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Undermining Your Leadership   Recently updated !

Undermining Your Leadership

This Is How Your Employees Feel When You Engage in These Types of Behaviors

Have you ever found yourself engaging in behaviors which, upon reflection, you believe might be undermining your leadership in the minds of those who work for you?  Undoubtedly you have, most of us would admit to doing this at one time or another.  What are some of the most egregious of these?  Consider the following common examples.

 

Upon asking for or receiving the suggestion of an employee, immediately shut down further discussion by stating that it won’t work and going on to give your opinion as to why it won’t work and why your ideas are better.  This behavior will cause some of your group to be intimidated, and from then on they will tell you either what you want to hear or nothing at all.  Employees who consider themselves knowledgeable will be angered by this approach, and they may decide you are not worthy of further suggestions.  Either way, credibility in your leadership is weakened.

 

Using humor in an inappropriate way.  Sometimes, those interested in a leadership position might try to use humor to better bond with their employees.  When used genuinely and appropriately, humor can be an excellent way to help build positive relationships with those who work for you.  If you constantly use humor however to show how clever you are, it may have the opposite effect with some employees.  The use of inappropriate (off-color etc.) humor is always, of course, inappropriate.  The use of acerbic humor, especially when it is seen as ridiculing, teasing or even bullying, will have the effect of leaving employees drained and disheartened.  If such humor leaves employees believing you’re trying to be mean, it can them lead to discount your leadership entirely.

 

Asking for input and then doing nothing with it.  This signals to individuals that their ideas are really not valuable and it won’t be long before they quit providing meaningful and heartfelt feedback.  This is different than not using every suggestion that is solicited, as no leader is obligated to use every suggestion they receive.  Not using sought after input might the your employees to believe you are unable to make decisions.  This can quickly cause your employers to lose their respect for as well as their confidence in you.

 

Providing feedback or being critical of your employees in public.  This should not even have to be mentioned, yet you see examples of it all the time.  I knew one such manager who would wait until he heard the suggestion of an employee he wanted to make a public example of, then he would leap upon that individuals suggestion as an example of what was wrong in the organization or with that particular employee.  Today they would call such behavior bullying, and there is no place for that in a workplace worthy of your participation.  Similar to this is keeping your composure.  The same manager I mentioned above would come into a meeting and sit as far away as possible from the rest of the group.  He would immerse himself in the Wall Street Journal and wait until he heard something he didn’t like.  He would then slam his paper on the table, march to the front of the room and take over the meeting.  Losing your temper, calling people names and using negative emotion to make a point not only sabotages your credibility, it also causes your employees to not trust or respect you.  Furthermore, employers who tolerate this type of behavior are not worthy of your employment.  In today’s environment, there are simply too many companies who are looking for dedicated and talented employees to continue working for an organization that tacitly supports such perverse behavior.


The Ultimate in Indoor Comfort

When your business receives a call for service, what does your technician do?  Do they just go out and make the repair that the homeowner needs, or do they also make note of conditions needing attention?  Do you see your company as being in the HVAC business or the indoor climate business?  If you’re in the HVAC business, you typically make the required repairs during the service call and check out the system to make sure it is operating correctly in all other areas.  If you’re in the indoor climate business you do this as well, and you also take note of conditions relating to filtration, energy efficiency, temperature, control systems and humidity.  Note that this involves more than just the heating and cooling system, it also involves the building itself.  An acronym to remind yourself of this is FETCH.  (Filtration; Energy efficiency; Temperature; Control Systems; Humidity)  “But I don’t want my service technician to be a salesperson,” you say.  Well, that’s the thing.  They don’t need to be.  All they need to be is observant, and make note of all of the items contained in the acronym.  Let’s look at each of these in a little detail.

 

Indoor Comfort Involves A Lot More Than Just HVAC

Indoor Comfort Involves A Lot More Than Just HVAC

 

Filtration: Ask the homeowner if they have allergies.  Note if they have any animals, if there are lingering odors or if it looks dusty in the home.  Make note of what type of filter they have on their system, and what condition it is in.  Also make note of the condition of their evaporator and condenser coil, to make sure they are not blocked by debris.

