• Contractingbusiness 3734 Homemagnified
    Contractingbusiness 3734 Homemagnified
    Contractingbusiness 3734 Homemagnified
    Contractingbusiness 3734 Homemagnified
    Contractingbusiness 3734 Homemagnified

    Some Easy HVAC Math: Home Performance Contracting = EBIT

    May 16, 2016
    Correctly implemented HPC translates directly to increased revenues and profits with the same number of leads.

    Every day, HVAC contractors all across the country work hard to increase revenues and
    profitability. In fact, at a recent industry trade show, booth after booth had a proverbial “silver bullet” claiming to help contractors do just that. Home Performance Contracting (HPC) is that “silver bullet”.

    Make no mistake, HPC is not easy, nor is it a quick-fix. HPC takes commitment to regular, on-going training and coaching. It’s not a sometimes or seasonal thing; it requires focus and attention, just like other core elements of your business. HPC is not for wimps!

    Home Performance Contracting takes a mind-shift in typical HVAC contracting from “boxes” to solutions.

    The bottom-line is HPC can turbo boost your bottom-line, like nothing else you do. Done correctly, you can dramatically drop more dollars to the bottom-line without additional leads and very, very minimal overhead. Successful HPC can literally transform your business.

    An average Perfect Attic Package, including air-sealing, insulation, and reflective barrier, runs about $7,500 total at 50% gross margin. Selling just a single attic retrofit a week X 4-weeks/month X 12-months, will increase revenues by $360,000. If your firm is doing $3M annually, this represents a revenue increase of 12% without ANY additional leads. If your pre-tax profit is 10% or $300k, dropping an additional $180,000 of margin to the bottom line drives your profitability up by 60%! Nothing else you can do can have that kind of dramatic affect.

    An average Duct Clean-Up Package runs about $1500 at 50% gross margin. Adding just two packages/week X 4 weeks X 12-months, will increase revenues by $144,000. Based on the same $3 million, that’s about 5% in revenues, plus a 24% bump up in profitability.

    It doesn’t take a rocket scientist to understand the impact potential of Home Performance Contracting to your HVAC business. So, why aren’t all HVAC contractors getting in the game? The same reasons most don’t evolve in any other area of their business; lack of vision, combined with the inability to implement effective change.

    Why aren’t all HVAC contractors getting in the game? The same reasons most don’t evolve in any other area of their business; lack of vision, combined with the inability to implement effective change.

    HPC takes a mind-shift in typical HVAC contracting from “boxes” to solutions. Unfortunately for most contractors, and fortunate for the visionary few, the primary focus in our industry is all equipment-centric, missing out on two-thirds of the opportunities to really help and serve the client, because equipment-only doesn’t solve their real problems or accomplish their true goals. Over 50% of consumers surveyed indicate after making the investment in new HVAC systems say they are:

    • 1. Not saving as much money as expected on utilities.
    • 2. Still experiencing uneven temperatures.
    • 3. Didn’t have their issues/concerns addressed. Over one-third of respondents said their comfort needs were not met. Clearly, something is wrong, and opportunity abounds for the visionary few who implement HPC.

    Correctly implemented HPC translates directly to increased revenues and profits with the same number of leads. This means more money for everyone in the company, from salespeople to ownership. HPC done right also is a key differentiator that helps increase close ratios on existing leads, so you sell more jobs too, because you’re the real expert over the equipment centric competitor. And, larger, more expensive, higher profit projects results in happier customers, along with more and better reviews and surveys, which smart contractors can leverage to sell even more jobs!

    As previously stated, HPC is not for wimps. Here are the Top-5 HPC Traps that prevent maximum
    implementation:
    1. Slow Season Strategy – HPC requires a year-round effort; it’s not just something you do to stay busy in off-season. Losing focus during “busy” peak seasons kills momentum and robs your firm of the potential bottom-line results.
    2. Not Taking The Shot – HPC requires integrating it into your “best” option every time; it’s not something you include only when the client specifically asks for it. Leaving whole-home solutions out of your “best” options is a disservice to the client, denying they them the opportunity to realize their real goals and objectives.
    3. More Is Not Better – HPC requires uniquely simple, packaged solutions that are easy to understand; it’s about solutions not products. More so than even HVAC equipment, HPC solutions must be benefit-focused, rather than feature or task focused.
    4. Keep It Simple – HPC requires easy, straightforward processes in the field to discover cause-and-effect for the client’s goals; extensive testing upfront wastes time and kills sales momentum. Simple, repeatable processes that can be leveraged to educate the client and differentiate your firm are key.
    5. Forget ROI/Payback – HPC is about solutions not economics; complicated financial computations confuse the client, and raise lots of issues that don’t relate to their goals.

    What’s the return on investment for comfort, health, or safety? Economics are the cherry on top of the pile of benefits and lifestyle improvements that HPC delivers.

    Implementing Home Performance Contracting also puts your destiny in your own hands, building your brand instead of the manufacturers. HPC captures more of your clients’ wallet-share, while simultaneously expanding your market-share. Rather than being an “us-too” dealer, you are positioned as the expert, head and shoulders above the competition, so even if they don’t adopt your entire “best” solution, they will likely still chose your firm because of your clear expertise.

    The GOAL of your business is to generate healthy, sustainable profits. Home Performance Contracting is your “silver bullet”. Implementation is the next evolution opportunity for the HVAC industry.