Business Services

First Quarter Profit Ensures Future Success

Earning a profit in the first quarter is a challenge for many, but those who do can expect a very profitable year. The first quarter is generally the slowest time of the year for contractors. Warming weather means fewer service calls and fewer opportunities for system replacements. Many contractors resign themselves to losing money during the first quarter, hoping to catch up during the rest of the year. However, those who do profit in the first quarter are not burdened with making up lost ground and are well on their way to a successful year.

Jim Hughes IBProfiting in the first quarter means you have to generate more business, which is no small feat during the slowest time of the year. It will require thinking outside the box in some cases, and in others, getting back to the things we should have always done. The following are some recommendations that will help you get started.

Reviewing Invoices

Reviewing invoices should be done on a regular basis and it’s especially important during the first quarter. Follow up on any estimates technicians have left during the last six months. Now that the holidays have passed, customers may be willing to have the work done if given the opportunity. When calling the customer say something like: “While closing past calls we found an estimate for … Have you had this work done or is it still something you are considering?”

Technicians are not always as thorough as they could be, especially going from a busy season to a slower one. This leads to missed opportunities that could generate more business. Look for calls where the repair might indicate another repair was needed. For example, if your technician cleaned a blower wheel but did not mention the evaporator coil, it is very likely that the evaporator coil needs to be cleaned as well. Also, look for invoices where a component was replaced, but the cause of the failure was not determined. This is a telltale sign that there are other repairs that may need to be done. Offer to re-inspect the customer’s system at no charge to determine if the other repair is needed. When calling, you should say something similar to: “During a technical review of your call we determined that there may be an item we overlooked. We would like to re-inspect your system at no charge to determine if there is another issue.”

Annual Tune-Ups

If you perform maintenance agreements, you should recognize that revenue when the work is performed. Many companies perform this work in the second, third, and fourth quarters. Performing it in the first quarter offers two advantages: It allows you to recognize that revenue from the maintenance agreement in the first quarter; and it frees your technicians’ schedules during the busier times, allowing them to address new customers.

Since maintenance agreements are pre-paid, the customer is not being asked for additional money. The challenge is having them agree to the tune-ups during a different time of the year. Take the time to answer your customer’s questions and address their concerns. Explain that the heating portion of their system does not operate during the cooling season. Performing the tune-up at the end of the heating season means their system will be ready for the start of the next heating season.

Depending on your location, cooling tune-ups can also be done in the first quarter. While many technicians cringe at the thought of a cooling tune-up in cold weather, by calculating airflow and using a psychrometric chart, you can determine if the system is operating properly. This method will not allow you to adjust the refrigerant charge, but very few systems on a maintenance agreement should need the charge adjusted. Every tune-up that you can schedule in the first quarter means that much more revenue is recognized.

The Power of Marketing

A portion of most contractors’ customer base consists of businesses with employees who need HVAC services. You can help your business’s customers provide an added benefit to their employees and gain dozens of new customers. Create a coupon for a free safety inspection, tune-up, air quality analysis, etc. Be sure the coupon has an expiration date so the work can be scheduled during the first quarter. Approach the owner/manager of the business and say something like: “As a thank you for your business, we would like to offer your employees a free safety inspection for their home.”

Then ask how many employees they have and supply them with enough coupons for each employee, plus one for the manager.

Send a Letter

Sending a direct appeal to your customer base during slow times is nothing new and can be very effective when done properly. Word the letter as if you were speaking directly to your customer. Explain that the first quarter is the slowest time of the year, and you are willing to offer some fantastic savings just to help keep your people busy. Include phrases like: “This is our slowest time of the year and as the owner I need to find ways to keep our people working;” “We have set aside (X) systems that we will install at cost just to keep our people working;” and “There is no way I can afford to install more than these (X) systems at cost and once they are gone prices will have to return to normal.”

Keep in mind that selling systems at cost includes your cost of doing business. Obviously selling systems at cost will not build a profitable first quarter, but the accessories and upgrades that can be sold with the system provide very profitable opportunities.

Quality Over Quantity

With the cold and flu season extending well into the first quarter, IAQ products are just as important now as any other time of the year. Consider offering a free air-quality analysis. There are a number of reasonably priced air-quality testers that help identify everything from the particulate count and volatile organic compounds (VOCs), to chemicals and relative humidity. Once the air quality is known it is much easier to present your customer with options that lead to sales.

Design a marketing piece to grab the homeowner’s attention. Keep it short enough so the average person can read the entire piece in 15-30 seconds. Use bold titles like: “The Air in Your Home is 100 Times More Polluted Than;” “What Are You Really Breathing;” and “Second-Hand Air, What’s in your Lungs?”

In the body of your flier, cite Environmental Protection Agency (EPA) and Center for Disease Control (CDC) statistics on indoor air pollution, and then offer to perform a free air-quality analysis. End the flier by asking the homeowner to take action by saying something like: “Call today and say: I want to know what I’m breathing.”

While no single strategy will insure a profitable first quarter, waiting for the phone to ring will ensure that you will be spending time making up for lost profits the rest of the year. Be proactive and know that a profitable first quarter can lead to a very good year.

Publication date: 2/25/2013

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