 

Energy Efficiency: Capture the model and serial number of the furnace, evaporator coil and condensing unit.  From that you can determine equipment size and age, matching compatibility and energy efficiency ratings.  Also make note of basic envelope issues affecting thermal efficiency such as the amount of insulation in the walls and attic, whether or not a radiant barrier is present, general condition of the windows, the square footage of the home’s footprint and the home’s age and geographic orientation.  (North/South/East/West)

 

Temperature: Ask the homeowner if there are any areas of the house which are hot or cold during winter or summer.  Also asked them if they are typically comfortable where the thermostat is currently set, and make note of that temperature setting.  If they complain of inadequate cooling, make note of the load conditions that might be causing that.

 

Control Systems: Make note of the brand and model of thermostat they have in their home.  If it is a setback type thermostat, ask the homeowners if they make use of the program in the thermostat to save energy.  Also asked them about their general occupancy schedules.  Keep in mind that according to one recent study, only 30% of the people who have a programmable thermostat actually use them and 23% don’t have a programmable thermostat at all.

 

Humidity: Take a humidity reading in the home, and make sure that the device you’re using is regularly calibrated.  Ask the homeowner if they feel comfortable when the air conditioner is running or if they get shocked during the winter, knowing that humidity levels can be a factor in home comfort during both winter and summer weather.

 

Just think of the powerful information you can gather about a homeowners needs just by making notes and asking a few basic questions.  This only takes a few minutes of the technicians time, but the information gathered is invaluable in helping your company build a relationship with that consumer based upon their specific situation and needs.  In the future when you contact the consumer through your marketing efforts, you will be helping them open their eyes about targeted solutions for needs they may not have consciously recognized.  The consistent application of this process will help you FETCH more lifelong consumers for your business, and all of it starts with the technician simply paying attention during a routine service call.


Does Your Business Stand out?

Does Your Business Stand out?

 

Stop me if any of this represents a shocking revelation.

1. People are not overjoyed to spend money on HVAC systems or repairs

2. Oftentimes, consumers focus on price because they don’t value this purchase

3. Most people don’t know who to call or trust for HVAC related purchases

 

These three facts can make life as an HVAC contractor difficult, especially if your business does not stand out from dozens of others in your trade area.  “We have great people,” you say.  Get in line, everyone else says that as well, whether it is true or not.  When is the last time you heard a contractor say, “Our people are iffy?”  Most likely, never.  This article is not about marketing channels.  You know you need to market your business through your website, through social media, through your service department, through targeted media etc.  This article is more about the message.  If you were to ask 100 consumers to name an HVAC contractor and state in one sentence what they stand for, I’ll bet less than 5% can do so.  Consumers are not tuned in to messages from our industry, so you need to find, for lack of a better word, a “hook” for your message.

 

Like many people, I have the TV on in the background as I am getting ready for work in the morning.  I normally have it programmed for the CBS morning news in order to try and keep up with what’s going on in the world.  There are two HVAC contractors who regularly advertise on this program.  The only reason I even pay attention to this is because I work in the industry.  One of the contractors makes it very clear that their business is all about good service.  The theme of the commercial, the visual images and their tagline all emphasize the same thing – that they deliver great service.  In all honesty, I cannot tell you what the other contractor stands for.  I see pictures of their warehouse with rows of furnaces and air conditioners stacked high, but that’s really the only take away I have from this commercial.  Perhaps their message is that they can respond to your needs very quickly because of their inventory, or perhaps that’s an image trying to reinforce some other message.  The point is, I don’t really know.  I catch these ads like other typical consumers, in bits and pieces, and I do not stop to watch more intently when they come on.  If that is the quick take away from someone who is in the business, imagine the impact on the typical consumer who is not really interested in spending money on our products in the first place.

