HVACR BUSINESS MAY 2023

FEATURES

6 From Zero to Six Million

Bart Hawley shares his journey from technician to inexperienced business owner to successful entrepreneur and adds ways you can achieve the same outcome.

By Bart Hawley

8 The Compensation Equation™ Part 2 — Compensation’s Impact on Profitability

In Part 2 of the series, the focus is margins, profitability, and total labor. Crew explains how to use The Compensation Equation™ to determine true profitability.

By Chris Crew

10

Establishing Long-Term Success by Eliminating Financial Barriers

Overcome the financial barriers that can plague any growing business and find success.

By Mike Disney

14 From the Website Click to the Five-Star Review

Ensure that the service call doesn’t end at the booking but continues with a five-star review by learning simple steps.

By Will Merritt and Derreck Hofrichter

COLUMN

18 Hold on Tightly to Top Employees

Follow the advice outlined in this piece and ensure your company’s success by retaining your best and brightest employees.

By Paul Grunau

19 What’s the Point of Asset Protection?

This installment delves into asset protection and why it’s vital for any business owner.

By Keven Prather

20 Are You Calculating Overhead Correctly?

King shares her formula on how to calculate overhead correctly.

By Ruth King

DEPARTMENTS

5 Editor's Notebook

The Power of Yes

An editorial about the importance of leading with a yes mindset as a business leader. Heather Langone

4 MRS | Your Financial Compass

You need to know where you are going to reach your destination, so we share two of the best financial podcasts to help you get there, with one by our own Ruth King.

21 Product Focus

22 20 Questions with Julian Scadden

President

and CEO of Nexstar Network

Your Success Compass Management Resource Shelf

In business, it’s important to have a plan and an ultimate destination as part of your overall vision. So, while you should never make your company a cookie-cutter version of anyone else’s vision, it is smart to hear others’ experiences and gauge your current professional performance. This month we offer podcasts and books that will help you navigate the road to HVACR business success. All of these choices are by experienced HVACR industry experts! As usual, we have done all the heavy lifting for you!

HVAC Masters of the Hustle

By Jason Walker, Don Johnson, Chris, Micah & Eddie

This Podcast is directed toward the HVAC industry. On this podcast, we will talk to high-volume closers and learn the secrets to their success. We will also talk shop talk as well of the everyday life of sales, HVAC Tech, and Dispatchers. You will learn the insides and outs of how to prepare yourself daily to ensure that to make it to the top 1%.

https://hvacmastersofthehustle.libsyn.com/

The Contracting Handbook

By Mike Knoche

Mike Knoche has been running his general contracting business for 16 years. In The Contracting Handbook, Mike shares his successes, and failures and asks other industry leaders to join him in a discussion of how to run a contracting business! The Contracting Handbook podcast discusses the behind the scenes running of a small contracting company. It’s everything from starting up, to working with employees, subcontractors, and clients.

https://www.thecontractinghandbook.com/

It’s Go Time

By Ben Stark (Author),

Contractor Cents

By Ruth King

Ever heard of the Home Comfort Book?

I hadn’t until Nate Adams stopped by the Women in HVACR booth at AHR. Nate graciously gave me a copy of the book, This is something you might use in your business. Nate explains the details behind the Home Comfort Book.

https://contractorcents.podbean.com/ e/contractor-cents-episode-263-home-comfort-book/

HVAC R&D

By Dennis and Rhydon

With over 30 years of combined experience, Dennis and Rhydon delve into business development discussions and technically informative talks, but mostly veer off track into stories about shenanigans and life in the HVAC industry. As contractors, with wholesale distribution and manufacturers representation sales and technical training, these two are changing the game and spreading their belief that the future of trades is about education and growth. If you don’t evolve, you will certainly dissolve.

https://hvacrnd.podbean.com/

Chris

Hunter

(Author), David E.

Rothacker

(Author), Matt Michel (Foreword), Mark Matteson (Contributor), Angie Snow (Contributor)

This HVAC book is written by two of the most successful individuals within the industry, Chris Hunter and Ben Stark. They found success in the HVAC industry and felt a deep desire to give back to the community by writing a book that outlines their profound success. https://www.amazon.com/Its-Go-TimeInsights-Strategies-Home-Service/ dp/0578753359/

Good to Great: Why Some Companies Make the Leap and Others Don’t

By Jim Collins

Good to Great studied a series of companies and the findings will surprise many readers and shed light on virtually every area of management strategy and practice. Marketing research done for you!

“Some of the key concepts discerned in the study,” comments Jim Collins, “fly in the face of our modern business culture and will, quite frankly, upset some people.”

Perhaps, but who can afford to ignore these findings?

https://www.amazon.com/Good-GreatCompanies-Leap-Others/dp/0066620996

THE HVACR MANAGEMENT MAGAZINE

TERRY Tanker

Publisher ttanker@hvacrbusiness.com

HEATHER Langone Managing Editor hlangone@hvacrbusiness.com

MEGAN LaSalla

Art Director mlasalla@hvacrbusiness.com

BRUCE Sprague Circulation Manager bs200264@sbcglobal.net

BARBARA Kerr VP Operations bkerr@hvacrbusiness.com

BY HEATHER LANGONE

EDITOR’S NOTEBOOK

ADVERTISING STAFF

ERIC Hagerman

VP Sales

Tel 216-409-3246 ehagerman@hvacrbusiness.com

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©2023 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 ©2022 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)

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

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

The Power of Yes

As a leader, the example you set for your employees sets the tone for the entire company. Leaders tend to be very adept at saying “no” and moving on. Decisive and direct leadership is often the mark of a successful entrepreneur. But while it’s important to say no, especially when saying yes can mean going over budgetary guidelines, being open to the yes possibility can lead to great opportunities and often, necessary change. While various business gurus opine the notion that saying “no” takes a certain amount of fortitude, it is also true that saying yes does not always mean you are a doormat. The ability to be open and listen often requires you to step out of your comfort zone which is just as courageous.

There are many reasons why having a yes mindset can uplevel your business and by default, open up opportunities that you may not have seen.

Avoid saying no to something you could easily find a way to say yes to with a little effort or creativity. Practice taking yourself out of the equation for a moment and viewing things from an outside perspective, free of your own judgments or opinion. Ask “What’s possible here?” You’ll be surprised how many times you can find a simple ‘yes’ when you just look for it.

Here are a few of the best reasons to change your first reaction from no to YES.

Create an Open Forum for Ideas

As a leader, if you adopt a yes mindset, you are saying to your employees that their ideas matter. Creating an open forum for ideas, and listening with a yes mindset, leads to innovative ideas. That kind of listening can only enhance your business. If you are so accustomed to saying no to every employee, you will miss the brilliance that may be lurking just beyond your office.

