• Four Unique Challenges and Opportunities for 2012

    Dec. 1, 2011
    As you wrap up 2011 and look towards 2012, it's appropriate to pause and think about not only what challenges lie ahead, but also the opportunities these challenges can bring.

    As you wrap up 2011 and look towards 2012, it's appropriate to pause and think about not only what challenges lie ahead, but also the opportunities these challenges can bring.

    I don't need to tell you how much the HVAC contracting industry is changing. The signs are all around you. You shouldn’t ignore these changes. Your company's survival may depend on it. While there are the usual challenges in leading and managing a contracting business, and many opportunities for niche markets, there are several opportunities that fall outside the "usual." Let’s look at some of them.

    1. Making the transition to whole-house performance. If you haven't begun this process already, I recommend you get going as quickly as possible. The industry's leading contractors are forging this path right now. There's no time to "wait and see," or jump in later when it's more mainstream or even mandatory. There's a learning curve to this — you must acquire a different set of skills and knowledge to understand the interactions between the HVAC system and the house.

    In addition, most of you will need to learn a lot more about HVAC system performance, well beyond equipment installation and service, as well as delivered performance of the entire system. There's much more to this than sealing ducts. You will need specialized knowledge and measurement tools to crack this nut. It requires testing in before you do the job, and testing out to prove your solution worked.

    2. Taking advantage of new energy programs. For example, there is a new bilateral tax credit bill being introduced for passage as this issue is being printed. The proposed 25E "Cut Energy Bills at Home Act" was introduced to the Senate for passage in November (http://1.usa.gov/sVXTwn). The bill would provide a 30% tax credit up to $5,000 for home performance work — it's not a sure thing, but there's a good chance it will pass this month and be effective December 31, 2011. If it passes, the requirements on contractors will be stiffer and will require you to invest in additional training and certifications.

    Our industry needs to be much more involved and help steer the definition of what constitutes "Home Performance," since the HVAC system is by far the largest user of energy in homes. It's equally important that as an industry, down to each individual contractor, we prove that we should be the leaders in this effort. Rest assured that alongside the federal credits, you will likely be able to offer utility incentives as well as state, and possibly local incentives to your customers to get their homes and HVAC systems working efficiently.

    3. Navigating local, regional, and state energy programs. This goes hand-in-hand with opportunity #2 above. Each program will have its own requirements, but there are some common denominators. I believe the combination of home and HVAC system performance will be the most common thread. Now is the time to start researching what is going on in your marketplace with regards to these programs and, more importantly, learn about what's on the horizon.

    Talk to your utilities, research your state's energy programs, do your homework, and you’ll be several steps ahead of the game. The good news is these programs generally take some time to roll out.

    4. Money is tight — especially your customers' money. We're still trying to come out of a recession — people are more careful than ever how they spend their discretionary dollars. There are two key factors you'll need to focus on if you want to win them over: You must differentiate your company to show more value than your competition, and you must be able to offer creative financing options, especially for people with less than stellar credit.

    This is also where opportunity #3 comes into play. Some of the state and utility programs are beginning to make low-interest financing tied to energy improvements available. Because the energy improvements are tied to a home, the utilities often will allow people to finance beyond the usual income and equity ratios in expectation of funds being available from lowered utility bills. In this tight market, getting someone financed can often make the difference between selling a job or losing it to a competitor.

    In this environment, execution is more critical than ever. Plan your actions, then take action on your plan. One word of advice: Get your key people involved, and keep them involved in the changes you'll need to make to overcome the challenges and capitalize on the opportunities.

    Dominick Guarino is Chairman & CEO of National Comfort Institute (NCI), (www.nationalcomfortinstitute.com), a national training and membership organization focused on helping contractors grow and become more profitable. Email him at [email protected] or call NCI at 800/633-7058.