How to organize a heating installation business

* The calculations use the average data for the World

My home is my castle. Housing is one of the basic human needs. The house of the first person was a cave, then a hut. Today we live in comfortable apartments and individual households. It would seem that many centuries of evolution have created an insurmountable gulf between modern ancient houses and they can have nothing in common. However, there are still more similarities than might seem at first glance. And one of them is warm. In the cold, man - today, like thirty thousand years ago - is uncomfortable. A strong and prolonged cold could well be a threat to life. For this reason, we try to warm our home. In the cave, a fire was a means of heating. Over time, heating systems have evolved. There were fireplaces melted with coal and firewood. There was steam heating. Today, water heating is most often used; electric heaters can also be used as additional heat sources.

According to one of the definitions, a heating system is a set of technical elements designed to receive, transfer and transfer to all heated rooms the amount of heat necessary to maintain the temperature at a given level.

What are these elements? To obtain heat, sources of various scales and levels of technical complexity can be used - from thermal power plants and nuclear power plants to wall-mounted gas boilers. As a means of transfer, piping systems filled with coolants are used - as a rule, fluids with high heat capacity and low viscosity. In most cases, ordinary water is used. Heat is transferred from the coolant directly to the atmosphere of the room through heating radiators - cast iron, steel, aluminum or bimetal. All together, as mentioned earlier, these elements represent a heating system.

Another important human need is the need for water. To satisfy it, a water supply system was created that delivers sufficient water to our homes for drinking and domestic needs. The pipeline is also a means of transporting water, which makes heating and water supply systems essentially similar.

For this reason, heating and water supply are often adjacent to each other - when studying at universities, in the structure of departments of design institutes, in the lists of services of installation organizations, or otherwise - installers of engineering systems. We will talk about the latter in detail in this article.

The market of engineering systems is quite clearly diversified: there are design organizations, there are suppliers of engineering equipment and tools, there are installation organizations. In rare cases, two, extremely rare - three functions are combined within one organization. Usually, an effective division of labor occurs

The tasks of the installation organization are the purchase of equipment, its installation according to the existing project and the subsequent maintenance of the system. Nothing complicated, it would seem. However, not everything is so simple. As in many other industries and lines of business, the staff here is everything. You can use the best tools and work only with the best suppliers, but spoil all this chic by the lack of qualifications of workers. Therefore, the most important task of an entrepreneur who has decided to invest in the opening of the installation organization of heating and water supply systems is the selection of highly qualified specialists. And the question here is not only about the possession of one or another installation technique and experience, but about adequacy and learning. Today, products and technologies are rapidly evolving, and their manufacturers and suppliers conduct seminars and workshops for specialists, so you must constantly keep abreast of the news and keep up with the trend. This will provide the enterprise with high competitiveness.

You can classify installation organizations by a huge number of signs, which indicates the wide possibilities of specialization, which, in turn, indicates the presence of a large number of large areas and narrow niches with a completely different level of competition and profitability. For example, according to the industry affiliation of customers, the market is segmented as follows: 30% - the primary construction market, 25% - utilities housing and communal services, 10% - construction and repair of industrial enterprises, 35% - retail and intermediaries. As a rule, installers form a sales structure, focusing on their own connections and opportunities. For example, if the founder has ties in the housing and communal services sector, it will be in this area that 90% of its turnover will fall. As practice shows, it is the housing and communal services sector that is by far the most corrupt, and entry for newcomers without connections has been ordered here.

In addition, in the repair of existing networks, the bulk of the use of low-quality materials that will allow after a while to repeat the repair of the same area for new kickbacks.

New construction is another matter. Usually subcontracting issues are resolved through tenders. You can win not only due to the low price, but also by offering a more complete set of services than a competitor, a guarantee, etc. Of course, there’s no getting around without kickbacks, such is the bitter truth. But in fairness it’s worth recognizing that such a way to achieve a result today is turning less and less. Personal contacts also play an important role: not all builders choose subcontractors on a competitive basis.

