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hey this is Kyle at projection hub and today I'm going to show you how to create a business plan for an HVAC company maybe you're trying to start your own business or maybe you're trying to get a business loan or potentially raise investment and you need to create or maybe just do internal planning you need to create a business plan to produce to those individuals that are going to be reviewing it in hopes of trying to get approved for that financing or that funding and what I'm going to do today is I'm going to go through this template here that's HVAC business plan free template you can get in the description below I'm not going to write a whole business plan in front of you today it's already pre-filled out with a fictitious example of Air Tech Solutions in Little Rock Arkansas and so I'm going to show you using this example what the structure the business plan can look like and then the main thing I'm going to try to accomplish is there are five key points that I want to point out to you that can take your business plan from just okay to hopefully a high degree of likelihood that you can get approved for the funding you're looking for so who is projection hub we've helped more than 50 000 small businesses create Financial projections for their businesses for business loan applications pitch decks business plans planning purposes you name it and we've helped a lot of eight-track companies in just different service repair contractor type companies but someone said the type of business we help actually a lot and my previous work before I was with projection hub I was actually a lender for an SBA a small business administration lender and so we worked with a lot of small businesses to review loan applications for startups and small existing businesses again we helped a lot of plumbers electricians HVAC companies review their business plans prepared loan applications and so reviewed hundreds and even thousands of applications of business plans through that process so I'm going to try to apply that experience here to demonstrate some best practices as you're putting together your business plan if at any point you like the video give us a thumbs up that really helps us here at projection hub as a fellow small business and if you like the content you can subscribe to the channel not all of our content is going to be HVAC or like specialty subcontractor related but lots of tips just in general about managing your business growing your business and things to look out for on the financial side of things with that we'll go ahead and jump in and get started okay so why is your business plan necessary probably obvious because maybe someone asked you for it and that's why you're here today to get one created but for a business like an HVAC company it's not so novel that your lender doesn't understand what the business is they definitely understand what business is what they want to see in your business plan is your specific roadmap for how you're going to succeed so the worst thing you can do in a business plan is making it too generic and too generalized and giving this impression that we're just going to start and it's going to work even though maybe that is the case because in your experience in your context you just you have all this business ready to go and it'll be really easy for you to adapt that or adopt that but they're not going to know that and so the business plan doesn't need to educate them on the industry in the opportunity but not the industry what it needs to do is they want to see your plan they want to see that what decisions you're going to make to get from point a point e to point x y and z and mitigate their risk on giving them giving you the money that they're planning to and so diving into things here the table of contents you can see the general overview of the business plan now you'll notice it's only 14 pages long so if you're told to have a business plan maybe that's a sigh of relief that you really doesn't do super long but also many people are under the impression that their business plan needs to be really long and as a former lender I can actually test it like the opposite I think is better whenever someone would hand us a 50-page business plan 75-page business plan it's a disadvantage for them because there was so much content there there's so much stuff there that we had to we would have to skim through that and try to pick out the highlights and so there's a chance that we would miss important details because it was hidden in all the other extra fluff in there and so I think a 15-page business plan the 20 Page business plan is plenty now if you need to create a longer business plan just for that exercise and that practice to feel like you have your whole plan down that's great do that just make sure you have a refined version a shortened version that just is just jam-packed with the important details that you can give to your lenders all right we are going to go through here section by section first up we have the executive summary I want you to think about this as like a cover letter for a resume to a job so it's not going to tell you the person everything about you but it is going to give them a really good idea who you are what you do where you're doing it do you have any specializations or special services or certifications that's really important to include in here obviously you have short-term long-term goals Mission State maybe that's fluffy but definitely you can include that and then your company description is like an extension of that but it's just a little more more technical you're gonna have like your legal entity structuring here your if a Target customer in mind whether that's residential versus commercial you should probably highlight that in here if you say both great but is your goal to get more commercial or residential because I know that can change the business model quite a bit there is one key point we're going to highlight later in this video but I'll just go ahead and say that here in the company history is a place that you'll be able to include those details just the relevant industry experience here but we'll talk a little bit more about that here in a second okay your market