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- EXTRA EDITION
"We're here for business," assured member Bob Gersden, owner of Switzerland Air - Air Conditioning & Heating, of Cincinnati. "This is not a vacation. We're here for business."
Business, business, and still more business.
Terry Nicholson, John Young, Jim Abrams, and the powers that be at AirTime 500 did not allow the 400-plus attending members to drift away from the business at hand at its gathering, held August 18-22. And, the business at hand was to make sure attendees had enough tools, services, and information, all with the intent to help members grow their respective firms, remain profitable, and stay ahead of the pack.
"That's our job," said Nicholson, president of Contractor Services. "We want our contractors to be the best. They are the best and we intend to provide them with enough tools and information to remain the best."
Club MembershipsAt the opening session on August 21, Nicholson kicked off Member Day with an eye-opening look at the future. He asked some candid questions in an effort to look at what might be in store for contractors in the HVACR industry.
"The key to your future? You have to have a profit," he said. "No matter what reason you started your business, in order to keep it going, you have to have a profit. You have to have a profit if you are going to stay in this business."
Nicholson noted that competition is coming from all sides, including from manufacturers and big box retailers, such as Home Depot and Sears.
"Could they be getting into the HVAC business today not with the immediate purpose to make a profit? Maybe they want you. Maybe they want you gone. Maybe they just want what you know today. Is that possible? Is it possible they want your labor pool? Is it possible they want your clients as well?
"These are some of the questions we all have to deal with," said Nicholson.
In today's market, he noted that manufacturers are fighting for sales, too.
"Who controls their sales?" he asked the crowded room of contractors. "You do. You ultimately do. You sell those units for them. Well, is it possible that manufacturers may attempt to drive sales themselves so they don't have to depend upon independent roughriders like you anymore? Is it possible? Some say it is happening already."
Nicholson said if manufacturers continue to partner with the large retailers, "Your future lies in service business only. That's it. It's happened to plumbers. For all practical purposes, if you are a residential services plumber, the only way you can make money is by service and labor."
He warned that, in the future, air conditioning and heating may just become an appliance commodity, similar to the VCRs and microwaves of today.
"How many microwave repairmen do you see in the world today?" he asked, before answering his own question. "Zero. Why? It's cheaper to get a new one than to get it repaired. Is it possible that this could happen in our business?"
Nicholson noted competition is also coming from utility companies and home warranty companies.
"Which brings us to this point: The only constant in this world is change," he said. "That is the only fact we know that will happen. We do know the HVAC side has changed over the years and it will continue to change. We have to be ready for these changes."
Over the years, this industry has gone through cycles, he explained. At one time, the way to make a profit was via the new construction market. Add-on business soon followed. He said in the 1980s quality contractors aligned with service agreements, and then the smart ones dived into the replacement market.
"But the replacement cycle is near its end," he said. "We have to be prepared for the future."
In his estimation, the next big opportunity for contractors is the "client-partner opportunity cycle." In this scenario, the contractor will have to lock in the customer. The proprietary program AirTime 500 offers is Vista Shield, which includes "club memberships." A club membership is, in essence, an extension of the service agreement. Here, however, a member can sign up a client via credit card, and it takes action by the customer to stop or cancel the agreement.
"In the future, you have to have clients. Clients give you the opportunity for a service call. A service call will give you the opportunity to make revenue. Revenue will give you the opportunity to keep your doors open," said Nicholson. "If you lose the very first criteria, which is clients, your service calls go away, your revenue goes away, and you will not be able to keep your doors open."
Importance Of BrandingIn a session that afternoon, Contractors Success co-founder John Young preached the importance of branding to a roomful of new members only. Young defined branding as "implanting an associated memory attached to a recall cue." In a contractor's world, he noted a company's name, logo, and strategy all figure into the branding picture.
"There is an identity component, an auditory component, and an embedded component," he said. "You must figure out how to capture attention, how to keep attention, and then how to turn that and create a value."
To illustrate the importance of a "recall cue," he asked members to fill in the following: "The tortoise and the ... what?" The answer was unanimous: "hare."
"How long did you have to sit down and ponder that?" he asked. "That was pretty fast. All of you gave the same answer. That's what we call a 'recall cue,' as it ties into built-in associations you already have in them. It's so instant. You didn't have to work at it. You didn't have to think about it. You didn't have to do anything. It was there."
According to Young, to reach that level, the message you want to use has to pass through Broca's area, a region in the left frontal lobe of the brain associated with speech that controls movements of the tongue, lips, and vocal cords. This area of the brain, he explained, has to be stimulated in order for associated memories to exist.
"For instance, it would be crazy to use a swastika as your company's logo," he said. "Sure, people would recognize the logo, but the associations that symbol has with it ... well, I don't really think you want that. That would be the wrong kind of branding."
To point out the importance of a company's name, Young identified some poorly conceived real-life examples, including Adequate Roofing, Starving Plumbing, and Moody Plumbing. He also questioned some manufacturers for their choice of brand names, as well as names of some manufacturers. To prove the power of a name, he noted "Houdini" as an excellent choice for a locksmith company.
"Already you get a picture," he said. "That's important. That's the power of a word and the associations that go with it."
Carl DiBene, director of the organization's New Millennium Academy, then took the stage to introduce the newest members to AirTime's multiple training offerings. He encouraged attendees to gain the right attitude and knowledge, plus practice properly in order to gain the correct skills.
Rebecca Cassel, vice president of operations-Contractors Services, closed out the day's session with some pointers regarding daily management essentials. She urged attendees to "Manage what's in your control: your time, your people's time, and your money."
"Everything revolves around an incoming service call or replacement lead," she said. "Call generating has to be a focus of everyone in your business. You have to be proactive to get the best results."
