![How to plan and track the budget of your HVAC contracting service [template]](http://onlineyougrow.com/cdn/shop/articles/cov-budget-6.png?v=1715856546&width=1100)
If you don’t plan and track your HVAC business budget properly, you're setting yourself up for failure.
When we developed our strategy pack for HVAC contractors, we saw a lot of HVAC business owners struggling with finances and planning.
They were disorganized, had no grasp of cash flow, and were drowning in financial troubles despite having substantial revenue.
Don’t let this be you—stand out and succeed.
We’ve created a small, free tool to help you get started: our Budget Tracker and Planner. Let’s turn your HVAC business's finances around and set you on the path to success!
Get the budget tracker tailored for HVAC contractors
Most HVAC contractors don't know how to plan and track their budget. This spreadsheet will help you.
Example of a full budget for HVAC contractors
Here is an example of a (very) detailed budget for an HVAC contractor, to give you some inspiration
1. Rent and Utilities
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Rent | Lease for office and storage space | $2,500 | $30,000 |
| Electricity | Power consumption for office and workshop | $300 | $3,600 |
| Water | Water usage | $100 | $1,200 |
| Gas | Gas for heating and equipment | $150 | $1,800 |
| Internet & Phone | Internet service and business phone | $200 | $2,400 |
| Waste Removal | Garbage and recycling services | $100 | $1,200 |
| Insurance | Property and liability insurance | $400 | $4,800 |
2. Salaries & Wages
| Position | Number of Employees | Monthly Cost per Employee | Total Monthly Cost | Annual Cost |
|---|---|---|---|---|
| HVAC Technicians | 4 | $4,000 | $16,000 | $192,000 |
| Office Manager | 1 | $3,500 | $3,500 | $42,000 |
| Administrative Assistant | 1 | $2,500 | $2,500 | $30,000 |
| Sales Representative | 1 | $3,000 | $3,000 | $36,000 |
3. Equipment & Supplies
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| HVAC Units | Air conditioners, heaters, etc. | $5,000 | $60,000 |
| Tools & Equipment | Specialized HVAC tools and machinery | $1,000 | $12,000 |
| Vehicle Maintenance | Maintenance and fuel for service vehicles | $800 | $9,600 |
| Office Supplies | Stationery, printer ink, etc. | $200 | $2,400 |
| Uniforms | Staff uniforms and safety gear | $300 | $3,600 |
4. Marketing & Advertising
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Online Advertising | Google Ads, Facebook Ads, etc. | $400 | $4,800 |
| Social Media Management | Managing social media accounts | $300 | $3,600 |
| Print Advertising | Flyers, posters, newspaper ads | $150 | $1,800 |
| Website Maintenance | Hosting, domain, updates | $100 | $1,200 |
| Email Marketing | Email campaigns and newsletters | $100 | $1,200 |
| Promotional Events | Special events and promotions | $200 | $2,400 |
5. Miscellaneous Expenses
| Item | Description | Monthly Cost | Annual Cost |
|---|---|---|---|
| Equipment Maintenance | Regular maintenance of HVAC equipment | $300 | $3,600 |
| Licenses & Permits | Business licenses, HVAC certifications, etc. | $100 | $1,200 |
| Software Subscriptions | Project management and accounting software | $150 | $1,800 |
| Contingency Fund | Emergency repairs and unexpected costs | $500 | $6,000 |
| Staff Training | Training programs and certifications | $200 | $2,400 |
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What are the biggest expenses for an HVAC contractor?
Be mindful of these potential pitfalls. Here are five major costs every HVAC contractor needs to consider, along with some tips on how to manage them effectively.
- Equipment and material costsThese can take up a significant portion of your budget. You're dealing with specialized tools, HVAC units, and materials that can vary in price based on quality and availability. To keep these costs in check, focus on bulk purchasing, negotiate better prices with suppliers, and avoid overstocking. It's easy to overspend by opting for high-end equipment that doesn't provide a proportional return on investment.
- Labor costsYour technicians and support staff are the backbone of your business, but their wages, benefits, and training can be costly. This expense is always high because you need skilled workers to provide quality service and maintain customer satisfaction. Optimize labor costs by scheduling efficiently, cross-training employees, and monitoring productivity. However, be careful not to underpay or overwork your staff, as this can lead to high turnover and poor service quality.
- Office rent and utilitiesPrime office locations can come with high rent, but they can also enhance your business's visibility and accessibility. Utilities like electricity, heating, and internet are essential but can add up quickly. To optimize these costs, negotiate favorable lease terms and invest in energy-efficient office equipment and lighting. Overspending often happens when you choose a location that's too large or too luxurious for your needs.
- MarketingGetting the word out about your HVAC services is crucial, but advertising can be expensive, whether it's online ads, social media campaigns, or traditional media. Optimize this expense by focusing on cost-effective methods like the ones we recommend in our guide. Overspending can occur if you invest in flashy campaigns without a clear return on investment.
- Vehicle and maintenance costsThis includes everything from service vans to the tools and equipment they carry. These are expensive because reliable vehicles and regular maintenance are crucial for timely service and customer satisfaction. Optimize by investing in durable, fuel-efficient vehicles and maintaining them regularly to avoid costly breakdowns. You can overspend by going for the latest high-tech vehicles or gadgets that you don't really need.
How to spend less with your HVAC contracting service?
