HVACR BUSINESS OCTOBER 2024

“ It’s good to be proactive rather than reactive. You have to go find out what’s out there, get outside of your role and your company and see what other people out there are doing.”

Level up at the event for HVACR.

FEBRUARY 10-12, 2025

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Management Resource Shelf

EDITOR’S CHOICE

Business people are more likely to think that they’re more likely to win the game if they can rationalize their decisions. But how do you live with indecision? Annie Duke, author of Thinking in Bets, retired as a professional poker player after winning a world championship. With a Ph.D. in psychology, Duke tries to offer advice about emotional controls and decision making. Her approach offers a sense of order in disorder. Her latest obsession is on the topic of quitting. In particular, she is on a mission to rehabilitate the term and get people to be proud of walking away from things.

Thinking in Bets

Annie Duke

This book offers a fascinating approach to decision making by embracing uncertainty. Duke, a professional poker player turned business consultant, teaches how to apply probabilistic thinking to business decisions. She emphasizes that good decisions don’t always result in favorable outcomes, and this mindset shift can help reduce the stress of business leadership.

https://www.amazon.com/ Thinking-in-Bets-Annie-Duke-audiobook/dp/B078SBSBW3/

Atomic Habits

James Clear

Clear’s highly practical book on building good habits and breaking bad ones remains a favorite for business leaders. His method focuses on making small changes that compound over time, helping readers enhance both their personal and professional productivity.

https://www.amazon.com/ Atomic-Habits-HB-James-Clear/ dp/1847943918/

The Personal MBA: Master the Art of Business

Josh Kaufman

Getting an MBA is an expensive choice — one almost impossible to justify regardless of the state of the economy. Even the elite schools like Harvard and Wharton offer outdated, assembly-line programs that teach you more about PowerPoint presentations and unnecessary financial models than what it takes to run a real business. The Personal MBA distills the most valuable business lessons into simple, memorable mental models that can be applied to real-world challenges.

https://www.amazon.com/ Personal-MBA-Master-Art-Business/dp/B0095PELTM

The Mindset Mentor

Host Rob Dial

The Mindset Mentor podcast is designed for anyone seeking motivation, direction and focus in life. Host Rob Dial has amassed a passionate following of 3 million social media followers, entrepreneurs and small business owners with his expertise and passion for helping people become the best version of themselves.

https://robdial.com/podcast

The Jordan Harbinger Show

Host Jordan Harbinger

In-depth conversations with people who are at the top of their game. Jordan Harbinger unpacks guests’ wisdom into practical nuggets that can impact your work, life and relationships. Guests have included Ray Dalio, Mark Cuban and Simon Sinek.

www.jordanharbinger.com/podcasts

The Leadership Podcast

Host Craig Groeschel

The Craig Groeschel Leadership Podcast offers personal, practical coaching lessons that take the mystery out of leadership. Each episode brings you empowering insights and easy-to-understand takeaways you can use to lead yourself and your team. www.craiggroeschel.com/leadershippodcast

THE HVACR MANAGEMENT MAGAZINE

TERRY Tanker Publisher ttanker@hvacrbusiness.com

TOM Perić Editor in Chief tperic@hvacrbusiness.com

MEGAN LaSalla Art Director mlasalla@hvacrbusiness.com

BRUCE Sprague Circulation Manager bs200264@sbcglobal.net

BARBARA Kerr VP Operations bkerr@hvacrbusiness.com

ADVERTISING STAFF

TERRY Tanker Publisher Tel 440-731-8600 ttanker@hvacrbusiness.com

HVACR Business, founded January 1981, is a monthly national trade magazine serving contractors, mechanical engineers, manufacturers, manufacturer representatives, wholesalers, distributors, trade associations, and others in the heating, ventilating, air conditioning and refrigeration (HVACR) industry primarily in the U.S.

The editorial focus and mission of HVACR Business is to provide business owners and managers with the very best business management concepts available. Critical topics covered include leadership, management, strategy, finance, sales, marketing, training, education, staffing, operations, human resources, legal issues, customer service and more. We are dedicated to helping contractors master these key management skills and provide them with the resources necessary to build strong, profitable companies. Every effort is made to provide accurate information, however, the publisher assumes no responsibility for accuracy of submitted advertising and editorial information.

Copyright©2024 by JFT Properties LLC.

No part of this publication may be reproduced or retransmitted in any form or by any means, including, but not limited to, electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees.

This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the authors nor the publisher may be held liable in any way for any interpretation or use of the information in this publication.

The authors will make recommendations for solutions for you to explore. Any recommendation is always based on the authors’ research and experience. The information contained herein is accurate to the best of the publisher’s and authors’ knowledge; however, the publisher and authors can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof.

Subscription Rates: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: U.S. and possessions:

1 year $48; 2 years $75; 3 years $96; Canadian and foreign, 1-year $108 U.S. funds only. Single copies $8. Subscriptions are prepaid, and check or money orders only. Subscriber Services: To order a subscription or change your address, write to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039 or call (440) 731-8600; or visit our Web site at www. hvacrbusiness.com. For questions regarding your subscription, please contact bkerr@hvacrbusiness.com.

HVACR Business (ISSN 2153-2877) Copyright ©2024 is published monthly by JFT Properties LLC,31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039, Phone: 440-731-8600. Periodicals postage is paid at North Ridgeville, OH and additional mailing offices. (USPS 025-431)

POSTMASTER: Send address changes to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039.

31674 Center Ridge Road, Suite 104 North Ridgeville, OH 44039 Tel: (440) 731-8600

Web site: www.hvacrbusiness.com (ISSN: 2153-2877)

BY TERRY TANKER

PUBLISHER’S PAGE

Give Your Branding Time to Work

One of my favorite discussion topics is branding. I see a lot of companies, large, small and in-between, doing this well.

Pick one message and stick with it. Enough said.

I also see and deal with an equal number that don’t.

Companies fall into two categories — those that understand the “what” of marketing communication strategies and, probably more importantly, the “how.” They also understand the basics, such as branding takes time and is about all you do, not just the ads you run.

The other category consists of those who don’t understand. Commonly, they expect immediate results and consistently confuse the many different components. They expect an X result when they should be expecting a Y.

In the real world, you don’t have infinite resources, and you don’t have perfect products — no one does. Guy Kawasaki, an early Apple employee who has written for us in the past, knows a lot about branding. I don’t agree with everything he writes about, largely because in his world, the mega brands he commonly discusses do things HVACR contractors simply can’t do. That said, below is some of Kawasaki’s sage advice, along with my definitions and commentary that should help you apply it to your business.

Seize the High Ground

Establish your brand on positive conditions like “making meaning,” “doing good,” “changing the world,” and “making people happy” — not destroying your competition. This is straightforward, because you own service companies. Nothing is better for a customer than having a great experience with your firm — it will make them happy. You’re doing good, fixing problems for customers. And it can easily be argued you are changing the world (can you imagine our world without heating and cooling? I can’t).

Create One Message

It’s difficult enough to create and communicate one branding message; however, many companies try to establish several because they want the “entire” market and are afraid of being niched. “Our service is the best.” “Our prices are affordable.” ”We’re an award-winning HVACR firm.”

Pick one message and stick with it. Enough said.

Speak English

Not necessarily “English,” but speak in non-jargonese. If your positioning statement uses any acronyms, the odds are that most people won’t understand your branding, and it won’t last long.

For example, “the furnaces are Bacnet compatible with builtin CTA-2045 ports with mobile application compatibility,

allowing users to choose their operation modes.” This presumes people understand what Bacnet is and what CTA ports are — not likely.

Test your messaging on a neighbor who is roughly the demographic you want to reach. Better yet, go the extra mile and bring in a focus group to evaluate your entire marketing program and positioning statement.

