Strategic planning for residential HVAC contracting businesses

Residential HVAC Contractors: Don’t "Just Do It" Without a Stategic and Tactical Plan

Dec. 6, 2013
A startegic plan spells out where you want your business to go. A tactical plan provides the map to get there.

When it comes to HVAC contractors, the old Nike marketing slogan didn’t get it completely right. Certainly, there are times the admonition to “Just Do It” is an important motivator. However, in an industry that has a propensity to “Just Do It” without much forethought or planning, taking a backward step and a breath every so often might be a better course of action. That’s why you need a strategic plan.

Without a plan, your business will stay in a “reactive” mode. It will be driven by the weather, by your market segments, and by the ups and downs of the economy. On the other hand, a business with a plan becomes proactive, allowing ownership to maximize profits, create a place of preferred employment, facilitate an upbeat and organized working environment, create a culture of professionalism and differentiation, and take advantage of those businesses caught in the reactive — and often downward — spiral.

A business actually requires two types of plans: a strategic plan, and a tactical plan. The strategic plan is the over arching vision for what ownership wants his or her business to be when it grows up. Think of your business as a child. Just as you have hopes and dreams for a child, you have hopes and dreams for your business. Just as you want a child to grow up and be strong and independent and successful without constant parental attention and guidance, you want the same for your business. The most successful and valuable businesses are those that stand alone without the owner incessantly and forever working in the business.

The tactical plan is the actions that must be accomplished in order to achieve the strategic plan. The strategic plan is the what. The tactical plan is the how and when.

The Strategic Plan

When creating a strategic plan for you business, follow these eight steps:

1. Give yourself permission to dream about what you want your business to be. Think about the early days when you first bought or started your company. Why did you want your own business? What drove you? What didn’t you like about where you were before — in your life or in your job? What did you want to do differently? We live in a world consumed by a desire for immediate answers, gratification, and actions, and we don’t give ourselves the time or space to dream. And here’s a helpful hint: Disconnect from phones, e-mails and outside interference during your dream session.

2. Determine what you personally want from the business. The answer will be different for each person. It depends on your age, your health, and the number of years that you want to continue working. Some owners want wealth; some want a business to pass on to the next generation; some want to create a legacy that survives them. There is no right or wrong answer, but it’s a question that ownership must answer in order to drive the business to the desired end result.

3. Describe what your business must look like in order to accomplish what you personally want from the business. Draw a picture in your mind of what your business looks like, what the people who work there look like, and what the customers the business serve look like. How large must it be? What position does it fit in its geographic community? Should it expand into other communities? What products and services should it offer?

4. Describe your business’ core values. One way to help describe what you want the company to look like is to consider what the core values of the business are today. If you were to ask current customers to describe why they do business with your company or what they like about your company, what would the answers be? Perhaps you should even consider personally calling some of your customers if you’re not sure of their answers.  Consider how the community is better because your business is in it. Then create a list of the business’ characteristics and its core values as recognized by customers.

5. List the markets your business currently serves. Analyze what percentage of the business volume comes from each type of market segment: new construction, custom home construction, residential replacement, residential service, commercial, etc. Are the margins what you desire from each segment? If not, can the margins be increased? If not, is that a market segment the business should continue to pursue? If the margins are good in a particular segment, ask if the margins could be increased. Then, dream about how to increase that market segment.

6. List the strengths and weaknesses of your business. Determine what’s unique about your business. Is it the marketing, the employees, the technical expertise, the difficult jobs no one else will tackle, the broad offerings of services?  How can the business, through its marketing and training, capitalize on its strengths? What are the business’ weaknesses?  How can the weaknesses be shored up?

7. List the strengths and weaknesses of good competitors. If a competitor is doing something effectively, analyze how that activity might be incorporated into your business. Describe how your business might give the process or activity its unique twist. Also, think about any weaknesses that a competitor is displaying. Does the weakness provide an opportunity to move into a new geography or buy out a competitor? 

8. Visualize what other good retailers do and how their processes might be transferred and implemented in your business. One example: a locally owned retail electronics store was finding it increasingly difficult to compete with the prices of big box stores on flat-screen TVs. So this business decided it couldn’t match price, but it could out-service the big box store by guaranteeing installation within 24 hours. They’re still growing and thriving today based on that strategic decision. Think about a business that you like. Is there some aspect of their service, their treatment of you as a customer, their follow-up, etc. that could be incorporated into your business?

The strategic plan that emerges from all this should be a two- or three-page document that captures your dreams, hopes, and vision for your business. It should be revisited every year and revised when necessary based on how the business has changed or your viewpoint or situation as the owner has changed. The strategic plan describes what you want your business to be when it grows up and what you personally want from it. Once that’s in place, you can move on to the annual tactical plan to define the how and when of getting it done. 

The Tactical Plan

A tactical plan should be written every year after the strategic plan has been reviewed (and revised, if necessary). The tactical plan lists the revenues, costs, and profits that are required to accomplish the strategic plan. An annual budget is a part of the tactical plan. In addition to the budget, the tactical plan describes the actions that the company must take in order to accomplish the budget and move it closer to the strategic vision of what it can be. 

Vicki LaPlant, VLE Enterprises

For example, the tactical plan might list the goal of improving billable hours of service from 50% to 62%. Then it would list action plans such as implementing flat-rate pricing using tablets, training for technicians on how to offer accessories when on service calls, and role-plays during company meetings on how to talk to homeowners about replacing equipment rather than fixing. The tactical plan also lists when each action item will be completed or whether the item is ongoing, and who is responsible for making it happen.

The tactical plan should be no more than 5 to 10 pages and include a marketing calendar and a training calendar. Once the tactical plan is complete, it must be measured against the strategic plan. Does the tactical plan bring the strategic vision closer to reality? The answer will determine if the tactical plan is ready to implement. 

Some business owners create a budget and some complete a tactical plan for the business, but very few actually take the time to dream about what the business can be. So take some time to dream, and let that be the birth of your strategic plan.  

Vicki LaPlant has worked with HVAC contractors for the past 30 years as a trainer and consultant. She is a longtime Contracting editorial advisory board member and the recipient of the 2013 Tom McCart Award, which honors the HVAC industry’s top consultant. She can be reached by e-mail at [email protected], or by phone at 903/786-6262.