Think you’ve got the chops to start a welding business? Ready to work for yourself, instead of another shop or corporate owner? The global welding business is projected to reach $48.16B by 2026. But there are some steps to follow before you’re in the metal fab zone. Here’s how you can cash in on the action.
Opening a welding business gives you the flexibility to focus on the specific types of welding that interest you. As a business owner, you’ll be able to call the shots on everything from who gets hired to where you work.
You’ll get to put policies and procedures in place that make sure every customer gets an excellent finished product, every time. Best of all, by running your own welding business, you’ll get a piece of the revenue pie from every single project instead of just the ones you work on.
Okay, time to get real about this. What you need is a checklist, and lucky for you, we’ve created just that.
Checklist for How to Start your Welding Business
- Create a Business Plan
- Choose Your Taxi Business Structure
- Determine Your Business Costs
- Create a <a href='https://www.zenbusiness.com/reserve-business-name/' >Business Name</a>
- Register Your Welding Business and Open Financial Accounts
- Purchase Equipment for Your Welding Business
- Market Your Welding Business
You may want to jump right into finding a location, hiring welders, and marketing it to potential customers. But first you have to get organized by writing a business plan. It’s crucial! “Most welders think business plans are a waste of time,” David Zielinski, author of The Welding Business Owner’s Handbook, told TheFabricator.com. “The truth is, a business plan will give you a very good idea about how much money and time you need to establish your business.”
In the plan, answer these questions:
- What exactly is the welding business you’re creating and why are you creating it? Be specific. What type of welding will you provide? What services will you deliver (e.g. repairs, fabrication)? What income will these welding services bring in?
- Set SMART objectives (Specific, Measurable, Attainable, Realistic, and Timely)
- What problems could arise during the day-to-day operations of your welding business?
- Who is your ideal customer? A corporation that needs fixtures made, an individual, or something else?
- Who is on your welding business team? How will they contribute to its success?
- What will it cost to start and run your welding business? (More on this shortly.)
- Does your area offer tax breaks or grants to entrepreneurs, welders, or welding businesses?
Your welding business must be registered with the IRS. To register, you must first select a structure. Welding companies that start small usually register as sole proprietorships or limited liability companies (LLCs).
The advantage to the sole proprietor route is that it’s easy. You can do business under your own name or come up with a business name and file a DBA (doing business as). All the finances of the welding business (profit and loss) go on your personal tax returns. You can operate under your own social security number or get an employer identification number (EIN) and hire other welders. But there’s a downside: By putting everything under your personal name, you open your personal assets to liability.
For that reason, many new welding biz entrepreneurs choose the LLC structure. Not only does it shield your personal assets from business-related legal action, it also saves the double taxation of other corporate structures. The extra steps are easy — you can even file online — and often very worth it.
A final note: Most states require that welders be licensed. Different licenses are required for different types of welding. Ensure that you and all employees are properly licensed to be a welder in your chosen state. Get more information on this from the American Welding Society.
Knowing what it costs to run your business is key. It can be helpful to break costs down into fixed, ongoing, and one-time expenses.
Cover the equipment costs you have right now, but also envision what could be coming down the pike. Maybe you don’t need all the tools they had at the shop where you previously worked. You can always buy more when the work supports the expense. Some things are necessary from day one (e.g., personal protective equipment) but others can wait.
The bulk of your business costs will come from payroll, renting space for your welding shop (or buying a truck to be mobile), and purchasing welding equipment. However, also figure on costs for an accountant, an attorney, and marketing.
How do you fund your startup costs?
Counting up the costs can leave you wondering, “How on earth can I afford to do this?” Don’t panic, because we have some suggestions.
There are forms of government assistance for small business owners, both grants and loans. Grants are awesome because, so long as you meet their requirements, you won’t have to pay them back. Loan programs can come from the Small Business Administration (SBA), or maybe it makes sense for you to get a personal loan from your bank.
What about your family and friends? Could they help fund your business, either through a loan or investment? You may be able to negotiate a better payback plan that way, but count the potential relationship cost if you aren’t able to pay it back.
You may also consider using business credit cards. They’re quick, though caution is key. Have a solid payback plan so that you don’t end up with a mountain of credit card debt that crushes your small business before it really gets up-and-running.
Finally, brainstorm ways to make money on the side as a welder, until your business is making enough money to be the sole gig. Here are some options.
What will you call your business? Envision it on a business card. Painted on a van. Hung over the wide, rolling garage bay doors. What is memorable? What captures the exact kind of business you envision?
After you’ve come up with a few names that could be a good fit, check to see if any are already in use in your area. You don’t want to create marketplace confusion or open yourself up to a lawsuit. Plus, check if they’re available as website addresses (URLs) and social media handles.
Once you pick a name, register it online by snatching up the web address and handles on whatever social media you plan to use, as well as legally so that another business can’t get it. You can call your welding business by two different names if you set up a DBA nickname.
Register your welding business with your state and local agencies and the structure you selected (LLC vs sole proprietor). Then use your registration documents to open bank accounts. Don’t mix personal banking with the business, since that pierces the corporate veil and may erase your liability protection.
You already know welders need to be licensed, but check with your local municipality to see if there are zoning permit requirements for your location or operation. Don’t forget liability insurance. You’re not exactly working with cotton balls and baby powder, right? Local insurance agents can help you determine what other type(s) of insurance are best for your unique welding business.
The equipment you’ll need is directly determined by the type of welding business you’re opening and growing. It can cost $1,000 or it may run into the millions. Consider whether you can cut costs by purchasing used equipment (though this may mean you don’t have warranty protection).
Or you can start small and add welding supplies like a plasma cutter or a portable MIG welder as your income grows. A mobile welding business will, of course, need a vehicle. Plasma and air cutters, a fume extractor, welding and respirator helmets, and more are also on the equipment list.
Here’s a guide from Jason Becker, a welder with over 22 years of experience, that describes the tools you may need to get started with your welding business.
There’s no business without customers, but how do you get them?
Make sure you’re online as well. Create a social media strategy across all your chosen platforms (Twitter, Facebook, Instagram, LinkedIn, etc.) that has the same look/message regardless of where you’re posting. Now is not the time for, “I don’t do social media.” The American Fabrication Academy says, “Social media is one of the greatest marketing tools you can use to keep your welding business busy.” Create a website and optimize it for search engines, or hire a consultant to do so.
Go to industry events and expand your network. This will help you find out what worked for existing, successful business owners in your industry.
There are different types of welding businesses you could start, from mobile to a fabrication shop, inspection to construction. The type that best serves your area might not be the one with which you’re most familiar or experienced. Here’s a handy list of Welding Champs’ top ten welding businesses to consider.
Opening a welding business can be a fun, lucrative way to take the next step in your welding journey and establish yourself in a multi-billion dollar industry. You’ll need a solid business plan and a commitment to stepping out from under your helmet to court and retain customers, but if you’re willing to put that work in, you could build a very solid, profitable business. For more information, check out the book The Welding Business Owner’s Handbook: How to Start, Establish and Grow a Welding or Manufacturing Business by David Zielinski.
1 All prices and services presented above were reviewed and verified as of 11/2/19.
2 The Starter plan is $49/year the first year and increases to $119/year after that
3 This chart does not include state fees because those will vary in each state.