analysis now this is a pretty important section and it's going to bring us to key Point number one and you'll see what's included in here you're gonna have an overview of the industry this doesn't mean like Shark Tank version where you're like the global HVAC market cap is seven trillion dollars that's not what this needs to be this is specific to your local market where you're going to be competitive at a quick overview of that so if you're gonna say we're primarily going to offer HVAC I'm saying in Little Rock that's the 500 000 person City probably bigger than that honestly so highlight this the scope of where you're going to be serving how many realistically customers are there what you think what kind of services are going to be really good there competitor analysis who are your direct competitors don't list every competitor but in an industry like this you should know every competitor that exists in a 20 mile radius or however far you're going to be traveling just to understand their Specialties their price points how big of a market share they have is it one big dog or is it a bunch of independent HVAC contractors so just have an understanding of that again your target market who residential versus commercial New Market opportunity so fill that out that's important the main thing that I think can really make your business playing good in this section is providing any example of like tangible research you can provide that you've really looked into this is going to be helpful so to give your Ledger the impression that you actually understand the state of the market the opportunity in the market so there's a couple ways you can go about doing this one the expensive way you can pay someone to do a market research study and go that route I don't know that I would necessarily recommend that it's not necessary it's not totally necessary there are three ways you can do this and sometimes they just require a little bit of hustle or a little bit of grip to pick up the phone or do some spend some time doing some research so one quick example I'll show you here is Google has a free tool called the Google Keyword Planner you can use this for free with a Google AdWords account which is free you don't have to create an ad to have an AdWords account and what I've done here is I've sent my location to Little Rock Arkansas and this one had about 500 000 people in it maybe a little less than that and I put in these Search terms and basically what this is going to simulate is like when you're on your phone and you search for ice cream shop near me and then those results pop up this is basically simulating if I was searching for these phrases while standing in Little Rock Arkansas this is how often those search phrases in some data around those search phrases is being searched so there's some important information here one actual search volume which I'm not terribly interested in it it's okay that this only says 90 there's certainly more than 90 people looking for that need HVAC work but this is think about this as like 90 new customers up for grabs each month maybe now once you win a customer you know you kind of have them probably for a long time what I'm more interested in is the trend the three-month trend of your viewer Trends one I think that's interesting to point out Arkansas probably gets pretty hot in the summer and you can see the seasonality which is interesting people searching for that so the three month changes up almost 500 so I'm guessing it's getting pretty hot in Arkansas right now and people are searching for air conditioning repair so that's interesting what's more interesting to me is the year-over-year change so this kind of Smooths out the seasonality fluctuations and it's going to help us give an idea of year over year is the demand for those Services growing are people searching for that more and so this one's interesting down 35 AC repair in me but air conditioning repair near me is up 50 percent HVAC servicing near me down 22 HVAC companies near me of 25 so it just seems to be maybe an adjustment in the way people phrase it but overall the amount of people searching for that is relatively the same and these are all really small search phrases so they're not gonna be super helpful in regards to that so not super compelling tangible evidence here but this is an example of a type of thing you can do to trying to be searching to see what's going on now if you are trying to open up your business into a smaller Community your the search volume for that type of stuff is going to be pretty small so it may not be that helpful and it might just look more trying to do some trying to do some surveying and even like I live in a pretty small town in Indiana outside of Indianapolis and so I know that there's only a handful of HVAC people in the area and I might go look at their reviews right and I might see wow the two stars their their customer service is terrible people aren't satisfied with that I might even try to call them and say hey if I was needing to get something repaired like how far out am I looking to get that booked just to see how busy um those services are those can give us some good indicators yeah it seems like all the HVAC people in my area are booking out multiple weeks ahead they don't have great reputations based on the reviews that's another way to Signal there's opportunity so you can get a little creative and do that in free ways but whatever you choose to do it's good evidence to include that in your business plan to demonstrate your lenders you're really doing your homework yeah so that's an example of that okay moving on marketing and sales strategy so here the obvious things but you're going to follow this roadmap what services or products are you going to offer how are you planning to price those how are you going to distribute those how are you actually going to connect with those customers promotion and advertising so you're going to have a website you're gonna do SEO you're going to have social media so all of this stuff in here is required this is the minimum requirement you need to have these things in here what I'm most interested in key Point number two When I Was A lender is a thing called customer acquisition demonstration so similar to what we just