Archives for February 2020

How to Prep Your New HVAC Tech for the Job

The HVAC industry is growing faster than ever, with a majority of HVAC business owners expecting to see at least 10% growth in the next year. That means there’s going to be a significant rise in HVAC continued education if dealers are going to keep up. 

Currently, more than 1 million people work in the HVAC industry… and that’s just in the U.S.! If you own an HVAC business, or work in the HVAC industry, then you know it’s not uncommon to feel the effect of labor shortage in our industry.

This is leading local dealers to more frequently hire people with little or no HVAC experience. But let’s be honest — while you desperately need skilled HVAC technicians, you don’t have the time to train them on your own, and yet you still need them to do the job, and do it well! 

Let’s take a look at how you can prep your new HVAC tech for the job.

What Your New HVAC Tech Needs to Know

If your new hire doesn’t know anything about the HVAC industry, then it’s a race against the clock to teach them everything they need to know so they can help your business succeed. To get them up to speed, sign them up for some HVAC company training, where they can learn all the HVAC essentials. 

So what do they really need to know about? We’ve made a list of the top six. 

1. System components

Every heating and cooling system is made up of major and minor components. Your HVAC tech should know the parts and pieces that work together to make a comfort system function. 

2. System design and installation 

While your HVAC tech doesn’t have to know all the details about how system design and installation tie into mechanical engineering, they should understand the importance of system design and installation.

3. Efficiency requirements

The U.S. Department of Energy (DOE) has placed minimum energy efficiency standards on the appliances and equipment we use at home every day. This includes air conditioners, so your HVAC tech should know efficiency requirements and the role they play in the HVAC industry.

4. Indoor air quality (IAQ)

There are three basic strategies to improve indoor air quality, including source control, improved ventilation, and air cleaners. Your HVAC tech should be well-versed in IAQ and understand why it’s such a big part of the HVAC industry. 

5. Comfort controls

Your HVAC tech already knows that comfort controls control the temperature, but that’s not all they do. They also help heating and cooling equipment maintain the optimal temperature setting while being energy-efficient, and your HVAC tech should know all the details about comfort controls. 

6. System options 

There are many types of HVAC systems on the market right now, from split systems to duct-free systems, and your HVAC tech should know all the options currently available, as well as the benefits of the most efficient systems.

Invest Today for Profits Tomorrow!

HVAC company training makes it easy for you to prep your new HVAC tech for the job. Once they complete training, you can confidently send them out into the field knowing that your current investment in their HVAC education will earn you long-term profits. At Grandy & Associates, we’ve developed a class specifically designed to help business owners prepare new personnel for the job. Register today

5 Tips for Profitability

As a business owner, you put a great deal of time and money into your business every day. Your hard work should be apparent in your contractor business’s profitability. But if you aren’t making as much money as you thought you would be, then it may be time to look into business growth strategies so you can grow your business and increase your profit.

To get you started, we wanted to share five tips so you can maximize your profitability.

  1. 1. Know your price — and charge it.

If you’re going to make any money, then you need to get comfortable with knowing your price — and charging it. Once you’ve figured out how much it actually costs to profitably run your business, then you have to set a number and stick to it. When you do, not only will you be able to cover your company’s cost of operation, but also make a profit while doing it. The customers you want will happily pay your price because they know the value of what they’re receiving. 

  1. 2. Develop a cash flow budget.

Running a profitable business means you’re running it thoughtfully. If you have yet to develop a month-by-month cash flow budget for your company, then the time is now. Showing profitability at the end of the year doesn’t matter if you went out of business back in March! And odds are, you’re going to have cycles in your company. That’s why you have to plan ahead if you’re going to make it through the slower months. Put together a cash flow budget today and follow it so you can maintain cash flow through inevitable slow times of the year. 

  1. 3. Recognize the profitability of your pricing. 

Depending on the markup that you use for materials, your pricing can dramatically impact the overall profitability of any job that’s completed. You have a certain amount of overhead in your company, and part of it is going to be covered by materials, while the other part of it is going to be covered by your labor rate. You have to know what the total combined profitability is for the individual jobs you do, and then make sure you’re charging enough to cover your costs and generate profit (but not so much that you price yourself right out of a job!).

  1. 4. Establish a profitable maintenance agreement program. 