Many large companies struggle with this. They let their engineers get involved with writing marketing copy, and 99 percent of the time, it doesn’t turn out well. How many times have you read or listened to a product description like this: “Our regenerative dynamic braking system.” OK, I’m not a race car driver, so I have no idea what that means. Compared with “Our new braking system stops the car 50% faster.”

Companies use adjectives as if everyone will understand their “industry speak.” You’ve got competitors, a lot of them. So create a simple message. Superior service; Certified technicians; 24/7 service; Experts at diagnosing heating and cooling problems. Over time, you can use all of these, just not all at once.

Cascade the Message

Cascade it up and down your organization. The marketing department of many companies assumes that once they’ve put out the press release or run the ad, the entire world understands the message. This is simple. Make sure everyone in the organization understands the message and your branding. The folks answering your phones and technicians in the field are the most critical.

Examine the bounce back. You know what messages you send, but you really don’t know what messages people receive. Here’s a concept: You should ask them to bounce back the message you sent to learn how your message is truly interpreted. In the end, it’s not so much what you say as what people hear.

This is really important.

Make sure your message is being interpreted and understood the way you intend.

Branding is one of the most important aspects of any business, large or small, retail or B2B. An effective brand strategy gives you a major edge in increasingly competitive markets. Your brand is your promise to your customer. They derive it from who you are, who you want to be and who people perceive you to be. Are you the innovative maverick in your market; or the experienced, reliable one? Is your product the high-cost, high-quality option or the low-cost, high-value option? You can’t be both and can’t be all things to all people. To some extent, who you are should be based on who your target customers want and need you to be. u

WHAT DOES YOUR ONLINE PRESENCE SAY TO CUSTOMERS?

Why is Your Online Presence Important?

BY WILL MERRITT

Your online presence is more important than ever these days. Think about it like this: You drive by a retail clothing store, and it looks run down. The displays in the windows are outdated, messy, and look like the owner doesn’t care. Would you decide to shop in this store? Probably not. Your online presence is your HVACR company’s retail storefront. It must look modern, have helpful content the searcher is looking for, and be up-to-date.

What is it Saying About Your HVACR Business?

You’re an HVACR business owner. What do you see when you look at your business online? Let’s be honest: Would you choose your company over some of your competitors? Try it, I dare you. If you would not choose your company when you’re looking for “air conditioner

Many companies in our industry have lived off word-of-mouth advertising for years and are not focused on their online presence.

repair” or “furnace service,” then what do you think the consumer will do?

Create Your Online Brand

Your “brand” is who you are, it’s what you stand for. Think about what homeowners are looking for. They want a trustworthy and honest company they can rely on to complete the job in a timely manner. Over the years, we have found that consumers look for three things from a heating and air company. They want to TRUST you. It’s a big deal to invite a service provider into their home or business. They want VALUE from

their purchase. Remember, the average homeowner only purchases heating and air 2.5 times in their lifetime. And finally, they want it FIXED NOW. And this will outweigh the first two if you cannot provide fast, timely service. This should be your underlying message on your website, social media, and in any traditional marketing you do. The best advice is to be yourself; if you are naturally funny, then that can be portrayed in your online presence. If you are a more serious person, that’s OK too, just be yourself. People will notice and appreciate the authenticity.

How Easily Can You Be Found?

I know this sounds crazy, but can your HVACR business be found online? You would think that, in the digital age, a home services business would be easily found online, but you would be surprised. Many companies in our industry have lived off word-of-mouth advertising for years and are not focused on their online presence. While word of mouth is great to drive business, we cannot rely on it in today’s world. Consumers are using multiple outlets to find contractors just like you. Here is a short list of “mustdo’s” in order to thrive in the digital world:

• Website: It must be optimized to rank on search engines like Google (SEO – Search Engine Optimization).

• Google Business Profile: Make sure all your business information is correct (hours, services, current pictures, service area).

• Google Local Service Ads: Also known as “Google Guaranteed.” This is a “pay per lead” service that sits at the top of the search engine results page. It’s the first thing consumers see today when they search for something along the lines of “air conditioner repair near me.” Being a pay-per-lead or phone call service, you will not be charged unless they call you. (Charged after 30-second duration.)

• Social Media: If you have profiles, they must be up-to-date and posted on a regular basis; if not, you should not be on them. Examples:

• Facebook – Gen X and Baby Boomers.

• Instagram – Gen Z, Gen X, and Millennials.

• YouTube – Can be everyone.

• Tik Tok – Gen Z.

• LinkedIn – Traditionally a B2B (Business to Business) platform, but it has gained tons of traction in recent years. Think about it like this: business people own homes and businesses.

Is Your Online Profile Up-to-Date?

It is so important to keep your profiles current with the proper messaging. We see so many contractors with outdated websites and social profiles that have not been posted to in months or years and have inaccurate data.

Let’s discuss the most important one: your HVACR website. Does it look clean and modern? Example: We are transitioning from summer to fall. What message does the consumer see when they land on your website? Are you showing summer-related content and images, or have you updated to fall-related topics. You should be conveying a fall theme with messaging enforcing the importance of getting ready for fall and winter. Information discussing fall tune-ups and maintenance is perfect.

So, How Do You Build an Online Presence?

Building a great online presence is a process that takes time. You start with your HVAC company’s website. It must provide the best user experience for the

Your online presence allows you to make impressions on potential customers before you ever have contact with them.

searcher. Remember, in our world, our target customer is in pain. They have a broken air conditioner or furnace, so when they land on your website, make sure you give them exactly what they are looking for:

• Website: One that looks modern and easy to navigate. Make sure it looks good on all devices (mobile, tablet, desktop or laptop). Mobile is the most important, Google indexes websites on mobile first.

• Reviews: Managing your Google and other online reviews is critical, consumers read reviews today before they hire home services companies. Do not neglect this.

• Answer or solve their problem immediately when they land on your site. (Ex: The consumer searched “AC Repair.” Your website shows you specialize in air conditioner repairs, you have guarantees on your workmanship, you show you are a trusted provider, and you offer some coupons).

• Helpful Tips: Consumers today want to search for how to repair things. They want a DIY answer. Give them a list of “things to check before you call” or “signs that you need repair.” These can be listed on your website repair pages and can be great blog topics.

• Helpful Videos: These can be way more powerful than words. People love to watch a video these days over reading.

• High-Quality Content: Consumers are looking for engaging content in written and video form. Your business should be viewed as the authority for the services you provide.

Tools To Create Your Online Presence

• Social Media Posting Software: Platforms such as Birdeye, Hootsuite, or Sprout Social allow you to post to multiple channels at one time. They also provide a one-stop shop to respond to questions and comments.

• Review Management Software: All reviews need to be responded to, both good and bad. Birdeye and Podium are great options and offer AI response tools.

• Listing Management Software: This creates consistency for your business profile, ensuring your business name, address, and phone number are correct across many websites. Ex: Google Business, Yelp, Apple, Facebook, Bing, and many more.

Your Online Presence Summarized

Your online presence allows you to make impressions on potential customers before you ever have contact with them. So treat it with the utmost importance. Keep your brand consistent across all online platforms. Whichever online ones you use, keep them up-to-date, or it’s time to deactivate them and say bye-bye. Take a peek at your local competition. What are they doing? How do they look? Your goal is to present your HVAC business as the best choice in your market. Do this and you will earn the consumer’s trust and, ultimately, their business. u

Will Merritt is the Managing Partner at Effective Media Solutions, a fullservice marketing agency. With 27 years of experience in the HVAC field, 10 of that in marketing for contractors, our agency has keen insight into our industry that others do not. Contact Will at will@myeffectivemedia.com or (704) 507-7858. “We Speak HVAC.”

