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- EXTRA EDITION
In my first article in this series, I reviewed the basic components of home performance contracting (HPC); the reasons why I believe that it belongs in the HVACR industry; and the benefits that it provides to both customers and contractors. In the second article, I discussed the skills and tools necessary to get started in HPC and began to overview my perceptions of the advantages gained by joining a proven, well-established franchise or membership organization. In this, the final article of the series, I want to examine those criteria that require critical investigation in the selection of an HPC partner.
Culture and Personality
In my opinion, the most important factor in selecting an HPC partner is sharing mutual ethics, principles, and beliefs in terms of levels of customer service, employee training and involvement, profitability, and transferrable value.
It’s also critical that you select a franchise or membership that you enjoy working with. Keep in mind that you will be spending a great deal of time with these people in order to absorb the knowledge and implement the strategies and tactics that they have developed. It’s important that you not only get along, but also enjoy each other’s company.
This is true not only of the franchise partner but also of the other contractors in the group. Are they the type of folks that you want to associate with? Are they the type of companies that you want to emulate? Remember that you are known by the company that you keep.
Before deciding on a HPC partner, you should consider the history, longevity, and financial stability of each organization. Have they been around long enough to have made — and solved — all of the mistakes that you want to avoid? Are they well-established and financially successful and stable? Finally, can they point to a consistently positive track record of helping contractors quickly achieve success in profitable HPC?
As I mentioned in my last article, there are certain business system requirements that must be met if you are to succeed in home performance contracting. Therefore, I recommend that you question each potential partner as to whether they provide a training and development process that addresses each element of the business system.
In looking at HPC, that process closely resembles HVAC. It consists of call management; home energy assessment; product and service sales; order processing; production; post-job verification. Each of these elements differs slightly to very significantly from what we know are the standards of practice in HVACR. Understanding the commonalities and departures is critical.
Where there is a government or utility program involved, make sure that the system provided by your partner prepares you for the avalanche of accompanying paperwork and challenges.
Since HPC will be an entirely new venture for most contractors, it is important to develop a launch plan. Such a plan will detail chronologically all of the tasks that must be accomplished, all the training to be completed, and who is responsible for each of these line items. A good HPC partner will assist you in the development of this plan and work with you every step of the way in order to ensure full and timely completion.
A good HPC partner will provide training in all of the areas necessary to make the HVAC contractor a proficient HPC contractor. This training will not only be an integral part of the launch plan, but also an ongoing part of the partnership. Training should be provided for everyone from office staff to service technicians to management. Areas of training should include safety, sales, operations, installation /production, and marketing.
Some of the turnkey HPC organizations offer up to 40 different self-developed training programs. In addition, some have several hundred online and audio courses that may be taken at a pace comfortable to the student. Finally, some have pre-purchased access to executive education offered by well-respected management training organizations such as The Institute for Management Studies (IMS). These organizations offer leading-edge executive training that would be nearly impossible for the typical HVAC contractor to access on his own. For example, IMS has a requirement of a minimum of $500 million in revenues for membership in its organization.
Best Practices + Procedures
In my opinion, any franchise or membership organization that does not offer you a well-documented and written operating manual (or set of manuals) should not even be considered as an HPC partner. After all, that’s what you are buying — a proven, successful method of going to the market that will make you a better and more profitable contractor in the shortest possible time period. That means that you have to rely on the expertise and experiences (both good and bad) of your HPC partner. Hence, you need a comprehensive operations manual.
The manual(s) should include a full set of procedures along with corresponding reports and documents. These procedures need to support the training mentioned above. They should be easily accessible and understandable and should contain as many templates as possible to make the entire HPC process accurate and professional.
Since the labor component in HPC jobs is usually higher than in HVACR installations, a different pricing structure is required. The partner you choose should offer you pricing templates and estimating forms and procedures that will help ensure that you are profitable in HPC.
All successful franchise and membership organizations realize that their offering is only as good as the ongoing support that they provide. Therefore, you should pay close attention to the type and levels of support provided by each of your partnering candidates.
Do they conduct regularly scheduled visits to your facility to upgrade your training, keep you informed on the latest technologies and, most importantly, help you achieve your pre-planned sales goals? Do they offer online and telephone support to all your people, both sales and production, on a real-time basis?
Bear in mind that you are going to be paying some sort of ongoing royalty or membership fee, so you need to satisfy yourself that you will be receiving support that more than justifies the fees you pay.
Just as you will expect a profit on your franchise or membership investment, any company that provides the levels of training, services and support that are detailed in this article must charge enough to cover the costs involved and make a fair profit on its investment. This is also true of the companies that only make available a portion of these services. So, in my mind, the amount of your investment should be directly related to the amount of services that you receive. A company that only has the ability to deliver half of the complete turnkey package is probably worth about half the fees of the full-service organizations. I also believe that you should pay fees on only those revenues directly related to HPC and not on your existing HVACR business. After all, you have been a successful HVACR contractor for years. Your HPC partner does not deserve to share in a revenue stream that it had no part in creating. Finally, other factors to consider include the availability of financing for your initial investment, including tools and equipment as well as the availability of third-party financing for your customers.
Regardless of whom you choose as a partner, all of the fees are paid by your customer because they are built into the pricing of the project. In return, as a result of your partnership, the customer should receive a more professional analysis, a more complete presentation, and a higher quality installation and test-out than he would get from another contractor.
Choosing an HPC partner is a lot like choosing a mate. It’s easy to fall for a pretty face that may have little substance behind it. It’s hard to undo the mess once the marriage has occurred. So look for an HPC partner that has the strength and depth and character mentioned here. Then, it doesn’t hurt to look for a pretty face, on top of it all. Do that and you will have the ingredients for a happy union that will last a lifetime.
Publication date: 12/12/2011