Here are practical tips to help you, as an HVAC contractor, optimize your budget and manage expenses more effectively.
| Expense | Tips to Optimize |
|---|---|
| Equipment Costs | Partner with reputable suppliers for bulk discounts on HVAC units and parts. |
| Labor Costs | Implement a scheduling software to optimize technician hours and reduce overtime. |
| Utilities | Install energy-efficient lighting and HVAC systems in your office and warehouse. |
| Marketing | Run social media campaigns for your HVAC services and collaborate with local influencers for free exposure. |
| Tools and Supplies | Train staff on efficient use of tools and supplies to reduce waste and extend their lifespan. |
| Vehicle Maintenance | Set up a maintenance log for regular vehicle checks and servicing to avoid costly repairs. |
| Rent/Mortgage | Negotiate lease terms during renewal or consider moving to a less expensive location. |
| Insurance | Regularly review insurance policies to ensure they meet current needs and compare rates annually. |
| Office Supplies | Use cost-effective, eco-friendly office supplies and go paperless where possible with digital systems. |
| Training | Conduct regular in-house training sessions and use free online resources to keep your team updated on the latest HVAC technologies. |
| Inventory Management | Use inventory management software to track stock levels and reduce excess inventory. |
| Technology | Invest in multi-functional diagnostic tools and utilize HVAC management software for scheduling and invoicing. |
| Licensing and Permits | Stay up-to-date with local regulations to avoid fines and costly renewals. |
| Transportation | Plan service routes to maximize efficiency and reduce fuel costs. |
| Customer Service | Use a CRM system to manage customer interactions and improve service quality. |
| Waste Management | Implement a recycling program for old HVAC units and parts to minimize waste. |
| Uniforms | Choose durable, easy-to-clean uniforms and offer staff a stipend for maintenance instead of using an external service. |
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Expenses that are just useless for an HVAC contractor
Yes, some expenses for your HVAC business are just unnecessary. They don't contribute to increasing revenue or improving customer satisfaction.
| HVAC Expense | Reason It's Useless |
|---|---|
| Luxury Office Furniture | High-end office furniture doesn't necessarily improve productivity and can be a significant drain on the budget. |
| Premium Vehicle Brands | Unless you are targeting a high-end market, most clients are satisfied with reliable, mid-range service vehicles. |
| Excessive Tool Inventory | Having more tools than necessary increases inventory costs and can lead to clutter and inefficiency. |
| Top-of-the-Line Software | Expensive software with features you don't use can be cost-prohibitive and unnecessary. |
| Traditional Advertising | Paper ads often have a lower return on investment. Focus on digital marketing strategies instead. |
| Multiple Uniform Styles | Having various uniform styles increases costs without adding significant value to the customer experience. |
| Overstaffing | Having more staff than needed leads to higher labor costs without necessarily improving service quality. |
| Premium Subscription Services | Expensive subscriptions for industry magazines or software often go unnoticed by customers. |
| Exclusive Tools | Using rare or specialized tools can inflate costs and complicate supply chains. |
| Costly Office Decor | High-end office decor is not always appreciated by clients and can be a significant expense. |
| Custom Printed Materials | Personalized materials like business cards or brochures are a minor detail that most clients overlook, and they can be expensive. |
| Unnecessary Software Features | Paying for software with features you don’t use is a waste of resources. |
| Premium Water Brands | Most clients are content with filtered tap water, making expensive bottled water unnecessary. |
| Extra Service Vehicles | Maintaining a larger fleet than needed increases operational costs. |
| Excessive Membership Fees | Paying for multiple industry memberships often yields little benefit. |
| Overly Frequent Office Renovations | Constantly updating office decor and layout can be costly and disrupt operations. |
| Expensive Office Decorations | Elaborate decorations are often ignored by clients and add to the cost. |
| High-End Office Supplies | Luxury office supplies are prone to damage and expensive to replace, often going unnoticed by clients. |
| Excessive Staff Meetings | Too many meetings can reduce productivity and increase labor costs. |
| Expensive Marketing Materials | Frequently redesigning marketing materials is costly and often unnecessary. |
| Unused Promotional Materials | Ordering more promotional items than needed leads to waste and unnecessary expense. Get our marketing budget planner template. |
| Paid Directory Listings | Many free listing options are available, making paid listings often redundant. |
| High-End Service Equipment | Specialized service equipment is often unnecessary and adds to costs without a proportional benefit. |
Stop working with a tight budget for your HVAC contracting service!
Managing a budget for an HVAC contracting business when funds are tight can feel like a nightmare. It's like being trapped in a cycle where any unexpected expense can throw your entire operation off balance.
This constant pressure makes it nearly impossible to invest in growth projects, leaving you always chasing after expenses. It's a life filled with stress and sleepless nights.
Yes, you can continue down this path, scraping together pennies and barely making ends meet. But there's another part of the equation you might be overlooking. Instead of just trying to cut costs, you can focus on growing your revenue. More income means more breathing room and more money to invest in your business.
And no, you don't necessarily have to spend money to grow. There are plenty of zero-cost initiatives and strategies that can help you increase your revenue by 10%, 20%, or more. We've detailed all of these strategies in our guides, after studying dozens of HVAC businesses just like yours. Get them now!
Make your HVAC contracting service more profitable
We have studied the strategies of the best HVAC contractors in the world. All their tactics are explained in our pack!
