HVACRBUSINESS.COM AUGUST 2020 / VOL.15 / NO.8
JUST HOW POPULAR IS AMERICAN STANDARD?
93%
of American Standard dealers agree that our products are easy to service.
88%
of people like dogs.
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George Washington’s Leadership Pete Grasso 5
Dumb Down Your Marketing Danielle Putnam 6
Find Skilled Trade Professionals Mark Schwartz 15
Time to Sell Your Insurance? Keven Prather 16
Improve Benefits, Lower Healthcare Costs T.J. Morrison 18
Be the Star of Your Own Success Julian Scadden 20
HVACRBUSINESS.COM AUGUST 2020 / VOL.15 / NO.8
CHANGING OF THE SEASONS Prepare for the heating season without losing sight of cooling during the busy summer.
Keep Your ‘A’ Players pg 12
ALSO INSIDE » Industry News .............................................................. 4 Ruth King: Beware the PPP Loan ................. 19 Product Focus ............................................................... 21 20 Questions with Corey Hickmann Owner of Comfort Matters Heating and Cooling... 22
pg 8
We get it: when you sell something, you want that something to have some weight behind it. This is RunTru by Trane. Designed, built and tested by the name synonymous with reliability— and priced affordably. Which, well, is the only thing it’s got in common with the competition. Find out how to become a dealer at RUNTRUHVAC.COM
CONTENTS
AUGUST 2020 / VOL.15 / NO.8
F E AT U R E S
6
Dumb Down Your Marketing
8
Changing of the Seasons
12 18
D E PA R T M E N T S
We must constantly evolve, grow and mold to the people because we are only in business if we have people. By Danielle Putnam
Industry News
5
Editor’s Notebook
Successful contractor entrepreneurs must keep one eye on the current season, with the other looking toward the next. By Pete Grasso
Keep Your ‘A’ Players
America has a rich history and we can learn a lot about leadership from our founding fathers. By Pete Grasso
Knowing the difference between confidence and ego will go a long way toward employee retention. By Brigham Dickinson
21
Product Focus
Improve Benefits, Lower Healthcare Costs
22
20 Questions with Corey Hickmann
Five steps to save money on better health benefits for your employees. By T.J. Morrison
Owner of Comfort Matters Heating and Cooling in Maple Grove, Minn.
C O LU M N
15
4
5 Tips for Finding Skilled Trade Professionals Recruiting younger professionals can be the answer to finding skilled workers. By Mark Schwartz
16
Time to Sell Your Life Insurance? Life settlements can help life insurance policyholders liberate cash that is currently ties up. By Keven Prather
19
Beware the PPP Loan! Make sure you understand the impact of Paycheck Protection Program loans. By Ruth King
20
Become the Star of Your Own Success Story It’s incredibly irresponsible to go into another business year without a plan. By Julian Scadden
PROTECT YOUR
FAMILY. THERMOSTAT-RECYCLE.ORG
REMOVE, REPLACE AND RECYCLE YOUR OLD THERMOSTAT.
INDUSTRY NEWS » Service World Expo Goes Virtual
Johnson Controls Commits to Preventing Spread of COVID-19
COPPELL, TEXAS — Service World Expo is making a major pivot. The show is still on, but based on the responses of a survey of prior attendees the show will not be physical. It will be virtual, but a different kind of virtual, powered by incredibly robust and creative software. Imagine Service World Expo as a video game.
MILWAUKEE — Though guidance around the transmission of COVID-19 continues to evolve, experts agree that indoor air quality (IAQ) should be a top priority. Johnson Controls is committed to helping create spaces that put people at ease.
“In 2020, people have become so accustomed to virtual meetings that they are now boring, passé,” said Matt Michel, Service Roundtable president. “That will not be the case with Service World. This will not be a glorified webinar. It is not another Zoom call. It is a true virtual event.”
A healthy and safe environment starts with a holistic approach that encompasses a building’s HVACR infrastructure. To do this, Johnson Controls can help building owners and operators identify strategies to increase outdoor air circulation, filtration options to provide better air quality, optimal temperature settings to slow the flow of airborne pathogens and the use of ultraviolet C (UV-C) lighting solutions to kill viral organisms.
Each day will start with a general session and a keynote speaker. The keynotes are Phoenix contractor Lou Hobaica; motivational speaker, Kevin Brown; and Matt Michel. Breakouts follow the general session and the trade show follows the breakouts. The same speakers who were lined up for breakouts in the physical show will give the breakouts for the virtual event. Each speaker will go to a virtual room after the presentation to answer questions.
“Keeping people safe and secure in buildings has always been at the heart of our mission for 135 years,” said Mike Ellis, executive vice president and chief digital & customer officer, Johnson Controls. “The new normal means being prepared for the unexpected.”
A number of booths during the trade show portion will use virtual reality and augmented reality. Attendees will be able to immerse themselves in one of these booths and get a 360-degree panorama. They will be able to see products in three dimensions and walk around them, just like a real show. Since the show is virtual, registration is FREE!
Aire Serv Celebrates Strong First Half of 2020
>> bit.ly/2CDfmYE
Interplay Learning Partners with NATE AUSTIN, TEXAS —North American Technician Excellence (NATE) and Interplay Learning are partnering to match up remote HVACR training with a new, alternative certification pathway for technicians. With a growing shortage of skilled labor in the U.S. compounded by a pandemic, traditional training programs are unable to meet industry demand for skilled workers. The collaboration of Interplay Learning and NATE signifies the readiness of the trades to move into the future of training, safely. “We are very excited to be partnering with NATE to help the HVAC industry train technicians more safely and effectively with online learning,” said Doug Donovan, CEO of Interplay Learning. The well-known format known as “micro-learning,” which is at the core of the Interplay SkillMill platform, is now directly linked with a NATE credentialing program — available as preparatory classes for NATE’s new certification program. >> interplaylearning.com
Economic Report Reveals Path to Pre-Pandemic Growth
>> johnsoncontrols.com/campaigns/reopen-buildings
WACO, TEXAS — Aire Serv, a Neighborly company, ended the first half of the year on a high note, awarding almost 10 new franchise agreements and opening 15 new locations from January-June of this year. This brings the total size of the Aire Serv network to more than 200 locations open and in development across North America with a strong forecast of continued expansion ahead. “Recognizing the uncertainty during this pandemic, we have consistently kept our owners informed about Economic Injury Disaster Loans (EIDL) or Paycheck Protection Program (PPP) loans offered by the Small Business Administration (SBA),” said Marla Mock, vice president of Aire Serv. >> neighborlybrands.com/our-brands/aire-serv/
SpeedClean Partners to Offer NATE-Approved Seminars STAMFORD, CONN. — SpeedClean is collaborating with HVAC School to offer NATE-approved programming to educate contractors on proper mini-split maintenance and coil cleaning practices. SpeedClean’s trained staff will partner with distributors to plan, promote and conduct the seminar. The seminar focuses on providing education and data to help contractors communicate the importance of coil cleaning and overall maintenance. The content will include a step-by-step guide to mini-split maintenance and coil cleaning and an overview of the resources and equipment available to help with the process. SpeedClean will provide demonstrations of its innovative solutions that are designed to make it easier for contractors to perform mini-split maintenance and coil cleaning.
TORONTO — Jobber released the Home Service Economic Report: Spring 2020 Edition, which showcases market trends and insights pertaining to Home Service businesses in the first half of 2020.
>> speedclean.com
“Although we have not yet seen the full impact that the COVID-19 pandemic will have on small businesses, the Home Service category has already shown great resilience over this past quarter,” said Sam Pillar, CEO and co-founder at Jobber. “Barring any unforeseen setbacks, the category is on a strong path to recovery and, in many industries, has reached and even exceeded pre-pandemic growth levels.”
Bosch Streamlines Split WSHP Air Handling Unit Portfolio
Jobber’s Home Service Economic Report is compiled using proprietary performance data aggregated from the 90,000+ home service professionals the platform serves. Category performance is also compared to the U.S. GDP and other major categories for context.
The consolidation reduces the total number of configurations and parts for Bosch’s SM and LM Split systems from thousands to 84 and 32, respectively.
>> getjobber.com/home-service-reports/july-2020/
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HVACR BUSINESS AUGUST 2020
WATERTOWN, MASS. — Bosch Thermotechnology announced the proactive streamlining of the Split WSHP Air Handling Unit (AHU) product lines for its geothermal SM and LM split systems, making it easier for contractors to fulfill ordering needs for specific projects and installations.
