On average, it takes two to three years for a business to be profitable. Sometimes it takes longer, depending on the industry and target market.
If you’ve started an HVAC business, you’re most likely looking to scale profits. An HVAC business can be incredibly lucrative if it is managed correctly—and looking inwardly at profit growth opportunities is the best place to start.
This article outlines the top profit-boosting business tips to becoming a successful HVAC business.
Profitable tips for HVAC business management
- Set goals and make actionable plans
- Analyze the data
- Practice good communication
- Always be recruiting
- Show appreciation
- Measure success
- Incentivize performance
- Don’t be afraid to delegate
- Reach out
- Never stop learning
- Let automation help
1. Set goals and make actionable plans
In order to grow your HVAC company into a successful, sustainable, and profitable business, you’ll need to set goals with detailed action items on how to achieve them.
Consider your five-year plan, your sales goals, and profit targets. Where do you want to be in five years? Set goals like quarterly milestones, Key Performance Indicators, and sales targets that will support the total revenue target of your annual business plan.
Some SMART (Specific, Measureable, Actionable, Relevant, Timely) goal ideas for your HVAC company could include:
- Reduce vehicle downtime by 5% in Q3
- Increase average customer satisfaction score by 10% within the next 6 months
- Increase HVAC maintenance service calls by 20% Year over Year
To achieve your revenue goals, you need to understand how many service calls, leads, installations, technicians, and salespeople are required. Audit your current state and determine what needs to happen to get your HVAC company to the place you want it to be down the road. Draft the projections, plan annually, and assess monthly.
Gathering specific data will help create your growth and profitability plan and keep you on track. You’ll also be able to see when adjustments to the plan are needed. More on this below.
2. Analyze the data
Using data to drive decisions is one of the best ways to grow your HVAC business with confidence. Analyzing performance metrics allows you to get clear on your company‘s strengths and weaknesses and know exactly where its marketing position is in relation to your competition.
Data that should be analyzed includes balance sheets, income statements, average service call ticket, sales, labor percentages, incoming service calls, installation sales, cost of HVAC equipment maintenance, and service agreements.
You’ll also need to take the costs associated with your HVAC fleet into account, as these indirect costs could impact profitability. This includes vehicle maintenance, fuel consumption, vehicle idling time, and any costs associated with vehicle downtime.
Understand your profit margins and look for opportunities to increase them. What are your competitors charging for the same services? What worked in the past that generated new customers and revenue? Crunch the numbers and let the data help drive your business strategy.
3. Practice good communication
It’s been said that the art of communication is the language of leadership. Good communication has the power to drive productivity and job satisfaction within an HVAC business.
Both internal and external communication needs to be sound. The way you communicate with your HVAC contractors and staff will reflect directly on the company and its growth potential. Always remain professional, level-headed, determined, dedicated, and positive. Don’t forget to lead by example. Your attitude will be contagious and others will feed off of your energy. Give constructive feedback, schedule reviews, and regular touchpoints to keep your team on the same page. Create opportunities for two-way communication so they can share their thoughts, concerns, or ideas with you.
When communicating with customers, it’s important to understand what’s important to them. Not only does positivity and professionalism go a long way, but as a business, you have the opportunity to proactively communicate with customers to deliver a ‘wow’ experience. This could include sharing a tracking link with customers so they know the whereabouts of their HVAC technician and aren’t kept guessing, or asking for their feedback after a service call (and implementing it!). Provide training to your technicians on how to communicate with customers as well—for example, showing empathy for a frustrated customer whose HVAC system has broken down, rather than fighting back.
4. Always be recruiting
Always. Be. Recruiting. This mantra should never be forgotten as a business owner. Employees are your number one asset and having great talent on board helps to grow your business.
Recruiting good HVAC technicians is expensive and difficult during peak periods when you’re most likely to see business growth. If you always maintain a recruiting mindset, you’ll continue to build your roster of talent and form relationships in off periods, who you can call on when you need them. This allows you to continuously grow and scale your business without being short-staffed.
Productivity and profitability are high when you have the right people working and selling for you. For example, if a technician does a particularly excellent job installing a furnace and provides a five-star customer experience, that client is likely to give your company a referral or go with your company when maintenance is needed.
Here are some tips for recruiting the best people for your HVAC business:
- Partner with trade schools to find new recruits looking for apprenticeship opportunities. These recruits are eager to learn as well as reduce wage costs
- Attract the best candidates by sharing success stories on your website or through social media
- Give existing employees a monetary incentive if they recruit someone great
- Look for recruits with unteachable soft skills like people skills, a good work ethic, and positive attitude. Technical skills can always be taught
When recruiting, it’s best to have a well-established interview and hiring process to ensure you’re getting the best people. Know how to vet applicants to determine their fit within your company. Once hired, be sure to have a formal onboarding process so new employees can begin contributing to your company’s success right away.
5. Focus on employee retention and team culture
Trade, transportation, and utilities industries have some of the highest employee turnover rates in the US. Hiring great people is half the battle—keeping them is the other. Here are some ways to retain your best technicians and employees:
- Focus on onboarding and invest in them early. As mentioned before, hiring apprentices and investing in their training will lead to more loyal technicians once they’ve completed their training
- Train consistently. Equip your technicians with the tools to do their jobs to the best of their ability. This could include technical training or career-related training to move up within the company (and stay longer!)