Remember that your way is not the only way. Avoid saying no to something you could easily find a way to say yes to with a little effort or creativity. Practice taking yourself out of the equation for a moment and viewing things from an outside perspective, free of your own judgments or opinion. Ask “What’s possible here?” You’ll be surprised how many times you can find a simple ‘yes’ when you just look for it.

Encourage Individuality

Having a yes mindset doesn’t always mean you have to say yes to every idea, but creating a yes environment encourages individuality and sets up a culture where people want to contribute. And since you have hired each person for their strengths, being open to hearing new ideas encourages individuality which can only serve to strengthen the team.

‘NO’ Closes the Door

As the head of the company, you set the tone. If your first reaction is to say no, your employees will sense that and stop taking the initiative. That culture only leads to stagnation, lack of productivity, and high turnover. And if you have gotten this far in the business world, it is because someone said yes. So, think about people as your assets. Would you say no to assets, to capital, to a potential inlet to more wealth?

Most people would laugh at that notion. Don’t close the door before you hear the idea.

What happens if you cannot say yes to the idea or strategy? Challenge yourself to ask to hear more before you snap to a dismissive reaction.

Changing your patterns may require a certain amount of confidence in your employees, but truly it requires trust in your ability to lead by inspiring rather than micromanaging. So, when you jump to say no, delay your rush to judgment and try asking instead, “Tell me more.” Then listen with an open mind. Even if it isn’t right, it may inspire an option you hadn’t thought of.

As your company grows, remember that saying no will move you in the direction you have been going. It will accomplish all the things you need. But being open to the possibility of another way may move you in a direction you never thought possible. Give your company and your employees the chance to grow – the possibilities are endless. u

SUCCESSFUL HVACR OWNERSHIP

FROM ZERO TO 6 MILLION

BY BART HAWLEY

In 2015, I had a good-paying job at a reputable HVACR company. I was a respected commercial service technician, and I enjoyed my job. Although everything was good, I was attracted to what Michael E. Gerber calls the “entrepreneurial myth” – more money, more freedom, respect, an abundant life, all of it. So, with four kids and a stay-at-home wife, I quit my steady job and set out to live out the American dream. I had about $20,000 in a retirement account and a couple thousand in my savings account when I took a leap of faith.

In the beginning, about 99% of my work came from a couple of property managers whom I’m pretty sure owned all the worst homes in our area. These were the worst roach-infested, rat-infested homes you can imagine. I’m also positive that I gave a discounted rate to every crazy cat lady in town. It was bad. One time I was working at a rental and the tenant stole my torches out of my van while I was trying to fix their AC. It wasn’t good, but I had a family depending on me. So, through pure pig-headed determination, I made it work.

I knew I had to find someone who could help. I started listening to business podcasts to educate myself.

Finding a Formula to Grow

After about two to three years of working in the worst possible HVACR environments, I realized that the one-man show, being the cheapest guy in town, was not the American Dream at all. I knew I had to find someone who could help. I started listening to business podcasts to educate myself. At first, I listened obsessively to The Home Service Expert Podcast with Tommy Mellow. I noticed you featured this in HVACR Business’ monthly column Management Resource Shelf. It was very helpful for me. He talked about growing your company, delegating, managing, marketing, customer service, and all of the necessary components that go into running an HVAC company. Although I had been in the industry, honestly I had never been exposed to this side and I bet that many newer contractors can relate. In one

episode he interviewed Ken Goodrich the CEO of Goettl who gave his story of how reading the E Myth by Michael E. Gerber changed his life. After hearing about that interview, I immediately purchased the book. I figured if it worked for him then it could work for me. It did. It has changed my whole perspective.

Running Your Business Like a Franchise

The E Myth approaches building your business as if you plan to franchise it. And to do that, you need documented processes and procedures for everything. By default, if you follow the steps, you then have a very good foundation. So, I followed his advice. Gerber uses McDonald’s as the best processes and procedures example. It is an international multi-billion dollar company yet it still has such good processes that it can

be run, in some cases by after-school workers. I took the steps seriously and spent hours writing job descriptions and processes – even for jobs I didn’t even have yet. I covered all the positions –from managers to bookkeepers, marketing staff, warehouse personnel, to every other position I could think of. At the time I was still a one-man show. I had one fulltime employee. But the practice of setting up the foundation for my business helped to clarify my vision. I knew that I wanted to work directly with homeowners and get away from the property managers. I could not wait to make this a reality. The first step for me – build an online presence and hire some great people.

Putting Principles Into Practice

Now that I had my job descriptions and some processes, I set about finding people to fill these positions. In 2017, I got lucky with my first hire; he was wanting to change careers. Several of his family members were in the HVAC trade whom I had worked with in the past and

he had some experience, so it worked out great. He is still with me today and is my top salesperson and like a brother to me. I hired my stepson as a service technician. He brought several of his friends and I was able to bring a few more of my friends onto the payroll. By 2020 I had seven employees. At that time, we were working out of my home and we rented a storage building to put leftover materials in. In early 2020, we moved into our first building a 4500-square-foot office/ warehouse space. It was beginning to feel like a real company but knew I was going to need some help if I was going to take it further.

Get a Coach

In 2020 I signed up for coaching with Business Development Resources (BDR). They were a huge help in training me to be more business-minded which included accurate books, knowing my numbers, presenting options to customers, offering to finance, and how to absorb those costs and also help to redefine those job descriptions and how to manage people which I had never done. Finding some coaching in the areas I just listed is huge if you are trying to go from a technician to a business owner or even grow to the next level. I highly suggest you spend the money and get a coach or mentor to help. I have the hustle, but most of the business end is not common sense or at least it was not for me.

values. After you define your processes and procedures, identify your values. I often return to these basic concepts. I have a couple of values that are firm and I always go back to them.

1. As a Christian, I hold true to the value: Do the right thing. It isn’t always easy because making money at all costs is not one of my values. I try my best to help people. I treat my coworkers, our customers, and our community with respect. I always treat them like I want to be treated, and even when it’s hard, I do the right thing. I feel like that is why good things have come to me.

2. Hire good people who are flexible enough to change. As we grow, we have had to consistently change processes and procedures. Any good company will experience these growing pains at various points. For us, the dynamics have changed as we added new jobs, our customer base changed, and the market fluctuated. Nobody likes to change so it was key for me to have a great group of people who would be willing to change with our growth.

Jenkins, Victor Rancor, Jimmy Hiller, Peterman Brothers, and the list goes on – and HVACR Business Magazine is a great resource. None of the people or companies I follow probably know who I am but I pay close attention

to them. I listen to what they say and I try to implement the steps they suggest. These are mentors and they don’t even know it.

The $20,000 I had in my retirement account when I started is still there. I never touched it. We are getting better every year and don’t plan to stop or slow down. No matter what stage you are at, find someone who is doing it well, emulate them and you can get there. u

By the spring of 2021, having followed all the steps laid out by other successful entrepreneurs, I felt like we had enough customers to end relationships with our property management companies. Today we have a team of twenty-five employees. We have an awesome leadership team, and we continue to grow. We have a warehouse manager, a service manager, an installation manager, and a financial controller. 2023 is looking to be our best year yet.