• SEO: Your website needs the proper service pages (Ex: AC Repair, Furnace Repair, Maintenance, About Us, Financing, Specials). It also needs to be optimized with the proper keywords that consumers are searching. This is accomplished through the proper page titles, onpage content, and meta descriptions.

LEVERAGE AI TOOLS TO UNLOCK THE FULL VALUE OF AVAILABLE, ACCESSIBLE EQUIPMENT & JOB SITE DATA

BY STACEY BRIGHT

For years, field service companies have used increasingly sophisticated and powerful field software to collect, store and manage valuable equipment and job site data. Utilizing that wealth of data could help service business owners address some of the most pressing challenges the industry is facing, such as the chronic labor shortage, supply chain disruptions and overall economic uncertainty.

Unfortunately, the industry has failed to capitalize on the full value of the industry’s deep collection of underutilized data.

That’s changing, however. The technology-driven transformation of the field service industry is reaching a new phase of its evolution, where technicians in the field have the power to pull detailed, accurate information from every job that they can leverage to generate meaningful insights and help boost productivity, efficiency and revenue.

With innovative tools now available, technicians can pull data from any job site or equipment. Companies can leverage

The technology-driven transformation of the field service industry is reaching a new phase of its evolution.

artificial intelligence to mine that data and produce automated reports that identify new strategic and monetizable applications they can act on, including:

• Proactive capital planning

• Tracking ERG regulations and compliance

• Proactively planning the purchase of parts and material

• Preparing for staffing needs

• Identifying gaps in technician training

• Aligning technician skill sets with how efficiently assets are performing

• Managing equipment lifecycle

As technology continues to advance, contractors have a stark choice. They can continue to let valuable data disappear into a virtual abyss or adopt tools that turn those bits of information into actionable insights.

Visible data connects the chain

One significant advance in technology for the field service industry is the capability to connect and empower the entire ecosystem, from manufacturers and distributors to contractors and their customers. Advanced technology tools break up silos of communication and data, equipping technicians, contractors, manufacturers, suppliers, and end customers with a single authoritative technology solution for the entire lifecycle of equipment, from installation to maintenance, repair and replacement.

These functions connect the entire supply chain to the essential data driving the industry’s technological transformation in multiple ways. Providers offering sophisticated insights backed by data and visual evidence can elevate interactions across the supply chain, functioning as partners, not just

vendors. Sharing meaningful photos, videos, and other statistical data points creates a more transparent experience for customers and distributors, extending trust to all parties involved. The reliability and predictability of those relationships can open powerful opportunities for future growth.

Some of the specific benefits that resonate from technicians in the field to the full ecosystem include:

• Equipment status

Visible data empowers contractors to automatically monitor the equipment their company works on and proactively generate reports identifying new revenue opportunities. By proactively scheduling jobs, they can better predict the associated expenses, including the number of techs and any special tools or parts that might be required. Customers benefit from the preventive service, helping to build trust and contributing to repeat business.

• Technician resume

Tracking technician performance helps dispatchers and leadership make

informed decisions about job assignments and training opportunities, enhancing overall service and productivity and elevating relationships with distributors and manufacturers.

• Automated insights

Automated collection and analysis of equipment generates equipment alerts and reports that users can leverage to secure additional revenue opportunities, enhance the customer experience, and make informed decisions about seasonal, service and sales trends.

• Empowered technicians

Automatic insights identify new opportunities and efficiencies without adding to a tech’s workload. They can offer accurate, consistent recommendations based on data without taking time or focus away from their service or maintenance tasks.

• Happier customers

One significant advance in technology for the field service industry is the capability to connect and empower the entire ecosystem, from manufacturers and distributors to contractors and their customers.

Consistently delivering transparent, excellent service and fixing equipment the first time result in an elite customer experience. Communicating clearly from the start of a customer relationship ensures shared expectations and enhances customer satisfaction, building long-term trust essential for repeat business and referrals.

More business-critical data is conveniently accessible through technology than ever before, and the dataset is constantly growing. Ignoring the capabilities of innovative solutions that drive informed decision-making

in an increasingly competitive industry will have consequences as more and more contractors tap into the wealth of opportunities now available. These solutions allow every stakeholder in the field service ecosystem to fully engage and activate data with powerful AI technology, giving them real-time insights that connect the supply chain and empower business owners and decision-makers to evolve and elevate their companies. Integrating AI- and data-driven insights enhances our service and product delivery and builds stronger, data-backed relationships with clients. u

KEEP YOUR HEAD ABOVE WATER

Think of all the things you need to know on a daily basis just to keep your business afloat. Questions about cash management, marketing, human resources, pricing, leadership, strategy, training and more. The real question is…will you find the answers before its too late? Only HVACR Business can give you the solid business foundation you’ll need to keep your head above water. We’re all business content because that’s what will help you succeed. Put your head in the right place… HVACR Business SUBSCRIBE NOW.

Stacey Bright is the chief marketing officer for XOi, the leading provider of technician-first smart technology for commercial and residential field service companies. As CMO, she drives demand generation, brand awareness in vertical and adjacent markets, and XOi’s future-focused digital strategy.

GIVING BACK: THE ROLE OF VOLUNTEERING IN BUSINESS SUCCESS

Boosting Business Through Community Engagement

BY BILL RONAYNE

If you own or work in a small business, the stream of funding requests from nonprofits can seem endless. Some are looking for funding for crucial community service programs they run, some are having a fundraising event and looking for sponsors, while others are just looking for funds to stay open. These reasons are important to the person asking, and for many, they are crucial for their survival.

So, the question is: How do I serve these nonprofits, be part of the big picture and be a good community partner without going broke? It is best to create a plan that is consistent and intentional, with a focus on your involvement in the communities you serve.

Becoming a good community partner makes sense

If giving back isn’t part of your core values or marketing program, it should be. The following reasons are some of the most important, and many others may exist, but you should keep your eyes and ears open. Never miss a chance to be a

It is best to create a plan that is consistent and intentional, with a focus on your involvement in the communities you serve.

good community partner. Your customers will appreciate a company that cares about the population they serve. Your employees are also proud to work for a community-minded culture. Support their charities and children’s activities. If you find out that the gymnastics program one of your associate’s children is involved in is running a capital campaign, find out how you can participate. The feel-good factor of community involvement is hard to measure but provides a strong feeling of inclusion with the people you serve.

If you do not have any connections with programs that need help, ask your friends and business contacts if they serve on a nonprofit board. I am sure that you will find a charity you can support. It is best to start small with your gifts and make sure to investigate the organization

before you commit. Not all nonprofits are well-run and organized. However, all nonprofits are required by the IRS to file a Form 990 or tax return for the organization. These documents are found on GuideStar and are available to the public at no charge. They include things like the percentage of the income that goes to programs and what is needed to run the organization, including salaries. You mustn’t invest in a sinking ship, so make sure they are fiscally responsible, have a strategic plan, a budget, a cash reserve and pay their bills in a timely manner.

Service clubs are worth a serious look

Service clubs like Rotary and the Lions can also provide a conduit to charitable

giving. Rotary International focuses on eradicating polio worldwide, and the Lions run eyeglass programs for the disadvantaged. Both also offer programs to volunteer for painting or landscaping community projects. I was able to participate in a fundraising event through our local Rotary Club. We raised money for the privilege to rappel off of a 30-story office building in Philadelphia to raise money for an Outward Bound leadership program. It was exhilarating.

Consider becoming a board member

Another way to give back is to join the board of directors of a nonprofit organization. This is a serious time commitment but can be very satisfying. It is important to understand what the time commitment is but also other things, such as your yearly expected giving when joining the board. Make sure the organization is something you are passionate about, and be willing to commit resources to help the organization.

