Since powder coating businesses can charge anywhere from $100 to $500 per hour, depending on the market, it can be a lucrative business. Many of our readers ask us about how to start a coating business.
In this all-encompassing guide, we included everything you need to know in order to start a powder coating business– from business licensing to finding your first customers.
Whether you powder coat cars or home fixtures, starting a powder coating business requires a lot more than just the equipment. To start a powder coating business, you must get a business license, secure insurance, and financing to purchase equipment and inventory.
Want to learn more? Keep reading and take a look at our frequently asked questions section.
Get a Business License
You need a business license to legally operate a powder coating business in the state you reside. There are two types of licenses that you will need at a minimum: a business operating license and a legal entity license, such as an LLC.
A business operating license is at the state or local level and grants you the right to run a business in your jurisdiction. An LLC (Limited Liability Company) is filed in your state and forms a type of private limited company.
Many power coating entrepreneurs decide to form an LLC over other types of legal entities because it is easy, cheap, and takes a great deal of personal liability away from the business owner.
Take Out an Insurance Policy
Any service business, especially one that does work on another’s personal property, needs to have insurance. The best coverage for a powder coating business is general liability coverage. The standard policy covers various risks, including property damage, bodily injury, and damage to property that you rent.
If you accidentally damage a customer’s vehicle, for example, this type of insurance coverage would prevent you from facing any financial liability. Thankfully, general liability coverage is cheap, with policies starting as low as $50 per month. Since general liability insurance is a business expense, it is also tax-deductible.
Rent a Shop
Depending on the size of the powder coating business, it might be necessary to rent a shop. Industrial space is often cheaper than retail alternatives, and it should have a bathroom, small office, and space for employees to take breaks.
It is possible to set up a powder coating business in a home garage, but it is hard to scale up the business with limited space. A shop is also preferable because it makes the business some more legitimate and professional.
Moreover, running a powder coating business in a home garage could violate a homeowner’s insurance policy or be against the lease if it is rented space. Serious entrepreneurs should rent a shop, even if it is a small one.
Hire Skilled Employees
A single owner may be able to operate a powder coating business, but he or she will eventually have to turn away customers due to a lack of capacity. While it is not a must, in the beginning, a powder coating business should hire skilled employees to help grow the business.
The right employee should have at least one year of experience operating powder coating equipment and have strong attention to detail. Moreover, employees should demonstrate a commitment to safety and pass a training exam and safety course.
As the number of employees grows, it is imperative to hire an HR/Office Manager to manage payroll, employee benefits, and the onboarding process.
Create a Business Plan
Starting a powder coating operation without a business plan is a grave mistake. Nonetheless, a business plan for a powder coating business is straightforward. First, the business plan should detail the purpose and mission of the business – what services will it provide? Who will be the target market? What is the timeline to start the business? Those are all important questions that should be answered in the description of a business plan.
Not only does a business plan need a target market, but it also needs to describe what type of competitive advantage the powder coating business will have over local competitors.
Moreover, the business plan should call out who will run the business – i.e., will it be a single-person operation, or will multiple people be involved? It also should state where the business will be registered and what type of legal entity it will be (an LLC, partnership, sole proprietorship, etc.).
Finally, the business plan should describe how you will finance the business. The typical business plan ranges from 10 to 15 pages, depending on the complexity of the business.
Obtain Financing
Opening a powder coating business can cost anywhere from $80K to $100K and upwards, depending on the equipment and space needs. Most people do not have that kind of money lying around.
If you want to start a powder coating business and do not have the funds on hand, you will need to obtain financing through a bank, credit union, or venture capital firm.
Many business owners take advantage of loans issued by Small Business Administration (SBA) lenders. Lenders approved by the SBA tend to have more lenient terms and make it so that a greater percentage of the population has access to capital.
Find an Accountant or Accounting Software
Every business owner needs either accounting software, such as QuickBooks, or an accountant to manage their financials. This imperative, especially when the business grows and takes on more employees and/or needs financing.
Someone just starting a powder coating business might prefer to hire an accountant because it will give him or her more time to focus on the day-to-day operations and attracting new customers.
It is important to have accurate financials because credits may ask for them and your financials will determine how much you pay in income tax. No matter the size of the powder coating business, an accountant or accounting software is a must.
