How to Start a Plumbing Business: 9 Keys to Getting off the Ground

If you’re looking to start a plumbing business, it’s the perfect time to get with the flow. Industry research shows that the US plumbing industry includes over 130,000 businesses (and more than 500,000 employees) with total annual revenues exceeding $130 billion. It’s an excellent time to consider starting a plumbing company, as both the residential and commercial sectors are experiencing a wave of new construction, and that means opportunities for plumbing companies, which are expected to grow revenues by more than 1% annually for the next five years. 

Moving from working as a plumber to starting your own business may seem like a lot of (water) pressure, but it doesn’t have to be. Establishing a business legally is a straightforward process, and creating a plan for growth is exciting. As you get deeper into the process, you’ll get to tackle challenges with cash flow, marketing, hiring, and more. 

We’ve covered everything you need to know in our guide, so keep reading to get a handle on the key steps to take when starting a business as a plumber. 

1. Get registered, licensed, and insured before anything else

Handling the fundamentals is like putting together a pipe diagram: It sets you up for success later. Starting a business starts with the legal and logistical nuts and bolts that get you ready for growth later on. 

Here are a few key steps to make sure you cover:

1. Register your business with your state’s Secretary of State. You’ll need a name for your business entity and a business structure — often a sole proprietorship or limited liability company (LLC). 
2. Get the proper license and insurance according to your state’s requirements. We have a contractor licensing guide for every state you can refer to — as many states do require specific licensing for plumbing businesses. 
3. Obtain a business bank account and any software or staff you’ll need for accounting and bookkeeping. It’s important to keep your business’ finances separate from your personal accounts. 

Once you’re registered, licensed, insured, and financially prepared, you’re ready to start thinking about how to grow your plumbing business from the ground up. 

2. Make a growth plan to stay focused on your goals

The first step in growing your plumbing business is to create a plan to grow. Start with your business plan – if you didn’t have a business plan when you started your plumber’s business, now would be a good time to write it down. Below, we’ve listed some items your business plan should definitely include. 

Set goals for your business

Goals may include the revenue you want to generate over the next five years, the number of new jobs you will take on, or targets for hiring employees. The clearer you can be with your growth objectives, the easier it is to determine what resources you need in order to accomplish them. 

Get clear on your customers

Are you going to specialize in a specific niche, or diversify your client base? Will your business focus on residential customers or commercial plumbing projects? The audience you are trying to reach — and the types of plumbing jobs you want to take on — will determine your marketing strategy and hiring requirements, as well as other business decisions.

Analyze your competition

Once you’re clear on your goals and the types of plumbing projects you’re going after, look at what your competition is doing. What kinds of jobs are they bidding on? How can you differentiate your company from existing businesses?  

Action item: Create a growth plan for your plumbing company. 
Why it matters: Avoid the most dangerous business error of all: “Failing to plan is planning to fail.” 

3. Keep the cash flowing through your financial pipes

Here’s a little-known fact about growing a plumbing business: It can be incredibly cash-hungry. If you start growing without proper financial management, you will quickly find your company out of cash and in bankruptcy court. That’s not an overstatement: Cash flow is the number one reason why plumbing contractors fail. 

In order to grow, a plumbing company must proactively manage cash flow. Since you’re a seasoned plumber, you know that payments can lag behind job completion — sometimes way behind. But your costs keep adding up, and you need cash on hand to continue hiring skilled plumbers, buying materials and equipment, and taking on more or bigger plumbing jobs. 

To grow your plumbing business sustainably, it’s not enough to be a Master Plumber, you need to be a master of your cash flow. 

Becoming a successful business owner means knowing when to delegate and when to stay involved. When it comes to cash flow, it’s important to always have your finger on the pulse. 

Review your cash flow regularly

If you have an accountant, work with them to create a real-time view of your cash flow that you can check at any time. Even without a dedicated accountant, you can use a cash flow forecast to predict your cash needs for the upcoming week, month, or year. Revise your projections to include actual expenses and revenue to make sure your model is accurate. 

Modern construction accounting software can take into account expenses, accounts payable, and accounts receivable to help you spot cash flow problems before they sink your business. 

WATCH: How to calculate cash flow for a construction project 

Use cash flow to inform your business decisions

When making financial decisions for your plumbing business, operate with certainty rather than assumptions. Cash flow predictions and analytics are useful, but you’ll also want to lean on cash flow statements from past months and years that give a true picture of how your plumbing business is doing. 

Beyond staying on top of cash flow as an owner, you’ll also want to make sure that you develop operational excellence among your team as your business grows: prompt invoicing, strong payment terms, and efforts to drive down costs where possible. 

Action item: Evaluate a recent cash flow statement and develop a real-time cash flow dashboard. Make it a priority to check in on your business cash flow at least weekly.
Why it matters: If your business is cash flow negative, it doesn’t matter if you have significant revenue coming in down the line. Growing and maintaining your plumbing business means having positive cash flow to expand your workforce and take on new jobs. 