My first board invitation came from an existing board member who knew I would be able to help the organization with the facilities management of the building they owned. I felt good about my time there, and although I was not involved in the program, I was proud to help keep their building in tip-top shape for the programs. Many of my everyday contracting skills were very helpful to the cause. It was easy for me to understand their issues with the building, and it was a huge help to keep everything on track. Small cost for us but a big gain for them.

My position on their board led to similar help for other nonprofits. We helped a homeless shelter each year by receiving a large order of beds and frames for their housing. To buy beds at the right price, they purchased in bulk and needed to have the delivery from that vendor to a facility with a dock-height receiving platform and a place to discard the packing trash. We provided that at our facility late on a Friday, other volunteers picked up the beds and frames over the weekend, and everything was gone on Monday. It was no big deal for us but a huge win for the organization. Over that weekend, we saw traffic from the volunteers as potential customers that we may not have reached by doing regular marketing. There is always an opportunity when working with people you have never met before. It is truly all about relationships.

It’s all about your local community

Giving back is also a great way to support the local economy. It is an investment that will elevate the community. For example, even though a tax base funds schools, you can still support local school programs. That enriches and educates students and results in a better-educated workforce. This will lead to smarter consumers with more disposable income to spend on local businesses. Supporting the local Little League teams not only gets your business name on jerseys but also encourages exercise and healthy habits for life. A healthier youth is a more successful one. The cascading effects are positive and far-reaching. Above all, be humble and authentic when giving back.

The most important thing about giving back is to be authentic.

The heart of the matter

The most important thing about giving back is to be authentic. Providing support to organizations that you genuinely believe in is of paramount importance; As a giver, you always gain. Work with organizations that complement your small business. For instance, a roofing supplier could donate the shingles to an organization that builds homes for the homeless. If you have leftover food from your grocery store, you could donate it to a nearby food bank for people who need to feed their families.

You must be genuine in your charitable giving — and practical in your messaging about it or don’t get involved. Giving in bad faith will be interpreted as a cheesy marketing ploy that will seriously harm your brand’s reputation.

“Paying it forward” is more than just a saying — it is a real-life example of being a good community partner. u

Bill Ronayne is the President of Brandywine Valley Heating & Air Conditioning. He is the author of The Role of Volunteering in Business Success and has been providing commercial and residential HVAC service and installations for over 30 years in the West Chester Community, Pennsylvania. For more information, contact Bill at (610) 692-3900, billr@ bvhvac.com or visit www.bvhvac.com.

TAKING BUSINESS INVENTORY IS YOUR BUSINESS READY TO GROW?

“If you don’t know where you are going, every road will get you nowhere.”

Henry Kissinger

BY RYAN KALMBACH

That quote perfectly exemplifies where my brother and I were five years after our parents retired from the business. We had spent those years working hard yet had little to nothing to show for our efforts; the business was stagnant. One evening at dinner, a mentor bluntly asked us what we planned to do with the business our parents had handed us. Were we going to squander it like many second-generation owners or were we going to build on the foundation given to us to create something even greater? He challenged us to realize our potential to double the size of our business and then double it again. Shortly after that conversation, we set a Big Hairy Audacious Goal - a goal that was genuinely 10 times from our current state. If you want to grow, it starts with having a big, inspiring, long-range vision.

“In most organizations, the bottleneck is at the top of the bottle.” Peter Drucker

The

ability of the business to grow is directly related to my own capabilities as a leader.

The first place to look to determine if your business is ready to grow is yourself. I have found that when the business gets stuck, I need to look in the mirror to find the root of the issue. The ability of the business to grow is directly related to my own capabilities as a leader.

The best advice I have heard is that successful business owners need three things:

1. A coach

2. A peer group (i.e., YPO, EO, Vistage.)

3. A business operating system (Pinnacle, EOS, Scaling Up. )

Coaches and peer groups will help you grow as a leader. I have effectively used both to accelerate my leadership journey.

A business operating system provides the structure and systems needed for growth.

I have made plenty of mistakes along our growth journey, especially around people. The same people who helped you grow your business to this point may not be the same people you need to grow your business to the next level. To grow, you will need to either change the people(help them grow) or change the people (hire someone new).

As a supplier, I bring a unique perspective to the discussion of growth. A great supplier partner can assist you with your growth plans and provide needed resources and advice. Additionally, communicating your growth forecast will allow your supplier to plan accordingly

and ensure a steady and efficient supply of the products you need.

Growth brings new opportunities and new challenges. The checklists below will help you gauge whether you and your company have the foundation in place to tackle growth.

Questions to ask yourself

1. Am I emotionally and mentally prepared to “let go” and delegate responsibility to others?

2. Do I have the capacity to take time to work “on” the business every week?

3. Am I clear WHY I want to grow? A powerful “why” will overcome any obstacle.

4. How will growth impact my work-life balance and personal life?

5. Do I have a strong support system in place, both personally and professionally, to help me navigate the challenges of growth? (e.g., coach and peer group)

6. Am I willing to invest in my own personal and professional development to better lead a growing organization?

7. Do I have the resilience to handle potential failures and setbacks?

8. Am I prepared for the long-term commitment required to achieve and sustain growth?

9. Do I have a clear exit strategy or end goal in mind for the business?

Here is a checklist to determine if your business is ready to grow:

Comprehensive Business Plan

1. Do we have a clear ultimate goal or vision (Pinnacle) for our business?

2. Have we defined our strategic objectives and milestones for the next three years?

3. Do we have a detailed action plan for the upcoming year?

4. Do we have a 90-day cadence to review our plans and set priorities for the coming quarter?

People

5. Do we have the right people in the right seats throughout the organization (Over 80% “A - Players”)?

A business operating system provides the structure and systems needed for growth.

6. Do we have a plan to recruit or train the necessary staff?

7. Have we developed an organizational structure with clear roles and responsibilities for the next year?

Financial Metrics

8. Do we know our Self-Financeable Growth Rate (SFG)?

9. Do we know how much capital we will need to invest? (e.g., Trucks, inventory, tools.)

10. Do we have adequate cash reserves to support growth beyond our SFG and for capital investments needed for growth?

Budget and Forecasting

11. Do we have a detailed budget forecast for the coming year?

12. Have we identified the resources needed (additional employees, marketing, trucks, tools, inventory) to achieve our plan?

Operational Playbook

13. Are our standard operating procedures (playbooks) documented and simplified?

Customer Base

14. Do we have a solid existing customer base measured by active maintenance agreements?

15. Do we know who our target market customers are? (Our Ideal Customer)

16. Do we know what differentiates us from our target customers?

Leadership

17. Does our management team have the leadership capacity to handle the growth?

18. Do we have a high level of trust and rapport on the Leadership Team and throughout the organization?

Supplier Relations

19. Do we have reliable and productive relationships with key suppliers?

20. Have we discussed our growth plans with our key suppliers?

Even the smartest and savviest of us in the business look for that magic moment or silver bullet that overcomes every obstacle we face in expanding our business. Yet we know intellectually and in our bones that it doesn’t exist.

Spend some time reviewing these suggestions, and implement or prop up any weaknesses. If you follow through, I suspect that your next growth spurt will be a surprise. u

Ryan Kalmbach is the CEO of Johnstone Orion Distribution with 12 locations and 125 employees in California. He has more than 20 years of experience in operating a family distribution business. The core passion at The Orion Group is to partner with its customers and employees to help them to grow. Contact Ryan at www.powerofjsog.com.

BECOME A GREAT LEADER IN SEVEN STEPS

BY SCOTT BRINKLEY

Leadership is not about holding a position or title — anyone can become a great leader. For an HVAC and plumbing business to truly thrive, it needs a leader who can improve the company’s direction and its employees through a position of influence and not necessarily from a position of authority. Throughout my career, many different leaders have guided me, and these experiences have greatly shaped my understanding of what it takes to lead an organization.