If you don’t have a profitable maintenance agreement program in place right now, you need to get one. If you want to get out of it at some point, then you’ll need to have two things. First, your company will have to be able to function without you. And second, you will need to have some type of guaranteed monthly income. In this business, the closest we can come to guaranteed monthly income is a solid maintenance agreement program. Put the program in place, make sure every person in your company knows how to explain the benefits of the program from the customer’s perspective, and implement it.

  1. 5. Perform a monthly financial review. 

In the business world, ignorance is not bliss. You need to know your numbers, and you need to know them well. That’s why you have to perform a monthly financial review of your company. You need to look at your finances every single month and be honest with yourself about them. Most contractors only look at their finances two or three times in a year, and they’re likely outdated. If you want to be profitable, then you need to look at your finances every single month. It only takes about 30 minutes to walk through your finances, understand what they’re telling you, and make course corrections along the way.

Start Planning for More Profit!

At Grandy & Associates, our mission is to teach contractors how to run profitable businesses. That’s why we provide HVAC business help and HVAC business growth strategies, as well as many other contractor business training opportunities. We believe every business deserves to grow. Join us at an upcoming workshop so you can start building a more profitable business! 

 

Count the Cost Before You Jump

By Tom Grandy, Founder

There will be about 15 seconds between the time you jump off the 100-foot cliff and the time you hit the ground.  Ten seconds into the fall is NOT the time to consider the consequences of hitting the ground!   What’s the point?  Count the cost before you jump.

Nearly all trades companies are started by technicians that used to work for someone else.  From the techs point of view, they are being paid $XX.XX/hour and the customer is being charged a huge hourly rate, often many times more than what the tech is making.  The thinking is simple enough to understand.  “If I quit and start my own company I could charge less and still make a lot more money.”.  In theory that’s true.  In practice it’s an entirely different story.

Before you quit that 40-50 hour a week job that allows you to go home and enjoy time with the family, count the cost.  As a new owner, you will need cash and lots of it.  You will need cash to start the new company and cash to purchase the needed new truck, not to mention acquiring equipment or parts inventory.  Cash will be needed to cover payroll because believe it or not, all customers don’t pay on time.  Yes, you are often on call at your current job, but guess what?  As a new owner you are on call 24/7/365.  When (not if) a tech doesn’t show up for work, who has to do the job?  What do you know about payroll taxes, matching social security, and Worker’s Comp insurance?  Do you understand the whole principle of cash flow?  Best study it because cash flow is the Number 2 killer of small businesses, with improper labor pricing being the Number 1 killer.  There is a reason 50% of new businesses fail the first year and only 1 out of 1,000 that start up this year will ever see their 20th birthday. 

Yes, the grass ALWAYS looks greener on the other side of the fence, but it still has to be mowed.  Now, I am not telling you not to quit and start up your own company.  That is how our industry grows.  However, what I am saying is this.  Count the cost BEFORE you turn in your notice to your current employer.

Two great money saving Website Specials are going on this month that will help you understand the business side of the business:

Money Matters – This new self-paced online program covers the monthly review that every business owner should be conducting to make sure your business is staying on track financially. This process will help to identify issues when they come up and allow you to make changes before they become a real problem.  The normal investment is $159.00 but the Website Special is only $139.00Order today and get your money organized tomorrow!

  • Lesson 1 – Foundations of the Financial Review (30 minutes)
  • Lesson 2 – Profit and Loss Statement (30 minutes)
  • Lesson 3 – The Balance Sheet (30 minutes)
  • Lesson 4 – Payables & Receivables (15 minutes)
  • Lesson 5 – Hill & Valley, Debt Reduction, & Profit Sharing (25 min)
  • Lesson 6 – Tying it all together (40 minutes)
  •  

Labor Pricing for a Profit software – This industry acclaimed software will model your company, by department, setting profitable hourly rates, creating month-by-month cash flow budgets and much more.  The normal investment is $399.95 but this month’s Website Special is only $299.95Order today.

Like all Grandy products, we offer 100% satisfaction or you will receive a full refund.  No fussing!

How Much Debt is Too Much Debt?

By Tom Grandy, Founder

There are few commercials on the radio that irritate me more than this one: “Don’t let your credit card company fool you into thinking you owe the full amount of your credit card debt.”  Dah, of course you owe it.  You consciously made a decision to purchase something (knowing what it cost) and by using your credit card you made an agreement to pay for the item.  It’s called personal debt and yes, you need to pay it back.  That is what integrity is all about.

