HVAC Contractor Industry Research and Analysis

Very few people can complete repairs on their own heating, ventilation, and air conditioner systems. These services generally can only be provided by a competent and licensed contracting professional. Although the bread-and-butter of HVAC contractors comes from the installation of new systems, these businesses are always able to remain profitable and cash flow positive from repair and maintenance services. Additionally, for commercial and industrial buildings – many state and municipal building codes require that these systems are inspected by a licensed professional from time to time. This lends to a great degree of economic stability for these businesses. Additionally, HVAC contractors enjoy readily available access to capital given that they can always generate profits from repair and maintenance services. Most financial institutions are willing to provide nearly all of the necessary capital in order to get these businesses often the ground (or for expansion purposes).

As it relates to the size of this industry, there are approximately 110,000 companies that are actively involved with HVAC services. The industry employs more than half a million people. Each year, the industry generates nearly $100 billion of revenue.

The growth of this industry has remained strong over the past five years given the strong demand for new housing (as interest rates have remained low). In each of the last five years, industry growth has remained above 2%. It should again be noted that even in times of economic recession – the industry remains profitable (although with flat revenue growth).

One of the common trends within the HVAC industry is to aggressively use online platforms in order to market these services to the general public. Almost all contractors maintain a proprietary website coupled with a moderate scale presence on social media platforms. As it relates to social media (with a focus on FaceBook), these businesses are able to develop profile pages that can feature reviews from prior clients. This is important given that many people will seek honest reviews on these pages. One of the other trends is to join independent review platforms such as Angie’s list in order to further boost the visibility of the business. Over time, positive reviews from these platforms can be an invaluable source of revenue for HVAC contractors. Many HVAC contractors will also engage in a regional search engine optimization (or “SEO”) campaign in order to ensure that their proprietary websites are frequently found in search results. Although this type of marketing has high upfront costs, the results can last for several years if this is carried out properly. Most companies outsource this type of work to a qualified digital marketing agency or web development firm.

Overall, the industry outlook for the HVAC industry is strong. Interest rates remain low, and many homeowners are taking advantage of low cost borrowing in order to upgrade their systems to be more energy efficient and environmentally friendly. Many HVAC contractors maintain relationships with specialized lenders so that these systems can be financed by home and property owners. There are numerous companies that act as a financing partner for contracting businesses. Additionally, new housing demand remains strong (again, as a function of low interest rates). As such, the demand for new system installations by real estate developers is consistent.

It should be noted that one of the best features of the industry is that HVAC contractors can scale down their operations during difficult economic conditions. This allows for a core focus to be shifted to profitable maintenance services.