• Jeff Dobbins, "New Year's Eve in Times Square," December 2011
    New Year's Eve in Times Square. From Jeff Dobbins' blog, 'Walks of New York' website. Originally posted in December 2011

    HVACR Contractors: 12 Resolutions for a Stellar 2014

    Dec. 2, 2013
    Dominick Guarino, CEO, National Comfort Institute

    It’s that time of year when we start making resolutions and promises to lose weight, eat better, stop procrastinating, start exercising, etc. All admirable goals, but have you made any resolutions to help improve your business?

    Last year I shared 12 resolutions for 2013, knowing that it would be near impossible to accomplish all of them. So this year I’m repeating some of the same ones — some with a different twist, and some new ones.

    Remember, these are just a starting point. Maybe you like a few of them but want to add some not mentioned. Terrific!  Create a list that makes the most sense for you. Why twelve? That’s one new goal for each month. Be sure to save your list for next December to see how many you can check off!

    — If you already have a detailed budget and have mechanisms in place to compare actuals at least once a month, you can skip this one. If not, it’s time to dig in and create a budget for 2014. Remember, forecasts are not set in stone. Conditions change, new opportunities come up, as do unforeseen challenges. But without a budget, you’re relying on hope for desired revenues and profits. Why budget for capacity? Because it makes your budget realistic: it’s based on people, trucks and other resources already in place.

    2. Install ‘goal boards’ in your shop — If you don’t already have them up, be sure to create and install goal boards in a central area of your building where all employees can see them. Many of our members use white boards with columns and rows laid out in thin black tape. Some companies have created electronic ones with flat screen monitors tied to a computer showing Excel spreadsheets 24/7.

    Goal boards can be used to track virtually any key performance indicator that can be measured in your company. Be sure to show both company-wide goals and individual goals. Sometimes less is more when posting goals and progress. Too much detail can be distracting.

    Some important goals to track are sales by product category and salesperson, service sales, and service agreements sales by service tech, renovation and replacement leads through service. You can even track and display leads from various marketing campaigns, and so forth.

    3. Raise your hourly rates — This is actually easier than it sounds. The National Comfort Institute (NCI) has worked with thousands of contractors who knew they weren’t charging enough, but were afraid to raise their service rates. Everyone who did, noticed no decrease in business. Just the opposite — their revenues went up and so did their profits!

    4. Institute flat rate service pricing — Similar to the previous resolution, virtually every contractor I know who switched to flat rate found it was one of the best things they ever did. In fact, most customers preferred the certainty of it, and ones who adopted a simple system found their technicians adapted quickly and preferred using it with customers.

    5. Test static pressures and system temperatures on every service call — When you verify these key indicators of system performance, both before and after you perform service or maintenance, you’re on your way to measuring delivered performance. Here are three reasons to performing these simple tests: First, you know the condition of the system before you work on it, so you can identify pre-existing conditions before you touch anything. Second, this information helps your diagnostic process to determine what’s wrong and how to fix it. Third, it’s a great lead generator for system renovation and replacement work.

    6. Implement menu pricing for replacement and renovation sales — If you haven’t already done this, start as soon as possible. Similar to flat rate service pricing, a menu pricing book shows professionalism and reduces concerns about being overcharged or taken advantage of. A well designed pricing book that clearly shows the options you recommend goes a long way towards building trust and getting the job.

    7. Test for carbon monoxide (CO) on every service call — Many existing homes have potential for CO poisoning. By implementing a solid protocol to test the home for CO and test the installed combustion equipment and appliances for potential CO production, you can help keep customers safer and healthier. If you’re not already performing this valuable service, seek out training and certification that will put you on the right track. Oh and by the way, by selling low level CO monitors to every customer, you help assure their safety even when you’re not there to test.

    8. Sell more service agreements — Service agreements are the life blood of a successful HVAC business. They help level your maintenance work through slow times, and generate service, replacement and renovation work year round.

    Service Agreements are also an important part of your company’s value when it’s time to sell. A company with thousands of service agreements is worth many times more than one without them. If you’re not selling service agreements, start as soon as possible. If you sell agreements right now, how is the ratio to your service and replacement business volume?

    9. Get busy implementing home and HVAC performance services — Home performance is becoming more than a buzzword, it’s a business model. In today’s HVAC business, understanding the interactions between the home and HVAC system is an important skill. This doesn’t mean you must become a weatherization contractor who seals and insulates homes — although you can add this valuable service if you see it as a potential add-on business.

    The home is the load of the HVAC system, and it’s why there is a system there in the first place. We cannot continue to ignore the effects of the house on the HVAC system. The two are inextricably intertwined.

    From a technical standpoint, the inside of a home is an extension of the duct system, so understanding how the entire system — home and HVAC — works together is very critical. And no one can master both better than you, the HVAC contractor. If you haven’t already, seek out the knowledge and training to do this right. It will pay big dividends.

    10. Create a year-round marketing plan — Do you have a marketing plan, or do you just set a reminder to “do something” before your slow season? A good marketing plan includes understanding your target demographic and geographic market.

    It’s equally important to map out your business’ seasonality over the course of the year and strategize exactly which marketing messages, vehicles, and timing you need for each stage of the weather cycles for your climate. If this isn’t your forte, seek help – it will pay off. And don’t forget social media!

    11. Aim for double-digit net profits — Are your pricing, costs, and overhead set for double-digit net profit? The budgeting process in the Resolution one above should help determine this. The keys to double-digit net are reducing unapplied time and pricing your services so your gross profits are at least 10% more than your overhead. How do you accomplish this? By doing all of the things outlined in the previous ten resolutions. By providing products and services that differentiate your company from the competition and level your business year-round, you can achieve the profits you deserve and need to maintain and grow a healthy business.

    12. Take good care of your employees The best way to achieve this is to become very productive and profitable in every aspect of your business. Look for ways to share your success with spiffs and bonuses, even small gestures that recognize your employees’ contributions to your success.

    There are also non-financial ways to take good care of them. Include everyone in your plans and dreams with company meetings to share your vision. This works well if you only have two employees or 200. Good employees want to know what you’re thinking, where you’re taking the company, and what their future with you might look like.

    Your people are your greatest asset. Be sure to let them know how important they are to the company’s success, and the good ones will help you achieve your goals in 2014 and beyond.

    Need help with any of the above Resolutions? Email me, and I’ll do my best to point you in the right direction. Have a happy and prosperous New Year!

    Dominick Guarino is CEO of National Comfort Institute (NCI), the nation’s premier Performance-BasedTM training, certification, and membership organization, focused on helping contractors grow and become more profitable. His email is [email protected]. For more info on performance-based contracting, go to WhyPBC.com or call NCI at 800/633-7058.