4. Set pricing carefully — don’t get caught in the ‘P’ trap

While cash flow is critical for survival, profit is essential for growing a plumbing business. Your profit is the money you will use to reinvest in the business for continued growth. Too many plumbers fail to price their services correctly, either aiming too high to attract customers or too low to maintain profitability. 

Read more: The profit roadmap for contractors

For many business owners, nailing down the right pricing structure feels like a mystery, and some resort to simply copying competitors in hopes of success. But here’s the truth: Plumbing businesses charge wildly different rates (from $45 to $200 or more per hour), and you need to figure out the price that will work for your business.

Your prices are going to depend on your region, whether you’re doing commercial or residential plumbing work, and your specialization. Fortunately, getting the price right isn’t difficult, and you only have to follow one simple rule: The customer has to cover every cost. To avoid getting caught in the “P” trap (without any profitability), you need to think carefully about overhead. 

When you’re just doing individual jobs, it’s easy to forget about the cost of doing business — but when you’re running a business, you need to remember that every job you take on needs to cover overhead as well. In addition to materials and labor for plumbing jobs, you need to cover the cost of staff, offices, benefits, and more. 

Oh, and you do want to make a profit, right? Your pricing needs to take all of this into account. The average profit margin across the plumbing industry is around 5%, but you may adjust that number higher or lower depending on your business needs.

Keep reading: Contractor’s guide to profit and overhead

Action item: Take a look at your current hourly rate and billable hours, then determine whether they are actually covering your costs and working toward making a profit.
Why it matters: Too many businesses fail because they undercharge or overprice their services. Make sure you know the real cost of running your plumbing business and price accordingly. 

5. Hire & retain employees that lay the groundwork

Your employees are the face of your plumbing business, which means that whoever you hire will represent your company in front of your customers. Successful business owners put their people first because a thriving team leads to a growing company. Plumbers know that pipes are the groundwork of any successful building project, so find employees that will build a strong foundation for your business.

Update your benefits package to remain competitive

The more you can offer potential employees, the better employees you will attract. Strong health benefits, retirement plans, and leave policies may seem like high costs, but the value of productive employees can quickly outweigh the initial investment. Hiring, training, and developing an excellent team is the best investment you can make in growing your plumbing business. 

When your employees consistently treat your customers with respect and demonstrate professional knowledge, growth comes naturally. Also, when you invest in your employees, they’re more likely to stick around, helping you to keep turnover low and engagement high. 

Provide training opportunities

Create onboarding procedures for every position that orients new employees to skills as well as company culture. While standardizing training for plumbers is important, don’t forget about your back-office employees. Make sure your office staff has access to tools and courses that help them do their jobs more efficiently.

Training doesn’t have to be expensive. Levelset’s Payment Academy offers free courses on collections and credit, construction financial management, and more. 

Make it clear how employees can grow from the start. Rather than providing a job, open up a career path for everyone who works in your plumbing business. Strong employees are attracted to growth opportunities, so provide incentives and promotions for performance to everyone who works for you.

Action item: Look at your processes for hiring, training, and development to identify areas for improvement. 
Why it matters: Employees are the single greatest asset of any plumbing business. Treat them accordingly. 

6. Build consistent policies and procedures for your business

As your business grows, you’ll have less direct involvement in the day-to-day operations of the company. Too many business owners try to fight fires or manage every aspect of operations, but this is a recipe for burnout and stagnation.

Instead, you need to optimize your operations by building great processes, writing them down, and trusting your employees. Take all that you’ve learned about plumbing, sales, and more — and add in knowledge from your employees. Use this accumulated experience to standardize how your team handles calls, evaluates customer creditworthiness, and manages repairs and installations. 

You need to have clear, written instructions for every company process. A policy serves three purposes: 

• Keeps everyone on the same page
• Saves supervisors from having to repeat information
• Ensures that wisdom isn’t lost when you have employee turnover 

Trust your employees

Once you have standard procedures, let your employees follow them. Too many business owners try to micromanage, but this approach is rarely successful. Instead, refine your procedures over time and use ongoing training to empower your employees to handle every situation. 

In the end, your business is a collection of many different processes — from simple phone greetings to deciding whether to file a mechanics lien for non-payment. Having clear, unified processes for every aspect of your plumbing business improves productivity and prevents knowledge from disappearing when employees leave your company. 

Action item: Identify processes that need standardization, write out clear instructions for those processes, and keep going until you have documentation to handle (nearly) every aspect of your plumbing business.
Why it matters: As you grow, you’ll have less direct control over your business. By crafting great processes, your wisdom stays in every aspect of the company even as your attention moves toward strategy rather than day-to-day operations. 

7. Implement a high-efficiency marketing & sales strategy

You can have the best plumbers, office manager, and accountant on the planet, but if you don’t win jobs, your plumbing business will not grow. Build a sales and marketing team that understands your target audience — and what gets them to say “yes” to the sale. 