 

The point here is to consciously think about whether or not your business stands out from all the other choices available to consumers.  What is your vision, your passion for your business?  How can you clearly and succinctly communicate that through the various channels your message travels in?  Solicit ideas from people in your company, your service techs, your installers, your office staff.  Look at other consumer related businesses for ideas, it is not necessary that you reinvent the wheel here.  Once you have defined that hook, make sure everyone in your business is aware of it – and delivers on it.  Every single time.


Inappropriate Communication

Inappropriate CommunicationGiven the title of this article, let’s first be clear about what we are writing about.  We do not speak here of communicating inappropriate things, rather we are talking about using a form of communication which is inappropriate for its purpose.  Once upon a time and not that long ago, there were two primary forms of communication.  You could either talk with someone face-to-face, or you could write them a letter if they were far away.  It is pretty easy to assess nonverbal cues and emotions when you are speaking with someone face-to-face, but it is more difficult when you are writing.  Perhaps that is why that letters were pages long back in the day, because people wanted to make sure their meaning was completely communicated.  There was typically no inappropriate communication, you either spoke to someone or wrote them.  One form was not substituted when the other was appropriate.  When the telegraph came along in 1844, it dramatically sped up long distance communication, but due to its expense, was not a substitute for a letter.

 

Perhaps the first electronic device that allowed for inappropriate communication was the telephone.  Invented in 1876, there were literally millions of American homes that had a telephone by 1910.  With the telephone, you could deliver unpleasant news in a way that allowed you from having to actually see that individual, while simultaneously making it easier to terminate the conversation at a time of your choosing.  The addition of voicemail made accomplishing that task easier yet.  In the past 30 years, numerous additional forms of communication have been added to our arsenal.  Email came first, and by making phones smart we made them ubiquitous.  Throw in videoconferencing and social media and you have a virtual communications cornucopia!

 

Why is it now that we have more ways to communicate than ever, communication has become more difficult than ever?  There is certainly no shortage of communication going on, go to any restaurant and observe families gathered around a table where all of them have their heads buried in their phones.  I have heard people say that their millennial offspring only communicate on Facebook or text, that it is pointless to send them an email or try to call them.  I even know one individual who is completely paralyzed, with no use of his hands.  Yet people who know he is paralyzed still send him texts!  Perhaps what is needed is a communications primer.

 

Such a primer would start by distinguishing between when to use verbal and when to use written communication.  Verbal communication is typically best used when you need to convey context associated with a message.  Verbal communication allows you to use elements of nonverbal communication, tone and intonation in order to strengthen elements of your message in a way that written communication cannot.  Additionally, verbal communication is the only method to use when you need immediate feedback from the person to whom a message is being sent.  Never substitute a text or an email when what is needed is a conversation.

 

Written communication is best used when a one-way delivery of facts is required.  The beauty of written communication is that it does not take as much time on the part of the receiving party to get the message , and you have a record of what was communicated.  Our time is the most precious commodity we all have, so using in person communication when written is appropriate can be a waste of everyone’s time.  Written communication is also the most appropriate form to use when you are sending a lot of detail, such as a proposal or technical document.  The most difficult thing to communicate in a written document is context.  People may take your message in a completely different light than the way you intended it.  Perhaps that is the reason for the rise in the use of emoticons, although they may not be appropriate in a business setting.

 

There is obviously no one correct way of communicating with someone, but as a society we seemed to have lost some awareness of what may be appropriate in different situations.  The correct method of communication depends completely on the situation calling for its use in the first place.  Perhaps the best way to choose the appropriate form of communication is to put yourself in the shoes of the one to whom the communication is intended.  A major part of being an effective communicator is the use of good judgment regarding the type of communication utilized.


That Floating Price Point

Chances are if you are a medium to larger size business, you have defined what type of organization you strive to be and what that means relative to pricing your products in the market.  For example, you may strive to be a leading-edge provider of the best products and solutions, and your pricing is targeted to yield a specific return, regardless of the competition.  On the other hand, you may have decided that all products are essentially commodities, and you strive to be the low price leader to the point of your target margin.  If however you are like many thousands of small businesses, you have never formally defined what type of organization you want to be, nor have you determined any type of pricing strategy for your business.  You simply bid each job as it comes, using some type of pricing mechanism that you believe will yield a profit.  This column is aimed at this last group, because there are a few proven things you can do to improve the profitability of your business relative to pricing, and it doesn’t take a Harvard MBA to implement them.