Money vs. Value

One of the key components, as I grew, was no matter how big my company got, I knew who I was and what I wanted it to represent – my personal and professional

3. Find good coaching or mentors. BDR has been great for me. And we were fortunate to be accepted into the Nexstar Network in late 2022. See our 20Q Interview with Julian Scadden Page 22 or go to https:// www.hvacrbusiness.com/news/twentyquestions. Our experience with them has been great so far! They have some incredible processes, procedures, and a large network of highly successful contractors. They are also helping us raise the bar on our customer experience. I couldn’t be more excited to continue to take advantage of their resources.

4. Commit to consistent improvement – I read a lot, listen to podcasts, and study the companies and owners I look up to. Tommy Mellow, Ken Goodrich, Ismael Valdez, Chris Yano, Paul Kelly, Josh Kelly, Morris

Bart Hawley is Owner, and CEO of Hawley Heating and Cooling.

By the spring of 2021, having followed all the steps laid out by other successful entrepreneurs, I felt like we had enough customers to end relationships with our property management companies. Today we have a team of twenty-five employees.

Training,

THE COMPENSATION EQUATION

Compensation’s Impact on Profitability

PART TWO OF A THREE PART SERIES

BY CHRIS CREW

The profitability of a company is like its scorecard. Each month’s income statement shows everything that was done in the business and what the results of those efforts were. At the end of the day, a company is either winning or losing based on its profitability. When looking at your “scorecard,” margins, profitability, and total labor are the three items to focus on. Revenue in and of itself means nothing. It’s all about how much you get to keep as a business.

Managing Profit Margins

The first component in that equation is managing your margins. As one of the keys to unlocking profits, keep your margins in line by managing your direct cost. Generally, direct costs are as follows; field labor, materials, equipment, subcontractors, equipment rental, and job permits. In other words, it is any expense that can be directly tied to an address without getting too granular. From that margin percentage, we’re then going to look at profitability.

If you’ve sold enough to cover your fixed expenses, your margins are right, and you’re priced correctly, you should be able to enjoy double-digit profitability. Other positions in the business may get a profit share. So, as an owner, you want to make sure that the way that you

A broken compensation plan negatively impacts sales if there’s no incentive to go above and beyond. The flip side of that coin is if your entire team is incentivized for the correct behavior, revenue is impacted positively.

pay, incentivizes good behavior to drive top-line sales, better margins, and overall profit of the organization.

Compensation Structure

A broken compensation plan negatively impacts sales if there’s no incentive to go above and beyond. The flip side of that coin is if your entire team is incentivized for the correct behavior, revenue is impacted positively. Think of it as your organization collectively rowing the boat in the right direction with no one fighting against the tide.

To put this into perspective, here’s an actual example from a member who worked with us on their compensation plan:

Last year, one of our members had challenges with their material percentage being too high. They tried everything to reduce it, but nothing worked. Then I showed them how to look at the problem differently.

When looking at their compensation structure, it was clear that their warehouse manager was not compensated for his performance; it was strictly a salaried position. Though the team member performed all the basics of the job, he was not incentivized to go the extra mile when it came to managing costs. The new compensation plan that we created allocated a portion of the savings to be shared with the warehouse manager. Having a stake in the savings, the warehouse manager became the gatekeeper, implementing a system that sourced better prices and a more stringent approval process on inventory purchases that other team members made. When money was saved, he received a share beyond his base salary. As a result, their company was able to save over $40,000 in one month on materials based on the new compensation plan we built for their warehouse manager.

Does this example apply to everyone? Maybe not, but the concept is universal.

And incentivizing your employees to think like an owner always results in additional savings or revenue for your company depending on how it’s applied.

At the end of Q1 2023, that same company closed out the month at a 25% net profit. As you can see, the benefits are twofold. They not only scaled back on material costs, solving that problem, but they created an incentivized employee through a better pay structure. Their customized plan was structured so that a percentage of the money saved was shared with the team member. Over the next several months, their material percentage not only lowered but maintained a very healthy number to ensure a high level of profitability. Why? Because they had a compensation plan in place that incentivized behavior and changed their team’s mindset.

Is Your Compensation Plan in Balance?

Some company owners may need to evaluate their own compensation. For instance, the owner of a company also acts as its General Manager and decides to pay themselves a $300K salary. The organization does 3 million in revenue, so the owner’s salary comprised 10% by itself. Sure, you can do that as the owner, but would your organization pay that

much for a general manager that wasn’t you? If not, figure out what that number is. Typically, your overhead labor should run between 8% - 9%.

Here’s a good metric: Your total labor cost should never exceed 30%, not including benefits or payroll taxes. That includes field staff and office staff, depending on your business. If the owner is taking an inflated salary, that number may be higher.

Keep in mind that all labor that’s calculated together is the highest category on an income statement. Therefore, if labor is out of balance, it makes it more difficult to generate profitability.

In some cases, if your compensation plan is out of balance, you may actually be overpaying for skill and talent. Many businesses pay their people out of their profits. That is a broken compensation plan. A business shouldn’t be looking to give away additional profit, but to increase overall performance. Simply trying to pay more than other organizations may impact profitability. So, you have to make

sure that you have a very well-thought-out process in how each position’s paid.

So that goes back to approximately 20% to 22% for your field labor, and 8%-9% on your overhead labor without benefits and payroll tax. Start by identifying your current labor percentage overall. If it’s over the metric that we

shared at 30%, you may already have a broken compensation plan.

It’s also worth mentioning that a broken compensation plan not only affects margins and profitability, but it’s also a major headache to administer. Start with identifying what it is you have today and what percentage you want to get to.

If you find that your total labor is at 20%, there’s a really good chance that you’re struggling to perform at a very high level because you’re not paying people well enough. u

After a journey in the HVAC industry that began when he was sixteen, Chris Crew went on to coach a large electrical company helping franchisees achieve success. Later, he shifted to owning an electrical business, growing it in a four-year span to 60 trucks, five locations, and generating $18 million. Ultimately, he sold his shares to join The Blue Collar Success Group® where he now serves as President. Chris Crew offers extensive knowledge about every facet of in-home services.

www.thebluecollarsuccessgroup.com

Keep in mind that all labor that’s calculated together is the highest category on an income statement. Therefore, if labor is out of balance, it makes it more difficult to generate profitability.

ESTABLISH LONG-TERM SUCCESS

BY ELIMINATING FINANCIAL BARRIERS

BY MIKE DISNEY

Whether you’re weathering an economic slowdown, facing the shoulder months, or simply unsure about how to handle your finances, planning for and understanding your financial barriers is one of the most important goals an entrepreneur can achieve.

