Successful HVAC contractors spend a lot of time and money on training. That's a given. The more a technician or customer service representative knows about the equipment they sell and service, the happier the customer will be and the fewer the callbacks. Most importantly, the higher the charge-out rates will be.

There is a direct correlation between a highly trained staff and a highly profitable company. Let's face it, training and success go hand-in-hand.

Some of the most common training courses include product-specific troubleshooting, load calculating, system design, new equipment orientation, soft-selling skills, etc. Now maybe it is time to add another to the list: contractor business management, or as I would label it, Contractor 101.

Let me explain.


Contractor 101 would be for the employees of owners who want to know what makes their business tick. How many times have you, the owner, said this (or something similar) to an employee: "Try walking in my shoes for just one day and you'll see how hard it is to run this company!"

Running a business is tough and often underappreciated by the uniformed employees who see the boss driving a nice SUV with a boat or motor home parked at the shop while the employees grumble about wages, benefits, and lack of a steady workload, to name a few common complaints. Often the employee has the same opinion of an owner as the customer who objects to a $300 repair bill while complaining about the nice home the boss lives in. The last thing an owner wants is an employee complaining about the boss' lifestyle.

Usually this lack of understanding comes from an ignorance of how the company is run. Do employees understand the meaning of overhead, fixed costs, earnings before income taxes, worker's compensation insurance, etc.? Chances are if an employee understands the cost of running and managing a business, they may be sympathetic toward the owner who feels he or she needs to justify increasing the hourly charge-out rate.

Does that mean opening up the books? That would depend on how much each owner wants employees to know. A little bit of knowledge goes a long way; after all, knowledge is power.


Here's what a Contractor 101 course would include:

  • Defining a fixed cost versus variable cost

  • Defining cash flow

  • Getting discounts and favorable pricing from suppliers

  • How safety records affect insurance rates

  • Letting a marginally productive employee go

  • Licensing and regulations

  • Inventory control.

    I have many more bullet points but if I add them, the total would run off the bottom of the page, or intrude on Butch's column. I would like to include important items like costs of training and marketing/advertising but I think you get the picture.

    And, what about important topics like productivity and nonbillable hours? What is the best way to make a presentation or bid? Businesses that employ accountants or sales managers can help with the last two questions but what about the smaller shops that don't have that luxury? Isn't it still important that all employees are on the same page with at least a basic understanding of the business?

    The point is, there are so many things that happen in a business that employees are ignorant of or unaware. They need to know, and it's not their fault if the boss does not explain how the business operates.

    Here is what I'd like to suggest: Let's develop our own course. I would like you to e-mail me with topic ideas for a hypothetical Contractor 101 course. I know there are a lot of great ideas among NEWS' readers, and I'd be happy to share some of your ideas with our readers. Any takers?

    John R. Hall, Business Management Editor, 734-464-1970, 248-786-1390 (fax),

    Publication date: 04/24/2006