The move offers relief and dramatic time savings for system installers who are seeing rapid growth in split geothermal projects. >> bosch-thermotechnology.us/us/en/
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THE HVACR MANAGEMENT MAGAZINE
EDITOR’S NOTEBOOK
BY PETE GRASSO TERRY Tanker Publisher ttanker@hvacrbusiness.com PETE Grasso Editor pgrasso@hvacrbusiness.com MEGAN LaSalla Art Director mlasalla@hvacrbusiness.com BRUCE Sprague Circulation Manager bs200264@sbcglobal.net
ADVERTISING STAFF ERIC Hagerman National Sales Manager Tel 216-409-3246 Fax 440-731-8750 ehagerman@hvacrbusiness.com TERRY Tanker Publisher Tel 440-731-8600 Fax 440-731-8750 ttanker@hvacrbusiness.com
BARBARA Kerr Executive Assistant bkerr@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©2020 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 ©2020 is published monthly by JFT Properties LLC,31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039, Phone: 440731-8600. 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 Fax: (440) 731-8750 Web site: www.hvacrbusiness.com (ISSN: 2153-2877)
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Leadership Lessons from George Washington
F
or a while now, I’ve been listening to a podcast called American History Tellers. It is described as, “Every part of your life — the words you speak, the ideas you share — can be traced to our history, but how well do you really know the stories that made America? We’ll take you to the events, the times and the people that shaped our nation. And we’ll show you how our history affected them, their families and affects you today.” Each “season” of the show consists of a series of two to six episodes that explores a different period in American history. So far, I’ve listed to a fascinating look at the Space Race, in-depth looks at the American Revolution, Prohibition and The Great Depression. I recently finished an account that chronicles “The Age of Jackson,” which covers the life and times of President Andrew Jackson.
George Washington, for example, can teach us a lot about leadership and business. The hallmark of Washington’s career was that he didn’t seek power but let it come to him. One thing that really struck me as interesting about Washington’s presidency — and let’s not forget, because he was first, he was basically making it up as he went along — was his forethought that to be a great leader, he had to surround himself with smart people. Washington’s original cabinet consisted of only four members: Thomas Jefferson as Secretary of State, Alexander Hamilton as Secretary of Treasury, Henry Knox as Secretary of War and Edmund Randolph as Attorney General.
America has a rich history and we can learn a lot about leadership from our founding fathers.
American History Tellers has been around for a couple of years now, so there are many seasons for me to pick and choose when deciding what period I want to learn about next. It’s been a welcome change from the usual interview centric and business focused podcasts to which I usually listen. If you’re like me, when you learn about something, you not only share that information with others, but also seek out additional information on the subject. While listening to the episodes on the American Revolution, I stumbled upon another podcast, [Abridged] Presidential Histories, a podcast that explores the pivotal moments that defined each president’s life and legacy and the lessons we can draw from them. When I subscribed to [Abridged] Presidential Histories about a month ago, it was in its infancy with only two episodes: George Washington and John Adams (it’s currently up to six episodes, John Quincy Adams, and will mostly likely be on Andrew Jackson or Martin Van Buren by the time you read this). Each episode is anywhere from 40-55 minutes in length and covers the life of each president before, during and after their presidencies. Already, I’ve learned quite a bit about our founding father that I’d either forgotten about or never learned when I was in school.
With any decision that had to be made for this new country — and there were many — Washington turned to his cabinet. Often time, these meetings turned into raucous debates where Washington sat quietly and listened to both sides of the argument before making his final decision. He could have very easily just “gone with his gut” and do whatever he wanted to do. Instead, he trusted those around him, smart men with differing opinions and expertise, to debate the issues and convince him one way or the other. Only then, when all options were fully explored, did he act. The most successful contractors with whom I’ve spoken to over the years all have this in common with Washington. It’s almost become cliché, but “hiring people smarter than you” is the best way to do business. Who you surround yourself with influences your decisions as a leader and ultimately shapes your business — successful or not. Do you have the right people in the right roles at your company? Do you trust your managers to keep you informed and lead your team? Relying on others to help in the decision-making process doesn’t make you a weak leader. It makes you an informed leader. Ultimately, however, the decision is yours to make and Washington knew this too. Right or wrong, the buck stops with you. So, make it easier on yourself and surround yourself with great people and your team will follow you as your business prospers. u
I think what fascinates me the most whenever I read a biography or, in this case, listen about the life of a historical figure is how much can be learned and applied to life today.
HVACR BUSINESS AUGUST 2020
5
DUMB DOWN YOUR MARKETING
We must constantly evolve, constantly grow and constantly mold to the people because we are only in business if we have people. BY DANIELLE PUTNAM
S
ummer is in full swing and, unfortunately, the COVID-19 pandemic is still in full bloom.
Everyone is panicked, everyone is uncertain. Will schools reopen? Will businesses close down again? Will states go back on lock down? What does all this mean for the blood line of our industry? What is the future and how do we market to a customer base in a crisis such as this ... do we halt marketing or push on? Regardless of the times, marketing requires two parallel tracks. Imagine two parallel train tracks. On the first track is your branding. 1) Consistent branding — keeping your name known and relevant in the marketplace. This can be done with truck wrapping, billboards, radio ads, door hangers, referrals, magnets…the list goes on. This marketing should represent who you are, why you are different, and why the world is better with you in it. 2) Flash Marketing — On the second track, we have what I call “flash marketing.” These are your coupons, promotions, and special deals, often used to “flash” new prospects, attract their attention, and potentially win their business.
6
Once the novelty of the flash wears off, what is left is what determines if customers are going to stay or not. Your brand marketing is in it for the long haul, chugging through continuously and providing a steady message, while your flash marketing makes frequent stops along the way, maybe bringing some new people on board, but often dropping them off a few stops down the line, too. I cheated on Chick-fil-A once. Let me explain. They are my go-to if I can’t decide what to eat or am in a hurry or just want a semi-nutritious lunch. They have healthy options, good food, and a consistently positive experience. Their consistent branding got me on the loyalty train a long time ago, and I’m unlikely to get off. But then I got a coupon for Arby’s in the mail. It’s a block away from my office, they have a drive through, and there was something for free on the coupon. I almost never go to Arby’s, but that coupon won me that day. I hopped on the Arby’s train at one of the train stops. They won me in the short term. However, I got off just a couple of stops down the road
HVACR BUSINESS AUGUST 2020
since I’m more of a Chick-fil-A person. Sometimes flash marketing can win longterm customers, and sometimes it doesn’t. But the true danger in flash marketing, is when your competitors do it. You can’t afford to lose your loyal customers to your competitors flash – which is why you must use flash too. Brand your customers, and flash your customers, simultaneously.
INSPIRE EMOTION Once the novelty of the flash wears off, what is left is what determines if customers are going to stay or not. You must inspire an emotional connection. And that brings me to my most updated point about dumbing down your marketing. On that branding track, we have to take it back to basic humanness, and we so often forget that; sometimes, it takes a global disaster for us to remember our humanness. For our brand to inspire an emotional connection, we have to actually try to
connect. We have to be human with true concerns for others. We have to show that we care for others, not just about ourselves. And then we inspire a connection. And then our marketing works. Think about every company you love and why you love it. Chances are, you like more than just the product. Sure, TOMS shoes are cool looking as far as canvas slipon shoes go, but I like the philanthropic work they do. I love that the Honest Co. has great organic products for my kids, but I also love that they donate toys and raise money for a children’s hospital. These companies have aligned with things I care about, so they get my business. And even if I get “flashed” by someone else, they only lose my business in the long run if the “flasher” connects with me more than they do.
CONSTANT EVOLUTION As the times change, marketing has to change too. We must constantly evolve, constantly grow, and constantly mold to the people because we are only in business if we have people. Dan Kennedy, the author of the “No
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Combi Condensate pump
When we sell just to sell and just to stay in business, we have lost our humanness. B.S.” line of marketing, management and business leadership books says that how a customer feels is much more important than what they know or think – before, during and after a purchase. Right now, all of us, our neighbors, our competitors, our friends, are all taking a huge hit financially. Calls are slowing and uncertainty is rising – so yes, we may have to invest in more freebies packaged into our marketing efforts but by showing the community that we care, we will surely win longer term business.
your customer hits “unsubscribe,” which means they miss your next message that maybe was more tailored to them. I developed a really cool marketing calendar last year (send me an email if you want one; I’ll send you a physically printed one for free), and it is helping me stay on track in my own business. But even though things are written on my calendar, I have had to be flexible and change with the times, too.
It’s okay to do something nice during a crisis. But it’s also okay to charge what you’re worth during a crisis. So, when flashing your specials and freebies, don’t be afraid to diversify and offer more expensive services than normal because your customers are inconvenienced and deserve the opportunity of choice right now, especially when it comes to the health and safety of their family.
I had some really great pieces developed for my upcoming workshops and trainings, and you know what? Right now, people are quarantined and will not be attending onsite, and that’s just the harsh reality. While I had a plan, I have to change with the times. I have to resist the urge to market how I had planned; I know that today, people won’t spend money the same way, so it’s time to connect, offer to serve, and remind people that I am in business because I care about them.
