The HVAC business startup costs can go as high as USD$10,000. Consider these five alternatives if you need a capital boost.
To launch a business, most entrepreneurs need external funds for capitalization. For instance, startup costs for an air conditioning service could set you back USD$10,000, according to Entrepreneur.com. The amount excludes the purchase price for a service vehicle and may be higher if you’re launching a heating, ventilation, and air conditioning (HVAC) startup.
Aspiring business owners like you may choose to operate from home initially to save on set up costs. Things like this can really work to your advantage in the beginning when capital is tight and cash flow not all that reliable. However, give careful consideration to what you can start without and what will be essential in making you competitive in the marketplace from the word go.
Some start up investments are essential in getting you set up and running quickly and efficiently such as business scheduling and management software from Jobber. This application helps improve operational efficiency and enables you to set up your business in such a way that it is easily scalable.
If your HVAC business needs a capital boost, consider these nontraditional ways to secure additional funding.
1. Approach venture capitalists
Venture capitalists or VCs are individuals willing to boost a startup’s funding for a stake in the company. Startups with brilliant ideas and small businesses having difficulties expanding may choose to approach them. (1)
These types of nontraditional business funders often have a committee in charge of deciding whether to inject additional capital into a company or not. They also have an investment fund pooled together, ready to be distributed to promising companies. These capitalists may ask for your financial statement to determine viability. To be able to quickly and easily prepare such documentation will be an asset in achieving such investment. A lot of companies now use HVAC invoice templates to adopt best invoicing practice which help to streamline and systemize revenue-generation methods and sources.
VCs often also offer coaching, alongside providing a fund boost once they have equity in your company. This can be a good option if your capitalization needs are stronger than your desire to keep your company. (1)
2. Look for angel investors
Angel investors are wealthy individuals who use private funds to boost business capital in exchange for equity. If you believe in your HVAC startup and know that you have something unique, pitch your company to these seed funders. Just make sure you have a winning strategy to ensure that your venture’s earning potential is high.
Unlike venture capitalists, they may require less involvement in your business and may agree to provide small amounts of cash for more extended periods. Still, they want a return on their investment by acquiring a portion of your business. In 2020, some USD$ 25.3 billion worth of capital had been attributed to angel investors. (2)
3. Get a business credit card
If you’re done with the essential preparations for starting a business, and you only need to make specific purchases, you may opt for a business credit card. This funding solution provides startups with access to additional cash for all their payment needs.
The good thing about a business credit card is that it’s often unsecured. However, an HVAC business owner must have a favorable credit score, as this will be the issuing bank’s primary basis for approval and credit limit assignment. (3)
In choosing the best business credit card, look for those with low or zero annual percentage rates or APR, representing the total re-payment costs. This type of funding can also help your startup business in the long term by promoting cash flow.
4. Explore crowdfunding
Crowdfunding works precisely as its name says; the crowd or online users will fund your HVAC startup. However, your group investors may choose how to go with the additional funds. In most cases, the campaign is run for a specific period and with particular investment goals. Here are some dimensions of crowdfunding:
• Debt-based, wherein investors are repaid the principal amount plus interest
• Rewards-based funding means a donor will receive services and discounts in exchange for their contribution
• Equity funding, wherein donors become entitled to a portion of your HVAC company’s shares
• Donation-driven funding means the contributor won’t get anything in exchange for the money (4)
When launching a crowdfunding campaign, pitch your company well, as you’re competing with other businesses. Grab users’ attention and ensure you have a winning strategy to compel donors to fund your business. (4)
Seek out business grants
Try checking the government grants site if you’re not rushing to secure additional funds for your HVAC business. As you’ll discover, several grants may apply to you, as the criteria range from industry-specific activities to research and development. Another factor is whether the enterprise is owned by a member of a minority group or by a woman entrepreneur. (5)
These subsidies may be purely government-backed or in partnership with private organizations. Allocations may also be accessed through federal, local, and state governments. Learning institutions and nonprofit groups also provide small grants to select enterprises, depending on their running programs.
Moreover, the Small Business Administration (SBA) is a good source of grant information. The SBA also provides multiple types of low-interest loans to qualified enterprises.
Conclusion
Besides taking a business or personal loan, there are other nontraditional ways of accessing additional funding for your HVAC and any other small business. Depending on your priorities and needs, you may choose from any or a few of the options above.
No matter what your choice is, always remember that building a business takes sacrifice and proper preparation. So, choose the funding option that provides a win-win solution for you and the funder.
References
1. “Venture Capitalist”, Source: https://www.investopedia.com/terms/v/venturecapitalist.asp
2. “What Is an Angel Investor?”, Source: https://www.thehartford.com/business-insurance/strategy/alternative-funding-startup/angel-investors
3. “Business Credit Card”, Source: https://www.investopedia.com/terms/b/business-credit-card.asp
4. “What Is Crowdfunding”, Source: https://www.businessnewsdaily.com/4134-what-is-crowdfunding.html
5. “55 Grants, Loans, and Programs to Benefit Your Small Business”, Source: https://www.uschamber.com/co/run/business-financing/government-small-business-grant-programs
