The 5 Commandments of HVAC Contracting
HVAC veterans share knowledge about growing a contracting business
A great deal of time is spent trying to get young people interested in the HVAC industry. And for good reason. For years, the industry has struggled to find enough good employees and the younger generation offers us the best opportunity to solve that problem.
We try to do our part at the ACHR NEWS by shining a light on the exceptional young people this industry offers. The perfect example of this is the Top 40 Under 40 list that we run each August.
However, we can’t forget that there are also a lot of great people in this industry who have a little snow on the roof. That is why I was both excited and amused when Jim Hinshaw told me he had put together a 7 over 70 list.
And what an impressive list he put together. The group includes HVAC contractors Larry Taylor, Stan Johnson, Steve Simmons, Hinshaw, plumbing contractor Ed O’Connell, and HVAC consultants John LaPlant and Vicki LaPlant.
These are probably names that many of our readers recognize. If not, there is still time to meet and pick the brains of these HVAC legends. That is what I did recently and came up with a list of knowledge I would like to share with our readers.
From these conversations, I came up with the five commandments for running an HVAC contracting business.
You shall not spend ahead of revenue. Hinshaw provided us with the first commandment. While it might be common sense, it is sometimes hard to do when new contractors are in the exciting time of starting and building an HVAC business.
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Everyone knows the HVAC contracting industry can be cyclical. During the summer seasons, it might feel like the company is printing money. But that feeling can quickly dissipate when the temperatures cool off a little bit. Those months when it is too cool for air conditioning and too warm for a furnace is why contractors should not be spending ahead of revenue.
“Set up a safety net of several month’s expenses to get through the slow times,” Hinshaw said.
You shall be a multi-dimensional business. This one comes from Stan Johnson who ran an HVAC business in Austin. This was a lesson he learned the hard way.
He took over the business as owner and president in 1987 which was a time when Texas was experiencing an economic collapse as the federal government was meddling in the oil industry.
“My dad walked away from the business and told me to put it into bankruptcy,” Johnson said.
They were struggling at least partly because they were one dimensional by completely focusing on the residential new construction HVAC market. He noticed going all in on this segment provided more negatives than positives.
“I had to change our business model and it would not be like turning off a spicket. We had to phase into add-on replacement and service to get the margins we wanted and to protect us from business failures by our customers,” Johnson said. “I would tell a young contractor to be very careful with residential new construction in an HVAC company. There is a place for it but it should not control your business. It can give you massive buying power but it can also give you bad debt and slow pay. So be careful.”
You shall not hire just a warm body. This is one that came up in every conversation I had with the 7 under 70. It certainly can be tempting. HVAC contractors have a hard time hiring enough qualified people to keep up with the amount of work that needs to be done. This has especially been true over the last few years.
But this wise group will be the first to point out that hiring just any warm body is not the answer. Having a subpar employee does more harm than good and has a direct effect on the other employees at your business.
“Hire communication and presentation skills. If they have aptitude (mechanical common sense) you can train them to be a great tech. Plus your team can be trained to be more consistent in their interaction with a customer. The worst techs I hired too often were set in their ways and had no communication skills. Warm bodies are just more expense to the bottom line,” Johnson said.
You shall develop an authentic company culture. Every industry has gotten high tech and HVAC is certainly not an exception. And it can be a good thing. AI and other technologies have made marketing, customer service, and equipment diagnostics a lot easier.
But former HVAC contractor Larry Taylor wants to make sure soft skills are not lost in the shuffle.
“If you are going to have high tech, you’ve got to have a higher touch. I don’t think a lot are doing that,” Taylor said. “A lot of these companies are focused on the replacement market and the talk is sell equipment, sell equipment, sell equipment. They forget about the basic reason why we got into this business and that is to provide service, health, safety, comfort, and energy efficiency to our customers.”
You shall not forget the soft skills. Everyone I talked with agreed that a lot of HVAC contractors focus too much on technical capabilities and not enough on hiring the right personality.
“You should be hiring somebody with patience, somebody with understanding, and somebody with the ability to learn. But the most important attribute is someone with good people skills,” Taylor said.
