November 22, 2022

How to start a plumbing business in the UK

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So you want to start your own plumbing business. Before you can get started, there are a few things you should think about to make sure you set yourself up for the best start possible.

To make things easy for you, we’ve broken these factors down into 12 key points. These are the following:

If you nail all 12 of these points then you will put yourself in the best position possible for your business to thrive.

Let's get into it.

Naming your business

The first step towards getting your plumbing business up and running is coming up with a good name.

Essentially you have two options, either you can:

  • Choose a unique or descriptive name that aligns with your brand or is designed to draw attention.

Or you can

  • Base the business name on your own person, either using your first name or surname.

The advantage of using a unique name is that this can help when marketing your business.

You can choose a catchy or unique business name that sticks in the mind and is easily rememberable. The right name can help you pick up more customers.

The other benefit of unique names is that these names help ensure that a business remains independent from its founder.

By detaching yourself slightly from the business, it makes it easier to grow your company and gives you the choice to step back from the business once it becomes successful. This approach also protects you personally if ever the business name gets some bad press.

On the flip side, a business named after you can help to increase loyalty and build trust. If you build positive relationships with your customers you can create a brand that feels more authentic and relatable. Customers relate to you and your business and often tend to feel that their interests and needs are better cared for.

Neither approach is wrong or right, it simply comes down to the route you want to take, you may even choose a hybrid of the two.

Often a popular option is a descriptive company name, for example, a Bristol plumbing business might go with the name Bristol Plumbing.

There are only two essential rules to abide by when deciding on your company name:

  1. Don’t use numbers and hyphens in your company name.
  2. Make sure the domain name is available so you can set up a website.

Type of company

When starting out you need to decide what type of company you want to create. You have two choices. You can create a limited company or you can operate as a sole trader (become self-employed).

Both options have their benefits and drawbacks and depending on your circumstances, either may work well for you.

First up, let's clarify what the difference is between a limited company and becoming self-employed.

What is the difference between a limited company and a sole trader?

The main difference between limited companies and sole traders is that a limited company has a separate legal identity that is independent from the owner. A sole trader is completely tied to the business and is legally accountable for that business as if it were part of their own identity.

Limited vs sole trader

Both these types of business ownership have their own advantages and disadvantages. To make things easy for you we’ve broken them down into their pros and cons.

Limited co.

Pros:

  • You can pay yourself with a salary and in dividends. These dividends have a lower tax threshold making your earnings more tax efficient.
  • It can be easier to raise funds and gain investment.
  • A limited company is easier to sell if you ever want to leave the company.
  • Shareholders have limited liability, meaning if you get into debt or incur losses you are not responsible personally.

Cons:

  • The administration and financial management of a limited company is usually more complex and time-consuming.
  • Your financial information is all visible via Companies House.

Sole trader

Pros:

  • It’s simple to set up and manage a self-employed business.
  • You keep all the business profits.
  • All your financial information is kept private.
  • You have more control over the business as you don’t need to consult shareholders.

Cons:

  • You are fully responsible for any losses or debts incurred and may have to pay for these out of your own pocket.
  • It can be more difficult to raise funds and take out loans.
  • Tax rates tend not to be as generous as with limited companies.
  • Your business name is not protected so someone else could trade under the same name.

Whichever way you decide to go, make sure you have a plan of where you want to take the company. You should take into account your ambitions and goals for the company when deciding which way to go and use those projections to guide you.

Bear in mind that if you do start out as a sole trader it’s always possible to change your business into a limited company, however, making the change the other way around would be nearly impossible.

Registering your plumbing business

Once you have decided on your company name and have decided whether to proceed as a sole trader or as a limited company you need to register your business. This process is different depending on what type of business you register as.

Registering as a sole trader

To register as a sole trader you will need to complete the following steps:

  • Visit HMRC and go to the Register for Self-Assessment page.
  • Follow the instructions outlined on the page to register.
  • If you haven’t filed a tax return before you will need to create your Government Gateway user ID and password to sign in.
  • Follow the steps on the website to complete this process.
  • Once signed up you will need to complete your self-assessment tax returns annually.

Registering as a limited company

If you want to register as a limited company there are a few more steps you need to complete. HMRC provides a very helpful step-by-step guide on their website. You can find it here.

Before you register you will need to complete a memorandum of association. This a legal statement signed by your shareholders agreeing to form the company. Instructions can be found on the HMRC website.

Completing the registration process will cost just £12 and your company will be approved within 24 hours.

Specialising

If you’re a plumber you will know that the plumbing industry has many different subsections or specialities that a person can go into. Which speciality you decide to go into will vary depending on your particular skill set, interests and available customer base.

