Heating & plumbing business start up

[Mbear]

Hi to all, Im new on here. A bit of advice reqd plz.

I'm in the process of getting geared up to start up my own business (buying all neccesarily tools at the min and putting money aside for a van when the time comes). I won't Be ready to start until next yr, September to be specific. Chosing September is no accident, in the central heating game winter/cold weather equals busy heating engineer, therefore starting in September Im hoping to pick up lots of work when ppl put their heating back on and realise its not working and then moving into the winter should keep me very busy. The summer is much more quiet, again I'm hoping to gain a few landlord contracts and mainly do gas safety checks and boiler installations in the summer. I know there's work in my area, I'm not overly worried about not getting alot of work, I do believe I'll be turning away work come december 2012.

My best friend is also a heating engineer, he also wants to go into business. We were originally going to start one business together but having done my research I found the vat turnover barrier to be £68,000ish. I reckon we would smash that barrier together, however separately I think we'd turnover £45/50k (1st yr). This would enable us to keep our prices competitive.

Now questions...

Am I right in my thoughts of 2 business we make more sense (bearing in mind we would do alot of bigger jobs together)?

If we had 2 business, would it be wise to name the business's similarly or completely different names? Pro and cons of both if u don't mind

For example.....

Home heat A ltd and home heat B ltd
Or
home heat ltd and gas heat ltd

These are just made up names FYI


Many thanks in advance for your replies

Mark

 

[Spearmint]

A few thoughts come to mind with your posting.

Are you already a qualified and experienced plumber?. Are you gas safe registered, OFTEC registered?

Good plumbers are busy all year, and most smart people have their servicing done before it gets cold, so I wouldn't hold off starting your business till September.

I think it would be wiser to start off on your own, start small and then build up. You'll have the overheads to worry about for one. Your friend could always help you out when you need him and vice versa.

Best of luck

 

[treehouse]

Having had experience of owning and running a plumbing and heating company
I would say different names for sure, your name is your reputation!

I would also suggest starting before September, like you say lots of people get their boilers serviced in the summer, when they find their heating does not work in the winter you will be the first heating engineer they think or ringing, since you were friendly, reliable, reasonably priced and punctual.

 

[Mbear]

A few thoughts come to mind with your posting.

Are you already a qualified and experienced plumber?. Are you gas safe registered, OFTEC registered?

Good plumbers are busy all year, and most smart people have their servicing done before it gets cold, so I wouldn't hold off starting your business till September.

I think it would be wiser to start off on your own, start small and then build up. You'll have the overheads to worry about for one. Your friend could always help you out when you need him and vice versa.

Best of luck

Yes I'm very experienced IMO, 28 yrs old, been doing heating (mostly) and plumbing post apprenticeship for 9yrs. I mostly do boiler repairs for my current employer but can i do anything in regards to heating. I'm gas safe registered yes, not OFTEC though, theres no oil boilers round my area. Don't kid yourself about plumbers always being busy, it's not true, the winter is where we earn our corn. Lots of heating guys do contractor work in the summer to ride them over.
Also i picked September for 2 reasons to be fair, the 2nd reason is that's a realistic target date for me to get everything ready to go, money wise(primarily), van on the road, insurances paid for, all tools and equipment paid for. Registering the company, website creation, re-registering with gas safe. Ive basically gave myself a yr to save up and sort everything out.

What is your thoughts about the company names? If we both started a company, my friend is less likely to do so than me as it stands

 

[Spearmint]

Yes I'm very experienced IMO, 28 yrs old, been doing heating (mostly) and plumbing post apprenticeship for 9yrs. I mostly do boiler repairs for my current employer but can i do anything in regards to heating. I'm gas safe registered yes, not OFTEC though, theres no oil boilers round my area. Don't kid yourself about plumbers always being busy, it's not true, the winter is where we earn our corn. Lots of heating guys do contractor work in the summer to ride them over.
Also i picked September for 2 reasons to be fair, the 2nd reason is that's a realistic target date for me to get everything ready to go, money wise(primarily), van on the road, insurances paid for, all tools and equipment paid for. Registering the company, website creation, re-registering with gas safe. Ive basically gave myself a yr to save up and sort everything out.