Finetune Your Financial Literacy

The inability to recognize how to handle your financial responsibilities can be a challenge when a knowledgeable tradesman transitions from doing the work to running the business. But it’s important to learn early how to review financial documents, read profit and loss statements, know what a balance sheet is, or know how to produce a cash flow statement.

new challenges. At every stage of business, there will be external pressures that you should anticipate as an entrepreneur.

The Pitfalls of Apathy

Right now, some residential services are experiencing an economic slowdown. As the country recovers from the pandemic, supply-chain shortages, and lingering inflation, there are still pitfalls business owners should avoid if they want to limit or eliminate financial barriers to success.

One of the biggest dangers a residential business owner faces is apathy. If you’re running the same old sales routine over and over because that’s the way you’ve always done it, you’re going to face failure or have a hard time recovering during economic slowdowns.

Invest in Software

You need to invest in software that allows you to take a deep dive into your customer database and build new sales campaigns to speak to your existing customers. Whether you are surveying your customers after service, asking them what services they want or need, or talking with them about what you could do to improve your business, you need to have regular conversations with your existing customers.

respond. Most people are flattered to be asked their opinion, and they want to know what you can do for them.

Develop Your Avatar Customer

Not only does a deep dive into your customer database net additional repeat business, but it also helps you develop the profile of your avatar customer.

Some of the challenges home service companies see in their conversion rates are usually the result of marketing to the wrong client. Surveys help you determine the types of clients that have used your business in the past, both those who have used it more than once and those who will use it again.

So, while you may have years of knowledge repairing HVACR systems or fixing plumbing issues, it’s not enough once you go into business for yourself. If you’ve never handled the financial side of the business, you must learn. Even after you master your finances, there will be

Instead of cutting down on your staff, it may be better to invest in hiring an outbound marketer or business development professional. Find someone who will take the time to get to know your current clientele and market to your customers.

By diving deep into your customer base before going wide and soliciting new business, you’ll create an immediate response that will improve your cash flow. For example, you’d be surprised how many of your current customers aren’t aware of all your company offers. An outbound marketing campaign simply letting them know all of what you offer can net you new jobs during economic slowdowns or even during the shoulder months.

And don’t be shy about contacting your customers. Despite conventional wisdom that your customers don’t want to talk to you, chances are that they will

When you have this information, you can run “look-alike” reports to determine the best marketing plan that reaches your existing customer database and a plan that will help you target the right audience when you want to expand.

When you are serving your true avatar customer, your conversion rate increases, your average ticket is higher, and your customer satisfaction feedback improves.

Plan, Plan, and Then Plan Again

Another reason home service business owners fail or suffer financial hardship is that they haven’t planned enough or, in some cases, at all.

As the country recovers from the pandemic, supplychain shortages, and lingering inflation, there are still pitfalls business owners should avoid if they want to limit or eliminate financial barriers to success.

One thing a business owner should do is make a 90-day plan that includes all the short-term goals necessary to make your business a success.

The 90-day plan should include:

• Pebbles: Business goals that take about a week to two weeks to complete.

• Rocks: Goals that need a month to a month and a half to finish.

• Boulders: Business plans that may take up to two months to complete; and,

• Mountains: Goals that will take the entire 90 days to achieve. Successful entrepreneurs know how to go after that low-hanging fruit to accomplish their goals and how to prioritize their objectives so that the larger projects still get done while the smaller ones are checked off. After the 90-day plan, you should also have a three to five-year plan.

The three-to-five-year plan should include:

• Good Employees: Hire good people who share your vision.

• Find Your Customer: Finding your avatar customer base is a very important step in your plan. Once you have it, you can market more effectively.

• Annual Benchmarks: Set annual goals and make sure the company is meeting those goals.

• Vision: Understand the business metrics needed for fulfilling your vision, and,

• Marketing: Develop a comprehensive marketing plan to meet your goals.

Five-to-Ten-year plans are also advantageous because they can be used to develop your vision. Planning further out is really difficult and probably unrealistic because of regulation, and economic and technological changes. But you should set longer-term goals.

A five-to-ten-year plan should answer these questions:

• How many clients do you want? 300, 500, 1,000, or more.

• How many service techs do you want along with the associated support system and fleet?

• What type of revenue do you envision? 5 million, 10, 15, or maybe more.

• And, don’t forget profit goals!

These are visionary and necessary but won’t be accomplished without working through your shorter-term plans.

Employees are Your Company Oxygen

You need to hire the right people if you want to be successful. This can be difficult in a market experiencing a labor shortage, as we’re currently seeing. But there are ways to retain the good employees you already have and attract the top talent you’ll need for the future. Employees are a company’s oxygen. One of the best ways to retain good employees – outside of paying well and offering good benefits – is to ensure you stay on the cutting edge of technology. Talented people don’t want to work for a company using antiquated equipment. Nor do they want to work for a company where there are no advancement opportunities.

Let your employees know how they can advance and give them the metrics

necessary to keep working up the ladder. Training should also be a part of your company’s DNA. You need to build educational coaching and training into the fabric of your business. And you should lead by example. The most successful entrepreneurs are always learning. Education should be as important a line item in your business plan as new tools and technology. You can’t go from a $10 million company to a $20 million company if you have a $10 million-company mindset.

Learn from like-minded people and those who have accomplished what you’d like to achieve. Staying stagnant in your thinking leads to failure. As you work on eliminating any barriers to success, always keep the big picture in mind. Once you master the steps necessary to achieve that long-term success, even during difficult economic times, you will prosper. u

Michael Disney is a co-owner and the chief operations officer for CEO Warrior, where he leads a large and growing company as a trainer and subject matter expert.

Software Inside Tips from JG van Graan, Director for ThermoGrid

As you know, businesses that manage teams of heating, air conditioning and refrigeration mechanics and installers rely on smart dispatching. Whether it’s assigning the team member with the most suitable skill set to each job or simply working out who can get there the quickest, it’s essential to have real-time information on hand. According to one study looking at 2022 field service trends, 55% of fleet managers and executives reported that the pandemic had negatively impacted their business, while 44% of fleet managers saw increasing costs as their top challenge.

To drive efficiency savings, many field service SMBs have implemented specialist software for contractors designed to improve accuracy and take the guesswork out of the scheduling and dispatching process. We chatted with JG van Graan, Director for ThermoGrid on the importance of smart dispatching and how it can help your business stay on track—and even scale!

How can finding the right software improve routing, scheduling, and dispatching?

A complaint I always hear is how emergency calls and last-minute jobs mess up a technician’s schedule. Most heating and cooling business owners aren’t aware how contract scheduling software can fully automate tech scheduling. This reduces downtime and even helps plan out the best schedules and fastest routes for their team.

What’s the importance of keeping your whole team on the same page with one software?

Your team in the field needs to stay connected, not only with each other, but with the folks in the office as well. When everyone is using and updating a single system together, then they’re all on the same page. This means your techs won’t need to make as many phone calls to chase down parts availability, or equipment records. Everything is available on their phone or tablet.