On residential jobs, the homeowner is dealing with a potentially large outlay of funds and may be in a stressful situation — like a major home renovation or a burst pipe. You want your sales staff to act with empathy and understanding. 

If your goal is to get more commercial or public jobs, you’ll need someone experienced in writing winning bids. Bidding on a private commercial project can be different from bidding on a government job — your team should understand the difference.    

Both residential and commercial plumbing companies need to be able to demonstrate their value to potential customers by addressing their needs and maintaining professionalism.

Growing a plumbing business requires that customers know who you are and how to find you. Having a recognizable brand, a strong online presence, and an easy-to-use website are all vital for growth. 

According to Findstack, 72% of people use Google reviews to find businesses, and those with at least 200 reviews generate twice as much revenue on average. As a residential plumbing business owner, you need to recognize that the majority of your marketing efforts must go toward optimizing for Google searches, which is where the majority of your potential customers are likely to find you when they’re looking for help with small service jobs or large remodeling projects.

Optimize your website

Either hire an outside agency or an internal specialist who can help you rank in Google for relevant search terms, like “plumber in X city.” You’ll want a strong domain name (www.yourdomain.com), well-written marketing copy, and perhaps even a regularly updated blog with information that supports potential customers. 

You can have your business show up in Google Reviews and on Google Maps by signing up for a business profile. 

Your website needs to work well on both computers and mobile devices, have your contact information readily available, and include a contact form that is easily accessible. When your potential customers find your website from a Google search, make it easy for them to get information about your business and reach out to you.

Feature recent plumbing projects that highlight the types of projects you want to work on. Write up the project details, like problems you solved, your standards of cleanliness during construction, and the communication process with the project owner. 

Create a recognizable brand

Beyond optimizing your website and working toward better rankings on Google, you’ll want to make sure that you have a strong brand. Considering your business’ colors, logo, slogan, name, uniforms, trucks, and more can make marketing easier — and make it easier for your business to spread by word of mouth.  

If people know about your business, you’ll get more business. Once you’re an established name in your area, marketing becomes easier, but it never loses importance. Staying ahead of the competition means continually reaching out to potential customers and positioning your plumbing business as the best solution to their needs.

4 techniques for closing sales

Here are four ways that strong plumbing businesses get the sale for both repair work and new installations:

• Participate in a sales training program that includes role-playing over the phone and in person. 
• Encourage your salespeople to spend more time listening than speaking, and to take notes on what the customer is looking for. 
• Ensure your sales staff do a thorough inspection, provide options, and use the echo customer’s language to share that they’ve understood.
• Provide a detailed proposal on-site, including transparent pricing and line item costs that give the customer a clear sense of your value. 

The majority of your customers are looking for you online, so making sure you stand out there is critical for business success. And it’s not just important for residential jobs — even developers and general contractors will look up your website as part of their prequalification process to determine your ability to complete a commercial plumbing job. 

8. Know the laws that apply to your plumbing business

Construction law is complex, and plumbers have a lot of rules to follow. Failure to comply with building codes and other regulations can result in project delays, steep financial penalties, or a loss of your contractor license.

In addition to property rules, plumber’s licensing requirements, and other laws, you also need to be able to read and understand your construction contract thoroughly. If you’re not careful, you may end up agreeing to contract terms that delay payments or hurt your business financially. Someone at your company should review every contract — even better, hire a legal team to do it for you.

9. Become a more capable leader

Becoming a strong leader for your business is an important step if you want to grow. Business leaders with a clear vision, strong communication, and deft organization are able to overcome challenges and make wise decisions as they grow. 

Many plumbing business owners started out as plumbers or supervisors. The upside of that path is that you have excellent background knowledge about the industry that can inform decisions about materials, techniques, or sales. On the other hand, very few people are natural-born leaders, and working as an individual plumber doesn’t always offer the opportunity to develop leadership skills. 

So start working on becoming a better leader right now. 

Always keep communicating

As the business owner, it’s easy to get stuck in your silo—but it’s a mistake. Your plumbers, salespeople, customer service representatives, accountants, and more are at the front of your business and have the information you need. Take time to ask three simple questions: What’s going well? What isn’t? How can I help you?

Stay open to feedback

It’s easy to get caught in a rut doing business the way you’ve always done it. Be open to new insights by meeting with other business owners, attending classes, joining professional groups, and getting feedback from members of your team. 

Never stop learning

Leadership skills develop over time and by incorporating insights from many sources. Listen to leadership podcasts, read leadership books, and take leadership classes with the intent to never stop growing as a leader.

The success of your business starts with your own success as a leader. Build from your strengths and work on your weaknesses to develop into a business owner capable of growing and expanding where you want to be. 

Action item: Make a plan to become a better business leader this year.  
Why it matters: Your plumbing business’ success starts with you. Leadership skills take time to develop, and these skills will help you gain the insights you need for continuous growth.