What is your thoughts about the company names? If we both started a company, my friend is less likely to do so than me as it stands

You made a slight typo in your 2nd sentence above - Do you mean that you can't do anything in regards to heating? If so, what do you mean by that?
Ignore my question if it should have read - I can do anything in regards to heating.
Do you have to re-register with Gas Safe as a different company or do you mean that you have to retake the qualifications?
I wouldn't worry too much about website creation, it would probably be more important for you to drop some flyers through letter boxes advertising your services, particularly if you can offer a competitive service. You should be able to do tis in advance of your business starting, so you've already lined yourself up with some work.
I'm not going to comment on the company naming as I still think you should do it alone, and particularly if there is some hesitation with your friend anyway about being in a partnership. I assume that he at present is also working for someone else. You've only got to read some of the threads on here where partnerships have gone sour, so if you can be your own boss and build up a good reputation on your own.

 

[Mbear]

I think it does say "can do" with regards to ur question.

No my qualifications are mine with regards to gas safe and I would not have to retake them. Ill have to pay to change my registration to my new company. my current gas safe no. Is intertwined with current employer kinda thing.

U reminded me of another reason for September start actually lol
My ACS (gas safe competency exam) runs out in July, my current employer will foot that bill (i know this is devious but hey, it happens) that gives me 5 clear yrs b4 I need to foot the next bill

I'm defo swaying toward 2 separate business's For many reasons, we can still swing work each others way when neccesary.

In saying that, it's not that he doesn't want to go into business with me, he's more hesitant/worried about making enough to live the same as he currently does whereas I'm confident there's plenty to go round and I'm very confident I can make it work on my own anyway.

Everyone I've spoke to about business partnership says don't do it but the biggest thing that's swaying me is the vat threshold.

Defo separate companies me thinks

 

[Spearmint]

With regard to Vat, another big advantage of being a sole trader is that you will benefit from not having to charge your customers Vat, so you'll be more competitive in comparison to any competitors that charge Vat. The current Vat threshold is £73K

If you have to renew your ACS that could cost you about £700 unless your current employer foots the bill, but you may want to check your contract just in case you have to pay it back should you leave shortly afterwards!

 

[Mbear]

One of our engineers did the same thing last August. I'll maybe ask him what if anything he had to pay back.

 

[vvaannmmaann]

Mark,you any good with macerators?

 

[ukperson1]

In my view it would be simpler to have 2 companies and then have a commercial agreement between them (eh. where you share revenue in some projects, etc). That way you are both independent and "together", if that makes sense.

As a stratup you could also try http://www.everydayoffers.co.uk/ to promote discounts and attract customers that way or at the very least advertise your business.

 

[estwig]

Disappointingly you've had some very bad advice in this thread, particularly from spearmint who seems to be stabbing in the dark at things he doesn't understand.

I've seen lots of two man teams who work this way, especially plumbers trying to stay under the VAT threshold. This is how it works.

You are company A, your mate is company B.

Mrs Smith wants a new heating system, you and your mate fit it, company A supplies all materials and invoices her, you set aside the tax and pay your mate in cash for his labour, give him a brown envelope.

Next job, Mr Jones wants a new heating system, company B supplies all materials and invoices him, your mate sets aside the tax and pays you cash for your labour, gives you a brown envelope.

Basically you take it turns to buy materials, invoice and pay the tax, divvying up the difference between you in cash.

The only other way to do it is to present the customer with two invoices, one from each company, customers don't like this and generally won't wear it.

There has gotta be a lot of trust between you and your mate and as far as any paperwork is concerned, you don't know each other from Adam.

 

[JamesCartwright]

(Not that it's really too important and mainly me being pedantic but VAT is £73,000 - but I'm sure it won't make a difference )

 

[Mbear]

Disappointingly you've had some very bad advice in this thread, particularly from spearmint who seems to be stabbing in the dark at things he doesn't understand.

I've seen lots of two man teams who work this way, especially plumbers trying to stay under the VAT threshold. This is how it works.

You are company A, your mate is company B.

Mrs Smith wants a new heating system, you and your mate fit it, company A supplies all materials and invoices her, you set aside the tax and pay your mate in cash for his labour, give him a brown envelope.

Next job, Mr Jones wants a new heating system, company B supplies all materials and invoices him, your mate sets aside the tax and pays you cash for your labour, gives you a brown envelope.

Basically you take it turns to buy materials, invoice and pay the tax, divvying up the difference between you in cash.

The only other way to do it is to present the customer with two invoices, one from each company, customers don't like this and generally won't wear it.

There has gotta be a lot of trust between you and your mate and as far as any paperwork is concerned, you don't know each other from Adam.

I was thinking along these lines. Only trouble arises when company A or B get a complaint and only one out of the 2 company's technically has to deal with it.
I wouldnt think customers would go for the split invoice, ppl want to know who they are dealing with, 2 companies could end up blaming each other for this or that, customers would not like this.

Trust wise, there'll Be no issues. We are gd friends and would agree from the outset what the pay is from each job b4 work commences.

