Where the 70% Number Actually Comes From
Most sites repeat this stat without saying where it originated. We ran it down instead.
The most commonly cited figure — reported by the U.S. Department of Energy's Better Buildings Neighborhood Program, which sourced it from Service Roundtable, which sourced it from a 2011 First Research industry report — is that up to 70% of new HVAC businesses fail within their first year, and roughly 20% of all HVAC contractors fail every year industry-wide.
It's an older figure, and it's still the same one nearly every HVAC coaching site repeats — usually without the "2011" attached. We're showing you where it actually comes from instead of just repeating it, because that's the same "verified data, not invented numbers" standard we hold the rest of this site to.
I started my first HVAC company from scratch in 1993 — one man, one van, no safety net. I could have been part of that 70%. I built it into a multimillion-dollar company instead, then sold it. I later stepped into a struggling $4.5M company operating in the red and helped rebuild it back to nearly 15% net profit. I've seen this failure pattern from both sides of it.
Two Different Problems. Two Different Fixes.
"Why HVAC businesses fail" means something different depending on where you're standing. Pick the one that's actually you.
Lane One — Already Open
My HVAC Business Is in Trouble Right Now
You're past launch. Revenue is coming in, but something is wrong underneath it — cash is tight, margins are thin, or you can't explain where the money goes. You are not alone, and this is fixable.
- Revenue looks fine on paper, but the bank account tells a different story
- You're the most expensive employee, and still the busiest
- Pricing feels like a guess, not a calculation
- You don't have a clean profit and loss statement you actually trust
Lane Two — Not Launched Yet
I Have My License but I'm Scared to Launch
You've seen the statistic. You know a bad start can bury a good technician. You'd rather get it right before the first call than fix it after the first year — and that instinct is correct.
- You don't want to buy the wrong software, trucks, or marketing first
- You're not sure what order things need to happen in
- You know pricing wrong from day one is expensive to unwind
- You want a plan before you spend the money, not after
What Actually Kills HVAC Companies
It is almost never a bad market. HVAC demand doesn't disappear — units break in every economy. It's almost always one of these six things, in some combination.
01 · Pricing Built on a Guess
Pricing copied from a competitor or set by "what feels fair" instead of calculated from true overhead, insurance, vehicle costs, and labor. Every job under-priced this way is a job that quietly drains the business.
02 · Cash Flow, Not Profit
A profitable month on paper can still miss payroll. Growth eats cash — equipment and materials go out before the customer payment comes in. Profit is an opinion at month end; cash is a fact every Friday.
03 · Technician Skill, Not Business Skill
Being the best technician in the market and being able to run a company are two different jobs. Most new owners have never seen a P&L, built a pay plan, or set up financial controls before opening.
04 · No Systems, Just Memory
Nothing written down. Pricing, dispatch rules, and the sales process all live in the owner's head — which means the business cannot run without the owner in it every single day.
05 · Buying Before Planning
Software, trucks, advertising, and staff purchased before the foundation is built. Activity feels like progress, but spending money in the wrong order is one of the fastest ways to run out of it.
06 · No Financial Visibility
No clean profit and loss statement reviewed monthly, no departmental breakdown between service, replacement, and maintenance. You cannot fix what you cannot see.
Signs Your HVAC Business Is Already in Trouble
Be honest about which of these are true today.
- You couldn't state your true billable-hour rate right now if asked
- Payroll has felt tight in the last three months, even in a busy season
- You don't know your close rate, callback rate, or average ticket off the top of your head
- Service agreements exist but aren't priced to actually protect margin
- You are the one holding the business together, informally, every day
Two or more of these true at once is not a character flaw — it's the exact pattern behind most of that 70%. It's also the exact pattern JordanWORX exists to reverse. See the Profit Leaks guide →
How to Not Become the Statistic Before You Even Open
Get these built before you take your first call.
- A true billable-hour rate calculated from real numbers, not a guess
- A flat-rate price book built on that number
- 3–6 months of operating expenses set aside before you need them
- A plan for the order you'll spend startup money in — foundation first, growth spending second
- A simple way to track cash weekly, not just profit monthly
A license proves you can do the technical work. It says nothing about whether the business underneath it is built to survive year one. Get the free HVAC Launch Guide →
HVAC Business Failure: Frequently Asked Questions
What percentage of HVAC businesses fail in the first year?
The most commonly cited figure — reported by the U.S. Department of Energy's Better Buildings Neighborhood Program, sourced to Service Roundtable and originally to a 2011 First Research industry report — is that up to 70% of new HVAC businesses fail within their first year, and roughly 20% of all HVAC contractors fail every year industry-wide. It's an older figure that's still widely repeated because the underlying causes haven't changed.
Why do HVAC businesses fail if demand for HVAC service is strong?
Because failure in this industry is almost never about demand. Units break down in every economy. Businesses fail because of pricing built on guesswork, cash flow mismanaged during growth, and owners who are excellent technicians but were never taught to run a company — not because the phone stopped ringing.
Can a profitable HVAC company still fail?
Yes. Profit is a number calculated at month end. Cash is what's actually in the account on a Friday when payroll is due. A company can show a great year on paper and still run out of cash if growth outpaces collections — this catches profitable, growing companies more often than people expect.
What's the single biggest first-year mistake?
Underpricing. New owners commonly price off a competitor's number or off what feels fair, instead of calculating their true cost — overhead, insurance, vehicle expense, callbacks, and their own time — and building a margin on top of that. Every job priced this way quietly funds the business's failure.
Is it too late to fix an HVAC business that's already struggling?
Almost never, if the owner is willing to look honestly at the real numbers. A $4.5M company operating in the red is one of the documented turnarounds behind this site — back in the black within two years, headed toward 15% net profit. The fix is rarely more marketing. It's usually the pricing, financial controls, and systems underneath the business.