After coming up with the business idea, the next step in starting your own insulation installation company should be to write a detailed business plan.  The business plan will make you focus on some important aspects, such as who your competition is, who your customers are, how you plan to reach them, projecting sales and expenses, and much more.

Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.

Related: How to write a business plan

Finding the perfect name for your insulation installation business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: How to do a Trademark Search Before Choosing a Business Name

A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the 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.

When deciding on which business entity is best for an insulation business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

It is possible to start a small insulation installation business out of your home if you have a large shed or garage to store the spray rig and any materials. As your business grows, you may need to rent a larger space to safely store vehicles, materials, and equipment. Exact rental costs will depend on the business’ square foot size, location, and amenities.

Related: Choosing a business location

An insulation installation business owner will need to obtain a number of business licenses and permits.  In many states and communities as well, a Contractor’s License may be necessary. The requirements to obtain a license varies, however it’s common to need to pass an exam and obtain proof of insurance.  See a list of state contractor licensing boards.

In addition, there will be general licensing requirements such as a business license, sales tax permit, Employer Identification Number (EIN), and others.

While not a license, becoming an ICAA certified insulation provider will provide your business with specialized education and credentials.

Related: Common business licenses, permits, and registrations by state

Coming up with a good business idea and having the skills to run it are one thing but getting the funding to start an insulation installation business is another.  It is worthwhile to present your business plan to investors and start-up incubators. If you are in need of a bank loan to get the business off the ground, 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.

Related: Finding the money to start a business

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

You will need to set aside a budget to cover initial as well as ongoing marketing for your insulation installation business. Starting out, going door-to-door to older houses in neighborhoods is a cost-effective way to start marketing (be sure to check if your town requires a solicitation license first). Wearing a nice shirt with your business logo and slacks will provide a better first impression than walking up to a house in dirty clothing. Be sure to bring plenty of professionally designed business cards and flyers as well.

Long-term, a marketing and communications strategy is especially important to raise and continue building awareness of your business. Common marketing channels for insulation installation services include social media marketing, online advertising, print advertising, and direct mail advertising. An insulation installation business owner might even explore radio advertising. Developing a website can be a significant expense, but it can also give a business greater reach and visibility beyond your region. It can be used to facilitate online inquiries and bookings.

Related: Low-cost ideas to market a new business

There are several types of insurance to consider when starting an insulation business. A few of these include:
– General liability insurance protects the business from expenses like medical and legal bills that it could face if a customer is ever hurt while on the business’ property.
– Surety bond, which is a type of insurance that protects consumers in the event that contracted work is not completed.
– 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.

The cost to insure an insulation business will vary in cost depending on factors like the business’s location, the value of its inventory, and the number of employees. 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.

Related: Common types of insurance a business may need

You can start your spray foam insulation business very small. However, most insulation installation businesses have a few employees; this is particularly true for businesses servicing larger properties and commercial entities. Think about specific skills you need to hire to compliment your staff and thus extend your business’s services.

In addition to salary costs, a business’ 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. It is also important to factor in ongoing training, certification, and development opportunities for yourself and your staff in your calculations.
Related: Hiring your first employee

Setting up an accounting system for your insulation installation business is critical to the long-term success of your company.
Staying on top of taxes not only keeps the business out of trouble with the government, but good bookkeeping will allow you to monitor and process all invoicing and can be used to track trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business