And yet, even despite the crisis, the volume of new construction continues to grow. According to some reports, their growth is limited to 1-2% of real estate funds, but in the current economic and political situation this is a good indicator. In addition, developers seek to build a long-term business, which requires a good reputation. Engineering systems, with their small relative cost (up to 5% of the total construction costs), have a very significant impact on the tenants' comfort. Therefore, they try to save on them less and less.

As for the retail market (retail refers to the installation and repair of heating and water supply systems for private customers) - it is both interesting and complicated. If an entrepreneur does not plan to limit orders only through word of mouth, it is necessary to be puzzled by the opening of an office (about 30, 000 rubles a month) and a small warehouse of materials. This is ideal. Having a trusted supplier of materials and equipment, as they say, close at hand, you can completely refuse to freeze money in stock. A sales manager will be enough for working in the office to answer incoming calls and advise visitors. It will be superfluous to recall that the manager should more or less tolerably understand the proposed equipment and installation technology.

The main difficulty of this segment is the need to find an individual approach to each client. In order to declare itself, large-scale advertising is required - as a rule, in specialized print media, on the Internet. When entering the market, the advertising budget should be at least 50, 000 rubles monthly, in the case, of course, if the founder plans to break the breakeven point during the first year of operation.

When choosing a focus, it should be remembered that new construction is a lower profitability, but, in the case of a contract, is the long-term job security during which you can participate in a number of other tenders, providing yourself with work ahead of time. The retail market is heterogeneous, more sensitive to economic and social disturbances - in a word, more capricious.

Next, you should determine the market segment (economy, standard or premium) and the materials and technologies used. This provides several more options for differentiation. The price segment will certainly establish the framework for the selection of materials and technologies, but only to a certain limit. In the middle price category, for example, imported polypropylene pipes and metal-plastic pipes with two to three types of joints can compete. Each of the types will require knowledge of the technology and the availability of an appropriate tool, the cost of which can reach several thousand euros. Although the middle-hand assembly team manages the simplest - manual - tool; more expensive and efficient - electric or electro-hydraulic - can usually be rented from a supplier of engineering equipment. It will also require a general construction tool - a grinder, a punch, and more. The entire kit for one brigade will cost about 100 thousand rubles. The optimal number of people in the team is 2-3 people. The number of teams will depend on the expected volume of work.

It is completely logical that the installer earns due to the work performed. The average installer has practically no opportunity to make an extra charge on materials. The profitability of installation work is on average 15-18%. Thus, with the sum of monthly fixed costs for advertising, office and staff maintenance of 150-170 thousand rubles, the monthly revenue should be at least 1 million rubles. This figure at current prices for work is quite easily achievable. For example, installing a circulation pump costs about 5, 000 rubles today, installing one heating radiator costs 2, 500 rubles, and a ball valve costs between 500 and 1, 000 rubles, depending on the diameter.

Additional profit in the presence of an office will be ensured by retail trade in components of heating and water supply systems. In this case, you can set the retail margin on average up to 20%. The most effective location of an office-store will be within a large construction market. Installation of sewage systems can also give additional profit. In the main part of the article, this direction was not considered due to the simplicity of installation and a rather low profitability.

The most appropriate legal form for this type of organization is, perhaps, an individual entrepreneur working on a simplified taxation system; the basis of taxation will be income reduced by the amount of expenses. The store will be taxed only according to the UTII system (single imputed income tax) in accordance with legally established physical indicators; in other words, the amount of tax payments will directly depend on the area occupied by the store.

Since 2008, in Russia, the law on self-regulatory organizations - SROs has been in force. Its essence lies in the fact that the state actually shifts the function of regulating the construction market to its participants - construction, survey and design organizations. Market participants without fail enter into SROs, which on their own analyze the activities of their members in order to ensure compliance of their actions with the legislation; in case of violation of this SRO is entitled to apply disciplinary measures against the violator. Such measures, first of all, include a fine. Funds are withdrawn from the contribution to the compensation fund, which the organization contributes upon entry into the self-regulatory organization. The contribution amount is 300, 000 rubles, which should also be taken into account when planning investment costs.

Denis Miroshnichenko

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08/18/2019

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