JG van Graan Director for ThermoGrid ECI Software Solutions, Inc.

800-959-3367 ecisolutions.com

What about emergency work orders?

And if you need to dispatch someone quickly, you’ll be able to easily locate the tech who has the skill and availability to jump on that job.

One of the biggest issues field service businesses face is identifying the right technician for every job. How can software help with accuracy?

Nothing is worse than a wasted trip. It costs you money and frustrates your valuable customers. If you have a service call for a boiler, you want to make sure you’re sending someone who is qualified to repair a boiler. Dispatch software will actually store your tech’s skills, qualifications, and training so that you can easily match the job to the best tech. You’ll improve call times and first-time fix rates, all while keeping your customers happy.

Imagine one of your customers calls you on the hottest day of the year, complaining that their A/C isn’t running. You will keep that customer for life if you can respond quickly and make sure they are sleeping in a cool house that night. Dispatch software can automatically assign the nearest or next available tech. You don’t have to scramble to arrange routes or schedules. And since the team is all synced into the process, communication and productivity are not interrupted.

About ThermoGrid by ECI Software Solutions:

For over 20 years, businesses worldwide have relied on ECI Software Solutions to help strengthen their operations and plan for the future.

Our ThermoGrid contractor management solution is built specifically for field service businesses, connecting the field with the office instantly for real-time business insight. Since implementing our software, many HVACR customers have experienced growth of more than 100% without adding IT staff or expensive equipment and you can too.

To drive efficiency savings, many field service SMBs have implemented specialist software for contractors

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BY WILL MERRITT & DERRECK HOFRICHTER

As HVACR business owners, aren’t we all looking for new customers? Of course, we are! We want quality lifelong customers that will sing our praises and be our best advocates – it’s all about the 5-star reviews. To understand how to get there, we must address how the buying cycle in our industry has changed drastically in recent years.

Not too long ago, we lived off our reputation in the community, and word of mouth, which accounted for much of our business. Today, people are more transient. The idea of longstanding relations among communities has changed. And the new resident in your community had no idea that you are the best service provider in their new hometown. So, to develop our reputations today, we must “preach” our messages on the platforms consumers trust. So, let’s see what that looks like….

The Road to the Review Starts with a Need

Remember from some of our prior articles, your potential new customer is not thinking about your company until they need you. At the time of this publication, it’s almost spring. The warm weather is just around the corner, so we’ll use an air conditioning scenario. Mrs. Homeowner X enters the home around 5:45 pm with the kiddos in tow. It’s been a long day at work, she was late picking up the kids, and they have soccer practice tonight. But she notices it’s uncomfortably warm in the home. The A/C is not working!

Then, A Search for Solutions

Mrs. Homeowner X grabs her smartphone and searches for something like, “Air Conditioner Service Anytown USA”.

FROM THE WEBSITE CLICK TO THE 5-STAR REVIEW

Here are the results that appear:

• Google Guaranteed – enroll your company in this “pay per lead” platform, it’s a free listing for your business. It creates no-cost impressions, and your HVACR company doesn’t get charged until they call you.

• Search Ads – invest in this platform if your budget allows for it. (This will assure another piece of real estate on the page)

Deliver on Your Promises

Your potential life-long customer is on your company’s website. Your content better answer the need immediately or they are going to leave your site. Mrs. Homeowner X searched for “air conditioner repair”, so when they land on your website, it must easily answer the need.

Here is what customers should see when they visit your website:

• A modern mobile responsive website that looks professional and inviting

• It showcases your services

• Calls to Action: Prominent phone #, Schedule Service Button, Learn More Button

Mrs. Homeowner X reviews the results: “Google Guaranteed” at the top, then the “Paid” search ads, then the “Local Maps Pack”, and finally the “Organic” results. Mrs. Homeowner X recognizes a couple of the companies in the search results; she is not sure how she knows them, but she clicks on their listing. Their website looks professional, modern, and up-to-date. She quickly checks their Google Business Listing and reads their reviews.

How to Get Your HVACR Company Found?

For the above to happen, you have to be found! We call it “real estate” on the page. The more areas your company is listed on in the SERPs(Search Engine Results) page, the better chance you have to get the phone call. These steps will ensure you have the opportunity to show up on page 1 or what is often known as rank on the first page:

• Local Maps Pack – Make sure your Google Business page is up to date with all the correct company information and the correct business hours. Update it regularly with posts, pictures, and new information. It will help your company show up more often.

• Google Reviews – These are of paramount importance today. Consumers read reviews and make quick assessments about the quality of your business based on them. Also, they impact Google Guaranteed, the local maps pack, and your organic listing.

• Provides collateral about your company: List the number of years in business, trusted associations, guaranteed service, and flexible hours with the consumer in mind Here comes one of the most important parts of our story…..wait for it! When the customer contacts you, the first impression often makes or breaks the sale. Let’s see how it’s handled from there.

The First Impression

The first impression starts with how promptly the phone gets answered, ideally within a few rings. Mrs. Homeowner X has an urgent need and is looking to find someone she can trust to take care of it. Attention to detail or the lack of it either builds or hurts trust.

Next, is there a consistent opening greeting that fits the appropriate branding and core values of your company?

This should be scripted and perfected by trained personnel whom you have answering the phones. Many companies leave this up to the person answering the phone which can create inconsistency.

“Hello, ABC Air Conditioning, how may I help you?” and “It’s a great day at ABC Air Conditioning, how may we take

Not too long ago, we lived off our reputation in the community, and word of mouth, which accounted for much of our business. Today, people are more transient. The idea of longstanding relations among communities has changed.

care of you?” are very different greetings and would be fitting at very different companies. Be intentional here and create the right first impression of your brand.

Set the Appointment

The ultimate measurement of success with your company’s skills on the phone is the appointment close rate. This is the percentage of the time that a lead who calls in gets successfully booked into an appointment. To improve this appointment rate, Customer Service Representatives (CSR) who answer the phone at your company must be trained on their tone, professionalism, empathy, and active listening skills. Often, their listening skills are the most important thing.

Following solid scripts is important so that all customer details are consistently asked and collected. CSAs should be trained to take notes on customer concerns. These should be documented and passed along to the service technicians to troubleshoot any objections or obstacles that can be handled without the need to transfer or place the customer on hold. Recording calls to learn and coach is highly recommended. Handling any concerns in the early stages of customer relations will also impact your star rating in the long run.

Now that the appointment is booked, and all notes are documented on the customer profile, the right technician must be dispatched to the right job. Dispatch has one of the greatest influences on customer satisfaction, as well as revenue, in your company of any position. Without tracking key data on the service technicians and utilizing a set dispatch strategy to match technicians to the right service call, customers are not served as well and valuable opportunities for long-term business are missed.