FIND YOUR TARGET AUDIENCE
I care about their families, their children, the elderly, and I care about humans.
When we sell just to sell and just to stay in business, we have lost our humanness. Marketing works by finding your niche and marketing to your target audience. But to truly market to someone, you have to understand them. Maybe you even have to be them. If we simply impose onto people what we think or say they need, we are marketing blindly (and at a high cost, might I add) at best and exploiting them at worst. But if we all take a moment to understand our customers and market to their needs, then we become a solution to their needs instead of an exploitation of their money. When we remember that we are all humans and inspire a connection, then we have a symbiotic relationship in which they benefit from our company and we stay in business because we are fulfilling their needs.
STAY RELEVANT Sometimes we get sloppy; we’re all guilty of it. We feel the intense pressure to stay relevant and market something today, so we don’t take the time to really focus on our message and think about who it is going to. It’s costly to do this, and if it isn’t the right message, it could be the time that
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Marketing has to have those double parallel tracks of loyalty branding and flash marketing to be effective, but if you forget to ask your passengers their destination, if you fail to understand what your customers really need and want, they’re not likely to get onto your train, or they might hop off before you want them to. And just like trains use those railroad switches to switch tracks, we have to evolve with the times and switch tracks, or we might just crash and burn. Look for the humanity in your company; look for the humanity in your customers and prospects; look for the humanity in your marketing. u
Danielle Putnam is president of The New Flat Rate and immediate past resident of Women in HVACR. The New Flat Rate, a home service menu-selling system designed to put profit directly into the hands of plumbing, electrical and HVAC contractors. Women in HVACR provides avenues for networking and educating while encouraging more women to enter the trades. For additional information, email danielle@menupricing.com or visit womeninhvacr.org and thenewflatrate.com.
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HVACR BUSINESS AUGUST 2020
7
CHANGING OF THE SEASONS
Successful contractor entrepreneurs must keep one eye on the current season, with the other looking toward the next. BY PETE GRASSO
A
ugust may be smack dab in the middle of cooling season — with phones ringing off the hook from customers looking for A/C — but savvy contractor entrepreneurs know heating season is right around the corner and soon those calls will turn from “A/C service calls” to “heating calls.”
“Very warm temps in the northeast have caused the residential market to explode and commercial construction has picked up.” — Eric Knaak
Transitioning between the seasons can be tricky if you don’t have the right processes, training and cooling/heating equipment to recommend to customers.
from around the country about how they prepare for heating season during the throes of a hot humid summer, what equipment they recommend, and why manufacturer support is critical.
In this special report, I spoke with a panel of top contractor entrepreneurs
The panel includes Ken Goodrich, CEO of Goettl Air Conditioning in
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HVACR BUSINESS AUGUST 2020
Las Vegas; Lanny Huffman, owner of Hickory Sheet Metal in Hickory, N.C.; Eric Knaak, general manager of Isaac Heating & Air Conditioning in Rochester, N.Y.; and Darryl Robinson, owner of Robinson Air in Lawton, Okla. Here’s what they had to say.
How has business been this summer, amid the coronavirus pandemic, versus past cooling seasons? Goodrich: Our summer season is on plan and significantly over 2019. January through May numbers were significantly over plan, and June was on plan. Huffman: Amazingly, the replacement sales are better than last year and new HVACR commercial projects are about the same as last year. Knaak: The season has been a strong once since Memorial Day. Very warm
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temps in the northeast have caused the residential market to explode and commercial construction has picked up. Commercial retail is still light, so our commercials service group is behind last year. The continued heat and temperatures of 90F+ are unusual here and we have had a number of days strung together that exceeded 90F. We have everyone back and we are hiring, so it’s all good.
“It feels like recording a Christmas album in the middle of July, but we have to think at least that far ahead.” — Darryl Robinson factories closing during late Q1 and early Q2.
Robinson: We have had our busiest June of record. Partly because of the heat, but also because so many of our customers are staying home and running their air conditioning systems longer.
Huffman: The number one problem is finding qualified employees. We work with the community colleges, our chamber of commerce and several staffing agencies. The other problem, we are seeing longer lead times on equipment.
Are you having a difficult time keeping up with cooling demand?
Knaak: Some equipment and service parts have been in short supply due to COVID19 and factories being closed. This has created a few issues, but nothing crazy. Our team has switched providers and parts to make it work.
Goodrich: Yes, as it has been for the last 35 years. There is always more HVACR demand than can be met. Huffman: Indeed, we are. Knaak: For service we have been scheduled out 3-4 days for some clients, but that is so we leave room for our service agreement clients to receive same day service. For installations we are booked out a few weeks but doing evenings and weekends to keep up. If we had 10 more installers we could probably install 10 more systems every day for the next several weeks. There is creative scheduling and moving of pieces to maximize the season and so far the team is doing amazing. Robinson: Although we have obviously not planned for or expected this pandemic, we have planned for growth this year and have hired the help we’ve needed in order to do so. We have continued to hire throughout this time to make sure we are staffed to serve as many customers as possible.
Our vendor partners have done a great job of getting us what we need and adjusting shipments from various locations to meet the demand and we couldn’t do this without them. Our suppliers rock. Robinson: Fortunately, we have not had as many cancellations as we expected with customers not wanting someone in their home. We check the temperature of each coworker daily and have had a few that we’ve had to send home, then to get tested for COVID19. We pay them for the few days they are out waiting on results. Again, fortunately, all who have been tested so far has had negative results and get right back to work. We have had delays in shipping and a few indoor air quality (IAQ) products have been hard to get.
With heating season right around the corner, how do you begin to prepare while What problems, if any, have demand for AC is still so top of mind? you run into this cooling Goodrich: We stay focused on our season? Goodrich: COVID19 training and personal protection equipment for our field personnel is a new challenge, as well as constant monitoring of their health and safety. Our retail credit approvals have been impacted, as well as minor HVACR equipment shortages due to various
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on Comfort Club sales. We will need to get these customers signed up so when the initial heating season does hit, they will be familiar with our service and what they can expect from us.
annual plan and pivot to the seasonality as needed. Huffman: Our service manager has a heating season truck inventory and a cooling inventory. The first week in August, he starts pricing truck stock items. Knaak: Our Isaac Training & Education Center (ITEC) is already
preparing the fall classes and schedules are being created to handle the technical component. For the sales and operations staff, it’s a fairly seamless transition as many of the systems we sell in the summer include new heating equipment as well. Inventory needs to be adjusted and min-max number adjusted, but that’s all behind the scenes work that’s being done. Robinson: We are working on different specials such as “Free Upgrades” to new systems. Our “Pick One” specials will allow the customer to choose with each system purchase an additional free item. This may include free blown-in insulation, standard water heater, zero percent financing, whole home air cleaner, etc. It feels like recording a Christmas album in the middle of July, but we have to think at least that far ahead.
What training is involved with preparing technicians for the switch from cooling to heating? Goodrich: Our training on gas heating and heat pumps begins September 1, as well as IAQ, duct system upgrades and insulation. IAQ has been strong this year and we expect it to continue through the foreseeable future. Huffman: The Air Conditioning Contractors of America (ACCA) has several quality assurance programs we use along with manufacturer training videos. Knaak: The ITEC provides our Isaac University internal training as well as training for other companies who chose to send team members. Our fall schedule of classes usually includes Gas Heat 1, Gas Heat 2, Hydronics, Oil Heat and Heat Pumps. These are 30-hour courses with a combination of classroom theory and hands on, with five classrooms and six labs we are able to provide a superior training and education experience to our team. Robinson: We are really focusing now
The more relationships we build in the shoulder seasons, the better our chances of gaining loyal customers in those busy times where the first company that shows up gets the call.
What equipment — both for cooling and heating — are you recommending to your customers? Goodrich: We recommend Goettl HVACR Equipment. Huffman: Primarily, we are Lennox and Trane dealers. In certain applications, however, we may use a different brand that may be a better ”fit.” We prefer to give our customers as many options as possible without confusing them. Knaak: We use Lennox and Rheem for HVACR and Mitsubishi or Gree for mini-splits Robinson: Our main line of equipment is Amana. Amana’s Lifetime Unit Replacement warranty gives us an edge over any other manufacturer.
Have you seen an uptick in customer demand for split systems? Goodrich: In the Southwest U.S., the mix is approximately 57 percent split systems to 43 percent packaged equipment. Huffman: No, most of our residential systems are split systems units. Knaak: It’s the same as any other year. Again, much of what we install are complete and matched systems. Robinson: We have seen an increase in demand for replacement systems. The fact that R-22 is no longer being produced has helped to move customers from a “repair decision” to a “replace decision.”
