You Earned the License. Now Build the Business.
The license says you can do the work. It says nothing about whether the work will pay you — and that is an entirely separate skill nobody taught you in the field.
Here is what almost every newly licensed contractor discovers in month four: the technical work was never going to be the hard part. You already know how to fix equipment better than most people alive. What ambushes you is quoting a job and finding out later it lost money, chasing an invoice for six weeks, or realizing you paid yourself less than you earned as an employee.
None of that means you were wrong to go out on your own. It means you went out with half the toolkit — the technical half — and the business half was never handed to you.
You are not starting a job. You are starting a company that happens to perform HVAC work. Owners who understand that distinction on day one make different — and far better — decisions than owners who learn it in year three.
What Actually Happens to New Construction Businesses
Not scare statistics. The real federal numbers — which are more encouraging than the folklore, and more sobering than the hype.
Four out of five make it through year one. About two out of three are still standing at five years. That is far better than the "90% fail" myth people repeat — but it still means roughly one in three is gone inside five years.
And here is the part worth sitting with: almost none of them close because the owner could not do the technical work. They close on pricing and cash — the two decisions you can get right before you take your first call.
Leonard has spent 34+ years building, running, repairing, scaling and selling HVAC companies — starting his first from scratch in 1993 as the one man doing nearly everything. These systems were built under real pressure, with real payroll on the line. Not in a classroom.
The Six Things to Decide Before You Take a Single Call
1. Your True Cost Per Billable Hour
The number behind every price you will ever quote. Built from your own overhead, your own labor burden, your own realistic billable hours — never copied from a former employer.
2. Entity, Insurance, and Compliance
Legal structure, the coverage your state and customers require, and full clarity on what your license class permits. Confirm current requirements with your state board directly.
3. Complete Financial Separation
Business bank account, business card, business bookkeeping from transaction one. Owners who commingle cannot see their own margin — and cannot fix what they cannot see.
4. Payment at Time of Service
Card and financing options ready on day one. Every week you wait to get paid is a week you are financing your customer for free with money you do not have yet.
5. A Flat-Rate Pricebook, Even a Simple One
A spreadsheet is acceptable at this stage. Quoting off instinct is not — it makes your price depend on your mood, your day, and how much you like the customer.
6. What You Will Not Do
The most underrated decision in a new company. Scope discipline protects margin, reputation, and your calendar. Saying no early is how you stay profitable enough to say yes later.
Know Exactly What Your License Class Covers
License classes carry hard limits, and quoting outside yours is a fast way to lose a job, a bond, or a license. Examples from states we serve — always confirm current rules directly with the board.
| State | License Structure | Key Limit to Know |
|---|---|---|
| Georgia | Conditioned Air Contractor — Class I and Class II, issued by the Secretary of State's licensing division | Class I is capped at 175,000 BTU heating and 60,000 BTU cooling per system; Class II is unlimited |
| Texas | TDLR Air Conditioning & Refrigeration Contractor — Class A and Class B, with Environmental Air, Commercial Refrigeration, or combined endorsements | Class B is capped at 25 tons and 1.5 million BTU; Class A is unlimited |
| Alabama | HACR contractor licensing through the state board | No tonnage cap in the license class structure — verify current bond, exam and fee requirements directly with the board |
| Florida | State certified and registered contractor categories | Confirm your category's scope and county registration requirements before quoting outside your area |
Licensing rules, bond amounts, and fees change — and published third-party summaries go stale fast. Confirm every requirement with your state board directly before you rely on it. We deliberately do not publish bond or fee figures we cannot verify against a current primary source.
The First 90 Days, In Order
- Days 1–15 — Build the foundation. Entity, insurance, bank account, bookkeeping, payment processing, and license scope confirmed in writing. Boring, unglamorous, and the thing everyone regrets skipping.
- Days 16–30 — Build the pricebook. True cost per billable hour first, then task pricing on top of it. Do this before the phone rings, because you will not do it after.
- Days 31–45 — Set up the customer path. How calls are answered, how jobs are scheduled, what the agreement says, how the invoice looks, and how you get paid before leaving the driveway.
- Days 46–60 — Turn on demand deliberately. Google Business Profile verified, service area defined, past relationships informed. Lead generation done right beats spending money on ads before your pricing is sound.
- Days 61–75 — Start the agreement base immediately. Offer maintenance from your very first customer. Recurring revenue built early compounds for the life of the company. The program is here.
- Days 76–90 — Review the real numbers. What did you actually earn per billable hour? Where did unbilled time go? Adjust now, while the company is small enough to turn quickly.
Leonard started an HVAC company from scratch in 1993 and was, for a long stretch, the one person doing nearly everything in it. He built teams and systems, scaled to multimillion-dollar success, and sold companies. Every mistake in this article is one he can describe from memory — which is exactly why you do not have to make them.
Launching Your HVAC Business: Frequently Asked Questions
I have my license. What do I actually need before taking the first call?
Six things, and none of them are a truck wrap. A legal entity and the insurance your state and your customers require; a flat-rate pricebook built on your numbers before you quote anything; a business bank account completely separate from personal; a way to take payment in the field on day one; a simple written agreement and invoice; and a decision about what you will not do. The license proves you can do the work. None of it proves the work will be profitable.
What does an HVAC license actually cover — and not cover?
It covers scope of work, and scope varies sharply by state. Georgia issues Conditioned Air Contractor licenses where Class I is capped at 175,000 BTU heating and 60,000 BTU cooling per system, with Class II unlimited. Texas issues TDLR Air Conditioning and Refrigeration Contractor licenses, where Class B is capped at 25 tons and 1.5 million BTU and Class A is unlimited, with separate Environmental Air, Commercial Refrigeration and combined endorsements. Alabama licenses HACR contractors through its own board. Verify your own state's current requirements directly with the board — they change, and so do fees.
How much of a cash cushion should I start with?
More than the equipment costs, because the gap that kills new contractors is timing, not price. You pay for material, fuel, and your own time weeks before customers pay you. Plan for your fixed costs plus a working-capital reserve that covers the lag between doing the work and collecting for it. The most common new-owner mistake is budgeting for startup purchases and forgetting startup float.
Should I price like the company I came from?
No — and this is the single most expensive habit technicians carry into ownership. Your former employer's prices were built on their overhead, their labor burden, their truck count, and their market position. You have none of those. Copying their price list means selling with someone else's math, and you will not find out it was wrong until the year is over. Build your own true cost per billable hour first. Free calculator here.
What percentage of new construction businesses survive?
Federal data gives an honest picture. U.S. Bureau of Labor Statistics Business Employment Dynamics figures for construction-sector establishments opening in March 2018 show 80.5% still operating after one year, 69.7% after two years, and 65.5% after five. So roughly one in three is gone within five years. Read that as encouragement with a warning attached: most survive the first year, and the ones that do not usually lose on pricing and cash — the two things you can decide correctly before you start.
Do I need a coach if I already know the trade?
Knowing the trade is exactly why the business side blindsides people. You have mastered diagnosis, installation, and doing it right — none of which teaches pricing for profit, reading a profit and loss statement, hiring, or holding a margin under pressure. That is a different education, and paying for it in mistakes is far more expensive than learning it from someone who already made them. Leonard started from scratch in 1993 and made most of them personally.