Get the Appropriate Tools to Start a Powder Coating Business
Pretreatment Equipment
Purchasing the right type of pretreatment equipment is critical to producing a high-quality product. Before starting any powder coating project, the surface must be 100% spotless. The exact type of pretreatment equipment and the solution you use will depend on your target market.
For example, cleaning sheet steel requires oil cleaning, but angle iron needs shot blasting to get a good clean. So, if you are in the business of cleaning angle iron or rusted steel, you should get a sandblaster. These machines can range from $7,500 to $30,000.
After cleaning the metal, the next step is to pressure wash it. All powder coating businesses should have at least one pressure washer on hand, which can cost $1,800 for a commercial-grade machine.
And while solvent wipes are an alternative, pressure washers tend to be more efficient and effective. If your business services a variety of customers, you should consider getting an etching device or phosphating equipment – two methods used to enhance the powder coating and keep the surface from corroding.
Curing Oven
Every powder coating business needs a curing oven to heat the powder coat. This oven exposes the coated item to extreme temperatures that cause a chemical reaction and creates a polymer.
This process, known as curing, requires a temperature of at least 400 °F. Industrial curing ovens are much larger than ovens you find in the kitchen – they often measure up to 86” in height with a stand included. Tabletop curing ovens sell for around $500 to $1,000. Larger industrial-sized curing ovens sell for $2,000 to $20,000 and upwards, depending on the size.
Powder Gun
There are two main types of powder coating guns – Corona style and Tribo style. A complete gun system with multiple air outlets can cost around $2,000. We recommend buying a system, as it is more affordable than buying the pieces separately.
Spray Booth
Because applying powder coating is messy, a spray booth is a must-have. An industrial spray booth costs around $4,000. Booths should have an exhaust fan to help ventilate the air. Some booths have a workbench, which is ideal for smaller projects. There are a few DIY options, but we recommend buying a spray booth for those who are just starting.
A Conveyor Belt
A conveyor belt is only needed for businesses with an extremely high volume of work. The conveyor belt would essentially take items through the curing oven and keep them in the oven until the curing process is complete. A newcomer probably does not need a conveyor belt, especially because they can cost well over $10,000 and are complex to implement.
Getting Your First Customers
After getting the equipment and legal side of the business setup, now comes the hard part – getting customers.
For some entrepreneurs, this will be easier, especially if they already have an existing client base. Those who are brand new to the business will have a difficult time getting their first couple of customers.
The good news is if you do a great job with your first few customers, you will start to get customers via word of mouth.
In this section, we will discuss starting a website – an important piece of getting new customers and retaining customers. Then, we will present general some general marketing techniques that every powder coating business must-have.
Create a Website
No matter the size of the powder coating business, an online presence is an absolute must. Potential (and existing) customers can visit the website to make an appointment, learn about the services offered, and find out pricing. The price of maintaining a website is minimal – some website hosts charge less than $10 per month.
You also do not need to be a web developer to create a website. There are hundreds of easy-to-use templates available on WordPress should you decide to create the website on your own. If you do not have the time or the design skills, you can always hire a local web developer to help you out.
Marketing Your Business
Start Marketing
Once you have a defined business plan and target market, the next step is to start marketing efforts. Nowadays, there are various ways to market, both online and offline. Below are some of the best ways to market a powder coating business:
Run Facebook Ads and Marketplace Groups
Facebook Ads are a great way to reach local customers. The average cost of running an ad on Facebook is $0.97 per click and $7.19 per 1,000 impressions. You can target your ad on age, location, interests, and other criteria that will ultimately reach your target market.
Another good marketing technique is to join local marketplace and service groups and advertise the powder coating service. This method is completely free and an effective way to gain new customers for those who are just starting.
Google Ads
An alternative to Facebook Ads is Google Ads. Paying for Google ads can get your website ranked on the first page on Google when someone searches for a certain keyword. Google ads are expensive, however, since there is a lot of competition. The average cost-per-click (CPC) is between $1 to $2, depending on the keyword.
Articles
Writing articles is an affordable way to drive organic traffic to your website. These articles should contain at least 500 words, have a few long-tail keywords that potential clients will search for, and be published weekly. Since powder coating is typically a local business, a long-tail keyword could be “best powder coaters in Henderson, Nevada.”
Flyers
Because a powder coating business is typically limited to a certain geographic area, flyers are an efficient way to get customers.