How critical is manufacturer support when switching seasons? Goodrich: I find that the manufacturers continued on page 10
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are generally ahead of the contractors in that regard. Huffman: Manufacturer support is critical any season.
Knaak: Manufacturer support is important, but the vendor relationship is critical. That’s why it’s so important for ACCA, Heating Air-conditioning Refrigeration Distributor International (HARDI) and Air-conditioning Heating & Refrigeration Institute (AHRI) to work
closely together … the three-legged stool. Robinson: When it comes to moving new equipment, we are in the same boat as the manufacturer, so it benefits us both to work together. For instance, we have in years past ran a “free furnace” special where
our equipment supplier gave us special pricing on certain pieces of equipment for a limited time to help our sales and also reduce their inventory before the end of the year. The trick is to find a solution, program or special that benefits us, the manufacturer and the customer.
“Manufacturer support is critical any season.” — Lanny Huffman
What do you rely on most from your manufacturer partners? Goodrich: Adequate inventory, on time delivery and after-hours availability. Huffman: Warranty support, technical and training support, timely undamaged delivery of their product and competitive pricing. Robinson: Good pricing is just the cost of entry. It is a given. Beyond that would be a good line of communication. For instance, are they having difficulty keeping up with the equipment they stock for us? Are there price increases on equipment or refrigerant coming soon that we need to prepare for? Technical training on high end systems or service bulletins that correct problems in the field.
How will you use the lessons you learned servicing and installing AC during the coronavirus pandemic to address concerns for heating season? Goodrich: Safety first, then discussing IAQ and system reliability with each and every customer. Huffman: As to our employees, we have established protocols for interacting with the customer as well as protection while servicing HVACR equipment. We will also continue offering ionization, higher MERV filters, evaporative coil sanitizing and ensuring outside air requirements are set correctly.
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Knaak: We will continue with the personal protective equipment (PPE) procedures, sanitizing and protecting our clients and team members the best we can. We also offer a home disinfecting solution that is applied using a misting device that can add an additional layer of protection from viruses. Robinson: We have gotten a pretty good handle on what our customers feel is important during this pandemic. Have we taken precautions with the health of our coworkers before we send them out? Are we using personal protection equipment to protect both our coworkers and our customers while in their homes? The IAQ conversation seems to be much easier now so this gives us a great opportunity to educate the customer on what we can provide. The need is obviously there.
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“We installed more than 1,000 UVC lights in our employees’ homes for their families’ IAQ and peace of mind. We purchased 300,000 custom face masks and provide them to our customers, their families and anyone who needs one in the communities we serve. ” — Ken Goodrich
What steps are you taking to ensure employee, customer and community safety?
in the communities we serve.
Goodrich: We installed more than 1,000 UVC lights in our employees’ homes for their families’ IAQ and peace of mind. We purchased 300,000 custom face masks and provide them to our customers, their families and anyone who needs one
Huffman: We adopted protocols the Centers for Disease Control and Prevention (CDC) recommends and information that ACCA has published in regard to COVID19. We also call our customers a day ahead to make sure they
In addition, we installed IAQ in each of our six office locations for our employees’ further protection.
are healthy and are comfortable with us coming to their home or business. Knaak: Education and enforcement on the proper use of PPE, hand washing, sanitizing and social distancing. There is zero tolerance for non-compliance. There has to be. Our supply chain and operations managers are sourcing so that we have a proper supply of everything we need. Robinson: We continue to wear our PPE, wipe down surfaces, maintain a safe distance from customers and monitor coworker temperatures. We believe this will be the new norm. u
Pete Grasso is the editor of HVACR Business magazine. To reach him, email pgrasso@ hvacrbusiness.com.
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KEEP YOUR ‘A’ PLAYERS Knowing the difference between confidence and ego will go a long way toward employee retention.
BY BRIGHAM DICKINSON
C
onfidence and self-assuredness draw people towards you while being egotistical drives others away. As a business owner, knowing the difference between the two will have a long and lasting effect on “A Player” retention. We all have an ego or what we consider our sense of self. It can be spot-on as long as you keep it in check or grossly inaccurate when you let yourself get puffed up over a few successes. Failure can negatively affect your ego as well. Whether tipped out of balance through failure or success, ego can make us lose meaningful moments through self-doubt
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That thing that you want to accomplish may not come as easy to you as it does for others, but you can still do it as long as you’re willing to pay the price. or self-aggrandizement. So, what is ego and how can learning to control it help us win meaningful moments, make real connections with customers and most importantly, help us keep our A Players? Years ago, when my business was in a state of transition, I knew I had to make a change. I started living by some of
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CONFIDENCE VS. EGO
the principles we were teaching our clients and distilled the lessons we learned through this process into my second book, “Patterned After Excellence.”
First, ego and confidence are radically different. Ego is driven by your successes and failures and it’s how you map those onto your understanding of who you are. It’s taking a string of successes and, instead of assuming that you must be great to have done such great things, learning from your successes and delivering credit where it’s due — whether it be on the circumstances, on your team or even just a lucky break.
Learning how to confront my own ego was difficult, but it helped me take control of my life and work and start delivering better experiences for my team as well as every one of my clients.
Confidence comes from hard work and dedication. It is taking a step back and assessing a situation on its merits. It’s understanding that you only get out of a moment what you put in, which means if you
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haven’t done the work, you can’t claim the rewards. It’s believing in yourself without bragging about yourself. In short, confidence is understanding where you are and being sure of your ability without overstating your importance or claiming to be better than you are. Confidence is gained over time, through difficult challenges and hard-won successes, with a measure of gratitude for the opportunities you were given and is reinforced by continual learning throughout your life. In comparison, ego is crossing the finish line without running the race.
WARNING SIGNS There’s a fine line between confidence and ego. It can be easy to overstep, but if you know the warning signs, it can be just as easy to avoid. 1. Needing to be right. There’s a huge difference between needing to be right and being confident. Even the most confi-
appear serious and in control that they end up projecting that onto others, appearing as if they’re above the very idea of fun. Confident people aren’t afraid to laugh at themselves. 5. Are your A Players team members or tools? When you think of your team, are they people or just cogs in a machine? Nobody can do everything on their own, but confidence is won from knowing your limits and working well with and trusting others. 6. Do you know everything? Above all, confidence is borne from a lifetime of learning. There’s always something new to know but shutting yourself off from learning because you think you know everything is a surefire way to end up knowing very little. Everyone experiences these egotistical symptoms from time to time. Even I have, throughout the course of building my business and it’s led to losing A Players
Optimism is a lot like a muscle. Every time we interact with someone or deal with a challenging situation, we can choose to exercise that muscle. dent people can understand that they may be wrong or at the very least that someone else will have a different point of view, while egotistical people are more inclined to argue their position as if it were the only valid one. 2. Seeking validation above all else. When you accomplish a goal, who knows about it and how do they find out? If you’re bragging about every success you’ve had, there’s a good chance you’re spoiling future successes in the process. Success and failure are events. They are a moment in time. If you attach yourself to them, it will negatively affect your ability to continue learning and growing. 3. Do you ask — and listen — for feedback? It isn’t enough to just ask what people think of you and your accomplishments. Sometimes, feedback can be cold, but listening to it and engaging it on its merits can lead to winning the moment and improving yourself. 4. Do you make fun of others or laugh at yourself? Egotistical people can get so wrapped up in their need to
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that would have provided great benefits for me and my team. Learning how to see ego coming and how to stop it, is a sure mark of a confident leader.
STAGES OF CONFIDENCE Becoming confident can sometimes be a painful, difficult process. It is often, the only way we learn what we don’t know. However, when we fail, we can get back up and start again and over time, pure grit can turn more and more failures into successes. When we start something new, the whole world is wide-open with possibilities. And then we try the thing and realize that we’re much less talented than we thought we were. Thinking isn’t doing and thinking you’re great at something without practice or training is a great way to get stuck and never make any progress.
A small business loan isn’t just about the money. It’s about making the most of it. To learn more, visit us at liveoakbank.com/hvac
But say you decide to push on through and try to learn all you can about the task at hand. You will find yourself face to face with all the inadequacies you carry with you and slowly, over time, you will work continued on page 14
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through them. This is a humbling process and most often, you’ll hate how little progress you make at times. But you don’t climb Everest on your first hike and as you grow through this process, eventually you’ll start making it just a little closer to the top. Eventually, this stage of conscious incompetence ends and you find yourself understanding more and more about what you’re trying to accomplish. The hardest part is over, but now you know what you know and, more importantly, what you don’t. From here, you work tirelessly to
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Adopting a toaster mentality — that you’re only as good as the thing you do — can hold you back. hone your skills and you’re reinforced by the successful outcome of your practice. Eventually, all that practice even becomes second-nature and that’s where true confidence comes from. And confidence draws A Players towards you because they like you and want to be like you.
