HVAC contractors from coast to coast have based their businesses on weather and the economy. When the weather is hot, business is good. When the weather is cold, business is good. When the economy is strong, business is strong.

But a business model based on merely weather and how the rest of the economy is doing does not allow them to grow. Over the last two years, with the change in the economy, many contractors have had to rethink their reactionary weather-driven business model. As an industry trainer and business coach, I have worked with many contractors across the country during these challenging times in an effort to transform their businesses from financial ruin to profitability in a short period of time. In this column I will share the fundamental steps that have allowed them to build strong, proactive businesses.

FOUR FUNDAMENTAL STEPS

After spending the last few years in the field helping businesses turn around from struggling and “just getting by,” I have found in many cases that changing to a proactive model requires completely rebuilding organizations from the top down.

The four fundamental steps to building a proactive business are:

1. Initiate a culture change.

2. Develop a business plan.

3. Establish leadership.

4. Recruit and retain top performers.

Regardless of the size of your company, this process is the same.

THE CULTURE STEP

In an effort to make an improvement in our traditional business model, we must change our mindset and begin a different approach to business. This step is the most crucial in every business. In essence, what type of business do you want to be? And what type of mindset does top management hold?

A successful business culture requires a proactive approach that turns your thoughts into looking for business instead of waiting for the phone to ring. This is a new strategy for many contractors. This new culture is about creating more opportunities to build relationships without the emphasis on the weather and the economy. After all, business is done with people and business is built on the relationships you have with those people.

As you consider your company’s culture, I challenge you to ask yourself: Are you reactionary or proactive in the three main components of your business?

1. Revenue: Are you marketing for reactionary work or proactive work? Does your marketing strategy focus on fulfilling needs or creating needs? Is a big portion of your advertising budget spent in reactionary work service? Or is it spent on proactive business model maintenance?

2. Operations: Are you delivering a product or service after equipment has broken? Does it seem to always happen when the weather is too hot and too cold? Does it always seem like you can’t find enough people or you have too many? Or are you delivering a proactive maintenance service that allows you to develop a model that creates more opportunities and relationships?

3. Accounting: Are you tracking and measuring results to proactively review and improve results? Or are you wondering about cash flow? Are you paying bills on time?

The individual mindset and the culture created in a business is the first step and sometimes the most difficult. But many contractors are at the point in their businesses where dissatisfaction has driven them to a change in their thinking from reactionary to proactive.

Also, note that changing your culture should not take away from the service aspect of your business and its sense of urgency. I understand that and want every company to maintain that part of its culture.

THE BUSINESS PLAN STEP

The next step is to establish a business plan. It should be a proven system that works in your industry - and, more importantly, a plan that you believe in.

For this step, you must take the time to learn and understand more about systems that will create a proactive organization while recognizing the reactionary industry you are in. Management must make the commitment to become a proactive culture, and then train others to implement proactive systems, processes, and procedures in the organization.

Your business plan must include tracking and measuring key performance indicators. This can sometimes be difficult because it can be hard to narrow down so many resources and information. But a firm commitment to review the numbers that matter most will enable the process to begin improving results.

Once your business plan has been established, you should be able to duplicate your results. Regardless if you are hiring another technician or acquiring another organization, you now have the system in place to duplicate a proactive process.

THE LEADERSHIP STEP

In the new culture of your company, leadership can become routine if you develop and enforce standards for your employees. Begin by setting the expectations for each employee.

Then train each employee based on your expectations, and utilize detailed accountability agreements for individuals that allow them to stay focused on their tasks. With a commitment to training, schedule weekly training sessions.

And follow up and hold employees accountable. Review their accountability agreement - weekly, monthly, quarterly. Develop the consequences for each employee’s job performance: compensation, commission, job advancement … or they are relieved of their duties.

THE RECRUIT/RETAIN STEP

With the proactive culture initiated in your company, it is important to find top performers who will strengthen this movement away from the traditional processes. Start to recruit top performers, and see if you can find nontraditional ways to find and incorporate them into your organization.

The hiring process should be a consolidated, cooperative effort by the members of your organization. Use interviews and approaches that will tell you a lot about the individual before you hire him or her. Try to determine his or her individual strengths and weaknesses.

This step is time-consuming because most contractors come from a reactionary environment - they want to find someone now. Therefore, they hire just about anyone and, in many cases, that person ends up leaving an organization.

After hiring a new individual, don’t forget to continue the leadership step of training and motivation. Invest in each of them to retain the top performers.

REVIEWING THE PROACTIVE ORGANIZATION

After the four fundamental steps of developing a proactive organization have been established, take time to review your organization’s changes. Consider how you bring in revenue and if you have successfully created a proactive organization. Service and repair will always be an automatic, reactionary business that contractors can’t control. But consider how you operate these other two areas:

1. Maintenance: This division is preventive and proactive. It should function without weather and with economic distractions.

2. Installation: This business can come from prevention and/or detection. You should increase this business in your proactive business model by creating more opportunities and relationships.

Be aggressive and be ahead of the curve. You can build an organization that does not let the weather and economy run your business and you. I realize these steps may be “old remedies” you have heard before, but sometimes current dissatisfaction cultivates a change in our thought process that enables us to actually make a change.

Publication date: 12/13/2010