The use of flyers yields the best results when they are targeted (i.e., distributed in a neighborhood with a high demand for powder coating), and when they have coupons and promotional offers on them.
Do not be too excessive with flyers, or they can come off as an annoyance. Flyers are great for new businesses and help get the company’s name out.
Door-to-Door Canvassing
Canvassing to get powder coating clients is a bit more of an aggressive approach. Be cautious because many homeowners do not like solicitation.
If done in the correct area of down, door-to-door canvassing can prove successful. Canvassing works best when you have a promotion to offer the potential customer or a tangible example of your work.
How Much Does It Cost to Start a Powder Coating Business?
A powder coating business can cost anywhere from $20K to $100K and upwards, depending on the size of the business and the locale. Every state and city has different costs of registering a business and renting commercial property, so we cannot provide you with an exact cost.
We can, however, provide you with a list of must-haves before starting a powder coating business. We will cover the intangible items, such as insurance and a business license, and then touch on the types of equipment needed.
To get the best estimate of how much it costs to open a powder coating business, you should look up the costs of our “must-have items” in your place of residence.
Frequently Asked Questions
Can You Start a Powder Coating Business Without Any Experience?
Yes, you can start a powder coating business without any experience. We believe that you will be more successful in the long run if you work as a powder coater for someone else for a couple of years before starting your own business. You can also see if there is a powder coating course or apprenticeship near you.
How Much Does It Cost to Start a Powder Coating Business?
Depending on the location and complexity of the services offered, starting a powder coating business can cost anywhere from $2,000 to over $100,000.
At a price point of $2,000, you would likely be operating out of a garage. On the other hand, an investment of $100,000 plus means multiple powder guns, high-capacity curing ovens, and maybe even a conveyor belt that can streamline the workflow.
How Do You Pick a Target Market for a Powder Coating Business?
Picking the right target market is an important factor to success and should be outlined in the business plan. You should first determine what you want to specialize in – cars, rims, doors, home fixtures, etc.
Once you find your initial specialty, consider the age group that would most likely use your service. You also want to consider the price of your services. For example, if you charge $300 per hour, you should not target low-income neighborhoods in your town.
How Do I Find Customers?
There are a variety of means to find customers. We provided information in our “Getting Your First Customers” section above. You need to market your powder coating services.
This can include door-to-door canvassing, hanging flyers on doors, buying Facebook and Google ads, and writing articles to drive organic traffic to your business’s website. After a year or two, you will get many customers via word of mouth.
What Type of Equipment is Needed for a Powder Coating Business?
The most important pieces of equipment for a powder coating business includes pretreating tools, a powder gun, a curing oven, a spray booth, and a conveyor belt (if it is a high-volume business). Most powder coating entrepreneurs should consider renting an industrial shop or warehouse, as using a home garage will limit the business’s capacity.
Pros and Cons of a Powder Coating Business
After reading our guide, one would imagine that starting a powder coating business is a whole lot of work. If done right, the work can certainly pay off. To make sure you are 100% confident about starting a powder coating business, we can up a list with the pros and cons.
Pros
- Business owners can charge up to $500 per hour in certain markets.
- You can run a shop without the need to hire employees in the beginning.
- High-profit margins if you can control costs and labor.
- It is easy to find customers via word of mouth.
- Initial investment cost can be as low as a couple of thousand dollars.
- You can run a business from your home garage (although not necessarily recommended).
Cons
- It can be difficult to find skilled employees as the business grows.
- Limited to a certain geographic area (hard to offer services online).
- There is a potential for expensive upfront investments to get equipment.
- Most business owners will need to rent commercial space from the beginning.
Is Starting a Powder Coating Business Worth It?
As you can tell from our guide, starting a powder coating is not easy. There are a lot of other ways to make quick money. We believe that a powder coating business is worth it if you have a passion for the trade and do not mind putting in long hours each week (at least at the beginning).
The first year or two might be rough, but if you do a superb job, you will start to see a constant flow of customers. With a lot of hard work and commitment, we are confident that you can run a successful powder coating business.
Ruben has been doing online marketing for the last 4 years. Prior to that, he spent 15 years managing different brick-and-mortar businesses, in the home improvement and logistics industries. Overall, he has 20 years of business experience under his belt. Recently, he added SEO, affiliate marketing, and link building to his business skills.