At this year’s Comfortech event in Philadelphia, during the Industry Leadership Symposium, a contractor stood and announced, “I won’t recommend getting into the HVAC business to my sons,” momentarily leaving the CEO panelists speechless.
When I talked with him after the symposium, I learned that the contractor had just attended a Comfortech seminar on the Affordable Health Care Act, also known as Obamacare. He was looking at the increasing regulatory environment and anti-business sentiment that seems pervasive today and wanted to throw up his hands. I don’t think it was HVAC as much as small business that worried him.
He’s right to be concerned. I can never remember a time when profit was used like a slur. At a time when French entrepreneurs are fleeing their own country, the U.S. is trying to become more like France. It doesn’t make sense to me.
Yet, short of recommending your children emigrate to a more business-friendly country (there are nine of them, according to Forbes magazine), why recommend anything other than HVAC?
Look at the advantages that come with running an HVAC company:
Service, repairs, and installations cannot be offshored.
Most manufacturing is still done in the U.S., though some has been sent overseas. More may be sent offshore in the future. Regardless, service jobs will stay here. While a compressor may come from Brazil or China, an American will replace it. A condensing unit may be manufactured south of the border, but an American will size it, sell it, and install it.
Regulations benefit contractors.
Regulations may be bad for the consumer, but they benefit the contractor. Let’s face it — there’s no economic justification for a consumer to buy 13 SEER in place of 10 SEER for much of the country. Yet, thanks to the heavy hand of government, contractors can only sell the more expensive unit. As a bonus, the larger evaporators often require replacing the furnace with a lower-height unit. If you can maintain your margins on a bigger sale, a bigger pool of money falls to the bottom line.
The necessity of replacing R-22 with R-410a may be scientifically in doubt (see “Bidding Adieu to R-22” in Contracting Business, July 2009), but it was a political landslide. Though questionable for the environment and consumer, the R-410a change-over nearly ended the practice of condensing unit swap-outs for system replacements — it would have completely ended it except for the dry charge loophole.
HVAC is a necessity.
No matter what costs get foisted onto the industry, we pass them along to the customer. Our customers must pay or live without heating or cooling, which is impossible. People CAN eat out less often. They CAN drive less. They CAN take fewer vacations, give up their season tickets, cut back at Christmas, and economize in a thousand ways, but they cannot live without heating and air conditioning. We have guaranteed demand.
Even when people put off replacements and try to squeeze more life out of old equipment, they can only delay the inevitable. Sooner or later, every furnace, air conditioner, or heat pump will be replaced. In the meantime, contractors collect on repairs and maintenance. If people skip maintenance, the inevitable just happens sooner.
Technology is moving in our direction.
The biggest problem most contractors face is finding qualified, personable technicians and installers. The problem isn’t a shortage of people, it’s a shortage of training for people. Advances in distance learning are beginning to make it possible for more people to get training at their convenience for less investment.
Your business is your best investment.
Building a business is hard work and fraught with risk. Yet, risking on oneself is managed risk. It’s risk you can influence. Try influencing a mutual fund. Investing in a business you own is the best investment you can make.
Your business is freedom.
Once you build a successful business, establish clearly written procedures to govern every aspect of that business, hire a strong team, incentivize them well, and make your presence unnecessary. Talk about freedom! Your HVAC business can become a money machine, spitting out coin while you go shopping every day, manage the company from a beach or a boat, travel, do whatever you want, as long as you can keep an eye on the numbers and key performance indicators.
I WOULD absolutely recommend the HVAC business to my children. Wouldn’t you?
Matt Michel is CEO of the Service Roundtable (ServiceRoundtable.com). The Service Roundtable is an organization founded to help contractors improve their sales, marketing, operations, and profitability. Call toll free: 877/262-3341 for more information about how to join.