You hired the best people. You've got the technical know-how, the tools and the equipment to create success. Despite your efforts, you can't seem to break through that ceiling at 3 percent or 4 percent profit. Looking ahead, when gas prices go back up, even that margin might narrow.
In simplest terms, running an HVAC business comes down to providing a service. Running a successful business is a bit more complicated. Technical expertise is only one element in the equation. Owners also have to weigh costs and how fast they can respond to customer needs. Sound strategic thinking helps you balance these core elements and that leads to greater margins.
A BALANCING ACT
Since you can't balance what you don't know, start with the numbers. They don't lie. Expenses from utilities to payroll and everything in between make or break a business. It is helpful to always know at the top of your head what break-even is. Everything flows from knowing the costs before you bid.
Trends.Your monthly costs need to be as available as your break-even numbers. They will tell you what you need to know, like when to advertise or run specials. You’ll be able to see when it makes sense to incentivize existing customers with referral discounts to make room for potential new customers later. Trend data can show when full staffing is best and when to encourage vacations. Planning for ups and downs makes it easier to ride them out.
Insurance.It is one of those necessary things that provides no return — until you need it. Go over your policy and compare it to the business changes you have made since purchasing the coverage. Call your provider and talk about policy specifics. If you have been with the same carrier for a while, call around for competitive rates. Also be sure to ask about what business practices can reduce liability.
Predictive Maintenance. Predictive maintenance technologies are becoming more mobile and affordable. Advanced techniques that used to be out of reach for most contractors, like vibration analysis, are becoming more accessible. Some new technologies help technicians diagnose problems in just minutes. Cheaper equipment and real-time data analysis make these viable options. The data analysis software learns as it goes, too, so patterns that showed up before in past problems help technicians prevent the next problem. These kinds of increases in efficiency help both your margins and your reputation for quality and speed.
Training.There is a lot to be said for field experience. What's in a technician's pocket often says more about efficiency than what is in his or her toolkit. At the same time, the field is drastically different than it was 30 years ago. Skills have to be updated if you expect optimum efficiency from your employees. But pick the right people to train first. The ones who love their job and talk up new things will spread their enthusiasm to the rest of the team.
Good Management.The best managers have people skills to match their technical know-how. Managers who focus on solutions and point out what's going right — even when other things are going wrong — inspire confidence and competence in their employees. Workers who know their boss has their back do a better, more efficient job.
Identifying Possibilities.Part of doing a better job is thinking about the possibilities at a site. Workers who think about ways to improve home performance, who notice mildew and talk about ways to eliminate it, and who help customers see ways to improve their system are working on the bottom line. Blower door tests and predictive maintenance methods like infrared thermography are excellent ways to help customers actually see what is going on with their home or business. And if you don't offer service agreements, you should look into them. They are a great way to create predictable revenue.
YOUR TRENDS. YOUR DECISIONS.
The balance that is right for your business depends on your customer base. Homes, health care, offices, and industrial buildings all have different needs and schedules. Trends, marketing, and mark-ups differ with these markets. It all starts with your numbers. When things go well, they show what to keep doing and, when things go wrong, the numbers show you what to change. In addition, they help you see when to resize your workforce to optimize response times. Your hard work and some determined creativity will help you make more out of what you have.