did with market research there are things you can say that are like yeah it's just a matter of fact this is the market but then there's example of like you actually doing the research and reinforcing and providing evidence for the opportunity in the market this is the same kind of thing here you can say we're going to have a website we're gonna have social media this is gonna be our pricing strategy key Point number two if you really want to make your business plan shine is going the extra mile and coming up with examples creative ideas or even what's called traction which is examples of you starting to do that thing maybe before the business even starts so you can see here example one and two okay so example one is more of a thing probably like after the business launches so that's kind of promotional offer number two is you can find contractors and people that are willing to partner with you if you have experience in the industry that might be easy to do before you launch if you're a brand new HVAC provider in the area nobody really knows who you are that's probably gonna be pretty a little difficult to do before you establish some sort of reputation but number three and this might sound cheesy to you but this is an example of something Leonard might actually like to hear is maybe before you even launch the business you start creating a YouTube channel where you're doing HVAC repair tips and Home Maintenance tips and preventative maintenance and things to look out for when you're paying for repairs and building some trust and some a following there for those types of services and establish yourself a little bit as a reputable HVAC repair person and that can open up different doors for different business opportunities but also maybe win you some customers in your backyard and other ways you can do this is just boots on the ground words of mouth friends and family people in the area start building some interest in like I think I'm going to start doing this you can even do it on the side like you have a full-time job somewhere else you can start offering HVAC repair services in the evenings or on the weekends just start grinding that way so it can be any one of these things my my point is just saying more than we're gonna have a website and people are going to show up lenders really like to see this is like something unique right what are you already doing to prove you're gonna have momentum stuff when the business launches you're likely going to have business already versus that build it and they will come mentality lenders love to see that so moving on operations and management we're shifting gears here into more like Logistics how are you going to deliver your services who's going to be on the team how is just the internal business going to operate a little bit you don't need a ton of detail in there just enough that your lender again is going to be okay they know what they're talking about but I had alluded to this earlier something you can include here those your relevant industry experience so it's simple but your lender is going to want to know that you know what you're getting yourself into and you know what you're doing when I was a lender we would oftentimes have people who would spend a whole career doing one thing and then they would decide all of a sudden they wanted to start a business doing something that was completely unrelated and they had no experience doing that that's not a guaranteed no but that does create extra questions it does create extra scrutiny little skepticism from A lender or someone who's a little nervous about that and so it just creates an additional hurdle um to get through that approval process all that to say if you have relevant experience be sure to highlight that HVAC repair is a Specialized Service so it's probably pretty difficult to get into the industry if you've never done HVAC repair or have relevant experience in Industry so that's probably a non-starter in this case but if it's not you maybe you have great executive or management or administrative skills and your partner or your co-founder is an HVAC wizard then that's great include that that helps so maybe a partner or a founder or key employees have relevant experience be sure to include that information in the business plane just to make sure you are emphasizing the fact that you do know what you're doing and you can build some confidence there with your lender okay moving on let's keep one number three key Point number four this is the big one financial plan now this is the big one and also the one I think a lot of business owners despise the most because it can be a little overwhelming and that is financial projections for startup most lenders are going to require at least a couple of years of financial projections if not all the way out to five years you're gonna see performance statements and second just be again overwhelming so I'm gonna show you a little bit more here but included in this business plan section a breakdown of your startup costs talk about how much you're going to need what you're going to use it on where you're gonna get the money from or where you would like to get the money from see that breakdown here we've got a revenue projections here again for five years our estimated cost to get sold gross profit net income some key ratios related to our business performance like a breakdown of our monthly planned monthly expenses we've got our five-year income statement performance statement or profit and loss here you can see cash flow projection for five years some you can also include a balance sheet if you'd like to a break-even analysis so I know maybe that sounds like a lot okay I'm gonna show you those charts there were made using this template here this is available at the link down below you can go to our website check it out again we've helped 50 000 businesses more than 50 000 businesses create projections and a lot of them are using these templates and doing it themselves it's very simple how this works these four blue tabs you just you're punching in your information right so what are the things you're going to need to purchase are you putting in any money in investment are you going to need a loan then what makes this template really special is that a lot