Do you want to start a spray foam insulation business? If YES, here is a complete guide to starting a spray foam insulation business with NO money and no experience plus a sample spray foam insulation business plan template.
If you are considering starting your own business, then note that one of the businesses you can easily start is the spray foam insulation business. Spray foam insulation is an alternative insulation that is used in the construction industry. It is used in concrete slabs, roof tiles and wall cavities.
Basically, there are two types of spray cell; open cell foam insulation (suitable for indoor use) and closed cell foam insulation (suitable for outdoor use).
We believe that people make use of spray foam insulation in order to save energy consumption cost and also to reduce their utility bill; it aids in controlling temperature, sound and moisture. Making use of spray foam insulation can help you save energy in hot climate by minimizing the use of air conditioners.
This is the reason why any building that makes use of spray foam insulation attracts tax deductions from both the federal government and the state government in the United State of America. Indeed starting a spray foam insulation business can be truly rewarding especially if your start the business in the US.
In today’s economy, “Sustainability” is more than just a catchphrase that is used to market those who are environmentally minded. This is why there can be some attractive rewards for a business that focuses on preserving the environment.
We have been able to find out that spray foam insulation is one of the few businesses that tends to be successful even in difficult economic times.
It isn’t a difficult skill to learn, but it does take some knowledge about insulation values for true success to be earned. With cutting edge technology available to make the application of spray foam easier than ever before, the time is right understand the best way to earn from this ever growing industry.
Steps to Starting a Spray Foam Insulation Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
It is very important to state that spray foam insulation is a popular alternative to traditional insulation materials such as glass and metal. It is also often referred to as Spray Polyurethane Foam Insulation (SPFI) and is routinely installed in new buildings, renovations and retrofits.
Note that spray foam insulation solves building insulation design problems, since it brings together proven thermal protection while offering superior air barrier properties. Have it in mind that spray foam insulation includes open cell and closed cell foam insulation.
Open cell insulation is a lightweight foam that stays soft and flexible. Closed cell spray foam is a high density product and becomes hard and durable when cured.
It is a more expensive product that also serves as a moisture barrier. It is more suitable for basements and under-grade applications as compared to open cell foam. Spray foam insulation uses less wall space, when compared with other materials.
This process also meets codes and completely fills the wall, hence saving energy and money. Also spray foam solutions reduce repair and maintenance costs over time for a variety of infrastructure. Spray foam insulation is also used in engineering solutions for foundations, buildings, roadways and concrete repair.
The ever increasing need for spray foam insulation is directly correlated with the recent boost in potential homeowners opting for high-performing environment friendly technologies for their homes. This is why the use of green technologies has also been incorporated into commercial construction and office buildings to reduce energy consumption and increase appeal among consumers.
This we believe will be one of the major drivers of the spray foam insulation market. The need for spray foam insulation will be solely affected by expected modification to building codes in various parts of the globe. Also the need for spray foam insulation will be moved up by building improvements and upgrades, coupled with increasing construction activities in APAC and LA regions.
Meanwhile, government authorities are backing energy efficiency and the need for spray foam insulation will also rise in government construction projects. We also believe that rising middle class population is also expected to ginger up the demand for spray foam insulation for various applications such as in roofing and concrete.
In developed countries, demand will stem mainly from refurbishment of commercial and residential buildings following a few years of decline. Also, rising shale gas exploration and importance of health and safety considerations are building more application opportunities.
Fire regulations will comprise a key restraint for the spray foam insulation market. There are issues related to thickness and application of spray foam that mostly depend on installers, however spray foam problems are generally less frequent and easier to overcome with proper planning and application.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Just because spray foam insulation is a lucrative business does not mean the business thrives in all countries of the world. Have it in mind that spray foam insulation business thrives most in the US, Canada and Europe. This brings us to the fact that you need to conduct a thorough feasibility study to be sure that this type of business is needed in the location you intend starting it.
The report from your feasibility studies will help you make informed business decisions; it will expose you to all the intricacies of the spray foam insulation business. Also note that spray foam insulation is segmented into different forms. On the basis of foam type, the spray foam insulation market can be segmented as:
- Closed cell
- Open cell
On the basis of application, the spray foam insulation market can be segmented as:
- Concrete rehabilitation
- Others (medical, marine, aircraft and furniture)
On the basis of infrastructure type, the spray foam insulation market can be segmented as:
3. Decide Which Niche to Concentrate On
When planning to start this business, one step you are expected to take if you are serious with starting your own spray foam insulation company is to draft or organise a good business plan. Note that your business plan for a spray foam insulation business is expected to address the issue of finance, your SWOT analysis, all the strategies that you are expected to adopt to execute your business plan and your goal and vision statement. It will also have to explain your niche decision, in very long and clear words.
