In today’s economy, “Going Green” is more than just a catchphrase that is used to market toward those who are environmentally minded. There can be some lucrative rewards for a business that focuses on preserving the environment. From LEED Certification credits to government subsidies, going green is something that can pay for itself. Because of this, many people are wondering how to start a spray foam insulation business.
Spray foam insulation is one of the few businesses that tends to be successful even in difficult economic times. It isn’t a difficult skill to learn, but it does take some knowledge about insulation values for true success to be earned. With cutting edge technology available to make the application of spray foam easier than ever before, the time might be now to follow these steps to get your business started.
1. The first thing that you’ll need to do is incorporate your business.
You could run a spray foam insulation as a sole proprietor or a limited partnership, but there’s a lot of liability in this field. If you mess up one job for whatever reason, you could be on the hook for several hundred thousand dollars and your personal finances would be at stake. By incorporating, you’ll protect your personal assets. This is a legal business procedure that will usually cost upwards of $1,000, but it is an investment that can secure your future.
2. Determine what kind of insurance you’re going to need.
Some jurisdictions consider the spray foam insulation business as a contracting business. Because of this, you may need to have some specific insurance policies in place to protect you. One of the most common in this area is called a surety bond. Surety bonds are like a line of credit that is extended to your business. If there is a claim against your company because of the craftsmanship of your work, then the surety bond can be used to pay for the job to be re-done without financial losses to the customer or to you. Obtaining a bond isn’t cheap and you may need to have an extensive amount of coverage [up to $50k or more], so do this research before any other steps.
3. Locate suppliers that can help you secure jobs in your local community.
You’ll need to secure a minimum of two foam suppliers to help you make sure that there’s enough inventory on hand for the work levels that are in your community. Two are necessary, a primary and then a backup, just in case you can’t secure additional inventories from one. The geography of your supplier is important, but not as important as their ability to provide you with the specific materials that you’re going to need while having the approvals necessary to do so.
There are some additional considerations that you’ll want to keep in mind as you hunt down suppliers as well:
1. Do they know what they’re doing?
If a company is selling spray foam insulation and other related products, then they should know how to install the insulation. If a supplier just sells the product without any technical knowledge, then that’s not a supplier to use.
2. Is it a known brand?
There are only a few brands with market saturation in this niche business model. You could save money by going with generic brands, but known brands are generally associated with known quality. If you haven’t heard of a company before, there’s a good chance your customer base has not either.
3. Are they financially secure?
The last thing you need as you’re starting a spray foam insulation business is to have your supplier go out of business. If a supplier doesn’t seem financially secure, then look for other options.
5. Take advantage of the one stop shopping model.
Even if you know what you’re doing, each spray foam insulation manufacturer tends to have their own specific best practices when it comes to product installation. When you make a purchase of inventory, you can generally receive training about how to work with the product, what equipment is necessary to complete a job, and specific information that may need to be known regarding building code application. Equipment suppliers also provide training like this, although its scope is usually limited to proper care of the equipment itself.
6. Marketing yourself is no guarantee of success.
The average contractor in the spray foam insulation business has spent at least $100k in total capital to bring their business to a grand opening and much of this cost is associated with marketing. The best marketing in this field isn’t a slick TV ad or a funny radio advertisement [although having these things doesn’t hurt]. The word of mouth ambassadors that speak highly of your work is what will bring you the best contracting jobs. You could spend millions on marketing and never get work because you have a lousy reputation. Sometimes the best marketing is to take a job at a discounted price so everyone can see how awesome you really are.
7. Old-fashioned pavement pounding still works in this field.
Most of the time a cold call visit in person isn’t a good way to spend your day, but that’s not necessarily true in this business opportunity. By getting out on the street and talking to home owners about the benefits of your product and how it can save them money, you’ll slowly build an awareness of your product. You don’t have to convert every conversation into a sale. You do, however, need to plant seeds that will grow into an appointment with you when a business or home owner is ready to pull the trigger.
If you want to know how to start a spray foam insulation business, then the first thing that you need to be aware of is the large capital expense. From there, follow these steps and you may just find yourself with a very successful business in the near future.