of templates out there for projections they just ask you what your estimated revenue is going to be rather than helping you actually calculate it so this is going to help you use HVAC specific assumptions to help you calculate your Revenue makes a little bit easier you're going to spend on Advertising how often do you plan to attract your customers and as just the owner this is these are important key assumptions to understand what services are you going to provide how much do those cost you what are you going to sell them for this is split between residential and Commercial so you can model those separately if your prices are different if your costs are different and your commission structure for sales people so this looks like a lot but again you're only changing the numbers in the blue sections here and that's it we have a video guide to go along and answer questions as you them again you're going to put in your monthly expenses if you have any salaried employees they'll go here and then it's just going to generate all of these charts in financial statements for you automatically ready to go for your lender both in the 12 year or 12 month format and annual format so that was a quick Shameless plug but if you're going to have that done you're going to pay to have that done as they're going to cost you a couple thousand dollars maybe to have a CPA do that for you that template is less than a hundred dollars maybe even like 79 or somewhere in that range and I'll even give you a promo code at the end of this video to give you a 20 discount on that but back to the business plan key Point number four is not Financial projections because you need to have them those are minimum requirement you need to have those included in your projection what key Point number four is they need to be realistic so say you get the template you fill it out you've got your projections created now you need to do a little bit of homework which one thing I'll mention is if you get a projection hub template you fill it out we'll review it free of charge we'll give you feedback on it and just answer any questions you have but something you can do is once you have your numbers calculated so I'm going to come back up to here to this information here and then just do some Google searches based on this or if you're comfortable using an AI chatbot like chat GPT or Bard you can ask it questions as well but I'll give you an example here of like a profit margin okay so look what is a typical profit margin for an HVAC company two and a half to three and a half percent as average um successful companies at ten percent and twenty five percent for companies I do exceptionally well so let's go ahead and look at ours four percent five percent six percent getting up to eight percent okay so we are well within the range probably even being really conservative what your lender is going to like earn on the side of caution there if I ask Chad CPT the same thing it's gonna give me a little bit more notes but again five to fifteen percent 10 to 25 percent we're still very much within that range so that is great now you can do that same exercise for any number in your projections the if you want to do that for Comfort sake what is what is common for Revenue numbers you can see these little percentages here along those numbers that's to help for this type of thing what is it what is a typical percentage of operating expenses versus your revenue or your sales to make sure that you're not planning to spend way more or way less than you would need to in your business um so just do that to just make sure it's realistic within industry standards your lender doesn't have this perfect sheet that says this is exactly what the number is going to be but they're going to be able to tell when things are out of whack or a little off balance there so just do your research for their sake but also for your sake just to feel like you know what to look out for from that so that is key Point number four is realistic and Industry realistic projections within industry standard data and then lastly the appendix down here and the very last key points key Point number five and this is demonstrating skin in the game now if you're trying to get a business loan this applies more so to you I would say and this is similar to if you're buying a home you're going to put a down payment on your house and the bank is going to put a lien on your house so if you default on that mortgage you're going to lose your down payment and you're going to lose that house business loan When I Was A lender all the time people would say that they received the advice to keep their personal and their business separate and so they don't want any personal stuff attached to their loan that's great advice when it comes to bookkeeping and like bank accounts it is unrealistic advice when it comes to getting a loan or getting funding because the business owner is the the business without the business owner then there's nothing there to stand upon that especially for a business like HVAC you may not have as much a collateral you're going to have some equipment you're going to have some trucks if you buy a building that's collateral so you're going to commit all that collateral to the loan if for some reason there's a collateral shortfall and the lender still needs more they might ask you for personal collateral that could be a personal free and clear vehicle that could be a second mortgage on a personal residence so just be aware you don't have to come into the bank prepared to give away everything but just don't act shocked when that is an expectation that they have of you I would encourage you just to know what you have available going into that conversation in that process just to be prepared to if they would ask for it that you can consider that so there you have it that's the five key points how to make a business plan for an HVAC company and as promised let me scroll back up here if you use ph20bp you can get that projection template for 20 off if you have any questions email us at support projectionhub.com we will personally follow up answer any questions you have and yeah like the video if this was helpful for you and we will see you in the next video thanks [Music] [Applause] thank you