Essentially there are three main categories within plumbing:

  • Commercial plumbing
  • Domestic plumbing
  • Service and repair plumbing

Although all three share many similarities the responsibilities and types of work involved are different.

Commercial plumbers

If you want your business to specialise in commercial plumbing then you will mainly work on large projects such as schools or libraries. The projects you will undertake involve large-scale systems featuring more extensive piping than domestic work.

These projects also tend to last longer than if you were to work on domestic projects, plus there is an additional responsibility of maintenance - you should make sure the plumbing systems you have worked on don’t fail.

Domestic plumbers

These plumbers work in people's homes making sure all the internal water works are operating properly. Most of the work involves changing pipes, fixing toilets and generally making sure the plumbing system in a customer's home is working.

A domestic plumber would not be able to work on a commercial project as the level of complexity and technical difficulty is generally more challenging for commercial plumbers.

Working as a domestic plumber can be very full-on and tiring and is often quite repetitive. You will need to see many different customers every day, often completing very similar, often straightforward work.

Service and Repair plumbers

If you’re looking to employ service and repair plumbers then you’re going to need people who have good problem-solving and interpersonal skills.

Service and repair plumbers need to be able to find, diagnose and fix plumbing problems that occur in commercial or domestic buildings.

These plumbers are typically called out for emergencies and need to be able to speak directly to the customer and resolve the issue. These plumbers require an understanding of commercial and domestic work and are typically very experienced having worked in plumbing for a number of years.

Of course, it is possible for your business to cover multiple specialities but it is important that if you are going to offer that service that you have the staff with the right experience to cover those specialities. Generally speaking, when you’re starting out it’s better to focus on one speciality and expand with experience.

However, do bear in mind that it can often be better to focus your attention on one niche and become well-regarded in that rather than spread yourself too thin. If you attempt to cover too many bases you may struggle to be competitive in any of the specialities.

Assess your competition

Once you’ve decided what type of business you want to run, you need to get a sense of the competition in your area. If there are a lot of established plumbing businesses within your vicinity you may want to consider expanding the area you operate.

Consider the demand and work available and what connections and opportunities you have already established. If you are going to travel further afield you need to account for that extra expense and how it impacts your business finances.

If you are an experienced plumber with an established presence in the area and you have a number of potential customers lined up then you can be confident that you will have plenty of work, however, not everyone is so fortunate.

It’s important to get your name out there and establish connections before you begin working.

When assessing your competition there are a few tips we would recommend to get a sense of what you’re up against:

  • Have a look on tradesperson referral sites and search for plumbers in your area. Have a look at Trustatrader.com, checkatrade.com, ratedpeople.com and Which? Trusted Traders.
  • Have a look on Google Maps and search for plumbers (or other plumbing-related keywords) and you will be able to see plumbing businesses in the area. To expand your search simply scroll out on the map.
  • Use Google to search online for plumbing and heating businesses in your area and see what comes up.

After doing this research you will have a good idea of the number of businesses in the area.

The other benefit of doing this is that you will be able to see these businesses' websites and read their reviews. This will give you a good idea of what they offer and the quality of their service. You may even be able to get a sense of their prices.

For more information on prices in your area, check out our blog looking at plumbing salaries and the regional differences across the UK.

Banking for your business

With your research done and a plan in place, it’s time to get into the detail of your finances.

You may wonder, “If I own my own business can I use my own bank account or do I need a business account?”

The answer is, we would always recommend setting up a separate business account. If you are starting as a limited company it is a legal requirement to have this account and even if you are operating as a sole trader it is best practice.

By setting up a separate business account you also protect yourself from potential legal issues and problems with bookkeeping.

Running a business account will cost you a fee. However, if you are a small business and choose the right bank, this cost should be low, plus most providers will give you the first 6 to 18 months free.

Setting up a business account

Getting a business account set up is fairly straightforward, however, not everyone is eligible so you should check this first.

We would recommend using the provider you currently bank with for your personal finances. You are more likely to be able to open an account with them as you already have an established relationship.

If you are a sole trader there is also the option to open a dedicated sole trader account. These accounts usually come with perks such as free business advice, access to a business bank manager and discounts on services and products.

To set yourself up you will need to contact the bank you want to open an account with and provide them with the following:

  • Identification, either with a passport or driver's license.
  • Contact details including your phone number and email address.
  • Proof of residency: you should provide a recent bank statement or other official document showing you and your business are based in the UK.
  • Business verification: the bank wants to know if your business is legitimate. They may ask for projections for your turnover or your businesses tax status.

There are a couple of reasons that could make you ineligible for a business account:

  • You are under 18
  • You do not reach the minimum or maximum turnover limit (this isn’t always required)

In the scenario where you fall into one of these categories, you should look into getting a dedicated sole trader account and taking your business that way.