Thanx for the input mate

 

[Bill1954]

Ok, first let me say that I run both an internet company and a trade counter in the industry.
You're dead wrong about the boilers only starting to sell in September. We sell loads of them all year round both to plumbers on the counter and to the internet, there isn't a huge upsurge in sales come September, it's an all year round thing. Are you intending to sticking to heating only or will you be doing bathrooms etc. If so I'd think that you will sail through the VAT threshold or you are no plumber If you only do 1 combi replacement a week you're going to be close.
Remember, if you have only 1 business between you, there will only be 1 set of fees for accountants, advertising, transport etc. If you go seperately, this will double.

 

[Spearmint]

Disappointingly you've had some very bad advice in this thread, particularly from spearmint who seems to be stabbing in the dark at things he doesn't understand.

I've seen lots of two man teams who work this way, especially plumbers trying to stay under the VAT threshold. This is how it works.

You are company A, your mate is company B.

Mrs Smith wants a new heating system, you and your mate fit it, company A supplies all materials and invoices her, you set aside the tax and pay your mate in cash for his labour, give him a brown envelope.

Next job, Mr Jones wants a new heating system, company B supplies all materials and invoices him, your mate sets aside the tax and pays you cash for your labour, gives you a brown envelope.

Basically you take it turns to buy materials, invoice and pay the tax, divvying up the difference between you in cash.

The only other way to do it is to present the customer with two invoices, one from each company, customers don't like this and generally won't wear it.

There has gotta be a lot of trust between you and your mate and as far as any paperwork is concerned, you don't know each other from Adam.

I fail to see how I gave him bad advice. My suggestion was that he sets up his business on his own, that's all. With regard to the Vat, until he goes over the threshold he does have an advantage over competitors for he doesn't charge Vat on his labour.

This is how it works

You are company A, your competitor is company B.

Mrs Smith wants a new heating system, you submit a quotation say £4500 no Vat

Company B submit a quotation which just happens to be slightly cheaper £4200 + Vat

Who is Mrs Smith likely to place an order with?

Company A because she saves herself £540

No brown envelopes, and one invoice, and no risk with any other parties.

 

[Mbear]

Ok, first let me say that I run both an internet company and a trade counter in the industry.
You're dead wrong about the boilers only starting to sell in September. We sell loads of them all year round both to plumbers on the counter and to the internet, there isn't a huge upsurge in sales come September, it's an all year round thing. Are you intending to sticking to heating only or will you be doing bathrooms etc. If so I'd think that you will sail through the VAT threshold or you are no plumber If you only do 1 combi replacement a week you're going to be close.
Remember, if you have only 1 business between you, there will only be 1 set of fees for accountants, advertising, transport etc. If you go seperately, this will double.

The September thing is geared toward heating 'repairs', this is my bread and butter, I'd happily do 2/3 installs a wk but I know they aren't always easy to
Come by. I do agree 'install' wise there's probably not alot in it when it comes to which period in the yr. My worry is if i start in say june then and I get a few installs to start me of. But heating tends to break down more in the winter, in my work the upsurge in repair jobs is clear to see. So between installs id need repairs to tide me over. Bathroom fitment wise I dont mind doing bathrooms but there's more money to be made in heating. I much prefer heating if I'm honest.

I want to take home 30k salary in my 1st yr minimum, the rest can sit in the business. Aslong as I make my salary I'd be happy (1st yr only), hopefully once I'm established in local area I can up my salary (2nd yr), I am confident I will turnover much more than that, 30k salary is just my base layer.

 

[ParfittTaylor]

I wouldn't recommend the brown envelope route - could cost you a lot of money with HMRC!

Only you can really decide if you go it alone or in partnership. I would recommend if you go in partnership that you put everything in writing - as previous posters have said a lot of partnerships turn sour. The alternative is that you could set up in business and employ your friend either on a permanent basis or on a sub contract basis.

And get a good accountant (biased I know!) - a lot of small businesses fail because they underestimate costs and overestimate income.

Good luck

 

[CKG]

I'd concur with the seasonal thing. I used to fit shed loads of boilers every year and the summer was just as busy as the winter. The slowest period was between jan - march I always found, with the run up to Christmas being the busiest time.

You get more rush jobs in the winter for obvious reasons.

When I was 1st self employed I started as a partnership. It keeps you disciplined financially as you can't just dip into the bank account and buy that new BMW you've been hankering after. And you've always got super reliable cover if you're ill or on holiday.

The only conn is if one partner starts slacking - resentment can set in.

I never tried to limit our earnings either. Though it depends what you want from it. If your happy with just a cushy lifestyle or want to build a good sized business out of it.

