Al Levi
[Editor's note: Consultant Al Levi helps HVAC and plumbing contractors run their businesses with "less stress and more success." Here, Levi shares with readers ofThe Newssome of the questions he gets and the answers he provides. This column is meant to serve as a resource only. Please check with your own trusted business advisers, including your own attorney, to make certain that the advice here complies with all relevant laws, customs, and regulations in your area.]

Nepotism Can Be Divisive

Dear Al,
I've been lucky enough to have grown a successful business in the last 20 years, but now my twenty-something children are ready to enter the business and there is resentment on the part of some of the existing management and employees. Any suggestions on how to bring them on board without a mutiny?

- Family Businessman

Dear Family Businessman,
Business is all about relationships. And, a company functions like a family even if there are no actual family members in the business. That means there are going to be sibling rivalries.

Having been a son who entered his dad's business, I can tell you it's difficult for the parent, the child, and the co-workers. But to my dad's credit, he made it clear to me and to his staff that all he was offering me, his child, was an opportunity to prove myself worthy.

It was clear I'd have to earn my way up the ladder by excelling at each job I filled. That meant starting at the lowest end, doing hard and dirty work, and demonstrating that I was an asset.

Don't get me wrong. I didn't appreciate it at the time, but later on I realized my dad was wise. It minimized the petty jealousy, and it allowed me to understand everyone's job much better than if I had started at the top.

What I recommend is some good rules that all the family members agree to follow. I've been to great companies that have recognized favoritism due to nepotism can be very divisive, so they made it a requirement that each child entering the business undergo evaluations by a group of non-family managers to maintain objectivity.

It's also common for children to attend business seminars and training classes. Leaders are developed more often than they are born.

- Al Levi

Getting Out Of The Basement

Dear Al,
I left my secure job as a top technician four years ago, and I've been struggling ever since to build my own business. Some days I ask myself, "Why did I ever leave?" Then, I remember I wanted to be in control of my own destiny. I just don't feel like I'll ever get out of the basement and build a real business. What do I need to do to get ahead?

- Directions Please

Dear Directions Please,
I understand how you may have thought that the transition from a top technician to an owner might have been a no-brainer. Now you know the awful truth. The biggest problem is that, as a tech, it's rare we have the requisite business skills needed to run a successful business.

There are business skills that you will need to develop or you will need to hire a professional to assist you. Financial, marketing, operations, and personnel management are the skills that create a successful business.

The good news is there are many success stories of guys who started out as a top tech and learned the business skills needed because they dedicated the time, energy, and money to develop those skills. There are lots of classes, books, tapes, DVDs, and mentors available to help you master this process.

- Al Levi

Confused About Conversion Rates

Dear Al,
I read the trade magazines all the time and I see the term "conversion rate." What does it mean?

- Confused Converted

Dear Confused Converted,
The term conversion rate (or conversion ratio) most commonly means the ratio between how many calls come in to your shop for service and how many your customer service reps (CSRs) actually convert into appointments for a technician to do a service call. For example, if 10 people called about a service problem and seven people booked an appointment, that would be a 70 percent conversion ratio for a CSR.

The same term, conversion rate, is also applied to service technicians. This time it means the number of calls the service tech went on and how many the tech turned into calls where the customer purchased work at the time of the visit. So, if your tech went on 10 service call opportunities and eight customers bought something that day, this would be an 80 percent conversion rate for the technician.

Tracking and improving these two key conversion ratios, and improving your percentages through the necessary training of both your CSRs and techs, will have the most positive effect on the profitability of your company. You can also initiate incentive programs based upon these numbers.

- Al Levi

Al Levi of Appleseed Business specializes in private workshops, on-site assessments, customized operating manuals, and staff training program for contractors. Levi delivers the benefit of the experience he gained from years of operating a large family-run HVAC and plumbing business. For more information, visit Levi's column runs regularly in the online Extra Edition section of The News. To send him your own question, which if selected will run anonymously, send an e-mail to or fax him at 212-202-6275.

Publication date: 06/27/2005