Insurance

If you are running your own plumbing business then you are going to need some insurance. Although it’s not always a legal requirement to have this cover it would be a bad decision not to give yourself at least the minimum cover.

Depending on what type of business you have and who you are employing the insurance you need and the insurance you should consider getting varies slightly.

Does a plumber need insurance?

Yes, if you are a plumber then you should have public liability insurance. This form of insurance covers you in case you make any serious mistake that results in damage or harm to you or one of your customers.

Although legally you are not required to have this insurance, you put yourself at serious risk if you do not cover yourself.

What insurance do you need to be a self-employed plumber?

As a self-employed plumber, you need the following types of insurance

  • Public liability insurance, to cover accidental injury or damage to a customer's property.
  • Product liability insurance, to cover accidental injury or damage to a customer's property caused by a product you sold.
  • Tool insurance, to cover loss, theft or damage to your tools.

Although none of these insurance packages are a legal requirement for one person sole traders they are necessary for you to run your business and ensure you do not incur a very heavy bill when something goes wrong.

What insurance do you need if you have employees?

If you employ anyone within your business, even if you are a sole trader or are just hiring someone for a short time, you need employer’s liability insurance.

This form of insurance is a legal requirement. All employers must have this insurance.

What insurance do you need for contract work?

If you perform contract work then you may want to consider getting contractor insurance (sometimes called Contractors All Risk insurance). This will protect you and any hired equipment or tools you use while working on site, plus it covers any accidents that occur out of your control while you are on site.

How much does plumbing insurance cost?

Typically, a plumber will pay approximately £325 a year for public liability insurance, however, this can vary depending on the type of plumbing service and the size of your business.

Marketing

Marketing your new company is a key part of establishing a successful business. Some of the key channels to peruse are the following:

  • Create a website: You can easily build a great website with BUILT. They create unique websites designed for tradespeople. Check out BUILT here.
  • Add your business to Google maps: This can easily be done by following the steps explained in Google’s guide which you can find here.
  • Reach new audiences with Social media: Get involved on social media. Platforms like Facebook, Instagram, TikTok and LinkedIn are all great resources for promoting your business. Also, check out online communities, these can be great for raising your profile.
  • Build a Youtube following: Youtube is a great opportunity to reach new audiences and increase your profile. There are already a number of plumbers seeing great success from Youtube.
  • Branding: If you’ve got a vehicle or you use a uniform then you’ve got a marketing opportunity. Get your logo and number on there. For more reasons why uniforms are a great idea read our blog on the topic.

We covered many of these tips and more in further detail in our blog on marketing a fencing business. Although the focus is for fencers, the same principles are highly relevant to the plumbing industry.

Setting your prices

Deciding on your prices can be a difficult task, but by doing your research and targeting the right audience you can establish some competitive rates.

The first step when deciding your price is to assess what your competitors in the area are charging. As a general rule, your prices should be set at a similar level to other plumbing businesses in your area.

Depending on the quality of your service and the type of customers you are targeting you may be able to price on the higher end and market yourself as a more premium service.

To achieve this, focus on presenting yourself as a premium service. A big part of this comes down to your marketing and making sure you come across as very professional. We’ve written a detailed blog giving you top tips on how you can manage your customers to achieve this.

To get a sense of regional price differences in the UK, check out our blog on plumbing salaries in 18 major UK cities.

As a guide anywhere in the range of £40 to £80 per hour is a reasonable rate to charge a customer.

If you need more help with pricing your jobs and setting your rates have a read of our blog on how to quote for a job.

Finding customers

With your business registered and everything in place to make the best possible start, you need to think about how you’re going to attract new customers.

A big part of this comes down to how you market your business. If this is done right, bringing in new customers is easy. However, there are other methods you can use to find work.

Here are some methods you can try:

  • Attend show homes and make yourself available - If customers are looking for a new house then they’re also going to need new plumbing, this is a good opportunity to find potential customers
  • Create a lead capture page on your site - Using a CRM like Payaca you can translate website visits directly into paying customers. Customers who visit your website via your marketing campaign can book directly into your calendar. Find out more about this technology via Payaca’s tutorial here.
  • Recommendations - This is the number one way to pick up new customers. Ask customers to recommend you, speak to friends and family and other professionals in related industries (such as electrical) and ask them to put in a good word. Word of mouth and positive recommendations are highly valuable.
  • Help out on other jobs - If you’re new to the industry or struggling to find customers you may need to spend some time shadowing another plumber or helping out on some of their jobs. By doing this you can make connections and start building a network. Speak to the customers, and ask them if they or their friends might need any plumbing work. By building positive relationships it’s easier to win work. Find out more about managing customers.
  • Approach landlords and letting agents - Those who rent out their properties often need inspections and work done, especially when there is a change over of tenants. This is a potentially endless stream of work if you can get your foot in the door as the go-to plumber. Especially in student areas, these properties always need work done.