1. Define Your Overall Business Strategy.

This doesn’t have to be complicated, but it sets the tone for everything else you do.  For example, you may have gone into business for yourself because you thought you could do it better than how you have seen it done, and you thought in the long run you could make more money.  You would like to someday sell your business, and have it be attractive enough that someone would want to buy it.  Other than that, you just want to be competitive and make a good profit.  So, define what is a “good profit.”  Is that 1%, 5%, 10%?  You have to answer this question.  Consider that someday when you sell your business, someone will want to know what kind of profits it generates, whereby they might be willing to pay 5-7 times earnings for that business.  If your business is only generating 1% or 2% net profit, you may end up having to sell it strictly for the assets.  It’s a good idea to talk with others in your industry before committing your answer to paper, do not shortcut this step.

2. Understand Prevailing Prices in Your Market

Who are your main competitors?  What do their prices look like relative to yours?  It is important to understand the market in which you operate relative to your overall business strategy.  If you are like the business described above and you are in a medium-sized or larger market, figure out which competitors are most similar to yours in terms of your business strategy and understand where they price their jobs.  Perhaps you plan to offer a good-better-best product strategy, so make sure you are comparing apples for apples when you look at prevailing pricing in the market.

3. Determine Your Target Market

Do you want to do jobs anywhere, or is there a specific area you want to concentrate your efforts in?  Chances are, you intrinsically know the answer to this, so define it in terms of specific ZIP Codes, and areas within those ZIP Codes.  You can base this on the age of the housing stock along with a variety of other demographics easily available.  (I.e. age of homeowners, household income etc.) Focusing your efforts on the customers most likely to fit your overall business strategy enhances your ability to be successful.  This is also an essential step toward developing a targeted marketing campaign.

4. Develop A Pricing Strategy That Fits with Your Overall Objectives

Perhaps you have decided that you essentially want to have an “everyday price” strategy as defined by margin goals by class of product.  You are willing to negotiate within reason, but you want to spend the limited amount of labor hours you have on jobs that yield your target margins.  Given that, you might plan to run occasional promotions, essentially one time deals to entice customers at certain times of the year or to throw off your competitors.  If you have a good-better-best product offering, you could price it in such a way that higher-end products or solutions deliver commensurately higher margins.  On the other hand, you could “sandwich” your pricing in such a way as to drive the consumer toward the solution in the middle category.  The point is, there are a number of ways to accomplish the same objective.

5. Do Job Costing

It is imperative to know how much you made on each job relative to your objective, and why.  This allows you to make the necessary corrections in order to make sure you are achieving your ultimate objective.  There are many places you can go to get help putting in systems to accomplish all this, and they don’t have to be complicated.  They just require a commitment on your part to make it happen!

 

Images courtesy of egyptinnovate.com & aviationbusinessconsultant.com


Did You Fail the Interview?

Did you fail the interview?

Image courtesy of wiki how

Remember, you are not the only one who is conducting the interview. According to LinkedIn Business Solutions, 65% of candidates say a bad interview experience make them lose interest in the job.

Interviewing is one of those subjects that everyone has an opinion about, because anyone who has ever worked (which includes just about everyone) has been through one.  Most of us have been through more than one interview in our lives, which likely means we have experienced both good and bad interviews.  This refers to the quality of the interview, not to our performance in them.  Unfortunately, it seems like attention paid to the interviewing process is lacking by many of those conducting them.  For one, the interviewing process is all too often handled in too casual of a manner, and is not approached from a planned or analytical point of view.  For example, if the person conducting an interview is the one who happens to be available at that moment in time, consider your firm guilty of failing the interview!  Other cardinal sins of interviewing include the interviewer talking too much, winging it when it comes to asking questions, not writing down and keeping a record of the candidate’s responses and not being clear it when it comes to articulating next steps with the candidate.  So what should you be trying to accomplish in interview and what are some steps you should take to make sure that is accomplished?