The Future Of ContractingAt the opening session on the last day of scheduled meetings, Jim Abrams, president of VenVest Inc. (AirTime 500's parent company) and co-founder of Contractors Success, told members, "It's a great time to be a contractor."
"You are going to see all sorts of opportunities open to you in the next couple of years that have not been opened to others," he told the attentive crowd. "I am not saying it is going to be a cakewalk. We have great challenges. We have manufacturers that are in direct competition with us. We have large retailers that are very sincere about being in this industry. ... But, I believe, if you put into place the tools available to this group, you can definitely succeed."
In his estimation, there are five possibilities for the future retail contractor. Some, he noted, will go out of business, unfortunately. The second classification he termed "alone" - i.e., small in size and dependent on price and quality to remain in business.
"There will always be one or two contractors on a nationwide basis - exceptional people - that will figure out how to do this business all on their own," he said. "But, the vast majority of those who go it alone are going to be relatively small companies - less than five people. They are going to be totally dependent upon price and they will have to depend upon the quality of their work."
Abrams thought the better choices for the future would be to be an "aligned" (or "mobbed up") contractor and/or a "branded" contractor.
In the former, he described contractors that are independent, "but have access to state-of-the-art systems and procedures."
"You want rebates. You want proprietary equipment lines. You want to communicate with other like-minded citizens of this world," he said. "You want to be a part of an organization like AirTime that will help you succeed. ... There is strength in numbers. You see what's coming and you've ganged up with like-minded people for protection, survival, and success. Together, you get the best state-of-the-art 'weapons' to compete."
"Branded" contractors, he said, are also independent in nature, but "seek to be a ground floor stakeholder in the future." He noted those entering One Hour Air Conditioning(r), a national franchise organization that is funded by VenVest Inc., "believe brand is the next great frontier."
"We are absolutely convinced that he who gets there first with a brand name that means something in the HVAC retail business, wins," said Abrams. "By 'wins,' I mean that contractors can attract a large amount of customers in a different fashion than has been done in the past."
The last category of future contractors, he labeled, are "free."
"These are the wealthy ones, free to do what you want and when you want to do it," he said. "Good luck if you are on that road."
In order to be successful in the future, Abrams said contractors will have to have "operational excellence" ("And I mean have your business in order," he said.), a strong handle on direct marketing, and must be on the lookout for acquisitions.
"This is the right time to be in this industry," he said. "Anytime an industry is in turmoil, it creates a phenomenal opportunity to step in and take advantage of it. But you have to know what is going on, what the trends are, what these major forces are that are taking place. For five years I have been warning everybody about Home Depot. Look out for Lowe's. Look out for Sears. Don't continue to buy from these guys.
"Remember, all I want is a competitive edge to win. That's what I am looking for. That's what you should be looking for."
As members of AirTime 500, Abrams thought those in the room had a head start on the future. He said the association will continue to add proprietary programs designed to help members remain in the forefront. Introduced before the expo closed included special financing available through Wells Fargo; Blue Chip Recruiting, a program designed to improve hiring techniques and reduce turnover, and gain blue chip prospects; and Criterion, a state-of-the-art, interactive computer-generated program designed to test the knowledge of applicants in all areas of employment.
Sidebar: Callahan/Roach & Garofalo Added To The VenVest TeamST. LOUIS - At the AirTime 500 Expo, VenVest president Jim Abrams announced that well-known industry trainers and consultants Mike Callahan and Al Roach have joined the executive staff at the company.
Roach is now president of operations and Callahan is president of retail operations for VenVest, AirTime 500's parent company.
Additionally, Abrams announced that Callahan/Roach & Garofalo, one of the industry's training and consulting firms for small contracting businesses, is now part of the VenVest family. The firm includes John Garofalo.
"This is a great opportunity for both Al and I," said Callahan. "Not only is VenVest a known leader in the plumbing and HVAC industries, they are furthering their leadership position by offering contractors even more opportunities through its revolutionary Ben Franklin Plumbing and One Hour Air Conditioning franchises. VenVest is really going somewhere, and we are extremely excited and happy to now be part of it."
Roach, who will focus on franchising and retail company operations, joins VenVest with more than 30 years of experience as an attorney, entrepreneur, consultant, and executive manager. Formerly the president of Service America, a national HVAC service franchise, he joined forces with Callahan in 1989 to create the firm Callahan/Roach.
Merging his company with Group Maintenance America Corporation (GMAC) in 1997, Roach led the growth of the commercial/industrial group from eight firms and $150 million in annual revenue to 37 firms and $900 million in annual revenue within three years.
Callahan, who will oversee acquisition and operations of VenVest-owned contracting companies, joins the team with more than 30 years in the contracting industry. Starting with Capital City Heating and Cooling in Columbus, Ohio, he later led Callahan/Roach to its success, which included the company being named the exclusive trainer of Quality College, sponsored by the Air Conditioning Contractors of America (ACCA).
When Callahan/Roach merged with GMAC, he became president of training and development. A featured speaker and seminar instructor, Callahan is also a past president of ACCA.
"This is a rare occasion when you can have two extremely successful and highly respected industry professionals join your team at the same time," said Abrams. "Through the combined experience of Al, Mike, John Young, and our current team, we feel that we offer the plumbing and HVAC industries the finest collection of experts to help contractors reach and surpass their business goals."
While Roach and Callahan assume new roles with VenVest, their firm will become part of VenVest. Through this merger, VenVest will now offer two training services: training for independent HVAC contractors and training for VenVest membership companies through its New Millennium Academy.
"Our two training services have a synergistic mission, which is to ensure that contractors have the necessary skill sets to reach their goals and objectives," said Roach. "Whether a contractor needs leadership or operational training, VenVest now has the right option for them to succeed in today's market."
Publication date: 10/13/2003