Costs / budgeting
Starting a plumbing business needn’t involve large amounts of upfront cash being spent. If you’ve done an apprenticeship you may have already built up a useful collection of tools, and most plumbers you hire will come with their own equipment too. One thing you won’t be able to scrimp on however is a vehicle. You’ll need a reliable mode of transportation to get to your jobs and while second-hand makes business sense you’ll need to spend enough to ensure it’s not breaking down every other day.
The average self-employed plumber earns £30-40,000 a year. That’s not to say the rumours about plumbers clearing an annual £70,000 are completely false, but you’d probably have to be working 12-hour days, six days a week to manage it. You’ve got to remember that from your earnings you need to deduct all your business running costs such as petrol, vehicle maintenance, advertising etc.
During the early stage of your business think carefully about the type of jobs you take on. Long-term projects such as bathroom fittings which take weeks of work may give you a nice lump some of cash but if you’re not being paid until the job is finished how will that affect cashflow? Emergency call-out jobs, where you invoice and receive payment on the spot, can be a much steadier form of income during the early days.
“It’s easier from a funding perspective to focus on emergency work,” says William Davies of Aspect Maintenance. “It has better margins and you get paid straight away. But even though larger jobs have lower margins they offer more long-term security, so there’s attractions to both types of work.”
Setting your prices should involve a degree of research of your competitors’ pricing but it’s not a good idea to base your pricing model on undercutting everyone else. “If you’re a small operation that trades in a small area then the main thing is to keep your service levels up,” says Davies. “In this sector price is quite inelastic – whether you charge £60 or £80 for a call out isn’t what makes the difference. Pricing your service as cheaply as possible won’t have as much benefit as making sure the service quality is consistently good.”
Consistent service is also what will you see you through difficult economic climates according to Charlie Mullins of Pimlico Plumbers. “You’ve got to raise your game to stay ahead of the game,” he says. “Get your response times up and improve your customer service and you’ll get through the recession.”