We have found out that there are many other types of spray foam applications and specialties, so in the beginning, it can be beneficial to specialize in a specific market and application such as commercial roofing or residential insulation.
It is very advisable that you consider not only the type of work you want to do, but also the type of work already being done in your area–that is, your competition. Note that even if specializing in crawl space and attic applications sound appealing, it is not going to be very profitable if several companies in a given area already offer such services.
We believe that niche applications like insulating farm buildings or storage tanks, can be quite profitable. It is really about understanding the market needs of the service area a contractor might have in mind. In any case, establishing an application focus will also determine a lot of other aspects of the business, like the necessary equipment, the required training, and the type of materials needed.
The Level of Competition in the Industry
We strongly believe that three major factors that will determine whether the spray foam industry grows are contractor education and certification, property owner and specified awareness. But the good news is that most of the folks in the industry understand the importance of good training, solid experience, certifications and quality installation.
But the point about property owner awareness is something that we should work to increase. We believe that the old days when word-of-mouth and the occasional ad or direct mail flyer was all that you had to explain what you do and what you stand for are over; we now have websites, social media, email marketing and a whole host of other media that we can use to build credibility and spread good information.
With the hiked interest in improper spray foam installation, we would humbly suggest preemptively combating any such concerns with regards to your new business by being upfront in your marketing materials. Note that this idea serves two purposes: letting your readers know that not all spray foam companies are equal and that there are companies that place a high value on proper insulation installation (which is good for the industry as a whole); and directly positioning yourself as one of those companies (which is good for your business).
4. Know Your Major Competitors in the Industry
Brands come and brands go. However, there are brands that stand the test of time year in year out. These brands can be likened to the key players in the spray foam insulation business. Here is a list;
- BASF Corporation
- Bayer Material Science
- CertainTeed Corporation
- Icynene Inc.
- Lapolla Industries Inc.
- NCFI Polyurethanes
- Premium Spray Products
- Rhino Linings Corporation
- The Dow Chemical Company
It is very important to state that the spray polyurethane foam industry is poised to expand 13% per year through 2015, from $800 million in 2013 to $1.1 billion in 2015. We believe that this growth surpasses project expansion in the construction industry in general, and is a hopeful sign that builders and building owners are increasingly seeing the value of energy efficiency.
It is also very important to state that the global spray foam insulation market is segmented into the seven key regions: North America, Latin America, Western Europe, and Eastern Europe, Asia Pacific Excluding Japan (APEJ), Japan and Middle East and Africa (MEA).
Growth in developed regions such as Western Europe, Japan and North America will be driven by new product innovation, owing to easy applicability and strict government regulations. Spray foam insulation is eco-friendly and is fast becoming the preferred home insulation nowadays. Here are some considerations before starting your Spray Foam Insulation Business:
- Find out if you have enough financing or capital to start this business. You need about $100,000 as starting investment for the equipment and other incidental expenses. In addition, you need to make sure that you can work in confined spaces and haul heavy equipment.
- Determine if your area has a need for a Spray Foam Insulation Business. Check out the yellow pages for existing businesses under “insulation” and size up your competition. It is best if you bring your business into environment friendly cities. Also, find out the fees and licenses in setting up your business in that city. Consider working as an apprentice or employee for this business first if you feel that you need more experience before plunging into full business ownership.
- Definitely, you would need an appropriate vehicle to carry equipment for your clients. Some operators typically use a trailer or truck set-up while others are satisfied with panel vans. Then, if you are good to go, you can advertise and sell your services in the community by networking with remodels and local builders.
5. Decide Whether to Buy a Franchise or Start from Scratch
From our research, we believe that buying a franchise in the Spray Foam insulation industry is very much better than starting from the scratch. In this business, a franchisee gets more than the right to use a Business Name: you will also be gaining both the benefits of the franchisor’s experience and the business’s formula for success. Another basic reason why you should consider a franchise is because you might have a good business background but no experience in this particular industry.
We believe that one of the benefits of opening a franchise is that the franchisee is provided with a turnkey operation. It means that the franchisor helps you choose the site and negotiate the lease, tells you how to lay out your building and where to order furnishings, provides information on what products you need to use and what your opening inventory should be, and offers you management and technical training.
On the issues of cost, control, expertise and support, these franchise owners are equally split. A franchise owner incurs more expenses and has less control over her operation, but lets you gain the advantage of the experience of the franchisor and other franchisees on what works and what doesn’t.