The objective of the interview should be formally defined by the interviewer in advance, and stated to the interviewee at the beginning of the discussion.  For example, you might tell the interviewee that the objective of the interview today is to better ascertain the candidates skills and fit for the opening available, and to allow the interviewee to find out more about both the company and the position so they can better decide whether it is a good fit for them.  If this is only an initial interview, make sure that is clear at the outset.  All persons from the company who plan on interviewing the same candidate should briefly meet before hand to discuss their strategy.  There is nothing to be gained by having multiple people ask the candidate the same or similar questions.  For example, one person might drill down on the candidates education and experience, while another might probe how they have or would handle real or theoretical situations.  The point is to find out information that you cannot discern from looking at their resume.  Following that, the interviewer should keep the following in mind as the discussion progresses.

  1. Allow sufficient time for the interview. If you rush the interview because you have too many other things going on, that will send major negative vibes to the candidate.  Remember, you are not only taking time out of your day for this process, but also time that the candidate could be productively looking for a job elsewhere.  If you are not prepared to spend a sufficient amount of time on the interview, reschedule or don’t hold the interview at all.
  2. Your job is to learn more about the candidate, not to tell them all about the position and how great the company is. Generally speaking, the interviewer should talk 20% of the time and listen 80% of the time.
  3. Give serious thought to your questions before hand and have them written down. You should be asking open ended questions that will elicit conversation, not those that lend themselves to yes/no or pat answers.  Having the questions written down keeps you from straying too far off course, and it communicates that you take both the candidate and the process seriously.  On the other hand, you want to be flexible enough to pursue a line of questioning if it is merited.  If you ask a question that elicits concern or further questions in your mind, spend time following your concern until you are satisfied. Jot notes down regarding the candidates responses to them, because a week later you are not likely to remember key elements of the candidates answers.  In addition, these notes will be extremely important if they are needed for reference prior to/during a subsequent interview.
  4. Remember that you communicate not only with what you say, but with how you say it. Your inflection, eye contact and body language are sending messages to the candidate.  By the same token, be looking for both verbal and nonverbal clues from the candidate in terms of their reaction to certain questions or elements of the discussion.
  5. Following the interview, all persons from the company who spoke with the candidate should briefly get together to compare notes. If you are the hiring manager, you may hear something from one of the other interviewers that causes you to disqualify the candidate, even if you had not arrived at that conclusion from your particular line of questioning.

 

While much, much more could be (and has been) written about this topic, these tips can go a long way toward making your interviews significantly more productive – both for you and for the candidate.


Are You a Micromanager?

Are you a micromanager?

Image courtesy of Pinterest

The term micromanager is one that is perceived negatively by managers – as it should be!  The behaviors associated with being a micromanager include detailed inquiries into the activities of both the employee and projects they are engaged in.  Micromanagers not only want to control the outcome of their employees projects, they also want to direct the process of how those outcomes are achieved.  These managers feel it is their job to give detailed directions to their employee in order to maintain control of the project.  If you were to ask the manager how they felt about the way they interacted with their employees, they might admit to wanting to maintain control, but it is doubtful they would classify themselves as micromanagers.

 

Their employees however would offer a different perspective.  They would likely describe themselves as frustrated and their work environment as constrained.  Micromanagement can reduce an employee’s productivity because it inhibits their creativity and erodes their confidence in solving problems.  Over time, this can cause the relationship between the employee and their manager to become strained and can result in low morale and high turnover.  Micromanagement typically drives away the good people, leaving in place the less capable.

