South / Regional Reports

Setting Goals, Having Meetings Important to Contractor Success

March 10, 2002
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SMYRNA, TN — Just how important are setting goals and having planning meetings to the success of your company? Mike Allen and Paul Wisdom, partners in Allen’s Air Care, a heating and cooling dealer in Smyrna, TN, say they believe goals and meetings are extremely important.

"We have quarterly meetings with the principals of the company," Wisdom said. "We sit down and set goals for sales and profit, and we discuss where we want to direct the company. It is so easy to sit around and say we want to do this and try that, but if your really sit down and have a formal meeting, and you have minutes to look back on, you can evaluate your progress," he said. "Your can review the minutes and say, ‘Okay, we said at this meeting that Paul is going to be responsible for doing that, and this is the approach he’s going to take: and Mike’s going to do this; and Rhonda’s going to do this.’ We set goals for each member, and then we follow up and say, ‘Okay, did you do this?’"

Wisdom said it was especially important this past year for the company to have those meetings and planning times to set goals, plan a budget, and then adhere to that.

Allen and Wisdom took air conditioning and refrigeration classes together for three years in high school. Each graduated and went to work for different contractors. Allen founded Allen’s Air Care in 1992. Wisdom, who worked for ICP for several years, joined Allen’s in 2000. The company has 10 employees.

Wisdom said the company divided the business into four categories and tracks the progress in each. The categories are service work, new construction, existing housing, and replacements.

"As part of our planning, we set a goal to increase our service work, existing housing, and change-outs, and to decrease in the area of new construction," Wisdom said.

The past year the company did 35.6% replacement work, 22.2% existing jobs, 21.7% service work, and 20.4% new construction.

"So 20% of our work this year was new construction," Wisdom said. "We want new construction to be less, and to increase our business in other areas because there is more profit in those areas. We’re trying to guide our business toward that end and we will keep moving in that direction.

BONUS PROGRAM

Wisdom said the company has implemented a bonus program for its service technicians to give them an incentive to do their jobs better.

"It is not an incentive based on their sales of equipment," he said. "We don’t think that would be appropriate because it might encourage them to sell the customer something they don’t need. So instead we are offering incentives based on their having fewer callbacks, maintaining a higher ratio of billable time compared to hours worked, collecting payments for services at the time rendered, and obtaining the customer’s signature on the job ticket.

"In some cases, employees are working a 40-hour week, and we can only bill for 30 hours. If they manage their time better, we can legitimately bill customers for more of their hours worked and we make more profit.

"If they collect payment on each job, we don’t have to bill for it and we maintain a better cash flow. We ask them to get the customer’s signature on the ticket, so the customer knows what we’ve done and is agreeing to the charges."

The service techs have goals in each of these areas and their efforts are rewarded with quarterly bonuses. Allen and Wisdom are finding that with these incentives, the service techs are becoming more professional, giving the customer better service, and they are helping the company to be more profitable.

"That’s the goal: Everybody wins," Wisdom said. "The customer wins, the service tech wins, and the company wins. While we are planning our company’s growth and the direction we want to grow in, we are also developing our service techs into top-notch technicians."

Wisdom said the bonus program should also help improve employee retention.

"There is always some other company around that will offer 25 cents, 50 cents, or $1 an hour more for the employees to come work for them," Wisdom said. "We feel like this incentive helps them become better technicians. When they see us trying to give our customers better service, they want to stay with us because we are the type of company they want to be associated with."

WHOLESALER DEPENDABILITY

About 95% of what the contractor sells is Heil products which are purchased through Ed’s Supply Co. Inc. "We are in Smyrna and Ed’s Supply has locations in nearby Murfreesboro and in Nashville," said Wisdom. "Any time we need a part, equipment, or technical support, they are there for us."

ADVERTISING

Wisdom said the company has used many forms of advertising. This includes the Yellow Pages and local newspapers in the fall and spring to keep the name in front of consumers. Recently the company tried some television advertising.

"The best response for the money spent was on the local homebuilder’s trade show last spring," he said. "It gave us a higher return on our investment, and we’re still getting calls from it."

He said direct mail also works well for the company. "We send flyers advertising fall and spring checkups to our customer base and selected subdivisions."

The contractor participates in the Heil Pro-Link dealer alliance. "It’s going great," Wisdom said. "We take advantage of the training opportunities and, of course, the 401(k) plan. We have a website through the alliance program."

Publication date: 03/11/2002

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