 

[Mbear]

I'd concur with the seasonal thing. I used to fit shed loads of boilers every year and the summer was just as busy as the winter. The slowest period was between jan - march I always found, with the run up to Christmas being the busiest time.

You get more rush jobs in the winter for obvious reasons.

When I was 1st self employed I started as a partnership. It keeps you disciplined financially as you can't just dip into the bank account and buy that new BMW you've been hankering after. And you've always got super reliable cover if you're ill or on holiday.

The only conn is if one partner starts slacking - resentment can set in.

I never tried to limit our earnings either. Though it depends what you want from it. If your happy with just a cushy lifestyle or want to build a good sized business out of it.

Plz don't misunderstand me in relation to income, I was just pointing out that 1st yr trading is (from what Ive researched) always the hardest. Therefore Id be happy to earn my base salary of 30k and bank any extra profit, I want to be as successful and profitable as possible by i also understand Rome wasn't built in a day. As I say in the 2nd yr I'm hoping to be much more established and that will bring more consistent work throughout the yr. the only limit I have set Is the vat threshold for obvious reasons but there are ways round that of course.

Ps when I buy a spare part for a cust how does the vat work on the purchased part, seeing as its trade and not public?

 

[Chris Ashdown]

Disappointingly you've had some very bad advice in this thread, particularly from spearmint who seems to be stabbing in the dark at things he doesn't understand.

I've seen lots of two man teams who work this way, especially plumbers trying to stay under the VAT threshold. This is how it works.

You are company A, your mate is company B.

Mrs Smith wants a new heating system, you and your mate fit it, company A supplies all materials and invoices her, you set aside the tax and pay your mate in cash for his labour, give him a brown envelope.

Next job, Mr Jones wants a new heating system, company B supplies all materials and invoices him, your mate sets aside the tax and pays you cash for your labour, gives you a brown envelope.

Basically you take it turns to buy materials, invoice and pay the tax, divvying up the difference between you in cash.

The only other way to do it is to present the customer with two invoices, one from each company, customers don't like this and generally won't wear it.

There has gotta be a lot of trust between you and your mate and as far as any paperwork is concerned, you don't know each other from Adam.

Why not work legally and just hire the other self employed person at a pre arranged daily rate, as both are self employed they can each invoice each other

 

[estwig]

Why not work legally and just hire the other self employed person at a pre arranged daily rate, as both are self employed they can each invoice each other

Yes you are right, it just adds complication with issues around having subbies.

 

[estwig]

I fail to see how I gave him bad advice. My suggestion was that he sets up his business on his own, that's all. With regard to the Vat, until he goes over the threshold he does have an advantage over competitors for he doesn't charge Vat on his labour.

This is how it works

You are company A, your competitor is company B.

Mrs Smith wants a new heating system, you submit a quotation say £4500 no Vat

Company B submit a quotation which just happens to be slightly cheaper £4200 + Vat

Who is Mrs Smith likely to place an order with?

Company A because she saves herself £540

No brown envelopes, and one invoice, and no risk with any other parties.

Yet more stabbing in the dark, at things you have no idea about.

 

[weevil68]

This is just an idea but couldn't you set up a limited company with only you as 100% shareholder.Then employ both you and your friend as directors,you could even pay your friend 50% of net profit.
You could always issue your friend an equal number of shares at a later date (as he's nervous about starting).
This way you would be protected if your friend suddenly decided he didn't want to work for himself,and judging by your projected income, you would benefit from paying yourself a small salary and dividends.

Hopefully other members could comment on whether this is feasible.

I know a plumber who registered for VAT from the start because he was paying a lot of VAT on his purchases.You could be paying £150-250 VAT on every boiler you buy.

 

[FarrellMackennon]

Don’t wait until September, if you can be ready before that then get started straight away. It takes time to build up a plumbing business and people are more liable to trust a business that has been established for longer. Keep the names separate too as you have to earn the trust of clients and if your friend isn’t as conscientious or personable as you then this reputation will stretch to your name too.

 

[Billmccallum]

Don’t wait until September, if you can be ready before that then get started straight away. It takes time to build up a plumbing business and people are more liable to trust a business that has been established for longer. Keep the names separate too as you have to earn the trust of clients and if your friend isn’t as conscientious or personable as you then this reputation will stretch to your name too.

you do know this thread is from 2011??????

 

[promdressers]

you do know this thread is from 2011??????

It is a shame the OP did not keep in touch. Maybe he is too busy. or realised life isn't so simple

 

[Billmccallum]

OP spent 2 days on the forum and not been back since, not sure why Farrell felt to need to dredge up this thread.