Inspired and based on Simon Sinek’s theory of great leadership, these are the seven characteristics for anybody who wants to be a successful leader in the HVAC and plumbing industry.

1. Make the Choice to Help Others Get What They Want in Life

The first step to becoming a great leader is for you to decide to look after the person on your left and your right. Great leaders prioritize looking out for

A great leader will never accept all the credit because they know that the contributions of their peers and coworkers are equally significant.

others because they know that people are the foundation of the success of any organization. Importantly, when leaders look out for and advocate for their employees, this fosters a sense of trust that encourages others to do the same. Great leaders put everyone else’s best interests before their own, and they make it their No.1 priority.

2. Take Responsibility for Failures

A great leader will accept 100% responsibility for their failures and everyone else’s. They take responsibility for when the team loses or faces any adversity. Leaders who consistently hold themselves accountable for both good and bad moments demonstrate a commitment

to the team and the organization, serving as a reminder that accountability plays a vital role in the success of any company.

3. Learn to Ask for Help

Nobody can do anything alone, and we all need support from others. However, none of us are mind readers, which is why a great leader knows how and when to ask for help. This skill recognizes that a leader does not have all the answers and enables them to uplift themselves and others up by seeking support to fill the needed gaps. This also creates a culture of raising selfesteem and confidence because people feel better about themselves when they help someone. You might have recognized that these seven steps are in order for you to transform yourself. You must learn to

help others (step one) before you ask for help because if you have not done step one first, the help you get may not come from the best intentions (reciprocity).

4. Speak Last and Find Solutions Through Asking Questions

Anybody can walk into a room and say here’s the problem, with predetermined solutions on how to fix it. Most people probably will agree with your solution, but by then, you have already limited other solutions that could be just as or even more effective. Learning to speak creates an environment where everyone can be heard, fostering a culture that encourages others to share their opinions and solutions willingly.

5. Never Accept Credit for Wins

Leaders are often given credit for a company’s wins. However, a great leader will never accept all the credit because they know that the contributions of their

peers and coworkers are also significant. You must learn to humble yourself. Attributing credit to others effectively motivates them to put in extra effort, as it assures them that someone acknowledges their contributions. As a result, if they win, you win.

6. Cultivate a Positive Workplace Culture

It’s estimated that the average adult living in the United States will spend 90,000 hours — or one-third of their lives — at work. Everybody deserves to enjoy their job, and a company’s workplace culture is integral to employee fulfillment. Teams with leaders who truly invest in their employees have higher engagement, belonging, mastery, and fulfillment levels during their time at work. Moreover, with the honed skills necessary for HVAC and plumbing professionals, a positive company culture will help these organizations retain their highly skilled employees and continue exceeding customer needs.

7. Paint the Vision

Knowing where you are going is

essential to how you will get there. When leaders paint their vision in a way that everybody can see, they can guide their employees toward a common goal and create a sense of purpose in their work.

Especially with the constantly evolving nature of the HVAC and plumbing industry, from technology improvements to changes in business models, a tangible direction is the best way to keep

employees engaged and united around a common goal. In simple terms, everyone wants to play a significant role in something greater than themselves, and it is your job to help them see the future. By working to develop these seven traits, anybody can be an impactful HVAC or plumbing leader and drive others toward success. Leadership is not an inherent quality that only some people possess but rather a set of skills that inspire others to work hard and make a difference in others’ lives. u

Scott Brinkley is Senior Vice President of Operations at Redwood Services, a home services firm focused on investing in leading residential HVAC, plumbing and electrical services companies in growing U.S. markets. Contact Scott at scott@redwoodservices.com.

PHANTOM STOCK & OTHER FINANCIAL INCENTIVES HELP SMALL BUSINESS OWNERS BOOST RETENTION

BY CHRIS BUTTENHAM

Small business owners are facing an ongoing crisis.

Chronic labor shortages continue to be a widespread economic challenge for a variety of industries, particularly the skilled trades.

It’s not all bad news, however. Today’s labor market is challenging, but the right retention strategy can help employers turn those challenges into opportunities. Successfully identifying and implementing a purposeful plan designed specifically for them, businesses may even establish a commanding longterm competitive advantage in recruiting and retaining key employees.

One common result of the labor crisis is extreme turnover, which has serious ripple effects. Inexperienced staff members are more likely to work slowly or make mistakes. Without experienced employees to serve as leaders and mentors, it takes longer for new team members to get up to speed. A lack of direction and motivation may lower morale. Lack of productivity and poor service diminish the customer experience and ultimately affect the bottom line.

The growing category of phantom equity plans allows small business owners to share interest in their company with employees in innovative and cost-effective ways.

On top of that, the hiring process itself is expensive. It takes time and personnel to recruit and train new employees. Employers who effectively and consistently keep skilled workers on their team can reduce employee turnover — and the significant costs and losses associated with it.

The tighter the labor market, the more urgent employee retention is. Keeping talented employees in key positions ensures consistent, streamlined operations and positive morale. Job searchers will start to recognize your company as a workplace where employees have opportunities to do meaningful work and advance their careers — giving you an edge in recruiting top new employees.

While multiple retention tools and strategies have been available over the years, one emerging solution is proving

to be uniquely suited to address today’s workforce challenges. Phantom stock, or phantom equity, allows small business owners to extend an ownership-like stake to employees, giving them a meaningful interest in the company’s overall success and elevating the performance of key staff members.

What’s the right retention strategy?

There are many useful strategies for successful employee retention: flexible hours, opportunities for remote work, wellness initiatives, enhanced recognition and feedback, company outings, and additional training and career development options. The right strategy for any company depends on its specific goals, business structure and community. Additionally, the cost, complexity and tax implications can vary greatly.

Before committing to any plan, it’s important to consider its true value and costs. In-house training and career development opportunities, for example, can be attractive perks for employees. But there are costs attached to implementing and maintaining them. Be sure to closely compare the expected results with the expenses to ensure the company is coming out ahead.

Similarly, many workers thrive working from home or managing productivity with a flexible schedule. However, each of those incentives can be hard to monitor, opening them to potential abuse.

In the long run, there is a risk that basing your retention strategy on perks will result in complacent staff who are there primarily — or only — for the free smoothies or unlimited PTO.

Financial incentives are a proven and cost-effective strategy for keeping employees, particularly those with key roles and responsibilities that require critical skills. Bonuses and other incentives boost recruiting and retention, helping companies reduce turnover and maintain workforce stability.

Incentives tied to the company’s overall performance can be especially effective. They align the employee’s interest with the success of the business. They’re designed to motivate employees to think and act like owners and develop a strategic vision for growth and profitability to give them skin in the game.

Stock option obstacles

Employee stock option plans are a traditional example of this category. They have been common among large corporations for decades. Small businesses, however, rarely have access to such financial programs. Most companies are structured as LLCs or S corporations — structures that aren’t conducive to the convenient implementation of stock options.

Even if LLCs or S corps wanted to offer traditional forms of equity, like stock options, their ability to do so would be limited.

For those companies, implementing and maintaining other categories of bonus plans may take too much effort and expense. Researching all the possible options, identifying the right plan for their employees, executing that plan, and continually monitoring it are major investments of time and energy. Hiring a full-scale financial service to handle the job will be quicker and easier, but the cost may exceed the plan’s value in the long run.

Historically, small business owners have largely been limited to cash payments in the form of performance, holiday, referral and other lump sum bonuses. Those can be incredibly valuable retention tools. To truly succeed, however, they usually must be part of a wider strategy, which can challenge the time and budget constraints of small businesses.

Increasingly, small business owners are looking for affordable ways to amp their retention rates with financial incentives similar to the ones that large corporations have enjoyed for so long. How can they see the same results that enterprise companies have benefited from for years?