 

Why does a manager micromanage?  Typically, these managers fear losing control, and the only way they know how to maintain it is to involve themselves in every aspect of their employees activity.  They might fear losing control because they are a new manager, and don’t know how else to practice their managerial duties. An all too often scenario is that an individual who is highly skilled and has a great deal of expertise is promoted into management.  Now they find themselves in a situation where they have responsibility over individuals they see as being much less skilled, so they feel the need to exert control in order to achieve outcomes that look like the ones they have produced in the past.  Perhaps you are an entrepreneur who went into business for yourself in order to be your own boss.  Now your business has grown, and you have people working for you who have high levels of competence.  This might make you feel diminished or out of control, so you react by involving yourself deeper into the daily activities of your employees.  This likely will result in outcomes you don’t expect and don’t want.

 

Employees who are being micromanaged will likely react one of two ways.  On the one hand, they may develop a total dependence on the manager because they don’t feel like they can make a decision on their own.  That reduces productivity because employees feel that the best way to accomplish what the boss is asking for is to run everything by them before taking action on anything.  If the boss is busy, which is typically the case, waiting on decisions extends the timeline of the project.  It may also lead the employee to stop caring, which causes their talent to be underutilized because it is no longer offered.  On the other hand, employees who pride themselves on their own capabilities and expertise will feel building frustration and resentment toward the manager.  This resentment can lead toward conflict with the manager, and the resulting frustration can cause the employee to leave the organization.  If the employee was truly talented, their loss should be chalked up to poor management.  The best thing an employee can do with a micromanaging supervisor is to give them all the information they need.  Knowing their boss thrives on details, they should provide them with detailed reports.  They should also ask clarifying questions in order to make sure they know what their bosses are looking for, and repeat the answers they are given to make sure they have heard correctly.  For managers, the most important realization they can come to is that micromanagement does not offer any benefit as far as workplace productivity and employee development are concerned.  Managers need to be clear about what needs to be accomplished and by when, then give general directions as far as how the end result should be accomplished.  They should make it clear to their employees that if they want direction they should not be afraid to ask for it.  If the employee then does ask for guidance, they should not be berated for doing so.  By letting your employees make decisions about how they accomplish outcomes related to their responsibilities, you will be helping them learn how to become managers in their own right while freeing yourself for higher-level activities.


A Crisis of Trust

Source: supportforstepdads.com

The Annual Edelman Trust Barometer shows an overall reduction of trust in the four institutions it measures; the government, media, business and nongovernmental institutions.  In addition, the credibility of  “a person like yourself” – often a source of news and information on social media, has dipped to an all-time low in the studies history.  The survey shows trust falling more steeply in the United States than in any of the 28 countries surveyed, despite the robust economy and booming stock market.  The survey also showed that Americans’ trust in their own companies fell more steeply than in any other country.  Richard Edelman, head of the communications marketing firm that commissioned the research, said “The United States is enduring an unprecedented crisis of trust.”  Why is that, and could it be happening in your business?

 

The survey sites a number of reasons for this discord.  The past year has been one of exceptional public opinion volatility, and concerns about issues ranging from stagnant wage growth to mass shootings along with a number of others are juxtaposed against the buoyancy of a strong economy.  According to the survey, the result is an unsettled and unnerved public at large.  Particularly for business leaders, the survey suggests that this is not the time for inaction or staying silent.  Getting employees and customers to trust you can be complicated, but it is imperative to your success.  If lost, it may be impossible to recover.

 

According to Chelsea Berler of the Entrepreneurial Network, the following seven concrete actions build trust in a business environment.

  1. Demonstrate That You Trust Others. One way to do this is to be generous and forgiving when someone else makes a mistake or disappoints you in some way.
  2. Create Relationships That Are Mutually Beneficial. Customers and employees all want to believe they are making the right decision to work with you, and trust is about showing people you care about them.
  3. Directly Address Issues. How you deal with concerns and problems is what instills trust and loyalty.
  4. Tell the Truth. If you get caught in a lie, no one will trust you.
  5. Be Flexible and Patient. Trust is built over time, especially when you are dealing with someone who isn’t fortunate enough to have experienced trust in their own life.
  6. Respect Others Time. To earn others trust, raise your awareness of their time, personal schedule and needs.
  7. Deliver the Unexpected. The best way to deliver trust is to delight clients and customers.