DOING THE WORK When people say you have to put in the work to really become confident in what you’re doing, that’s what they mean: agonizing over every little inch of progress
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until, one day, you make it to your goal without letting it go to your head. Learning to be confident in your business requires constant learning, training and self-improvement. If you do not put in the work, you can’t grow as a person and any confidence you have will crumble at the first sign of failure. Instead, focus on planting the seeds of confidence and nurturing them throughout your life with continued work.
into true confidence, enriching everyone around you. Especially your A Players. u
Brigham Dickinson is president of Power Selling Pros and author of Patterned After Excellence, a book which explores his journey to live a life informed by the same principles he established for his business. Brigham started Power Selling Pros in 2009 when he saw that call handlers needed assistance consistently converting calls to bookings. His experiences led him to write Pattern for Excellence, a 2016 book about engaging customers and creating Wow! moments. For additional information, visit powersellingpros.com.
Eventually, those shards of ego will turn
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RECRUITING
BY MARK SCHWARTZ
5 Tips for Finding Skilled Trade Professionals
T
he ongoing labor shortage among specialty subcontractors and service businesses is no secret. For decades, high school age students have been steered toward four-year universities and colleges for degrees while less and less emphasis was placed on trade schools and apprenticeship programs. The mid-2000s recession rattled the trade industries even more as thousands of skilled workers were laid off and funding for what few trade education programs remained all but dried up. A decade later, the demand for skilled workers was strong, but the talent pool was lacking. Now, contractors are faced with a new challenge amid the COVID-19 pandemic — will they lose more talented workers during a prolonged shutdown or economic downturn? Many who left the industry in the mid2000s took positions in other industries, while technology companies exploded on the scene and have lured the lion’s share of young professionals to their ranks. The construction industry has been pushing efforts to renew trade skill education and training at all levels for years. There is growing appeal to enter skilled-labor careers and high schools are bringing back courses such as shop class and mentoring kids on the benefits of trade-specific schooling. Still, this is not going to be an overnight fix. Those who have already undertaken the opportunity to pursue a career in HVACR still need time and the right resources to effectively learn the ropes. And now with the current pandemic and economic uncertainty the industry needs to prepare itself not just to weather the current storm, but come out ahead as an appealing option. Maybe this time, tech workers will look to construction jobs if contractors offer the right technologies and opportunities. Although it won’t be easy, recruiting
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Although it won’t be easy, recruiting younger professionals can be the answer for subcontractors and service businesses that struggle to find skilled workers. younger professionals can be the answer for subcontractors and service businesses that struggle to find skilled workers. These five steps are a great place to start.
UNDERSTAND YOUNGER PROFESSIONALS Younger, tech-savvy professionals want assurances that they’ll be able to use and learn about the latest technological advances in their jobs. Where construction was traditionally seen as an honorable, decent-paying and often exciting trade among earlier generations, the industry today is competing with internet and social media companies, technology providers, arts and entertainment outlets, online retailers and many others that are driven primarily by technology. Younger professionals don’t want to deal with paper, manual processes, outdated software or spreadsheets. They want to work quickly and efficiently. They want to create, innovate and lead. They want to build careers and grow their skills instead of spending the bulk of their time doing routine tasks that could be addressed with automation.
MODERNIZE YOUR OPERATIONS As a specialty contractor, you should continue investing in modernizing and adopting the latest technologies to attract younger professionals. Contractors that deploy modern software and technologies realize significantly greater efficiencies, helping achieve more productivity from the skilled workers they already have in their ranks, and subsequently, higher profit margins. At the
same time, these modern tools are attractive to tech-driven professionals.
ENHANCE RECRUITING, ONBOARDING AND TRAINING Human resources functions in construction — whether that means a full HR team, a single dedicated HR professional or, often, members of accounting or operations — can use technology to help automate processes and create a streamlined, positive experience for new employees. Through modern HR management solutions, you can improve HR processes, from recruiting and onboarding to training, uploading HR documents, accessing pay statements and more.
TAKE ADVANTAGE OF DATA Data can help you understand everyday work challenges and discover ways to make the people who work for you more productive. Many industries have gone digital, incorporating technology into their day-today work. Construction, unfortunately, has lagged in this area. And while many leading contractors are modernizing their operations, far too many still rely on manual processes or outdated technologies. Young workers have come to expect a modern workplace that uses the latest technology. Cloud-based construction software that connects the office, team and field provides one unified source of data that everyone in the company can access. This prevents errors and reduces wasted time, resulting in significantly greater efficiencies, increased productivity and higher
profit margins. These modern solutions also provide a leg up in attracting younger, tech-driven professionals to your workforce.
FOCUS ON EDUCATION Provide training and educational opportunities to show potential employees that you want to see them advance in their roles and their careers. Many construction career paths exist, which gives you an opportunity to promote career exploration by providing cross-training for those interested. Developing leadership programs can help promote this kind of cross-training and motivate employees to master their craft. This will also help ensure that you have capable employees to promote when the time is right. Will younger professionals see your company as modern, or will they be turned off by old-school methods like pen and paper? It’s a question worth taking seriously. Investing the time to understand their needs and provide a career path, access to technology and the modern processes they expect might just be your answer to overcoming the skilled labor shortage. u
Mark Schwartz is a senior product manager with Viewpoint, a Trimble company, and has over 30 years of business and product management experience. Most recently, Mark facilitated the launch of Viewpoint’s Service Tech app for service contractors to deliver greater speed and integration between the field and back-office. For additional information, visit viewpoint.com.
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ESTATE TAXES
PROVIDED BY KEVEN PRATHER, CFBS
Time to Sell That Life Insurance Policy?
Y
THE LIFE SETTLEMENT PROCESS
ou know that life insurance policy you’ve been paying for all these years? It could get you a nice sum of money now — while you’re still around to use it. That’s because you may be able to sell your policy for cash through a process known as a life settlement. Here’s how it typically works: • Most types of life insurance policies can qualify for a life settlement — including universal life, whole life, variable life and term life.
• That payment is more than your policy’s cash surrender value (the money in the cash account) but less than the death benefit the insurance company would pay out if you died.
While not extremely well-known, life settlements are becoming more common — especially among some affluent households that have insurance policies meant to pay their estate taxes down the road. The reason: The Tax Cuts and Jobs Act of 2017 increased the estate tax exemption to approximately $11 million for individuals and approximately $22 million for couples.
• Tax law changes have made life settlements more attractive to more people — especially the affluent.
1. Screening. This is a preliminary analysis to eliminate situations where a life settlement is clearly not appropriate.
• Your health and life expectancy play major roles in the amount of money you’ll be offered for your life insurance policy.
• You sell your policy to a life settlement investment fund for a one-time payment.
• The investment fund takes ownership of the policy, pays the ongoing premium payments, and pockets the entire death benefit when you pass away.
• Life settlements can help life insurance policyholders liberate cash that is currently tied up.
The amount of money you might be paid for your policy depends on several factors — including the policy’s face value and premiums along with your life expectancy. Getting a life settlement payment is a five-step process:
That higher amount means more families may no longer need life insurance they’ve earmarked to pay the federal estate tax—so they’re selling their policies for tidy sums. REASONS TO CONSIDER SELLING YOUR EXISTING LIFE INSURANCE If you have a life insurance policy you no longer need or want, you can surrender it to the insurance company and receive its cash value or you can let the policy lapse. However, as noted above, a life settlement is almost always the superior choice economically. Chances are, you’ll get more money if you go this route.
That higher amount means more families may no longer need life insurance they’ve earmarked to pay the federal estate tax — so they’re selling their policies for tidy sums.
People sell their life insurance policies for a variety of reasons. If you find yourself in one or more of these situations, it probably makes sense to at least consider a life settlement:
Here’s a closer look at life settlements, along with advice that can help you decide whether they may be a smart move for you.
• The face value (or death benefit) is no longer needed due to the death of a spouse, divorce, changes in the tax
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code or other circumstances. • The premiums are no longer costeffective or affordable. • Money is needed to finance retirement or other lifestyle benefits. • The money can be better used for gifts to loved ones or philanthropic concerns. • The money is needed for medical treatments or other large expenses. The caveat: Life settlements are generally for seniors usually no younger than 65. That’s because a company that buys policies doesn’t want to be stuck paying premiums for decades as it waits to collect on the death benefits. Put more simply, you’ll probably get a better offer if you’re old and in relatively poor health.
