Are you a skilled welder but tired of working for someone else? You may have considered starting your own welding business, but you’re not sure what is involved. Owning a welding business involves a lot of selling and business acumen, as well as superior welding skills. If you think you have what it takes and are ready to be your own boss, there are some basic things that you should know, and you’ll need to do some research on your own.
Simply put, a welding business repairs and builds metal-based items. Welding businesses can be either mobile-only, traveling to customers to make repairs, or have a fabrication shop that focuses more on building metal items. Examples of things that might be built or repaired include car bodies or frames, machine parts, aluminum welding, trailers, structural elements of architecture, tools, and much more. Consumer products include metal fences, handrails, gates, metal doors, shelf brackets, and furniture.
According to Fortune Business Insights, welding was a $19.53 billion industry in 2019 and is expected to grow to $27.22 billion by 2027. There is a large shortage of welders currently in the United States, so demand for skilled welders is high.
The welding industry is sensitive to market volatility because sales are often business to business (B2B). As other businesses suffer in an economic downturn, the demand for welded parts (such as car parts) and machinery declines.
Applications in welding have expanded due to advances in tools and new tools that require welding, which is why the industry will continue to grow. However, due to the welder shortage, automation of various types is becoming a part of the welding process. Welders need to be aware of new processes and techniques to keep up with changes in the industry due to advancing technology.
Target customers for a welding business include manufacturers, construction companies, farms, and any type of business that utilizes metal machinery. Sales to these customers are generally direct sales, so pounding the pavement and making sales calls are the best ways to reach them.
Skills, Experience, and Education Useful in Running a Welding Business
Since welding is a very specialized business, there are specific skills that you should have to be successful.
- Welding education and experience. You will need credibility to be successful, so you should have advanced welding certifications and a length of experience in welding to own your own welding business.
- Knowledge of trends. You need to keep your skills updated to keep up with advancing technology that affects the welding industry.
- Business knowledge and experience. You will need to have some basic knowledge of marketing, contracts, finance/accounting, and human resources.
- Sales. You have to be able to cold call potential customers or visit them in person in order to win their business. Sales experience, particularly B2B sales, can be invaluable to a welding business owner.
- Customer service. You’ll need to be able to build rapport with your customers so that you retain them as customers and gain repeat business and referrals.
Costs to Start a Welding Business
The costs to start a welding business will vary depending on whether you are going to be mobile only or have a shop.
- Setting up a business name and corporation costs approximately $200.
- Business cards, brochures, postcards for marketing $200 – $300
- Website setup $100 – $200 for a basic, do it yourself website, $1,000 – $2,000 for a professional site
- Welding license – Varies by the state licensing board but expect $150 – $200
- Welding equipment (TIG, MIG, multipurpose welder) $1,000 +
- Welding tools (plasma cutter, air cutter, milling machine, lathe, fume extractor, etc.) $2,000
- Initial supplies (electrodes, gas, pipe, etc.)
- Welding gear such as gloves, goggles, welding helmet, etc. – $100 +
- Van or truck $10,000+
- Downpayment or initial months lease $500 +
Steps to Starting a Welding Business
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your welding business should be to write a business plan. The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be.
Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.
Step 2: Name the Business
Finding the perfect welding shop business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name. Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.
Step 3: Form a Legal Entity
A legal entity refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
Related: Comparison of Business Entities
Step 4: Select your Location
If you decide to have a shop, it’s good to be in an industrial area, so you are close to potential customers and get visibility from your signage.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
You may need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located. Some common local, state, and federal registrations a welding business may need include a sales tax permit and an Employer Identification Number.
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a welding business is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs. Startup costs for a welding business are fairly significant unless you already have a shop at your home and a truck or van.
Step 7: Open a Business Bank Account
Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.
Step 8: Get your Marketing Plan in Place
A welding business will need to set aside a budget to cover marketing costs on a continuous basis. Common marketing techniques for a welding business include social media marketing, online advertising, print advertising, direct mail advertising, and coupons or special promotions. Developing a website can be a significant expense, but it can also give your welding business greater visibility online. However, your main channel for sales will be direct, which is free except for the time cost.
Step 9: Get Insurance
A welding business needs several types of insurance for full coverage:
General liability insurance can help protect you from third-party claims of bodily injury and property damage.
Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.
Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.
Property and casualty insurance protects you if your shop is damaged.
Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.
Step 10: Hiring Employees
You may need additional labor to help you run the welding business as you grow your customer base. If you hire additional welders, you will want to make sure they’ve had the right training and experience.
In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system for your welding business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
How Much Can You Potentially Make Owning a Welding Business?
A welder typically starts at $30-40 per hour but can command a higher price depending on the welding services they provide. Higher-priced welding services can include mobile welding, underwater welding, breakdown welding, and others. As a welding business owner, it will be up to you to get clients and grow your business. The average welding business makes about $70,000 annually, but a successful business can grow to well into the six figures.
Things to Consider Before Starting a Welding Business
Running a welding business or any small business will have its challenges. You need to be prepared and make sure that you know what you’re getting into.
The first thing to consider is that you have to be able to provide top-quality work, whether it’s done by you or your employees. Repeat customers will be key to your business, so you need to make sure they are always happy with their results.
Next, and most importantly, you will have to be aggressive and sell yourself continuously. You will have to be able to present yourself as credible and prove that you have credentials and experience.
Talk to other business owners for tips on starting a business, and do your homework to determine costs. Visit other welding shops to see how their owners run things and what they offer, but make your business unique. You may want to choose a specialty based on your experience to differentiate yourself.
American Welding Society