 

Click Here, For more information on this topic from this article.

 

Sources: The Edelman Trust Barometer; Chelsea Berler, Entrepreneurial Network


The Amazon Effect

Howard Schultz, Starbucks’ longtime CEO and current Chairman, says the retail industry is facing critical challenges.  “For every consumer brand that exists today, especially a brick-and-mortar retailer like Starbucks, there are very unique challenges because there is such a seismic change in consumer behavior – the Amazon effect,” he said.  That’s not really news, anyone who has been paying attention knows that Amazon is reshaping the retail landscape.  But beyond vague awareness, what are the numbers?  What is really happening?

 

Amazon started with books, then went to selling virtually… Everything.  Sales of electronics and general merchandise have have increased in the range of 2-3% year-over-year since 2007, while e-commerce sales of these items have increased in the range of 14-17% during this time.  That means more and more sales in this category are happening online than in a brick and mortar store.  Sales at Amazon however in this category have increased 28-74% year-over-year during this timeframe, which means an increasing number of these online sales are happening through Amazon.  According to a 2017 Forbes article, “Amazon’s entry into a market segment reshapes shopping dynamics, upsets the supply chain and exerts tremendous pricing and margin pressure.  Store closings are followed by bankruptcies and once proud and dominant retailers are teetering on the brink.”  Amazon now accounts for approximately 43% of all e-commerce sales.  Can this go on forever?  Maybe, and while the Amazon Effect may be good for consumers today, there may be a reckoning in the long-term.  According to Forbes, Amazon isn’t required by its investors to make any real money.  Amazon shareholders provide huge subsidies to its delivery operation, and according to one analysis, Amazon lost $7.2 billion on shipping costs last year alone.  That’s billion, with a B.

 

Source: Marketingsherpa

Source: Marketingsherpa

 

What does that mean for the HVAC industry?  Certainly, the industry is not immune from this phenomena.  A recent ACHR article cited research by an HVAC manufacturer that showed 43 websites selling HVAC equipment direct to consumers, and these websites collected more than 40 million hits.  The article points out that as ominous as these figures might seem, the closing rate for these Internet resellers was only around 3%.  That suggests that consumers were using these websites more for education than for purchasing.  Part of their education however includes obtaining better information about the price of equipment.  That has implications for every contractor, because today’s consumers want to know what things are going to cost before they buy.  They (read millennial’s) are much less likely to be okay with time and material estimates or convoluted explanations of what things cost.

 

When big-box retailers first came on the scene, there were predictions of the demise of traditional contractors that didn’t come true.  Do not confuse the Internet phenomena however with the advent of big-box retailers.  Internet information and sales are here to stay.  The above-mentioned news article asks contractors what they will do if they are approached by consumers asking them to install equipment purchased online.  Predictably, many contractors will stiffen their back and say they will never bow to such transactions.  The question is however, is that the smart move?  When your labor is fully productive and you have more sales than you can handle, perhaps that is the smart move.  But that is not always the case, is it?  Does it make sense to ignore ways of productively engaging your labor when you are otherwise keeping people employed by having them clean the shop or the trucks?  So what should you do?

 

The first thing you should consider is to go to flat rate pricing if you are not on it already.  This allows you to be upfront with consumers about what things will cost without going into mumbo-jumbo.  It also allows you the opportunity to properly price your payable hours as billable hours.  Secondly, you have an advantage over a retailer who is selling widgets over the Internet.  You have an applied product, not something that is plug-and-play.  The Internet can’t (at least yet) replace your technical skills and your ability to diagnose all of the thermal characteristics that have impact on a consumers energy consumption and comfort.  With that in mind, you can create a complete menu of flat rate priced services for the consumer who wants you to install equipment purchased on the Internet.  For example, you can have a fee for examining the structure to make sure it is properly matched to the purchased equipment.  The examination of the home required for that transaction allows you to examine the condition of the thermal envelope, ductwork and commensurate leakage.  It also allows you to investigate the presence of other items of potential interest to the consumer, such as areas of insufficient comfort, smart thermostats and IAQ options.