6. Know the Possible Threats and Challenges You Will Face
Building a Spray Foam insulation business might seem like a very hard task that you won’t be able to pull through, but you need to understand that every successful entrepreneur has made his or her share of mistakes along the road to the top. Possible challenges may include…
- Employing technicians
- Remaining competitive
- Good location
- Lack of experience
- Employee incentives
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When planning to start a business, choosing a legal entity for your Spray Foam insulation business is one of the primary decisions you have to make when starting and your decision depends on your individual situation and tolerance for risk.
We will like to state that you can decide to run a successful Spray Foam insulation business using any of the available business entity types. You might want to choose between a sole proprietorship and a Limited Liability Company, however, you should consider this difference before you choose. We strongly advice that you start your Spray Foam insulation as a limited liability company. This legal structure offers you so many advantages that other legal structures can’t.
- Let’s you run your show
- Avoid double taxation
- Limit Your Personal Liability
- Less Administrative Hassles and Paperwork
8. Choose a Catchy Business Name
- Vintage Tradition
- Zeno Construction
- Allegro Builders
- Hydrotech Inc.
- Dome Construction
- Charter Construction Inc.
- Grant Construction Group LLC
- Favour Construction
- Award Corporation
- Creative Design & Construction
- Dream House Construction
- Fast Construction Inc.
- Alpha Construction Co.
- Vesper Construction
- General Growth Properties
- American Construction Company
- Nixon Building Company
- Heller Companies
- Interior Construction Group
- Beautiful Home
- Kal Construction Company
- LEV Development Group
- Benny Group LLC
- McCarthy Building Companies, Inc.
- Flat Construction Group
- Clean Creek Timber Company Inc.
- Majestic Construction Company, Inc.
- Rome Consulting Group Inc.
- Sunshine Builders
- North West Custom Homes
- Taylor International Group
- 3D Construction Co
9. Discuss with an Agent to Know the Best Insurance Policies for You
We believe that a lot of jurisdictions see the spray foam insulation business as a contracting business. This is why you may need to have some specific insurance policies in place to protect you. One of the most common in this area is called a surety bond.
Note that surety bonds are like a line of credit that is extended to your business. If there is a claim against your company because of the craftsmanship of your work, then the surety bond can be used to pay for the job to be re-done without financial losses to the customer or to you. Obtaining a bond isn’t cheap and you may need to have an extensive amount of coverage [up to $50k or more]. You equally need;
- General Liability Insurance
- Business Owner’s Policy
- Business auto policy
- Workers Compensation Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
A lot of experts have been voicing the need for businesses to protect their assets, yet a lot of business owners fail to take a cognizant degree of caution with their designs, ideas, and valuable business information – the business’s intellectual property (IP) – and leave themselves at risk of theft and counterfeiting.
We believe that new changes to the law have solidified the protection of designs in the world, and the introduction of simpler patenting processes will make it easier for small businesses like a Spray foam insulation business to look after their IP and intangible assets. Ways to protect your business may include…
- Understand your assets
- Research for the right protection
- Watch the competition – and enforce the law
11. Get the Necessary Professional Certification
- Goldstar Certified Applicator
- SPFA Professional Certification for Insulation
- Certified polyurethane technician
12. Get the Necessary Legal Documents You Need to Operate
In the business world, it is very pertinent for all new businesses to comply by acquiring all licenses, permits and regulations. Have it in mind that when starting a business, the entrepreneur must contact the municipality involved along with the state and federal governments.
It is indeed true that each municipal government has the authority to issue its own business licenses within its jurisdiction. But we believe that since there is no uniformity throughout the country regarding municipal licenses for businesses, that you should consult with the appropriate local officials to know whether your business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property use in their Municipalities to avoid troubles.
We believe there are be a lot of licenses and permits needed for your Spray foam insulation business. Note that business licensing requirements differ from city to city, county to county and state to state. A lot of them need all businesses to register and they collect annual business licensing fees. While some don’t need licenses or registration for unincorporated businesses unless you are doing business under a fictitious name (also known as a DBA or “doing business as”).
Have it in mind that you may need a license or permit for occupancy, sanitation, and fire safety. We strongly advice that you check with your city or town clerk for any local requirements. We advise that you also check on zoning and sign regulations that may apply to your business and location. Example of licenses, permits and regulations that could apply to you when starting your Spray foam insulation business may include, but are not limited to:
- contractor’s license
- municipal business license
- vendor permit
- health regulations and requirements
- fire safety standards or regulations
- Zoning by-laws
- building permit
- Police Permit
- fire safety
13. Raise the Needed Startup Capital
It is very important to say that a lot of banks and lenders always need you to put some of your own money into the business, and experience is a major factor for lenders. It is well known that lenders believe that the more experience you have, the better.
