Run a Proactive, Not Reactive, Business

December 27, 2010
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HVAC dealers from coast to coast have based their businesses on weather and economy. When the weather is hot, business is good, and when the weather is cold, business is good. When the economy is strong, business is strong. A business model based on merely weather does not allow dealers to grow their business. Reactive, weather-driven businesses coupled with a change in the economy over the last two years have made us rethink our business model.

In an effort to make an improvement in our traditional business model, we must change our mind set and begin a different approach to business.

A successful business model must encompass two things:

1. A proactive approach that turns our thoughts into looking for business and our marketing strategies to creating a need and away from a current business model where our marketing focuses on fulfilling a need and waiting for the phone to ring.

2. This business model constitutes a change in culture one that allows us to plan, and one that still maintains a sense of urgency. This is a new strategy for many. The new culture is about creating more opportunities building relationships without the emphasis on the weather and economy. After all, business is done with people and business is built on relationships.

DEVELOPING A PROACTIVE BUSINESS MODEL

When any change occurs, we must learn to adapt and position our businesses in an area we may not be familiar with.

As manufacturers and distributors reduce training budgets, our business has increased by coaching and developing proactive business plans for dealers in their businesses. We find many dealers are at the point in their businesses where dissatisfaction has driven them to a change in their thinking from reactive to proactive.

This process begins with a culture change, not allowing the phone to drive the business. Be aggressive, be ahead of the curve, and build an organization that does not let the weather and economy run your business and you. These may be old remedies you have heard before, but sometimes current dissatisfaction cultivates a change in your thought process.

After spending the last few years out of the classroom and in the field turning around businesses from struggling, just-getting-by companies to proactive organizations, I found in many cases this involved completely rebuilding organizations from the top down.

I have witnessed four fundamental steps that can begin the process of changing to a proactive organization:

1. Figuring out the company culture,

2. Putting a business plan in place,

3. Showing leadership, and

4. Recruiting and retaining top performers.

In an effort to implement these four steps, keep in mind we have three main components that make up an organization:

1. Revenue: bringing business in the door consisting of sales and marketing.

2. Operations: delivering the product and or service to our customers’ doors.

3. Accounting: tracking and measuring results.

THE CULTURE STEP

This first step is the most crucial in every business. In essence, what type of business are we looking for? What type of mind-set does top management have in creating a proactive organization?

In review of your three business components, I challenge each of you and ask yourself are you reactive or proactive in each.

1. The revenue side of your business: Are you marketing for reactive work or proactive? Does your marketing strategy focus on fulfilling needs or creating needs? Is a big portion of your advertising budget spent in reactive work service or proactive business model maintenance?

2. The operations side of your business: Are you delivering a product or service after something has broken, which that seems to always happen when the weather is too hot and too cold and we can’t find enough people or when we have too many, or delivering a maintenance proactive business that allows us to develop a model that creates more opportunities and relationships?

3. Are you tracking and measuring results that allow you to proactively review and improve results or are you wondering about cash flow and paying bills on time?

This message is not wanting to take away from the service business and the sense of urgency. I understand that and want a company to maintain that culture. I can tell you with a great deal of confidence and field experience, in most cases, the cultural mind-set must change if the owner and the business want to move from running a business to building an organization. The individual mind-set and the culture created in a business is the first step and sometimes the most difficult. This is about moving from a reactive business to a proactive organization.

BUSINESS PLAN STEP

1. This step is about finding a proven system that works in your industry, one that you believe in. One that directs you through key performance indicators that have a proven successful track record used by multiple companies in multiple locations.

2. In this step you must take the time to learn and understand more about systems that you believe in that will create a proactive organization while recognizing the reactive industry you are in.

3. Management must make the commitment to a proactive culture and train others to implement proactive systems, processes, and procedures in the organization.

4. Understanding key performance indicators tracking and measuring these components are in place with a commitment to review these numbers and begin the process to improve results.

Once a proactive culture has been established, now is the time to duplicate your results. Regardless if you are hiring another technician or acquiring another organization, you have the system in place to duplicate a proactive process.

The business plan step is sometimes difficult because of so many resources and information. Most successful dealers find one system one way and follow the steps without other distractions.

LEADERSHIP 101 STEP

1. Set the expectations of each co-worker. Utilize detailed accountability agreements for individuals that allows management and individuals to stay focused on their task.

2. Establish your guidelines of an organization. This is the culture portion of a business. This is the priority of a business that’s customer-focused.

3. Teach each co-worker what your expectations are. With a commitment to training, schedule weekly training sessions.

4. Hold them accountable. Review their accountability agreement weekly, monthly, quarterly.

5. Develop the consequences for each co-worker. Compensation, commission, job advancement or they will be relieved of their duties.

This leadership step is a process that once in place becomes routine.

RECRUIT, HIRE, TRAIN, MOTIVATE, RETAIN STEP

1. Recruit nontraditional ways to find top performers.

2. The hiring process should be a consolidated effort by others in your organization. Subscribe to ways that will tell you a lot about the individual before you hire them, their individual strengths and their weaknesses.

3. Develop a training agenda for each person you hire.

4. Motivate them weekly. Review the results from the previous week.

5. Invest in each of them to retain top performers.

This recruiting and retaining step is time-consuming because most dealers come from a reactive environment, they want to find someone now. Therefore they hire anyone and, in many cases, those individuals end up leaving an organization. Once this is in place this becomes automatic, too.

A MOMENT FOR REVIEW

After these four fundamental steps of developing a proactive organization have been established, keep in mind we have the following three main components that make up an organization: revenue, operations, and accounting.

These three components must be developed in a way that ensures a proactive culture in each division of an organization:

1. Maintenance: prevention - proactive. This division is created without weather and without economy distractions.

2. Service/Repair: detection - reactive. It’s automatic business we can’t control.

3. Installations: coming from prevention and/or detection. We want to increase this business from a proactive business model by creating more opportunities and relationships.

Regardless of the size of your company, you want to build this process the same.

ACTION PLAN

The next step in securing the foundation of your proactive business model is to develop an action plan that will allow you to improve each of the three departments in your business.

Publication date: 12/27/2010

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