The Home Service Appointment Builds Trust

The service technician who is dispatched needs to continue the goal of building trust which again comes from following an intentional and consistent process. Technicians need to be heavily trained on making a call ahead, first impression details upon arrival, and have quality questions to ask the homeowner to understand how they can help them be more comfortable in their home. Homeowners don’t want to feel they are being told what to do or feel pushed into recommendations, they want to be listened to, to understand what the technician is finding and seeing in their system, and to know what the options are for solving their problems. These conversations should be practiced

over and over again. Well-trained technicians lead to happy customers!

Service Techs Ask for Reviews

If everyone at every step in this process understands their purpose and does their job well, the customer should be happy and comfortable. This is the perfect time to ask for a review. Ideally, the service technician should ask for and collect a review before leaving the house. A great time to ask is right after the technician has completed their work and showed it to the homeowner to confirm the homeowner is satisfied. This then gives the homeowner time to complete it while the technician is cleaning up their job site and moving tools back out to their van. The technician can then check in and see if it was completed before saying goodbye and driving off from the home.

Good Reviews Matter

The importance of reviews for your HVACR business is vital to your success. People actively read reviews before they make purchase decisions. Studies show consumers will put more TRUST in reviews from someone they don’t know over a friend’s recommendation. The GOAL here is to drive as many reviews as you can as consistently as you can. Also, Google wants you to reply to all reviews. The 5-Star ones are easy – a simple thank you will suffice. But for the 1- and 2-Star reviews, it requires a little more effort. Consumers want to know how you handled a bad situation. Simply tell your story. Apologize if necessary and move on. Remember the customer is always right. I recommend contacting the customer directly so you can potentially work out the issue with them. They may even improve the star rating or take the review down if you handle it well and ask nicely. u

Will Merritt is the managing partner at Effective Media Solutions in Charlotte, NC. He has more than three decades of experience creating marketing solutions for business owners. For more, visit http://myeffectivemedia.com or email will@myeffectivemedia.com

Derreck Hofrichter is a Coach & Trainer at Service Business Evolution. As a business owner, communications professional, and athlete, he brings all of this experience into his coaching and training. Having founded and managed a successful fitness coaching business from a solo enterprise to a staff of 20, he understands how to inspire and motivate teams to reach their goals.

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I T ’ S T I M

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RESOURCES

Hold on Tightly to Top Employees

Communication, recognition, and inclusion will help your company retain its most powerful asset. It’s not strange to regularly think about employee retention given the workforce challenges we all have been facing. Many business owners and managers have been spending a big chunk of their time on this specific area of business and rightfully so. Working on employee retention is more important than ever. The pandemic forced us to examine every aspect of our businesses to identify any number of “non-essentials” — perks that we had enjoyed during prosperous times. (It’s amazing to me all the nonessential “things” we identify when we are forced by external circumstances to significantly tighten our belts.) When doing this examination, you need to also focus on keeping your best employees and protecting the company for their benefit.

Why?

During the balance of 2023 and into 2024, we should be defining success in terms of preparing for the future so our companies are ready to capitalize on the opportunities that will surface when supply chains recover. There are huge backlogs of business. Some equipment manufacturers have 12-16 month delivery times on commercial equipment. As deliveries speed up it will require contractors to retain our very best employees and keep them motivated and interested in the long-term success of our companies. As a leader, you must plan for this now.

As you consider how to retain your key employees I encourage you to think about a few things:

Continue to Communicate

Communication is always important, particularly right now. Your team is working long hours you must spend time with your key employees to clearly articulating your strategy. Explain the

thought process, logic, and rationale for the strategy, and explain the implications on both sides of the equation. Left to their own devices, most people will assign negative reasons to business decisions they don’t agree with. Don’t allow that opportunity to exist. Instead, actively communicate to key employees what is going on, why it’s going on, and what it means for them. If you really are protecting the company for the best employees, then tell them! They will appreciate being included, and many of them will recognize that there are greater opportunities ahead for them as a result.

Involve Key Employees in the Process

Involve your top people in the strategic decision-making process, especially when it comes to getting in front of challenges. I know of a company that chose to do just that — they convened a group of key employees to collectively examine the business. Ultimately, they decided together what actions to take regarding long work hours, expenses and employee retention. This process received a heightened level of buy-in on the part of key employees and created positive peer pressure to dig deeper to find more

creative ways to get large jobs done. When the changes were implemented, they were broadly understood and supported because there was a built-in communication network to take the message into the company.

Consider Non-Financial Rewards

Giving non-financial rewards isn’t a new concept, and it’s definitely worth reconsidering. The volume and scope of work is pressuring businesses to work longer hours because finding additional qualified employees to maintain is so challenging. There is plenty of overtime to go around and often to avoid burnout other rewards can help. Focus especially on thoughtful rewards such as responsibility, opportunity, recognition and praise, and inclusion in the decision-making process. Are you out in your business thanking your team for their efforts? Are you letting them know, frequently, what is happening in the business and marketplace? Are you asking them for advice on situations and/or challenges? When one of your team members goes above and beyond, or is exceptionally creative with ideas of strategic importance, are you recognizing them?

It’s easy in times like these to get overly concerned with managing your business, focusing on the details, and adopting a “bunker” mentality. Keep in mind that your employees — and in particular your best employees — are the company. They need encouragement, honest feedback, and specific thanks and praise right now.

All the things I’ve mentioned revolve around interpersonal relationships. Make sure you and your key managers are spending significant time on those relationships. Employees will fully invest themselves in an organization when they feel valued and respected, and when they believe leaders sincerely care about their success.

The reality is that your best employees are thankful that they have a job, but they will not be satisfied with just having a job — they want to be part of something important. Furthermore, they can and do go elsewhere, even in tough times. We all know who our best employees are, and our competitors usually do as well. We are always at risk of losing them — in good times and bad. Now more than ever, you and your management team should focus on employee retention because your top employees are your most powerful assets now and in the future. u

Paul Grunau is chief operating officer, Api Group, inc. APi Group is a family of more than 33 independent construction and construction related businesses. Its life safety division includes fire protection sprinkler systems, air sampling, and low voltage alarm systems. Its industrial and specialty construction division includes steel fabrication, thermal insulation, distribution, electrical and mechanical construction.

If you really are protecting the company for the best employees, then tell them! They will appreciate being included, and many of them will recognize that there are greater opportunities ahead for them as a result.

PROVIDED BY KEVEN PRATHER, CFBS FINANCE

What’s the Point of Asset Protection?

As a successful business owner, you know how important asset protection is. However, many business owners look past an important question when protecting their assets: “Why am I doing this?” A cursory glance at that question might make an owner say, “Because I’ve worked hard to create what I’ve got.” But that raises another question: “How is your hard work connected to what you now own?”

Achieving and Maintaining Financial Security

This isn’t a semantic trick, either. You need to know the reason behind asset protection so that you can implement strategies that allow you to use the assets you protected to achieve your purpose. Today, we’ll look at how you can more confidently answer the question, “What’s the point of asset protection?” and begin focusing on ways to best use the things that you protect to achieve your goals.