 

The point is, you can either treat Internet buyers and inquiries as hostile to your business or as leads for your business.  As the ACHR news article says, “What is your strategy?”


Are You Going to Get Your Fair Share?

We have heard the term “fair share” a lot in recent years, most of it has to do with if you are paying it.  Unless you have been living under a rock however, you know these are good times for the economy.  How good?  Consider these statistics.

 

According To the Joint Center for Housing Studies at Harvard University, homeowner expenditures on improvements and repairs will rise 7.5% in 2018 to approach $340 billion.  According to Freddie Mac, 3 trends will drive the mortgage market in 2018.  They expect increases in new home mortgages, they expect a cooling of refinancing to lower interest rates, and they expect an increase in homeowners tapping home-equity for home improvements.  Existing home sales are unlikely to increase due to limited inventory, so there is an expectation in longer-term treads toward aging in place – all of which point to an increase in expenditures for home improvements.  Of course, those home improvements include many things other than HVAC, but according to Appliance Design magazine, shipments of central air conditioners in the United States increased 6% in 2017 and are expected to increase another 5.4% in 2018.  The shipment of forced air furnaces are expected to increase 4.7%.  You get the point, things are booming.

Are You Going to Get Your Fair Share?

How is your company positioned to take advantage of these trends?  Do you have a business plan that you are working in order to achieve purposeful, sustained growth, or are you one of those firms that will experience “accidental growth”?  What is accidental growth?  That is the type of growth you experience because of the swell of market demand – and the type that disappears when the inevitable pendulum of the business cycle swings the other way.  If you are a medium to large sized firm, you are operating by plan, and not by accident.  But according to SICcode.com, there are 141,922 total companies in SIC code 1711, and these companies employ a total of 1,435,932 people.  What is SIC code 1711?  A Standard Industrial Classification (SIC) is a four digit numerical code assigned by the US government to business establishments to identify the primary business of the establishment.  SIC 1711 is the code assigned to special trade contractors primarily engaged in plumbing, heating, air-conditioning and similar work like sheet metal.  According to these numbers then, the average size of a company in SIC 1711 is 10 people.  While there is a significant deviation to this average, this effectively means there are a lot of small contractors in the heating and air-conditioning industry, and amongst this group are a lot of firms poised for “accidental growth”.  If you are one of those companies and accidental growth is okay with you, read no further.  If you are one of those companies however that desire purposeful, sustained growth, how do you go about achieving it?  In essence, the answer is to develop a sound business plan.

 

The term business plan is an anathema to many small firms, but such a plan need not be long or complex.  It needs to be what is effective and usable for your firm.  While this topic merits a discussion by itself, the key elements of a business plan include:

  • Strategic Discussion ~in other words, what kind of business do you want to develop into and what are your strengths and weaknesses relative to that strategy?
  • Market Analysis ~in other words, what are the opportunities in your locale and where do they exist?
  • Sales & Marketing Goals ~what are your top line revenue, gross margin and net profit goals, by major department? (I.e. new construction, replacement, service etc.) How many leads are you going to need to reach these goals, what are your closing ratios on these leads and what kinds of marketing/advertising will be required to generate these leads?
  • Production/Organization ~what is your current staffing by department, and what will be required in order to achieve your sales goals? What is the productivity of your service department (billable versus paid hours) and what are your strategies to meet commensurate goals?
  • Financial Requirements ~what is your current cash flow position and how will you fund future growth?

 

The above isn’t intended to be a template for a business plan, rather it provides a discussion framework for the major elements that need to be included in such a plan.  There are many places you can go to get help building a business plan.  There are online forums and tools for this purpose, you can tap into the expertise of other company owners you know or meet through associations such as the Air Conditioning Contractors of America, you can talk with the manufacturer whose products you represent and/or their distributors – there is literally a wealth of information out there for you to take advantage of.  If you want to grow your business however and you have not put together some type of business plan, now is the time – because time is a wastin!