as Facebook, Instagram, and TikTok to post behind-the-scenes footage, before-and-after images, and educational content. You can also promote discounts.

• Search engine optimization (SEO): Create a website and optimize it to rank highly in search engine results. You’ll reach customers who use search engines to find local service businesses.

• Flyer distribution: Create visually appealing flyers and hand them to prospects in your local service area.

• Email marketing: Use email marketing to nurture relationships with prospective and new customers and retain top-of-mind awareness. You can send tips, promotions, industry updates, etc.

• Word-of-mouth or referral marketing: Encourage customers with incentives such as discounts and tickets to exclusive events to refer others to you. Also, create a plan to get customers to leave positive online reviews and make sure you address any negative ones rather than ignoring them.

• Traditional marketing strategies: Use traditional marketing strategies to reach customers who are not on the internet. Some examples include business cards, direct mail, local newspaper advertisements, networking with other business owners, and yard signs.

To create, manage, and track your different marketing campaigns, consider using ServiceTitan’s marketing solutions:

• Home Service Marketing software lets you create and assign trackable phone numbers to each marketing campaign so that you can attribute each customer call to the source campaign.

• Marketing Pro Email platform lets you create, design, and track emails. The platform has fully customizable templates you can pick from and a robust analytics dashboard that assesses email performance using different metrics.

• Local Services Ads integration collates every job booking from your Google Local Services Ads into your ServiceTitan dashboard. This makes it easy to track job bookings and follow up on prospects.

• Reputation platform lets you create customer review requests sent immediately after a technician finishes a job. It also has a central dashboard that collates reviews from different social media platforms and listing directories, helping you respond quickly to reviews. 

Over to You

Currently, there's a high demand for contractors, which presents an excellent opportunity for any plumber who wishes to strike out independently.

After starting your plumbing company, invest in all-in-one plumbing software like ServiceTitan to automate business processes and grow your company.

ServiceTitan is a cloud-based platform for streamlining business operations such as marketing, invoicing, scheduling, and accounting. Over 100,000 contractors nationwide use it.

Frequently Asked Questions (FAQs)

Do you still have questions? Here are the answers.

How much does it cost to start a plumbing business?

Starting a plumbing business can cost between $10,000 and $50,000. The actual cost depends on your location, company size, type of plumbing business, and available equipment and tools.

How profitable are plumbing businesses?

The most successful plumbing businesses report a 10–20 percent net profit margin. However, most plumbing companies have net profit margins as low as two or three percent.

How much is the plumbing industry worth?

The plumbing industry is currently worth an estimated $126.4 billion.