- Compensate fairly. This should go without saying. Paying technicians a fair or higher wage than the competition greatly reduces the chance of them looking for something better.
- Provide support. HVAC technicians are customer facing, making service calls and entering peoples’ homes. There is always a chance of an install taking longer than usual, the technician making a mistake, or a customer leaving a bad review. Instead of coming from a combative place, support and trust your technicians. This will lead to a better relationship with employees, leaving them wanting to stay within the company for longer.
When we talk about the team culture, we don’t mean providing free snacks and perks. Company culture is the heart and soul of the company—the way the company runs and the values it adheres to. Ask yourself, “what are my employees getting out of this other than money?” In order to build team culture try:
- Encouraging open and honest feedback and communication. If your technicians are frustrated about the condition of their HVAC equipment or vehicles not being maintained as they should, they should be able to speak openly and freely.
- Organize team outings and build community. HVAC technicians are constantly on service calls, and building a team culture can be difficult. Set aside time every quarter for the whole team to enjoy each other’s company.
- Encourage and sponsor professional development. Invest time into helping your technicians advance their career and build a company where growth is encouraged.
- Hire new employees with your company culture in mind. You could have the most well-trained, talented technician; however, if they do not embody your business’s values, they won’t be around for long.
6. Measure success & conduct performance reviews
Studies have shown that people behave differently when they know they’re being watched. Measuring the success of your HVAC professionals is one way to boost productivity and profitability. If employees know they are being evaluated, they are likely to work harder.
Ask for numbers to be reported. Include checks and balances for each department to assist with accountability. For example, compare your service and repair booking rates to actual jobs completed, or compare inventory controls to parts used on each job. Display key performance numbers on a whiteboard or shared digital document that is accessible to the whole team.
Check-in with your team individually on an annual or seasonal basis. Schedule performance reviews and create an opportunity for yourself as the business owner and each employee to have a candid discussion about their performance. Consider using the 360 review method to gather feedback on each employee from their colleagues. Use these insights and your own observations to create a plan to help employees succeed and reach their full potential within your company.
7. Incentivize performance
Incentivizing performance is another management tactic to boost productivity and profitability. Some popular incentives focus on speed or quantity of installs but this can end up sacrificing quality work and customer service. As an alternative, your HVAC business might want to consider incentivizing based on how many techs are able to upsell their install. For example, if they installed a furnace, were they also able to make a sale for an air conditioning unit for summer? Or were they able to sign those customers into a maintenance agreement? These are great options for quality-focused incentives.
Remember, not all incentives have to be monetary. Some employees respond better to vacation time or recognition. Consider all options and go with what works best for your small business.
8. Don’t be afraid to delegate
The saying “if you want something done right, do it yourself” is the wrong attitude for a business owner. Delegating, letting go, and trusting the talent you’ve hired is critical to growing your business and generating more revenue. Delegating frees up more time for you to do things like business development, recruiting, networking, and more.
9. Reach out
If all you do is wait for customers to contact you, you’re missing out on the opportunity to create repeat business. Reaching out to existing customers and contacting them about a service is another way to increase profitability. For example, you could schedule service calls to previous customers to suggest a furnace check-up before winter—something customers may not have considered. Show them that you care about their comfort and safety and that you are there to support them.
10. Never stop learning
We all know that knowledge is power and with knowledge comes new opportunities and ideas to expand and grow a business. Reading HVAC industry and business development books and articles, listening to industry-relevant podcasts, attending workshops, seminars, and conferences are some of the best ways to expand your knowledge base.
Here are our top picks:
- HVAC Talk. This online forum is a great place for HVAC business owners, contractors, and technicians to share knowledge
- ACHR News. Here, you can catch up on the latest air conditioning, heating, and refrigeration industry news, including interviews with business owners, podcasts, webinars, and more.
- AC & Heating Connect. This podcast keeps homeowners, facility managers, and contractors in the know of the ever-changing HVAC technology and business landscape.
- Western HVAC Performance Alliance. Here you can find a running list of HVAC conventions and conferences in the US.
- ASHRAE. Committed to the advancement of technology in the HVAC industry, you can find many technical resources and a schedule for ASHRAE’s conferences.
Another option is to find a mentor to help you learn and grow. Use them as a resource to help develop your company and reach those goals you set out to achieve. Lastly, look into research surveys and studies to help you identify red flags, trends, and expansion opportunities in the HVAC industry.
11. Let automation help
Don’t be afraid to let technology help you reach your business and revenue goals. There are many great field-service software options available to HVAC businesses to help control and track inventory and assets. For example, vehicle tracking software that is designed specifically for HVAC companies allows you to see where your fleet vehicles are in real-time, collect data on how they are being driven, and even help monitor maintenance, all of which have a direct impact on your bottom line. These systems can even lower your business’ fleet vehicle insurance.
To learn more about GPS vehicle tracking software for HVAC companies you can start a free trial with Force by Mojio and see firsthand how the tracking features improve productivity by leveraging accountability.