Cost-effective enterprise-level benefits for small businesses

The growing category of phantom equity plans allows small business owners to share interest in their company with

One

advantage of phantom stock and other equitybased incentives for small businesses is value.

employees in innovative and cost-effective ways. It’s a win-win situation. Phantom stock provides unprecedented long-term value for both parties.

Phantom stock is an increasingly popular and affordable complement to traditional profit-sharing concepts. With a phantom stock plan, employees have a stake in the potential success of the company without having actual equity or shares. Phantom stock is a promise to pay a cash bonus equal to the value of a certain number of company shares, typically paid out after a set time frame or in response to a trigger event, such as retirement or the sale of the business.

They’ll have the same interest in the company’s overall success as employees participating in profit-sharing, with the expense deferred and spread out. Participants won’t earn regular dividends, but they could share in the profits. They won’t have voting power like stock owners, but they’ll have a tangible motivation to perform at the highest

positions those owners to plan the perfect exit and gives employees a tangible financial motivation to help the company succeed.

Innovation for sharing equity has typically been limited to large corporations. Long-term employee retention is a critical, ongoing issue that is having real effects on the lives of small business owners across the country. Phantom stock plans bring enterpriselevel innovation to those small businesses that are the backbone of the American economy. u

Chris Buttenham is co-founder of Reins, a pioneering technology firm founded in 2023 dedicated to empowering small businesses through modern equity solutions. Reins’ proprietary solution, the Modern Agreement for Rewards and Equity (MARE) program, was built by attorneys and is customizable to meet each business owner’s needs. Contact Chris at (725) 213-4213.

level. They’ll also have a reason to remain at the company long-term.

One advantage of phantom stock and other equity-based incentives for small businesses is value. A phantom equity provider can help small business owners identify the right plan for their company. With our proven strategies and solutions, experts can keep a company’s benefits competitive with those of larger companies so you can attract and retain the talent you need to stay ahead in your market.

A growing number of owners are reaching the age where retirement, succession and legacy are prime concerns. Phantom stock

IT’S ALL ABOUT YOUR EMPLOYER VALUE PROPOSITION RECRUITING VS. TALENT ACQUISITION:

BY STEFFAN BUSCH

I’ve been involved with recruiting for nearly 20 years, and I’ve seen a lot of recruiting strategies and trends come and go. A few years ago, I saw a new term: talent acquisition. At the time, I figured the term was just the newest buzzword for recruiting. Big deal. I moved on and continued to call what I do “recruiting.”

Last year, we hired a new Recruiting Coach, Jason Florek. Not long after starting, he asked me why we use the word “recruiting” as opposed to “talent acquisition.”

I asked, “Why shouldn’t we? What’s the difference?”

His response changed my thinking on the matter.

Jason told me that recruiting involves trying to convince someone to do something. When we’re recruiting, we’re attempting to convince people to work with us. Talent acquisition, on the other hand, is using strategies, tactics, and processes for identifying, recruiting, and retaining talent for organizations. It involves developing, implementing, and evaluating programs for sourcing, hiring, orienting, and retaining talent. Talent acquisition also considers the cultural impact an individual will have on an organization.

That makes sense. I’m on board now. And if we all want to switch from being a recruiting organization to being a talent acquisition organization, where do we start?

The first thing to do is create an Employer Value Proposition (EVP). An employer value proposition is an

There’s more to rewards than compensation and benefits. Total Rewards also includes training and development opportunities.

explanation of why someone should consider working at your company.

High-performing people (the people you want working at your organization) are currently working … somewhere else. Why should they consider leaving their current situation to work with you? What sets your organization apart from others in this industry? Now, these aren’t easy questions to just answer off the cuff. Pay and benefits are important, but it’s more than that.

Three major components make up an effective EVP.

The first (and most important) component is Leadership and Culture. As author John Maxwell says, “Everything rises and falls on leadership.” Your leadership offers a framework for your company’s culture. As a leader, how do you show up to work every day? Are you connecting with your employees? Are you checking in on them? How does your presence make them feel? Are you facilitating opportunities for them to connect? When you take ownership of how you show up as a leader and commit to showing up as your best self, you’re creating the foundation for a strong company culture, which then allows your employees to really flourish. Strong relationships between employees and leadership are the real reason people stay at organizations. Relationships are the foundation of a strong company culture.

Another important part of your company culture is your business’s mission, vision, and values. Having a strong set of mission/vision/values statements and living them goes a long way.

The second major component of an effective EVP is your Products and Services. As a recruiter, when I talk to someone from outside of the industry, the first thing I want them to understand is that the skilled trades are an essential service. They’re always evolving, but the trades can’t be offshored or outsourced. This industry literally protects people’s health.

And protecting people’s health and comfort should be important to the employees you recruit. Years ago, when I was training a roomful of technicians, I asked them what gets them up in the morning. The overwhelming response was, “I love using my skills to help people and solve their problems.” The best technicians in this industry get a great deal of satisfaction from helping others, including their team members and customers. Of course, some technicians choose commercial, new construction, or industrial roles, and that’s great, too, because we need their skill sets and expertise as well. However, keep in mind that your mission as the owner of a residential HVAC company, is to acquire technicians who love helping people.

The third component of your EVP is Total Rewards. There’s more to rewards than compensation and benefits. Total Rewards also includes training and development opportunities. It includes employees’ work environment – is your shop environment clean and organized? Is it comfortable? Are the trucks stocked and well-kept? It includes the work/ life balance for your employees. Do you seek to create a flexible work schedule to help prevent employee burnout? Do your employees have enough time off? Total Rewards even includes your level of community involvement and fostering a sense of belonging, affirmation and meaning. People want to be proud of where they work, and companies that are active in their community have better employee retention. No, your work colleagues are not family, but they are a team. And the best teams work well together and support one another, which helps build a successful organization.

As you can see, creating an effective employer value proposition is the way to know you’re heading in the right direction for talent acquisition. Knowing what your company brings to the table is the first step toward recruiting the best and the brightest in this industry. u

Steffan Busch is an Executive Recruiter and Talent Acquisition Coach for Nexstar Network, where he helps support the world’s best tradespeople on their quest to become the world’s best businesspeople. Contact Steffan at SteffanB@NexstarNetwork.com.

Steffan Busch Super Meeting Breakout

PROVIDED BY KEVEN PRATHER, CFBS

When It’s Time To Update Your Estate Plan

Estate planning—how you transfer your wealth to heirs and others—can be very important for anyone who wants to be certain that you have adequately provided and taken care of their loved ones.

Chances are, you know that—and you have an estate plan in place. But if you think your current plan is where it needs to be, you might want to think again. We often find that affluent individuals’ estate plans are more than three years old. Some reasons why that’s a potentially big problem:

• Continual changes in tax laws mean that older estate plans may not take full advantage of current opportunities to transfer assets optimally.

• Tax law changes also could mean that some aspects of an older estate plan are no longer effective.*

• Changes in your wealth status mean that your estate plan may no longer accurately reflect your financial situation.

• Changes in your personal and family situation may make your estate plan ineffective in accomplishing what you actually want it to do, given those changes.

The upshot: It’s a good idea to stay on top of your plan and revise it when appropriate—especially when events occur that could potentially affect your wealth.

We believe that strong estate plans involve two key components: technical expertise and the human element.

Technical expertise

Exceptional estate planning demands a deep understanding of the laws, rules, and strategies involved, many of which can be highly complex.

The tools and techniques of exceptional estate planning can range from the basic to the cutting edge. From the technical side, some estate planning strategies and tools you might end up considering are:

Trusts. In many ways, trusts are often cornerstone solutions for many successful

Continual changes in tax laws mean that older estate plans may not take full advantage of current opportunities to transfer assets optimally.

individuals and families. A trust is a means of transferring property using a third party (the trust). Specifically, a trust lets you transfer the title of your assets to trustees for the benefit of the people you want to care for—also known as your designated beneficiaries. The trustee will carry out your wishes on behalf of your beneficiaries.

