Perhaps you’ve worked in the HVAC industry for a while, and now you’re ready to branch out and start your own company. You have high hopes of generating a profitable, sustainable business, but to get there, you must develop and follow certain practices. Here are five vital tips for running a successful HVAC business.
1. Establish Financial Expectations
Set a reasonable goal for sales, gross profit, and net profit. To help you arrive at these numbers, consider what you’ll charge for services calls, preventative maintenance visits, and installations. Remember to consider overhead costs, such as parts, vehicles, fuel, technician pay, and more.
Then, determine how many service calls, preventative maintenance visits, and installations you need each month to reach your financial goals, keeping in mind that the HVAC industry is seasonal, so some months might come out in the negative. How will you ensure you get the customers you need to stay open? This is when you consider marketing costs and how much repeat business you can expect from loyal customers.
This initial planning phase may sound overwhelming, but with a little research and accounting help, you can budget your cash flow so you don’t start your HVAC business with blind expectations.
2. Maintain Responsible Bookkeeping
Track the key metrics of your HVAC business that affect your profitability on a weekly or monthly basis. These include:
Average service call ticket
Average installation sale
Sales per technician
Labor as a percentage of overall service and installation costs
Customers with service agreements as a percentage of total active customers
Then, at the start of each work day, look over a dashboard with these crucial metrics:
Incoming service calls
Revenue from service calls, installations, and maintenance visits
Number of new service agreements compared to total active service agreements
Even if you hate going over the numbers, good bookkeeping is vital to keep your HVAC business on track.
3. Recruit Employees
When you first launch your business, recruiting technicians and dispatchers should account for at least a quarter of your time every day. Always be on the lookout for people who could benefit your team, and maintain a list of names and key positions you think they could fill. Keep in touch with these individuals so that, even if you’re not prepared to hire today, you can call them when you’re ready, and they won’t be surprised to hear from you.
4. Measure, Communicate & Incentivize
A significant part of your job as a business owner is measuring your employees’ performance and communicating that to them. Don’t be shy about sharing your balance sheets and income statements. Require your employees to report their numbers, and make it clear that you’re tracking how they’re doing, both individually and as a team.
When they know you’re “keeping score” and are willing to offer incentives for outstanding performance, your technicians will excel. Make results public by displaying them on a whiteboard or monitor. This “leaderboard” will become a tremendous motivational tool and drive the top performers to continually outdo each other.
Consider the incentives you offer carefully, as some could have unintended consequences. For instance, if you split the diagnostic or service call fee with your technicians, this may incentivize them to run as many calls as possible rather than being thorough and providing excellent customer service. Also, keep in mind that not all incentives are monetary. Getting an extra day off at the end of the month or seeing their name on a Technician of the Month plaque can work wonders.
5. Learn About the Latest Technologies for HVAC Business Owners
HVAC is one of the fastest-changing industries out there. If you stick with the old ways of doing things, you could be left behind. To remain competitive, you must stay informed and be willing to adapt to industry changes.
Never has there been such a wealth of resources for HVAC business owners. You can read trade magazines, business books, and HVAC blogs. You can attend seminars, conferences, and dealer meetings. Best of all, you can tap into HVAC software designed to simplify your scheduling, billing, invoicing, and reporting processes.
Prepare to save money, improve productivity among your technicians, and automate more processes to reduce costly errors and oversights with 3C Connect, the ultimate resource for running a successful HVAC business. Best of all, with Cost Recovery Plus, the setup and membership costs of running this HVAC software are absorbed into the fees you charge your customers. In this way, you can adopt an invaluable HVAC tool at no cost to you.
If you’re interested in learning more about 3C Connect HVAC software, please contact us and schedule a free demo today!