2. Collection of information. Your life insurance and your health are evaluated. 3. Life expectancy report. Using this information, a life expectancy report — a mathematically calculated projection of how long you will live — is produced. 4. Life insurance policy analysis. Your life insurance policy is evaluated in the context of your life expectancy report. 5. Value calculation and offer. The current monetary value of your life insurance policy is calculated, and you are made an offer by the fund. There are three types of life settlement payouts: • Cash for your life insurance policy. This is the most common life settlement payout. You receive a single payment for your policy and give up any future benefit from it. • Retained death benefit. Using this approach, you will not get any money. Instead, you no longer have to pay premiums. Upon your death, your beneficiaries will receive part of the life insurance policy’s death benefit. • Hybrid. This approach is a combination of the two previous payout types. 6. Decision. In the sixth and final step, you make the decision whether or not to accept the offer.
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CASE STUDIES THE NEW TAX SITUATION FOR LIFE SETTLEMENTS It’s important to realize that life settlement proceeds are taxable (unlike death benefits to beneficiaries). The good news: Thanks to the Tax Cuts and Jobs Act of 2017, the tax rules on a life settlement you receive are now the same rules that apply if you surrender your policy to the insurance company. This can make it more tax-effective to choose the life settlement option.
Keven Prather specializes in serving the complex needs of business owners through Financial Planning and Business Transition/ Exit Planning. Using a Total Wealth Planning approach, Keven’s objective is to turn complex problems into actionable, understandable and manageable steps, by collaborating with business owners, their family, and strategic partners.” Keven can be reached at (216) 592-7314 or kprather@financialguide.com. www.TransitioNextAdvisors.com.
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To see how life settlements can make good sense, consider these examples. • After reviewing his estate plan, an 82-year-old man realized his policy was no longer necessary. Because of his advanced age and medical history, his policy sold for $1.2 million — almost double the cash surrender value of $573,601, and roughly half of the death benefit of $2.5 million. He is now using the money to prepare for continued care as he ages. • An 89-year-old woman needed additional funds to help with family issues (the monthly premiums were also getting difficult to afford). After rejecting the idea of letting the policy lapse, she sold it for $110,000 — more than double its $47,281 cash value.
Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. www.SIPC.org. TransitioNext AdvisorsTM is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. Supervisory Office: 2012 West 25th Street, Suite 900 Cleveland, OH 44113. 216.621.5680. This report is intended to be used for
• A 70-year-old man with Alzheimer’s required 24-hour care. His daughter needed cash to pay for medical expenses and to get relief from rising premiums. The policy had a hefty death benefit ($7.5 million) but a cash value of just $237,535. It eventually sold for $1.5 million in cash — while the daughter retained a death benefit of $3 million, using a hybrid-sale approach.
MAKING THE RIGHT DECISION Navigating the life settlement process can be tricky. Certainly, the industry is better regulated than it used to be. Most states now require the companies that buy policies to be licensed and disclose fees and other financial information to policyholders.
informational purposes only. Neither MML Investors Services nor any of its employees or agents are authorized to give legal or tax advice. Consult your own personal attorney legal or tax counsel for advice on specific legal and tax matters. CEG Worldwide, LLC. is not a subsidiary or affiliates of MML Investors Services, LLC or its affiliated companies. VFO Inner Circle Special Report By Russ Alan Prince and John J. Bowen Jr.
That said, regulations can vary from state to state. And there’s no shortage of fine print in some of the offers that these companies make. Our advice: Sit down with a wealth manager who has experience in this area, to determine whether the strategy in general makes sense — and whether a particular contract to buy your policy has terms and conditions that are really in your best interest. Action step: If you think you or a family member could potentially benefit from selling an existing life insurance policy, contact your legal or financial professional to explore the topic further. u
©Copyright 2018 by AES Nation, LLC. All rights reserved. This report is reprinted with permission from VFO Inner Circle. Unless otherwise noted, the source for all data cited regarding financial advisors in this report is CEG Worldwide, LLC. The source for all data cited regarding business owners and other professionals is AES Nation, LLC.
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IMPROVE BENEFITS, LOWER HEALTHCARE COSTS
Five steps to save money on better health benefits for your employees. BY T.J. MORRISON
L
ike many businesses designated as essential services, HVACR companies have been working tirelessly to serve their customers and navigate the unique challenges posed by COVID-19. Between the usual summer demand for air conditioning and the hesitation many people are feeling about inviting anyone outside the family circle into their homes, HVACR business owners are now facing many obstacles. One is ensuring they can provide their employees with high-quality health benefits without breaking the bank. As essential workers, HVACR technicians need access to affordable, reliable and effective medical care that will enable them to keep doing their jobs. But, with budgets incredibly tight in just about every industry, the majority of contractor entrepreneurs may feel caught between a rock and a hard place. Not knowing that they can provide health benefits , in tough times like these, employers typically feel forced to consider every option including: loans and/or layoffs. Before they do that, though, there are five things you can do to free up money being funneled into expensive health insurance plans.
LEARN TO BE LIBERATED FROM THE STATUS QUO Traditionally, health benefits provided to employees come from one of the bigbrand insurance carriers. These cookiecutter plans are often accompanied by exorbitant fees, and often, carriers increase premiums 10-20 percent. The usual justification is that “healthcare costs are rising.” When employers break ties with these insurance carriers, and become fully responsible for their health plan by switching to a self-funded model — the employer pays directly for beneficiaries’ claims — they can see for
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The best investment an employer can make is in high-quality, value-based healthcare providers, especially those in primary care. themselves just how little truth is in that statement. And, without any unnecessary fees, they can see a savings somewhere between 20-30 percent versus the cost of a PPO. This equates to an estimated savings of $2,800 per employee.
OPTIMIZE HEALTH PLAN INFRASTRUCTURE
become known for pocketing the prescription drug rebates they are supposed to pass along to patients. There are transparent PBMs out there, however, and there are some who are willing to sign a contract that says that employer owns their company’s prescription claims data. Understanding what kinds of medications are used most often by the beneficiaries covered by their health plan, employers have the opportunity to look into lower-cost generics and/or invest in services that could help their employees become less prescription-dependent.
Converting to a self-funded insurance plan can be confusing, which is why it’s important for employers to have all the right resources and tools. This starts with picking the right benefits advisor. Some advisors receive commissions, ADD VALUE-BASED bonuses and other perks from insurance PRIMARY CARE The best investment an employer carriers, which unfortunately means they can THE TAX SITUATION FOR LIFE make is in high-quality, value-based may NEW be incentivized to keep employers SETTLEMENTS on health insurance plans that aren’t ac- healthcare providers, especially those in primary care. Compared to the physicians It’s important to realize thatTo lifemake settlement tually in their best interest. sure proceeds that are stuck in the fee-for-service system are taxable (unlike deathisbenefits to beneficiaries). their benefits advisor fully committed — in which providers are paid according toThe doing right by Thanks their organization, it’s and good news: to the Tax Cuts Jobs to how many tests/service/procedures and imperative pick an adviAct of 2017,that the employers tax rules on a life settlement you patients they see — value-based physicians sor that willing be fully receive areisnow the to same rules transparent that apply if you surare able to provide patients with lengthiabout whether and what commissions render your policy to the insurance company. This er, more in-depth appointments through they receive. can make it more tax-effective to choose the life setwhich they can get a better, more comIt’s also important for employers to tlement option. plete picture of the patient and their pobring on board a carrier-independent tentially harmful lifestyle factors. third-party administrator (TPA), which Value-based physicians don’t benecan process claims and take on other administrative duties. Stop-loss insurance fit from having people constantly come will also help make the transition to through their doors. Rather, value-based self-funding less stressful, as it can be used physicians in a direct primary care model to protect the employer against large, un- are paid a flat, monthly fee. Their incentives are aligned with the patient’s. foreseen claims.
CARVE OUT PHARMACY BENEFITS
LEAVE BEHIND VALUEEXTRACTING PPO NETWORKS
Pharmacy benefit managers (PBMs) are the middlemen that have unfortunately
For historical reasons, PPO networks often charge three to five times the amount
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that Medicare pays healthcare providers. And on top of that, they tack on monthly fees for each and every member. A cost-saving alternative is to use reference-based pricing, in which employers and their benefits advisors contract with healthcare providers at a rate that exceeds Medicare reimbursement, but is less than what traditional insurance plans pass through. Then, employers ensure they see the savings that come from reference-based contracts by incentivizing employees to use chosen providers by waiving copays. Bob Whalen, CEO of HB McClure in Harrisburg, Pa., saved more than $500,000 in the last three years by doing each of these things. His company already had a self-funded health plan, but he still wasn’t seeing anywhere near the savings he and his employees were looking for. Knowing that his still-expensive healthcare costs were hurting the whole company, Whalen decided to take his health plan transformation to the next level. He hired a carrier-independent TPA, partnered with a transparent PBM, and bundled payments for imaging and surgical needs. He slashed the cost of a knee-replacement procedure by more than $30,000 and grew his business from 170 employees to more than 500 employees. The success Whalen found for HB McClure was a direct result of following the five steps outlined above, and even in these uncertain times, other HVACR companies can experience similar results by embracing this method. For these essential businesses, doing so may prove to be equally essential. u
T.J. Morrison is president of Benefits Design Specialists, Inc. For additional information, visit bdsadmin.com.
