Diversifying Services Can Be Boon or Bust

There’s no shortage of services HVAC contractors can branch off in to. Home-performance contracting, geothermal, and an expansion into the light commercial market are areas residential contractors can consider because there are a lot of similarities in those lines of work. Hundreds of contractors have transitioned into the home-performance arena, and industry organizations such as the Air Conditioning Contractors of America (ACCA) and Building Performance Institute Inc. (BPI) are placing an increased emphasis on this practice. Both organizations have great and plentiful training resources that can be at your fingertips in almost no time.

If you’re out to make as much money as possible, there’s probably a cap on how much business can be done within the HVAC landscape — though home-performance, geothermal, ductless, and other technologies are granting more profit potential.

Other non-HVAC-related services, such as plumbing and electrical contracting, also offer a path to profit prosperity. While there’s many advantages to adding geothermal and home-performance services, adding additional non-HVAC-related services extends your customer reach even further — especially if you do a great job.

Here’s the key with this: You don’t want to marginalize anything you offer. We all know reputation is huge; so if you go into new services, you can’t do so haphazardly. It’s all or nothing. You have to offer the same high-quality service you were known for in HVAC across all divisions. If someone comes to you for an electrical fix and the service stinks, it’s pretty easy to connect the dots and assume they won’t be trying out any of your other services.

But if you accurately and efficiently finish that electrical job, the chances of getting a callback when that homeowner has a plumbing or HVAC problem increases greatly. For me, as a consumer, I prefer to use one trusted company. As a control freak, it greatly soothes me to continue doing business with a reliable source. I’m sure a lot of other potential customers feel the same way.

Recently, I spoke with the owners of Gold Medal Services in New Jersey. They’ve carved out a future for themselves by offering pretty much everything under the sun — HVAC, plumbing, drain and sewer, generators, electrical, and most recently, waterproofing. They have a motto: “We want to own the home.” Their aim is to be a consumer’s one-stop shop for home services. This expansion led them from almost closing up shop in 2003 to now boasting more than $23 million a year in profit. And they’re still growing.

If you invest in new employees, the right training, and the right methods, the return on investment can be obtained very quickly (look at what Gold Medal has accomplished), but you have to be smart about it.

Clearly, this model won’t work for everybody. There are issues of licensing, not to mention making sure you have competent people in the new divisions with the right people to oversee them. You have to be able to hire more people so you’re not stretching your company too thin.

If you do decide to expand and offer additional services, it certainly can be a boon to business, but it takes commitment, it takes patience, and it’s all or nothing. There’s no going halfway. There’s no going half speed. If you don’t have passion, don’t bother. If you do have the passion to deliver the goods to your customers, it’s likely that will shine through and give you the best chance to be successful.

Publication date: 12/16/2013 

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