Partnerships. As with trusts, there are many types of partnerships. They can determine how the partners of a business address ownership issues, and they have varying tax benefits. For example, within the business world, disharmony among family members or unrelated business partners can mean a higher tax bill if elements force the owners to divide assets among the partnership’s members. By using sophisticated partnership structures, business owners can divide their companies and possibly reduce taxes.

A PLAN THAT REFLECTS YOUR GOALS

The human element

The true goal of exceptional estate planning is to transfer your wealth in accordance with your wishes. The role of an estate planner—who may be a top lawyer, accountant or wealth manager—is to make it possible for you to achieve your desired agenda and to be as tax efficient as possible in pursuit of that agenda.

That’s where the human element comes into play. While technical expertise is absolutely required, the human element— understanding your agenda on a deep level and then designing a plan around that agenda—distinguishes exceptional estate planning from merely good estate planning.

That’s because today, most estate planning legal strategies and financial products are commonly accessible. So a big difference among estate plans and planners

FINANCE

as perpetually being a work in progress.

is the ability to put the pieces together to get the desired results.

Clearly, then, an estate planner you work with should deeply understand you—your situation, values, goals and concerns. Without that knowledge, the tools themselves (good as they may be, technically) might not get you what you want because they’re not appropriate for the job you want done.

A process to follow

There is a process you can follow that we believe can potentially increase your chances of ending up with an exceptional estate plan that satisfies the technical and human aspects and reflects your latest thinking on your needs and goals.

1. Start with the end in mind. Start by thinking through what you want to have happen—the outcomes you ideally want to see occur. For each possibility, you must specify what happens to your assets. You’ll also need to decide who is in control at different points in time—making decisions such as when your children will have control of the assets.

2. Determine your desired results. Share your desired results in each scenario with an estate planner you find highly capable. They should be able to come up with ways to enable you to best achieve your preferred results.

3. Make a decision. Choose a course of action based on input and insights from the estate planner.

4. Implement the plan. Once you have decided, the estate planner will formalize everything and create the estate plan.

Important: Don’t ignore your plan once it’s done. Revisiting an estate plan every few years should be part of your agenda. It’s best to think about your exceptional estate plan

If you have any doubts about whether your estate plan is likely to achieve your wishes, consider having a wealth management advisor work in conjunction with your estate planning attorney to review the plan and your particular situation to answer two questions:

• Is the plan likely to deliver the outcomes you currently want?

• Is the plan missing anything that can make it more effective or efficient?

Conclusion

Estate planning should be a part of ensuring the outcomes you want in your financial life and the lives of the people you care about most. What’s more, your existing estate plan needs to be reexamined occasionally—and revised if necessary. u

Contact Keven at (440) 895-7515, kprather@financialguide.com, or visit www.TransitioNextAdvisors.com.

* Tax laws are subject to change, which may affect how any given strategy may perform. Always consult with a tax advisor.

Keven P. Prather is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. www.sipc.org. Supervisory Office: 1956 Carter Rd., Suite 200 Cleveland, OH 44113. 216.621.5680 TransitioNext Advisors® is not a subsidiary or affiliate of MML Investors Services, LLC or its affiliated companies.

Neither TransitioNext Advisors, MML Investor Services, LLC. nor their representatives provide legal or tax advice. Consult your attorney and/or accountant for such advice. CRN202709-7140559

ACKNOWLEDGMENT: This article was published by the VFO Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2024 by AES Nation, LLC.

BY RUTH KING FINANCE

12 Most Common Financial Statement Mistakes to Fix Before You Sell – Part 3

Whether planning to sell your business to family, employees, or outsiders, you must show a potential buyer clean, accurate financial statements.

There are 12 common financial statement mistakes that you must avoid. I’ve written about operating your business on a cash basis rather than an accrual basis, profit and loss statement date that doesn’t match the balance sheet date, a balance sheet that doesn’t balance, and a negative gross profit. This month, I’ll write about Mistake No. 5.

Remember, to present your company well, you must have clean financial statements showing that your company is growing in profitability.

Mistake #5: Negative Cash

It is a serious problem to have negative cash in the bank. This means you’ve overdrawn the bank account. If this were the case, then you would incur huge bank fees and eventually, the bank would close your account.

This figure is a graphical representation of why you should not have negative cash. Assume this is a tank of cash rather than a tank of water. The spigot at the top brings cash into the tank. This happens mainly through collections of revenue (not the bill to the customer). Occasionally, you’ll get interest from savings accounts, cash from the sale of assets, or an infusion through borrowing from a line of credit or an equity investment.

The drain at the bottom takes cash from the tank. Generally, you do this through payment of invoices, payroll, loan payments, and other normal business expenses. Occasionally, it will drain because of asset purchases, tax payments, or loan payoffs.

There is a certain level of cash at the beginning of the month.

It is a serious problem to have negative cash in the bank. This means you’ve overdrawn the bank account.

The spigot opens, and your company receives cash from one of the sources listed above.

The level of cash in the tank rises.

At the end of the month, the spigot closes.

During the month, the drain opens to pay payroll, bills, and other expenses listed above.

The level of cash in the tank drops.

At the end of the month, both the spigot and drain are closed. There is a level of cash in the tank. It has to be at least a penny or your company is out of business. This is why you should not have negative cash on your balance sheet. You’ve got to have at least a penny in the bank.

So how does a company get negative

cash? Generally, bookkeeping errors.

Many times, bookkeepers print the checks that require payment during the month and keep them until there is cash to cover those expenses. At the end of the month, there are still checks sitting on the bookkeeper’s desk. The payments have been deducted from cash in your accounting software. It doesn’t care whether there is negative cash or whether you’ve sent checks to suppliers.

For QuickBooks® users, bookkeepers may sometimes make deposits directly, bypassing the ‘undeposited funds’ general ledger category.

This pays bills. There is a huge positive balance in undeposited funds and a negative cash balance.

The “cash tank” shows you why you should not have negative cash on your balance sheet. If cash is negative, a potential investor will know that your financial statements are incorrect and be less likely to invest in your company. u

Ruth King has more than 25 years of experience in the HVACR industry and has worked with contractors, distributors and manufacturers to help grow their companies and become more profitable. Contact Ruth at ruthking@hvacchannel.tv or at (770) 729-0258.

PRODUCT FOCUS »

A. O. SMITH

A. O. Smith announced the addition of the Point-Of-Use (POU) Electric Tankless Water Heater to its family of tankless products. The new unit features a reduced, compact footprint, making it easy to install at or near fixtures in light commercial and residential applications. The POU tankless water heater does not require venting, making it an ideal fit for a variety of applications that need immediate hot water on site, including lavatories, isolated sinks, emergency fixtures, boosters and more. The unit is equipped with continuous dry fire protection, which prevents it from firing without water in the system. www.hotwater.com

BALTIMORE AIRCOIL CO.