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FINANCE
BY RUTH KING
Beware the PPP Loan! Editor’s Note: Due to the unprecedented situation we are finding ourselves in with COVID-19, Ruth King is suspending the Rules of Wealth and writing about actions that can help you survive these times and prepare for the future. This is Part 4 of How to Salvage 2020 Profitability. Next month, she will resume the rules of wealth series.
Make sure you understand the impact of Paycheck Protection Program loans on your financial statements.
Accounts receivable plus cash Accounts payable plus credit card balances This ratio should be two or higher. If it isn’t, then is it increasing on a week to week or month to month basis? You are headed in the right direction. If it is decreasing make sure all the billing has been done: all the cash is in the bank and all the receivables are in for the money owed for performing that work.
I
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I’ve taken these factors into consideration. The new ratio: —————————————————
f you got a Paycheck Protection Program (PPP) loan during the coronavirus pandemic, the loan will create false indications on your balance sheet. And, if it is forgiven, you will see false indications on your Profit and Loss Statement. Make sure you understand the impact of PPP loans on your financial statements. PPP loans have a great impact on your company’s current ratio (current assets divided by current liabilities) and your company’s acid test (current assets minus inventory divided by current liabilities). Accounting for the PPP loan properly, the loan amount is a long-term liability and the cash received is a current asset. When you calculate the current ratio and acid test, they will be much larger than before you received the loan. Normally increasing current ratio and acid test means that profitability is increasing. In this case it is because you received a loan. Likewise, your debt to equity ratio and your long-term debt to equity ratio will jump. Your debt to equity ratio is total liabilities divided by total net worth or capital or equity. Your long-term debt to equity ratio is your long-term liabilities (loans for more than a year) divided by total net worth or capital or equity. Net worth, equity and capital all mean the same thing. The changes in your debt ratios occur because of the PPP loan. This is the additional debt that you have saddled your company with.
of their credit on the credit card).
Here are some things to consider: • Do not be thrilled with an increasing current ratio and acid test. They are false positives. Your profitability is probably not increasing. • Do not be concerned if the current ratio and acid test start falling back to what they were before the loan. That is normal. • As the next months unfold, however, and your company gets busier and busier, as long as the company stays profitably busy, the company’s current ratio and acid test will show a real increase due to increasing profitability.
and Loss Statement will show an increase in other income (the forgiven loan). This increasing profit has nothing to do with more profit from operations. It happened because of a forgiven loan. That’s why it is called other income.
NEW RATIO TO WATCH In the past, one of my 10 critical financial ratios was accounts receivable divided by accounts payable. It is calculated by taking the value of trade receivables (those customers who owed your company money) divided by trade payables (those vendors you owed money to).
• Do not be concerned with an increasing debt ratio. It is a false negative. If the loan is forgiven, then these ratios will return to their pre-COVID-19 levels.
From what I am seeing on the financial statements of many contractors is more cash/credit card payments (i.e. COD or partial up front payments) than in the past. In addition, many companies put their purchases on a credit card.
If the loan is forgiven, then according to the IRS, as of the date of this column, the forgiven dollars are taxable. Your Profit
The credit card balance gives the company travel points, etc. and allows companies to stretch out payments (to the limit
If all the billing is in, then what is happening with productivity? What percentage of a field employee’s time is billable? If you pay a technician for eight hours and only four hours is billable, then productivity is low and probably revenues are lower than they should be. The other place to look is to make sure your pricing is correct and there are few if any warranty calls or callbacks. This can also affect the ratio since there is expense and no revenue to offset that expense. PPP loans have inflated current ratio, acid test and debt ratios. Make sure you take these factors into consideration when you are analyzing your financial statements each month. 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 call 770-729-0258.
HVACR BUSINESS AUGUST 2020
19
BUSINESS PLANNING
BY JULIAN SCADDEN
Become the Star of Your Own Success Story
F
ailing to plan is planning to fail. You’ve heard this saying before, but — like all pieces of timeless wisdom — it’s still around because there will always be those that don’t heed the warning. This saying directly applies to us: the leaders of small businesses in the demand service industry. By now, after a career spent in the trades, we ought to know what surprises to expect. But year after year, I hear business owners complain about the same old things, including slow seasons, not enough
It’s incredibly irresponsible to go into another business year without a plan.
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HVACR BUSINESS AUGUST 2020
calls, and inclement weather. There are even complaints about expected and reoccurring events, such as lulls in business during the holidays. This seems ridiculous, but I understand, because I used to experience similar issues with our business. I simply failed to plan for them. Most businesses start with a business plan. But once that first plan is laid out, and the bank has issued the loan, and the investors have given their seed money, many business owners never create a plan again. Doesn’t that seem odd? It seems odd to me, now. Yet I know we’ve all heard and bought into the stories of entrepreneurs that threw caution to the wind, started their business and figured it out as they went along. Don’t get me wrong —those are romantic stories. They’re so romantic, in fact, that many start-up business stories seem just like movies — they make your heart race; they make you wonder, “What if I could do that too?” But here’s the thing: just like a movie, these instant-success stories don’t show you the footage that’s left on the cutting-room floor. You don’t see all the retakes; you don’t see the behind-the-scenes support needed
to make it happen. You definitely don’t see all the planning. Yet we know the planning happened. Movies don’t just put cameras in front of their stars, start filming, and “wing it.” Extensive planning is involved. How long would you sit through a movie that clearly had no script, for instance? Who wants to work for a company that’s just winging it? How many employees will follow you down an unplanned path? How long will they stay with you? It’s incredibly irresponsible to go into another business year without a plan. Heck, it’s tough to go into this week without a plan! Successful businesses, like Hollywood movies, involve incredible amounts of planning. There will always be key factors to creating a successful plan: • Have accurate and timely reporting on your business’s current performance. • Enlist a third party to help you check your blind spots. • Schedule follow-up check-ins with the third party on your progress. Become the star of your own summer blockbuster, but don’t wait until the spring to prepare — start planning your business’s next steps now. u
Julian Scadden is vice president of operations at Nexstar Network. To learn more, visit nexstarnetwork.com, call 888-240-7827 or email membership@nexstarnetwork.com.
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PRODUCT FOCUS »
APRILAIRE
BADGER METER
EMERSON
LG
The Model 8145 Power Ventilator is designed with the contractor and builder in mind, with a new slim, lightweight design for simple, flexible installations.
The FC-5000 BTU Monitor provides accurate measurement of power/ energy consumption used in closedloop, hydronic thermal transfer systems, typically found in HVAC sub-metering applications.
The Copeland Digital Outdoor Refrigeration Unit, X-Line Series from Emerson is ideal for walk-in coolers, display cases and food preparation areas, reach-ins and other refrigeration equipment commonly found in convenience stores, small-format stores and restaurants.
LG’s Art Cool Premier Wall-Mount Split System is among the industry’s most efficient and stylish air-conditioning units. The outdoor unit is measurably quieter than its competitors and consumes less energy than conventional air conditioners, while the inverter compressor ramps up or down to match the load of each room’s demand.
The introduction rounds out the complete line of ventilation solutions as part of their Healthy Air System suite of whole home humidity, air filtration and ventilation control; critical elements as identified by ASHRAE to delivering and maintaining healthy air in the home. Available retrofit kits provide complete intuitive installations to make ventilation applications extremely approachable in existing homes.
The FC-5000 BTU Monitor is an economical, full-featured and compact unit, compatible with the complete line of Badger Meter industrial flow meters, creating a solution to monitor the effectiveness and efficiencies of hydronic HVAC and other comparable systems. >> badgermeter.com
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The digital X-Line Series is designed to provide substantial annual energy efficiency improvements compared to legacy equipment and technology, thanks to its proven Copeland scroll digital compressor technology, large-capacity condenser coils, variable-speed fan motor control and smart controls. >> climate.emerson.com
LG’s Art Cool Premier system also features “Reliable to Extreme Degrees” (RED) heating technology, an industry-leading heat technology that provides 100-percent-rated heating capacity down to 5F with continuous operation down to -13F, offering comfort to users living in even the coldest climates. >> lghvac.com
MALCO TOOLS
NU-CALGON
RHEEM
YELLOW JACKET
Malco’s model #TC174 Double Roller Tube Cutter is a compact cutter that requires only 1-15/16” clearance, yet accommodates tubing from 3/8” to 1-1/8” (9.5 to 28.6 mm) O.D. (1/4” to 1” Nominal).