Before we dive too far in, an important reminder: Achieving and maintaining financial security is almost certainly one of your most important goals. We’ll always keep this in mind.

Start With “Why?”

There are countless reasons why you may have started your business. The freedom to be your own boss. Personal pride in your company’s mission. A chance to grow your wealth and give your family a comfortable life and improve your community.

Regardless, you’re still in business now because you have goals. Knowing precisely what those goals are is the initial thrust behind asset protection.

Determining your goals motivates you to protect your assets. More importantly, it can help reveal the most efficient and effective strategies for protecting your assets to achieve your specific goals.

Determining your goals motivates you to protect your assets. More importantly, it can help reveal the most efficient and effective strategies for protecting your assets to achieve your specific goals.

For example, if protecting your wealth so you can pass it to future generations is most important, you may dedicate more time to planning for the most efficient ways to transfer that wealth. This may include gifting ownership in the business to family, separating some assets into a new operating entity, reducing personal guarantees from your business, or implementing strategies to manage and reduce taxes you pay during and after ownership.

Another example: If keeping the business in your community is most important, you may create plans that train and motivate inside employees to eventually take the reins. You might also create plans that encourage thirdparty buyers to keep the business local. You might even use some of the wealth your business has given you to benefit charitable organizations in your community. These approaches are also a form of asset protection, as you protect your ability to benefit those close to home.

While achieving financial independence is paramount, you should also know why else you’re protecting your assets. Knowing why can help you plan more appropriately and make life – both inside and outside the business – more fulfilling.

Next, Ask “How?”

After you determine why you’re protecting your business and other assets (i.e., your personal and business goals), it’s important to determine how you want to use your assets.

For instance, after assuring your personal financial independence, you may want to use your assets to send all of your grandchildren to college. To plan this successfully, you need to know what you

currently have and what you’ll eventually need to achieve goals like this. This is what we call addressing the Asset Gap. Generally, there are four aspects to consider when addressing your Asset Gap:

1. The current value and expected growth rate of the business

2. The future performance of all non-business assets (e.g., investments)

3. The amount of money you expect to spend going forward

4. The life expectancies of you and your spouse/partner

Addressing your Asset Gap can help you plan and act in ways that help you not only protect your assets but also eventually use those assets in the ways you want to use them. As you can imagine, many business owners have one set of expectations for how they’ll manage and protect their assets during the years in which they rely on their business as their primary source of security, and a different set of plans for future years when the some of the business goals have been achieved. So, looking at your financial situation today, and also at what you want it to be at various points in the future, can help you plan to fill your Asset Gap and meet a series of goals.

Then, Ask “What’s Next?”

Knowing why you’re protecting your assets can provide focus. Knowing how you want to use your assets provides motivation. The final overarching step is to figure out what you need to do next.

For example, if you want to sell your business to an employee or group

of employees, you’d want to propose a method and schedule of ownership transition before implementing your plan. It’s a sinking feeling to create a plan only to find out that your wants don’t match the wants of the people you’re relying on to achieve your goals. Bringing the right people into the conversation and planning at the right time can help protect the integrity of the plan and improve the possibility that it will be a success.

Likewise, if you want to use your assets to provide your family with a comfortable life, you may consider creating a business continuity plan. This can protect your family and your business (which is likely your most valuable asset) if you were to die or become incapacitated unexpectedly. This is yet another way to use the concept of asset protection in your regular business planning.

Overall, we encourage you to think of the topic of asset protection as something much broader than you might have expected. Protecting your goals, the people you care about, and your desired future are just as important as protecting assets from more immediate threats.

We strive to help business owners identify and prioritize their objectives with respect to their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience u Keven

BY RUTH KING FINANCE

Are You Calculating Overhead Correctly?

Many companies price jobs without taking overhead into consideration. They use a gross margin divisor or just add a percentage of overhead to each job. Taking overhead into consideration is critical to determine profitability.

The Formula for Calculating Overhead

To determine accurate job profitability, the first step is to calculate overhead costs per hour. If you do not have different departments, to calculate your overhead per hour, take your total overhead cost from last year’s fiscal year-end profit and loss statement and divide that by the number of revenue-producing labor hours last year.

For companies with different departments, you must departmentalize

Another

overhead cost

overhead so that each department gets “its fair share.” Calculate departmentalized overhead based on space costs and labor costs because they are the two components that create overhead. To calculate overhead cost per hour, determine the overhead costs for each department, and divide that result by the number of productive (billable or revenue-producing) hours for each department. Use only revenue-producing hours – those hours your employees could bill a customer for – do not include vacation, holiday, meeting, training, or shop hours.

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You’re likely to find one department with a much lower overhead cost per hour than another. After this calculation, you know how little you can charge a customer at slower times of the year and still make a profit on an individual project. The result can be very sobering. It’s common for me to find the overhead cost per hour above $60/hour in many companies that used the price by the divisor method. It should be under $40/hour for service and under $30/ hour for installation/projects.

Breaking Down Overhead Costs

If you don’t like the result, then start decreasing the overhead cost per hour. First, make sure you have as many revenueproducing hours as possible. For example, if you pay an employee for eight hours, but he only can bill a customer for four hours, you’ll have a higher overhead cost per hour.

Another way to reduce your overhead cost per hour is to ask your employees. They know how they waste time. Many times you have to ask the office about the field operations and vice versa. They know. Implement their suggestions.

Here’s the step-by-step process to departmentalize your company’s overhead and overhead cost per hour:

First, there is space overhead. Five things cause space expenses: rent, utilities, building maintenance, building taxes, and building insurance. Determine the total amount of productive space used by each department. Productive space is the space occupied by either people or things related to a revenue-producing department. Your common areas such as a conference room, kitchen, and bathrooms are not included; bookkeeping space doesn’t count; your reception area doesn’t count. The space that is used by financial people or other people who are not producing revenues does not count in this equation. The only area that counts is the space related to your departments.

Next, consider people overhead. Every overhead item that is not included as space overhead is related to people. For example, the more people you have, the more office supplies you have. The more people you have, the more telephone calls you have. If you know the exact amount of time that somebody spends in a particular department, then take that percentage rather than the overall estimate. If you have a bookkeeper who is splitting her time between three departments determine how much time she is spending in each department on its tasks and then allocate her salary appropriately.

For example, assume your bookkeeper’s salary is $50,000 per year and she spends 20% of her time in Department A, 30% of her time in Department B, and 50% of her time in Department C. Then, Department A gets $10,000 of her salary, Department B gets $15,000 of her salary and Department C gets $25,000 of her salary. If materials or services are bought for one department only, then that department gets 100% of that expense. For example, for advertising or printing, many times, advertisements are placed for only one department. As such, that department receives all that advertising expense. For website expenses, divide the expense by the productive payroll percentages. It’s hard to determine if a department should get more or less of that expense.