We suggest that you consider taking a job in a spray foam insulation company, and/or take some classes to help you succeed in getting the funding you need – that is if you are a newbie in the industry. Places to get funding may include;
- Small Business Association
- Personal resources – Savings, IRA accounts, credit cards, home mortgages and personal assets (including family or friends)
- Private investors – also known as angel investors
- Commercial finance companies such as banks and equipment leasing companies
- Friends and relatives (be careful to arrange the loan in a business-like manner). Draw up papers stating the loan repayment schedule and interest to be charged
- Real-Estate assets
- Life Insurance
- Housing and Urban Development
14. Choose a Suitable Location for your Business
You need to secure a property first before purchasing the required materials and equipment needed for the business. You also need to consider certain factors before agreeing to the terms of the property, like space, security, accessibility, affordability etc.
We believe that the two major choices facing prospective spray foam insulation businesses include: What kind of spray foam insulation should I do and where should I open it? Indeed, you will have already chosen either a location or a concept for your business, but we believe it is important that your location and concept complement each other.
Have it in mind that different types of spray foam insulations will have different location requirements. But some elements should be analysed regardless of the type of spray foam insulation you are planning. Use the following checklist to complete this part of your market analysis.
Factors of Immediate Area
- Residential and commercial profile
- Adjacent land uses
- Proposed developments
- Special appeal of location
- Map of area (identify sources of demand, competition and other relevant landmarks)
Comfort to Customers and Competition
- Major demand generators (retail, offices, lodging, hospitals …)
- Number of potential customers by segment within one-, two-, three- mile radius, etc.
- List of direct cleaning competitors
Busy Traffic Volume
- Street and road patterns
- Speed limit and traffic signs/lights
- Highway/Street traffic counts
- Pedestrian traffic counts
- Peak and off-peak traffic periods
- Proximity to major streets and highways
- Ease of entrance and exit
- Parking (guests and delivery)
- Pedestrian accessibility
- Americans with Disabilities Act (ADA) compliance
- Visibility from road
- Effectiveness of sign
- Curb appeal of building
- Exterior lighting
- Environmental Issues
- Easements and restrictions
- Growth Patterns of Surrounding Areas
15. Hire Employees for your Technical and Manpower Needs
For you to be able to successfully build your own spray foam insulation business, you must first of all get trained. You have to study how to operate the machines and how to get the job done neatly. You can attach yourself to someone who is already in the business to get trained or you can enroll in a technical college around you to learn the trade.
Note that one of what you would be taught to while undergoing training on spray foam insulation is safety measure. Also have it in mind that you would need to purchase the needed tools required for the spray foam insulation business.
We believe that some of the basic tools that you would need are; foam saw air powered spray foam removal machine, spray foam insulation rig, saws, cutting tools, safety booths, overall, safety hand gloves, safety helmets, spray foam trailer and polyurethane pump et al.
We also understand that the full spray foam insulation system kits can be very expensive but if you don’t have enough money to purchase new spray foam insulation equipment’s, you can purchase fairly used ones, they are sure going to serve you for a while before calling for replacement.
It is so very useful to note that strict training and comprehensive understanding of the SPF form is perhaps the biggest asset of a new contractor, and perhaps the biggest key to success. Also know that your training must include the technical aspects of an SPF operation: foam processing, equipment operation, and maintenance/troubleshooting.
Just as important, training must also include application knowledge about the installation of SPF roofing, SPF insulation, and/or spray-applied protective coatings. These training may sometimes need traveling to the suppliers’ facilities, although sometimes jobsite training is offered. Finally, it is important to treat training and SPF knowledge as a continual effort, rather than a singular achievement, so keeping up with periodic training schools and courses should be an ongoing priority.
The Service Delivery Process of the Business
Indeed spray foam is a very specialized packing material, sometimes needed for use in shipping valuable fragile items. It simply means the process where packaging principles are designed to protect sculptures, vases, large fossils, lamp bases, busts, computers, furniture, chandeliers and other objects of unusual shape. Due to the ability of the liquid foam to expand by up to 30-60 times the volume of its liquid state, it efficiently protects almost any size, form and weight.
At this point, the custom fit of the moulds, top and bottom, securely and uniformly cushions the object. There are many types of alternative materials that can be used to handle more specific needs. Just like we already know, spray foam insulation or spray polyurethane foam (SPF) is an alternative to traditional building insulation such as fiberglass.
t can be said to be the point where two-component mixture composed of isocyanate and polyol resin comes together at the tip of a gun, and forms an expanding foam that is sprayed onto roof tiles, concrete slabs, into wall cavities, or through holes drilled into a cavity of a finished wall. Polyurethane and polyisocyanurate are two types of foam used in this application.