Nu-Calgon has launched a new pump spray version of Evap-Fresh No Rinse coil cleaner and disinfectant. The readyto-use liquid spray is a non-abrasive, one-step cleaner and disinfectant for evaporator coils in small air conditioners, commercial air handling equipment, HVAC cooling coils and refrigeration equipment.
Rheem ductless mini-split systems provide home and business owners just the right amount of heating and cooling needed by installing 1 to 5 indoor units connected to one outdoor unit. Indoor units vary by size and use inverter driven compressors that can be applied to single zone or multi-zone applications.
Identifying the smallest leaks is now fast and easy. The AccuProbe IR detects all CFC, HCFC, HFC and HFO refrigerants, including R-134A, R-404A, R-410A and R-1234YF.
This lightweight, aluminum alloy body Malco Tube Cutter, cuts copper, aluminum, or brass thin wall tubing. The tool includes a spare cutter wheel. >> malcoproducts.com
Although Evap-Fresh is highly effective at cleaning and controlling mold and mildew on evaporator coils, it also has demonstrated effectiveness against viruses similar to 2019-nCoV on hard, non-porous surfaces. >> nucalgon.com
Rheem’s ductless systems are highly efficient with single-zone system efficiencies up to 33 SEER and 14.2 HSPF and multi-zone efficiencies up to 19.7 SEER and 10.3 HSPF. Because ductless systems reduce energy consumption and do not require costly ductwork changes, they are rapidly growing in popularity.
The SmartAlarm LED shows the size of the leak on a rising scale. Coupled with two modes for sensitivity, the AccuProbe IR will locate a leak of any size. >> yellowjacket.com
>> rheem.com www.hvacrbusiness.com
HVACR BUSINESS AUGUST 2020
21
20QUESTIONS >>
with COREY HICKMANN
We sat down with Corey Hickmann, owner of Comfort Matters Heating and Cooling in Maple Grove, Minn. Hickmann, who is a 2020 Tops in Trucks Fleet Design Contest winner, discussed learning a trade, the effects of the coronavirus pandemic on business and the importance of industry support. 1. How did you start in this industry?
Through high school, I didn’t have a plan of what I was going to do, and didn’t really like school at that age. My brother went to school for HVACR and ended up working for a wholesale supplier. I decided to move across Wisconsin and went to school for HVACR too, and I enjoyed it. It’s amazing how much better I did in school on something I cared about.
2. What did you do after school?
I did some intern work at Trane Engineering in La Crosse, Wisc. In the R&D lab, where I learned that manufacturer work wasn’t for me. I liked the technical aspect of it, but it just wasn’t the direction I wanted.
3. Where did you go from there?
My roommate also worked for a wholesale supplier, the Train Distributor where my brother worked, so I went there. I spent the next 12 years at that distributor and I ended up moving up to Minneapolis during that time.
4. Did you like working in distribution? Yes. I spent that time training as a territory manager, and learned a lot about the industry and saw a lot of opportunity in the retrofit/replacement side.
5. Then you started Comfort Matters?
Yes, in 2005 I left my job there, built a house, had a child and started my business. All in just a couple of months. It was a little bit of a plan and not a plan.
6. What was it like in the beginning?
It was just myself, so I did everything. I tried to follow the book, wrote a business plan, had some idea and some goals. I did it all from sell it, install it, fix it, service it, and probably hired our first guy about two years in. In the beginning, I’d use anyone I could to help on installs. Anyone I could find if it was short notice or short term.
7. When did you start to grow?
Within two years, we hired our first full-time individual. We installed together, and then eventually he was able to start doing service. And then I think we hired someone in the office to help on the office side.
8. How big are you now?
We have 27 people and grew nicely through the years. I always had growth, anywhere from 15 to 45 percent each year. Building to the first million dollars in revenue was one of the toughest periods … I felt the profit was the lowest and the workload was some of the highest. That was one of the hardest marks to hit.
9. What helped you get there?
That was right around the area when I joined Service Nation Alliance, actually. That allowed me to partner up with some good people with amazing minds who have just done it. Being able to congregate and associate with the best of the best and people who have done it … that was just a game changer.
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HVACR BUSINESS AUGUST 2020
10. Do you still go out in the field?
No, I’m pretty much corralled to the office most of the time. I’ll still go out and I’ll sell some of the larger and commercial jobs. Or, if they get a weird application type of thing. Actually, I think I have to go on a call tonight because I sold this lady a furnace and air conditioner about 14 years ago and she insists that I come out there.
11. How did you make the leap?
I got rid of my service truck. Probably about eight years ago, I just pulled my truck in the shop and told all the guys, “Okay, take all my parts out of the truck.” I figured if I don’t have parts in the truck, it restricted me. Because what always has happened was, someone would take a call in the office and I’d end up running out on a call. Now, I’m like, “Well, I don’t have any parts, so now we’re going to have to find another way to do this.”
12. What’s your business mix?
Right now, it’s right around 90 percent residential, 10 percent commercial. Maybe 85/15, but by far, the majority is residential maintenance, demand service and replacement.
13. What’s your management style?
I should be more flexible, because I’m sometimes a little brash. I’ve learned to really hold back on a ton of stuff. It’s pretty amazing what toleration can get you. I don’t take things personal, so I can have a hard conversation with someone and we’re done after that conversation. That’s it. We’re good. We’re done. We’re friends again. Everything’s clean. I don’t look to hold onto things like that. Trying to create my leadership skills has been hard, but I’m focused on that process and want to continue to get better.
14. What impact has the pandemic had? It’s been interesting. When this started in the middle of March, we were literally making an agreement with a new marketing company to make a large marketing push. It was hundreds of thousands of dollars into a plan. At first, I thought, “Whoa, pump the brakes. What do we do? Do I follow through with this?”
15. Did you follow through?
I’ve been told over and over again, anytime you go into a slowdown, recessions and things like that, don’t stop marketing. Matt Michel is somebody who has preached that into me for so many years. So, I said, “That’s it. We’re going to stick to our guns. We’re following suit.” We did it, we released on the plan. We’re still running, continuing on plan right now.
16. What kind of precautions are you taking?
At the beginning, you couldn’t get sanitizer … you couldn’t get anything. We’re buying everything we could. Luckily, we found a local distillery that was not able to brew anymore and they started making sanitizer, so that helped carry us along. We just go through cleaning process after each call … our devices, our phones, our steering wheels, the vehicle and tools. Also, masks are customer-by-customer case. If the customer wants the technician to wear a mask, then we’ll definitely do that. Around the office, we’ve got a daily cleaning ritual goes through a couple times a day.
17. When did you know you had a winning truck design?
I showed it to my daughter, who was probably about 14 then. I said, “Ella, what you think of this?” She looks at it, and goes, “Oh, it’s like an emoji! It makes me smile.” For me, that was it. Done. That’s what I want.
18. Where did the color scheme come from?
The first truck I had when I started the company came from auction, and it was yellow. The colors on our trucks now keep things new, which help us stand out from the competition, but its still recognizable with the yellow.
19. How has this new design paid off?
Without a doubt. Overall image is a really big differentiator between a solid performing HVACR company and one that’s not. I work with a lot of different heating companies, and I see the companies that have created a brand, and then the ones that haven’t. And the ones that have the brand are generally the ones that have the stability.
20. Has marketing helped with recruitment?
Recruitment’s always a difficult thing. Everyone struggles in the industry, and we will for a long time. In general, most technicians are good people who don’t like to move around. By getting our image out there in front of lots of other technicians and things, it’s made a huge difference with people being attracted to us, without a doubt.
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IT’S NOT TOO EARLY TO ENTER YOUR FLEET FOR THE 2021 CONTEST
FLE ST ET DE SIGN CONTE
The First Winner of the Tops in Trucks Fleet Design Contest in 2007
hvacrbusiness.com/topsintrucks
93%
of American Standard dealers are satisfied with our product quality.
81%
of people eat chocolate.
AMERICAN STANDARD: MORE POPULAR THAN CHOCOLATE. It’s hard to get everyone to agree on something—but we’ve come close. American Standard’s proven quality, ease of use and customer satisfaction make it easy for dealers to love—and sell.
American Sandard received a 93% product quality satisfaction score among current dealers in a proprietary Dealer Brand Health Study conducted by Trane Technologies in 2019. Chocolate habits were reported by Statista in 2019.
See why it makes sense to sell us more at
amsd.us/numbers
ONE THING (PRETTY MUCH) EVERYONE CAN AGREE ON:
SELLING AMERICAN STANDARD MAKES SENSE. And if you’re already an American Standard dealer, chances are you agree, too. In fact (as you might’ve noticed elsewhere in this magazine), we’ve got the numbers to prove it.
With everything we do to set ourselves apart, it’s no wonder that dealers love to sell us. And you can learn more about why at
amsd.us/numbers