Once you know the total amount of overhead for each department, then calculate the overhead cost per hour by dividing each department’s overhead by its revenue-producing labor hours. Breaking down overhead costs and determining if you are truly profitable, will make a big difference in long-term growth. 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.

way to reduce your

per hour is to ask your employees. They know how they waste time.

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with JULIAN SCADDEN

1. How would you finish this sentence, “I need to get a new…”?

I drive a 17-year-old vehicle. It’s been very well maintained, and I like it. But I need to start shopping for a new car before it’s too late.

2. What secret talent do you wish you had?

Oh, playing an instrument hands down. I wish I could play. I don't care if it's guitar, piano, or anything!

3. My dad always said?

I was going to leave home and the state where I was raised, and it was a big deal for me. I took my dad out for lunch, told him all the pros and cons, and he said, "You can always come home." When he said that, I felt empowered to go.

4. What is your favorite website?

I’m an ESPN sports guy. Checking the stats, and breaking news. Yeah, you'll catch me on the site pretty often.

5. What always puts a smile on your face?

This is another softball answer. Children. I’m very fortunate that I have five beautiful kids and all I have to do is see them. One girl and four boys – 28, 24, 20, 12, 7.

6. What would people be surprised to know about you?

I’m more of a compass than a roadmap. I’m regimented and have a lot of discipline. The truth is that I’m as intentional as people may think. I’m like a compass. I know the direction I’m going and will find any way to get there. I’m not stuck on a prescriptive path. The general direction is fine with me.

7. What’s the best business advice you’ve received?

Sleep on it for a night. Tough decisions need some thought. If you decide in the moment, it’ll still be right tomorrow.

8. In twenty words or less can you describe Nexstar?

To turn the world’s best tradespeople into the world’s best businesspeople with an ownership structure of being member-owned and member-led.

9. What has been your most recent “the buck stops here moment”?

It was a collection issue. A longstanding member missed several of our monthly dues. They were upset when they received a reminder phone call and wanted to talk to the person in charge. And I said, “I’ll take care of it. Let’s sit down. Let’s talk. I want to hear what’s going on.”

10. What would colleagues say they expect from you?

They expect transparency and authenticity and I do my best to provide that in every aspect of my day.

11. How do contractors build high-performance teams?

I think the foundation of any great business is built on clear, measurable KPIs and metrics, but a highperforming team is given not only direction but the empowerment and the equipment to do the job.

12. What’s your motivation?

My motive in life is to have deep, meaningful relationships. And I have been fortunate to find that here at Nexstar. I want to know that it all meant something when I'm done. And this is the perfect place for that.

13. Who was your business mentor?

Jack Tester was my mentor. I was a member of Nexstar and Jack was my business coach. He watched me grow that business. He knew the type of operator that I was. And when I stepped away from that business I told him I wanted to be a Nexstar coach. He agreed it would be a good idea and we aligned.

14. What are your core organization values and how do they impact your success?

M1 – members first. Live business excellence as we teach business excellence. Culture of caring and no enabling. Bring more energy to work than you take. Bad news early, good news often. See it, say it, directly and with respect.

15. In which areas of management do you excel and why?

I’ve learned how to read people and can attract talented people. I can tell which players will play well with each other. This makes it easier to build great teams. I’m also good at conflict resolution. I can sense when something is off, and I’m always willing to sit down and talk. That’s my super skill. Most managers avoid conflict and aren’t good at conflict resolution.

16. What fundamental business areas are you focusing on right now?

We’re focusing on service levels for our members. I want to ensure we hire enough professionals to be there for our members when they need us. If you need to reach your coach, we want them to be available. For example, if you needed to send one of your staff to training, we want to make sure there is training reasonably close and that it’s available for you in the timeframe that you want.

17. Does Nexstar offer services other than business management coaching to owners?

Yes, we do. Over the past few years, we have grown to have coaches for every function in your business. And we’re working to communicate that. We have coaches for software, inventory control, accounting, and marketing, for service managers and sales managers. Just about every aspect of your business you can think of.

18. Was this planned growth?

Yes, rather than looking for ways to grow outside of our established core we decided to grow vertically as our members’ organizations grew. We decided to invest more resources deeper into and across our members’ organizations. We coach and train at all levels of their organization.

19. What should contractors be focusing on right now?

It’s not sexy. It’s not new. It’s workforce development. Finding the next leader as well as finding young people to join the trades. It's workforce development.

20. What is the most exciting thing happening at Nexstar right now?

We’ve launched a new exciting mission and vision. Nexstar will advance the careers of 250,000 employees of our member companies through direct coaching and training within the next five years. We’re no longer talking just about the owners of the business. We want to help advance the careers of our member employees.

Publisher Terry Tanker met with Julian Scadden, President and CEO of Nexstar Network. Nexstar is a member-owned organization that drives business growth and development through continued education and the sharing of ideas.

day

RENEW NOW

to see the epic updates at

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. www.hvacrbusiness.com

Tap An Executive Recruiter For Your Top-Tier Talent

There’s recruiting for your business – recruiting new technicians, finding talented office candidates – and then there’s executive recruiting. Executive recruiting focuses on identifying highly qualified candidates to fill senior-level positions. Need to hire a general manager, a vice-president, or a CFO? That’s executive recruiting.

The people you choose for these vital positions will play a fundamental role in the success of your business. Putting the right person in the right seat is crucial. Sourcing, screening, and interviewing qualified candidates for roles that can shift the course of your company’s future can take weeks, even months.

When it comes to hiring critical roles, the best and brightest may not be in your market. At the very least, they may be difficult to find. That’s why engaging with a third-party executive recruiter can benefit you tremendously. Here’s how:

1. Executive recruiters tend to have large, active networks, which they leverage to find the right candidates. Good executive recruiters use their network to play the “who you know” game to find the right person. They also tend to be well-connected beyond a single market with access to candidates across the U.S., possibly even Canada.

2. Executive recruiters have experience recruiting specific types of highly qualified people. Some even specialize in the trades. They will recognize and understand the skills and experience you’re looking for.

3. They save you time. Executive recruiters take care of everything. They manage sourcing candidates as well as contacting them, conducting initial interviews, and serving as the primary liaison. They work with you right up until the glorious moment when you’re sitting in a room with the newest member of your leadership team.

Do you already have an in-house recruiter? Great! It’s still a good idea to work with an executive recruiter to fill senior-level roles. Most likely, your in-house recruiter is busy. Engaging with a trained executive recruiter ensures they have time to focus on other open positions.

If there’s an opening on your leadership team, save yourself some serious hassle. Engage with an executive recruiter so you can focus on your business!

Be Great

Author Steffan Busch is the Recruiting Coach and Executive Recruiter for Nexstar Network and supports Nexstar members in identifying and retaining the best and brightest talent.