Baltimore Aircoil Company Inc. (BAC), announces the launch of its AI-driven Loop™ Platform, an advanced AI platform that seamlessly integrates with existing cooling tower systems. This compact yet powerful device is engineered to optimize operational efficiency by continuously monitoring and adjusting for environmental conditions. Its AI algorithms analyze data in real-time, ensure optimal performance and enable predictive maintenance. The result is significant energy savings, reduced maintenance costs, and extended equipment lifespan. www.BaltimoreAircoil.com

JOHNSON CONTROLS

Johnson Controls (NYSE: JCI) announced the launch of the YORK® YVWH Water-to-Water Dual Variable Speed Screw Heat Pump, the first screw heat pump in North America to use R-1234ze refrigerant. R-1234ze is a refrigerant with an ultra-low global warming potential (GWP) of 1, enabling the YVWH to go considerably beyond the refrigerant regulations that go into effect starting Jan. 1, 2025, as currently proposed by the U.S. Environmental Protection Agency. The YVWH is three times more energy efficient than a typical boiler and four times more efficient than traditional boiler and chiller equipment. www.york.com

PUMP ALARM

PumpAlarm.com, announces the launch of the TextLight Temperature Monitoring Kit. Designed to address concerns related to both high and low-temperature conditions, this kit provides a comprehensive solution for temperature monitoring across commercial, industrial, and residential settings. It includes a TextLight Alarm Unit, a temperature switch, a 6VDC rechargeable battery with mounting pocket, a bushing, an accessory bag, and a user guide. simple mounting options and compatibility with most open-air setups. The kit is accessible to users of all skill levels. The non-submersible sensor is designed to be mounted adjacent to mechanical systems, such as water pipes and air handlers, ensuring accurate temperature readings without the risk of damage from immersion.

www.PumpAlarm.com

TAPHERO

TapHero announced the launch of a mobile app and teleservice platform that enables service businesses like HVAC vendors to monetize oneon-one video chats with customers. The technology is comparable to telemedicine, but for service providers. With TapHero, a tradesperson can seamlessly earn revenue by delivering services without a physical visit. The provider’s customers benefit from TapHero by getting rapid, economical access to services that are conveniently paid for through the app.

www.taphero.com

TITUS

Titus has launched the Nexus OR (Operating Room) Suite, an all-in-one OR system that delivers clean air and high-quality lighting, while maximizing space and performance in hospital operating rooms. The fully-customized system features a modular design using combinations of airflow diffusers, gel-seal HEPA filters and LED lights that allow for virtually unlimited layout options. With this flexibility, the system can be designed to meet exact OR specifications with fast and quiet installation. The Nexus OR Suite is available in two customizable models – a standard model and a heavier-duty model, the Nexus OR Suite-S, that can accommodate a wide range of suspended equipment, including all necessary lighting and booms.

www.titus-hvac.com

PLATINUM TOOLS

Platinum Tools® has launched its new PT-OTDR-100 mini OTDR tester. The Platinum Tools PT-OTDR-100 mini OTDR tester provides a solution for OTDR testing that is simple to set up and easy-to-use. It includes a 5.5 inch OLED touch screen for easy viewing of cable tests and can save and export your OTDR tests. This unit will perform OTDR tests, OPM, VFL, and laser source functionality for fiber optic cable and will also perform continuity testing and TDR for Category cable.

www.platinumtools.com

VIEGA

Viega has released a new line of MegaPress® Transition Couplings that can be used to transition between galvanized or carbon steel pipe and copper, PEX, or stainless steel in seconds. The company will be offering three products available in ½” to 2” sizes: • Viega MegaPress ZL Bronze IPS to CTS Transition Coupling (Model: 4813.4ZL) – This transition coupling includes a factory-installed EPDM sealing element and is ideal for transitioning between IPS and CTS piping systems, including PEX. www.viega.us

20QUESTIONS >>

with JEFF UNDERWOOD

Publisher Terry Tanker spoke with Jeff Underwood, President of RectorSeal. The two discussed living in Texas, family, selecting a management team and introducing new products, the impacts of business travel on managing the company, and the make up of a good HVAC contractor.

1. What is your favorite thing to do in Texas?

I enjoy hiking and camping with my family.

2. Do you listen to podcasts?

If so, what are your top three? I do. My top three would be The Daily, Freakanomics and How I Built This with Guy Raz.

3. Do you live on a ranch, farm, or just the wide-open spaces in Texas?

I live on a farm. We have about 40 animals between chickens, goats, ducks, cats, a dog and some show cattle. My sons are active in 4-H.

4. Have you ever gone hog hunting?

Texas has a huge problem. I’m not a big hunter, but it is a real problem where I live.We have seen them come onto our property on a more regular basis and are fortunate to have neighbors who help trap and hunt them.

5. You entered the HVAC industry as a consultant. What attracted you to stay in HVAC?

I had the good fortune to work with a great leadership team at Goodman when I was a consultant. They were a team that I was excited to work with. Once joining the HVAC industry, my co-workers, customers, and friends have been a strong reason to stay.

6. In the past, you’ve moved up quickly in organizations. What’s your secret?

I have been blessed with some amazing opportunities. Aside from the typical answer, I would credit a strong sense of curiosity, a desire to serve others and a desire to win.

7. What is your favorite part of managing an organization?

Being able to work with my friends, as well as people that I genuinely enjoy. Moreover, the role at RectorSeal is different in that we are an ESOP (Employee Stock Ownership Program), and there is a strong sense that the organization’s performance directly impacts everyone’s financial well-being.

8. What do you find most challenging about managing a company?

The pace and depth of the travel. I find it important to be at our 10 manufacturing and distribution sites with our team on a regular basis, as well as to talk to our customers.

9. RectorSeal has recently completed several acquisitions. What’s the plan for the future?

Our vision has been to make it easier, faster or

more reliable for the HVAC tech or installer to do their job. We will continue to add on products and companies that help us meet that vision, especially staying ahead of market trends.

10. What is your greatest achievement so far?

My family. I am fortunate enough to have been married for over 15 years and have three boys that I take great pride in seeing grow and mature.

11. How did you put your management team together?

I have tried to recruit folks that I have known professionally and that I think share my values and work ethic.

12. What characteristics do you look for when hiring?

Aside from the standard qualifiers, curiosity is the most important differentiating factor.

13. What do you think personifies a successful HVAC dealer?

HVAC dealers are often the backbone businesses in most of their communities they serve. My friends who have excelled as HVAC contractors have done it by being technically sound, treating their customers fairly and treating their teams exceptionally. Their businesses are driven by word of mouth, with a high level of recurring customers over an extended period.

14. How does RectorSeal ensure that they offer high-quality products?

RectorSeal is fortunate enough to have a quality reputation. A major focus over the last decade has been to improve those quality systems, as well

switches get run test three times before being shipped to a distributor. As a result, our warranty claims rate is very low, even with us being the first parts manufacturer to offer a standard 3-year warranty on all products.

15. RectorSeal is a company name and a brand name. Does it cause any confusion?

Only a nominal amount of products are branded RectorSeal. We view ourselves as a House of Brands, with a portfolio of contractor-developed or contractor-supported brands, such as TRUaire, Safe-T-Switch, Novent, etc. In the coming year or so, you will see us do a better job of conveying the value of RectorSeal as a manufacturer for our brands while letting contractors know the full breadth of brands we offer.

16. How has technology changed the relationship between a supplier like RectorSeal and a distributor or manufacturer’s representative?

It allows for it to be more robust and direct. In the past, you had a game of telephone to reach contractors and explain why you have a better product to serve their needs. Now, there are multiple avenues to have that conversation. This includes a dedicated Inside Sales team, in addition to our Outside Sales team and manufacturer reps, that call, email and provide samples to contractors. These conversations expose contractors to new products, as well as provide feedback on their needs.

17. How often does RectorSeal plan to introduce new or enhanced products?

This year, we are targeting 15-plus product launches, in addition to integrating the products from our recent acquisitions.

18. What is one RectorSeal product that every HVAC dealer should use?

Surge & voltage monitoring. It is going from a niceto-have to a best practice on all multistage installs.

19. What do you think will be the next big thing in the HVAC industry?

Acceleration of the current trends of energy efficiency, greater diagnostics, electrification (heat pumps) and indoor air quality.

20. As A2L refrigerants are introduced, what challenges are created for component manufacturers?

The change has been much less impactful for the component side. We have focused on ensuring that all of our refrigerant products work well with A2L refrigerants. This required nominal changes on some elastomers.

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