Middle Ground Not Safe for HVACR Contractors

The current state of the economy has shed some light on interesting dynamics, particularly within the HVACR industry. While our trade is not much different from other service trades, we can at least fall back on variations - sometimes extremes - in temperatures to ensure ourselves of staying busy in even the toughest of times. Plumbers, electricians, carpet cleaners, lawn service technicians, even home cleaning workers do not have a big safety net like a hot summer day or frigid winter night to guarantee some sort of workload.

So why are we complaining about the economy?

After all, there are lots of HVACR contractors out there who are staying busy with residential and commercial service and replacement jobs. I have spoken with several who are booked a few weeks out and the weather hasn’t spiked at all, at least not in the Northern tier of the United States. They are staying busy for a number of different reasons, such as performing routine service and maintenance calls; and spring/summer specials, calling for a/c tune-ups, etc. The good ones know how to stay busy and keep their workers on a regular full-time schedule.

The contractors who are not doing as well are the ones that probably aren’t taking the risks that others are taking, even the lowballers. They are the middle grounders.

Let me explain.

ECONOMY BRINGS OUT THE WORST

A lot of people are scrambling to stay one step ahead of their bills, the taxman, the banks that want to foreclose, and even the in-laws who want their money now! Thousands of manufacturing jobs, many which involve people with mechanical skills, have been shipped overseas or been lost due to slumping sales of U.S.-produced products, namely automobiles.

These workers are not likely to take jobs in fast food joints or delivering pizzas. Many of them have opted to start their own garage businesses, using their mechanical “skills” to make some quick money and stay busy, all with little or no overhead costs. They need some quick and dirty cash and people are willing to pay bargain prices for their services.

Now don’t get them confused with legitimate handypeople - these are people who are only looking to bridge their own employment gap by trying to steal your customers.

You might be charging a spring a/c tune-up special for $79 and the recession-age tech down the street is willing to do it for $20. And these people aren’t really risking much since they already lost a great deal when their jobs left town.

Why not take a chance at a new career? It’s pretty hard to hurt yourself when you fall out of a first-story window.

These people will likely stay busy for a while, all at the expense of legitimate contractors who have overhead, labor costs, and yes, the costs of filling up their trucks and vans with liquid gold, errr, gasoline. I am calling these contractors the middle grounders who have the most to lose.

MOVE AWAY FROM THE MIDDLE GROUND

The middle grounders have second and third story windows to fall out of. They have their money tied up in inventory, payroll, rent, insurance, blah blah blah. They can’t afford to go out and run $20 tune-ups, even if it means keeping everyone busy.

We already know that the top HVACR contractors have done a good job of bulletproofing their businesses in lean times. They took early risks to build their businesses and can now weather the storm (at least I think they can, but feel free to sling arrows at me if I’m off base).

So that leaves the middle-ground contractors who have played it pretty close to the vest. They have spent just enough to advertise and market their business and kept their prices at levels that afford them to pay their bills and still turn a net profit of 2 percent or so. They have played it safe and not taken any great risks (and yes, all business start-ups are at risk so feel free to put a bull’s-eye on my belly). But at times like this, you may need to shed the middle-ground image and take a few more chances. For example, spend some extra money to “re-market” your business to existing customers, assuring them you are in business for the long haul and still have the quality workmanship and customer service they have come to expect. Ask an employee to take a day or a week to get referrals from your existing customer base and pay that person a bonus to bring in referral business.

Move off the middle and don’t try to compete with the garage mechanics or the larger, established businesses. Carve out your own niche with a little bit of risk.

Publication date: 05/12/2008