How much does starting a new plumbing business cost?

Based on all this you may wonder how much it will cost you to start your own plumbing business.

Starting a new plumbing business cost approximately £350. This is based on two unavoidable expenses: the cost of registering the business and the cost of insurance.

This figure is the minimum amount a person would have to pay and doesn’t include the cost of tools, transportation, management software and marketing expenses all of which add a lot to the bill.

Starting from scratch with all other expenses taken into account, 'Professional Heating Plumbing Industry' puts the figure for starting a plumbing company at £9,124.

To find a more accurate representation of your costs, you should take the time to calculate your expenses yourself. Just like when pricing a job for a customer you should take into account all the potential expenses and put together a cost analysis to find out how much it will cost you to get started.

Only once you have done this can you start thinking about how you are going to raise the funds you need.

Raising funds

If starting a new plumbing business sounds expensive, there are a few things you can do to get yourself up and running.

Essentially there are four ways to fund a new business, either you can fund the venture out of your own pocket or you can take out a loan. Depending on your financial situation and your projected expenses, you may prefer one of these methods.

Self-funding

This is the most straightforward method for financing a business.

By drawing on your savings and investing your own money into the business there are a number of benefits you stand to gain:

  • There is no interest you have to pay, saving money in the long term.
  • You don’t have to report to investors or debtors.
  • By using your money you have complete autonomy over the business.
  • Using your money forces you to be very engaged and focused on the business. This can give you the drive you need to make it succeed.

The obvious drawback of this form of funding is that if the business fails you risk losing all your investment.

Loans

If self-funding isn’t the right option for you then you might want to consider taking out a loan. To do this you’ll need to approach a bank to see if they will offer a loan for your business. Sometimes this can be difficult as banks are usually more willing to invest in established businesses than those just starting out as these businesses are considered to be more of a risk.

The more planning and preparation you can do the better. If you put together a good business plan and if you have customers lined up, this can help to convince the bank that your business is a relatively safe investment to make. You should also provide:

  • Clear sales projections.
  • A detailed cash-flow forecast.

Even if you do have a good business plan it can still be difficult to convince the bank to provide a loan. However, there still are options out there.

Start-Up loans

Start-Up Loans are personal loans that have been supported by the UK government to help small start-up businesses get up and running.

Can you get a startup loan as a sole trader?

Yes, sole traders are legible for start-up loans, however, it can be more difficult to secure funding than limited companies.

If you want to take out a start-up loan, you can apply for a start-up loan via the UK Gov. website. They provide you with free support and guidance along the way.

Some of the benefits of taking out a loan are the following:

  • You can usually get larger sums of money.
  • You receive advice and support from the loan provider.
  • It takes the stress off the early stages of your business

The drawbacks:

  • You will have to repay the loan plus interest
  • Organising and managing the loan involves more admin time

Investor support

The third method to raise money is to approach investors. You can either do this by receiving funds from peer-to-peer lenders or through equity investment.

Essentially these are two sides of the same coin.

Peer-to-peer investment occurs when individuals invest in lending schemes. You can then receive a loan from these schemes in the same way you would from a bank. This form of loan often has better interest rates with lower overheads.

Equity investment comes from business individuals - venture capitalists who provide financial investment in exchange for a share of your company. Via this route, you will receive a decent chunk of money to get you going, but you can end up losing control of your business as the investors own shares in the business.

This method is only going to work for limited companies and wouldn’t be an option for a sole trader.

Crowd Funding

This is a form of investment that is growing in popularity having contributed to over 15% of the total start-up and equity investment in 2016.

To raise money through crowdfunding an entrepreneur will post about an idea or service online and seek investment from many small investors. This form of funding works best when employed with an effective marketing and advertising campaign to promote the business.

For most plumbers, this form of funding may not be the right way to go, but if you have a strong digital presence and are happy to get really hands-on in the fundraising process then it may be an option to consider.

Final thoughts

So that’s it. Starting up your own plumbing business can seem like a pretty daunting task, but if you put a good plan in place and break it down into manageable chunks, there is every opportunity to be very successful.

Running your own business is a fantastic opportunity for any plumber, allowing you to take control of your career and be your own boss. As an owner of your own business, the opportunities to grow your income are far higher than working for someone else. Just have a look at our blog on plumbers’ salaries to get an idea.

With your own plumbing business, the only limit is your own ambition, so take the plunge and go and make a success of it.

For further tips and advice on how to create and run a successful business, check out our blog on Mike Winnet, a man who built and sold an 8 million pound business from scratch. He offers some really valuable tips and advice that are relevant to all small businesses, so go check it out.

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