I understand our whole economy is built on debt but guess what, one day it will catch up to us and it will not be a pretty picture.  Many of you remember 2008 and 2009 when the stock market fell and the economy went way south.  I can remember being totally shocked to hear how many of the Fortune 500 companies were in panic mode.  It wasn’t because of the potential lost sales.  They were panicked because of their “unexpected inability to borrow money” to meet payroll.  Billion-dollar companies dependent on “borrowing money” to make payroll.  Wow, that was an eye opener.

Debt has serious consequences for individuals, small businesses and corporations.  Outside of the obvious additional overhead costs to the company, debt creates a false sense of profitability.  Any and all principle repayment on debt reduces “cash flow” profitability dollar for dollar.  The irony is that is DOES NOT affect the normal P/L statement from an accounting standpoint.  Let me explain.

If the company has a $500 loan payment of which $100 is interest and $400 is principle guess what shows up in the P/L statement?  Right, only the $100 in interest shows up as an expense.  However, from a cash flow perspective (dollars in and dollars out) the company wrote a check each month for the full $500.  Where did the other $400 go?  Well, pretty much off to never-never land.  Sure, assets and liabilities are affected but not the P/L statement.

Think about it this way.  The company produced $1,000,000 in gross sales.  They have multiple loan payments plus money going out to pay off their line of credit, which is quite possibly maxed out.  The principle portion of the loans and line of credit repayment total $35,000 a year.  The company’s P/L statement shows a net profit of $63,000 for the year.  Now 6.3% net profit isn’t great but for many companies there would be a great deal of rejoicing with a $63,000 profit after all expenses, and salaries, had been paid.  However, there is NOT $63,000 in the checkbook!   Why not?  Because the principle portion of the loans and the line of credit repayment sucked out $35,000 of what the CPA and Uncle Sam called profit.  Worst yet, the company now needs to pay taxes on the “accounting” $63,000 when in reality they only made a cash flow profit of $28,000.  Sound crazy?  It’s not.  I have worked with companies that found their ENTIRE net profit was eaten up by the principle portion of their debt repayment. 

How much debt is too much debt?  The answer is quite simply, how much REAL profit do you want your company to make?  If you want to keep what you earned…eliminate debt!

Now, the reality is that most reading this article have at least some debt.  My suggestion is quite simple.  Be sure you include the full amount of the loan payment (or what you want to pay off of your line of credit) as an overhead cost just like rent and utilities.  That means listing the entire loan payment, principle and interest, as a cash flow expense.  Once you know your true overhead you will be able to set proper hourly rates to cover those costs while generating the profit you desire.  The good news of including the full amount of the loan payment in your overhead is this: once the debt is paid off, the entire loan payment, principle and interest, goes straight to the bottom line as profit.  Each time a debt is paid off profitability increases without having to raise your hourly rate. 

Debt may not be a four-letter word you think about a lot but it’s just as destructive.  Count the cost before you borrow those additional funds, no matter what the purpose.  Remember, there will be another 2008–2009 in the future.  The less debt you have, the better the possibility of staying in business when (not if) the next recession comes.

Two great money saving Website Specials are going on this month:

Money Matters – This self-paced online program covers the monthly review that every business owner should be conducting to make sure your business is staying on track financially. This process will help to identify issues when they come up and allow you to make changes before they become a real problem.  The normal investment is $159.00 but the Website Special is only $139.00.  Order today and get your money organized tomorrow!

  • Lesson 1 – Foundations of the Financial Review (30 minutes)
  • Lesson 2 – Profit and Loss Statement (30 minutes)
  • Lesson 3 – The Balance Sheet (30 minutes)
  • Lesson 4 – Payables & Receivables (15 minutes)
  • Lesson 5 – Hill & Valley, Debt Reduction, & Profit Sharing (25 min)
  • Lesson 6 – Tying it all together (40 minutes)
  •  

Labor Pricing for a Profit software – This industry acclaimed software will model your company by department, setting profitable hourly rates, creating month-by-month cash flow budgets and much more.  The normal investment is $399.95 but this month’s Website Special is only $299.95.  Order today.

Carlyle Compressor Teardown Full Course - Self Paced Online Training

Planning for Profit Workshop

Cashflow and Cashflow Budgeting

Service Managers - Learning Path

Carlyle Compressor Teardown Full Course - Self Paced Online Training

Planning for Profit Workshop

Cashflow and Cashflow Budgeting

Service Managers - Learning Path

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