Every new year we make resolutions to lose weight, stop smoking, start exercising, etc., but how often do we make resolutions on improving our businesses? Here are a few you can make to boost your business and your profits in 2013. Are there other areas you feel are more important than some of the ones listed? Great! Make a list that makes the most sense for your company. Why twelve? That’s one new goal for each month.
Does this mean you’ll implement all 12 by the end of the year? Highly doubtful, but if you can get a good start on them by year end, and have 3 or 4 of your highest priorities fully implemented, think about how much further ahead you’ll be in one year! So here’s my recommended resolution list:
1. Create a budget based on your goals and capacity — Budgets help quantify goals and measure how you’re doing as the year progresses so you can make adjustments. Forecasts aren’t set in stone. Conditions change, new opportunities come up, as do unforeseen challenges. Without a budget, you’re just hoping to reach desired revenues and make a profit. Why budget for capacity? It makes your budget realistic, based on the people, trucks and other resources already in place.
2. Raise hourly rates — I’ve worked with hundreds of contractors who knew they weren’t charging enough, but were afraid to raise service rates. Everyone who did, noticed no decrease in business or lost customers. Just the opposite — their revenues went up and so did their profits!
3. Start flat rate service pricing — Similar to the previous resolution, every contractor I know who switched to flat rate found it to be one of the best things they ever did. In fact, their customers preferred the certainty of it, and ones who adopted a simple, visually appealing flat rate system, found their techs adapted quickly and preferred using it with customers.
4. 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 get many benefits: First, you know the system condition before you work on it and can identify pre-existing conditions before you touch anything. Second, this information helps your diagnostic process determine what’s wrong and how to fix it. Third, it’s a great lead generator for system renovation and replacement work.
5. Implement menu pricing for replacement and renovation sales — If you haven’t already done this, start soon. 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 helps to build trust and win the job.
6. Test for carbon monoxide (CO) on all service calls — Many existing homes have potential for CO poisoning. By implementing a solid protocol to test for CO and test the installed combustion equipment/appliances for potential CO production, you help keep customers safer and healthier. If you’re not already performing this service, seek out training and certification that will put you on the right track.
7. Sell low-level CO monitors — This goes hand-in-hand with resolution six. Even if you test for CO and find none, there’s always potential for future equipment malfunction, blocked flues, change in pressures, etc. A good low-level monitor (not to be confused with UL 2034 CO detectors), monitors the air 24/7 and alarms at 15 ppm, so your customer is alerted at the earliest signs of CO. With the right training, you can be a first responder with the knowledge to locate the cause and fix it before a tragedy occurs.
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. They’re 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 soon. If you sell them now, how is your ratio to your service and replacement business volume?
9. Become a student of home and HVAC performance — In today’s HVAC business, understanding the interactions between the home and HVAC system is important. This doesn’t mean you have to become a weatherization contractor who seals and insulates homes, although you can add this service if you see it as a potential add-on business. We can’t ignore the effects of the house on the HVAC system. 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 critical. 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 are needed for each stage of the weather cycles in your climate. If this isn’t your forte, seek help — it will pay off. And don’t forget to include social media in your marketing plan!
11. Aim for double digit net profits — Are your pricing, costs and overhead set for double-digit net profit? The budgeting process in the first resolution should help determine this. The keys to double-digit net are reducing unapplied time and pricing services so your gross profits are at least 10% more than overhead. How do you accomplish this? By doing all the things outlined in the previous 10 resolutions. By providing products and services that differentiate you from the competition and level your business throughout the year, 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 do this is to become very productive and profitable. 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 have 2 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 2013 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), (www.nationalcomfortinstitute.com), 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 ContractingTM go to WhyPBC.com or call NCI at 800/633-7058.