Doing Well in HVAC Community with Service and Replacement

Thanks for the recognition for One Hour Air in the sidebar ["Team Has One-Hour Flavor"] of Mark Skaer's Sept. 11, 2006, article ["American Home Maintenance Tops Replacement/Add-On All Stars (Again)"].

Obviously, the article confirms what we believe to be true: Clockwork Home Services (CHS) has the answers that lead to success. We serve only 1 percent of the residential HVAC community and yet represent 64 percent of the largest 22. (For the record, there are six One Hour firms that made The NEWS' 2006 All-Star team, as well as eight current clients: Morris Jenkins, Service Champions, Horizon, Service Champions of Northern California, Atlas Butler, Comfort Experts, Estes, and Weeks.)

I think, for future reference, it would be of great value to the HVAC community if sales were ranked by singular market, rather than by company total. This would provide a much greater perspective for the vast majority of your readers.

For instance, CHS' total company sales in this category for 2005 was approximately $70 million almost a surreal number to the independent contractor. But, by reporting by market, our largest center was $27,884,505. Contractors can now view what is possible in a single market.

Also, in determination of sales for ranking, I would definitely use "service and replacement," rather than "add-on and replacement." This truly reflects the retail side of our industry.

Thank you for providing this service to the contractor community. I think it illustrates "the possible," and certainly continues to inspire our organization to higher levels of success.

Jim Abrams
Clockwork Home Services
Sarasota, Fla.

Let's Raise the Income in HVAC

Please allow me to extend my congratulations to the Residential All-Stars [which appeared in the Sept. 11, 2006, issue]. What a great year and what terrific recognition. While extending my best wishes, I also want to discuss a misleading word used in several of the articles.

While this word choice may seem minor, it speaks to the heart of what ails the HVAC industry. On several occasions, the word revenue is used interchangeable with income. I'm not an accountant, but the important distinction here is that revenue includes sales as well as other forms of revenue such as maintenance agreements and service and replacement business. The Residential All-Stars are ranked by total revenue.

Income, on the other hand, is what is left after all expenses and financial obligations have been paid. And, these income levels are what truly define a healthy, growing business. Consequently, income is not at all the same as revenue. Low income levels are what the HVAC industry has struggled with for years and is at the heart of what needs to change in our industry if we are all to succeed.

Mitsubishi Electric HVAC has been offering training for several years now to assist HVAC contractors in improving the financial operation in their business. For years we've all been hearing that there just isn't enough income in HVAC, that too many of the participants in the industry only know how to reduce prices and that too many do not understand how to sell value.

Clearing up the confusion between revenue and income is not going to fix the problems in our industry, but letting the confusion stand certainly will not help. Like Mitsubishi Electric, many manufacturers, wholesalers, and others are working to improve conditions in the industry not only for today, but for the future. Making sure everyone is clear on finances is one necessary place to start.

William Rau
General Manager
Mitsubishi Electric HVAC Advanced Products Division
Suwanee, Ga.

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Publication date: 10/16/2006