Spray polyurethane foam (SPF) insulation can be divided into two different types: light-density open-cell spray foam insulation and medium-density closed-cell spray foam insulation. Both types of SPF are thermoset cellular plastics comprising millions of small cells.
R-value is the term given to thermal resistance to heat flow. The higher the R-value of an insulation product, the more effective the insulation properties. 1.8-2 pound polyurethane foam has the highest R-value of readily available insulation used in homes and buildings. Have it in mind that Polyurethane is a closed-cell foam insulation material that first contains a low-conductivity gas in its cells.
This is why the high thermal resistance of the gas, spray polyurethane insulation typically has an initial R-value around R-5 to R-6 per inch. In comparison, blown fiberglass typically has an R-Value of only R-3 to R-4 per inch. Foam insulation blocks all three types of heat emission:
Conductive Heat Transfer
Note that this is the flow of thermal energy through a substance from a higher to a lower temperature region. Foam thermoset plastics reduce conductive heat transfer due in part to having very loose molecular bonds. In addition the cells of the installed spray foam are either filled with air in the case of open cell foam or 245fa in closed cell foam.
Radiant heat transfer
We believe that this is the means by which heat energy in the form of light (usually IR unless the substrate is hot enough to glow in the visible range) is emitted more strongly by warm surfaces and absorbed by other materials especially those of low IR reflectivity (think matte black finish). But you need to understand that the heat transfer does not need a medium. Foam insulation materials such as spray foam insulation, are opaque to thermal radiation, like most solid and strong.
Convective heat transfer
In this form of transfer, heat which is created elsewhere that is moved by means of a fluid, such as water or in our case air. Spray foam insulation’s most important function is the ability to air seal creating a custom airtight envelope within the building structure. The added benefit to air sealing is the ability to block convective heat transfer from interior to exterior during heating months and vice versa during cooling months, as the heat cannot escape through gaps in the building envelope not without the help of air movement from infiltration as a means of movement.
16. Write a Marketing Plan Packed with ideas & Strategies
We have been able to note that the average contractor in the spray foam insulation business has spent at least $100k in total capital to bring their business to a grand opening and much of this cost is associated with marketing. Have it in mind that the best marketing in this field isn’t a slick TV ad or a funny radio advertisement [even though having these things doesn’t hurt].
The word of mouth ambassadors that speak highly of your work is what will bring you the best contracting jobs. You could spend millions on marketing and never get work because you have a lousy reputation. Sometimes the best marketing is to take a job at a discounted price so everyone can see how awesome you really are.
Having Technological Expertise
Everyone can attest to the fact that the field of marketing has taken hold of the digital age with enthusiasm and vigour. This of course doesn’t make the marketing fundamentals that applied twenty years ago invalid; many marketing principles are being reinterpreted through the lens of today’s technology. We believe that one of the things that need to be considered by foam insulation businesses is a search for news to leverage technology to scale up the organization’s promotional firepower.
Establishing A Community Around Your Brand
You need to ask yourself, does my business have a social media presence? If not, you may be falling behind the rest of the marketplace. You have to understand that foam insulation businesses need to do a better job connecting with their customers. We believe there are a lot ways to launch a social media strategy. We strongly recommend that you begin with a direct mail campaign. Also making use of vendor-provided mailing lists, you can broaden your reach by informing new contacts as well as established customers about your presence on popular sites like Facebook, Twitter and LinkedIn.
In has been long proven that event and team sponsorships are some useful method of raising the public profile of foam insulation businesses. We believe that successful sponsorships build connections with customers; ineffective ones alienate customers and drain your marketing budget. This is why you need to accurately match your event and team sponsorships to likely foam insulation business patrons.
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
For those who do not know, brand awareness or having a corporate identity is very important because it is what makes you an outstanding entrepreneur in any business industry. It is also what makes people know that you exist, what you do and how you do it. Ways to do that for your spray foam insulation business may include…
- Advertise a grand-opening special or offer a service at a discount
- Leverage on a digital strategy
- Remember that Team work pays off
- Plan to move the spray foam insulation business to a higher traffic area if possible
- Always Deliver Your Promise to Your Clients
- Print your website and social media addresses on any materials associated with the spray foam insulation business
- Display a sign-up sheet in the business for email newsletters and special offers
- Use technology to advertise through QR, or quick response codes
- Brand your vehicles and work clothes