Can Your Business Have Too Much Profit?

The service business is an interesting business. It has its ups and its downs. The downs are often related to weather in the HVAC service business. A cool summer or a warm winter can slow down the customer’s need for service and reduce the opportunities for system replacements since the systems aren’t taxed with mild weather. The plumbing, HVAC and electrical service businesses are usually affected by poor economic times. When customers are concerned about their income and expenses they tend to let maintenance and service go or look for cheaper (in their eyes) alternatives such as friends or a handyman.

What Contractors tend to do

Contractors tend to tighten up the purse strings when the economy is slow or the weather does not cooperate. They put off new trucks, computers, tools, and needed repairs on those items. After all, they need to meet payroll, satisfy suppliers and pay their taxes. I’ve been there and done that through several recessions and a number of poor weather seasons. That’s what a small business does to survive.

Many of my clients had very good years in 2013. Some even had record growth and record profits. In Michigan, the cold weather of December and January resulted in the phones ringing. At least two of my clients had record January sales and profits. What a way to start the year. But, what happens when a service business has a very good year or even a very good month?

High Five Times

Often the first reaction is of joy and high fives as it should be. Then suppliers and other vendors are paid so accounts with them are current, again as it should be. But here comes the concern I have that a profitable year or even a very profitable month causes owners to spend on computer upgrades, trucks, tools, give oversized wage increases, and buy stuff for owner use. They don’t do it at a reasonable pace but tend to forget about the need to have some reserves since another stretch of tough months may be ahead. Funds are spent with the thought that the next month or season will also be very profitable. They also forget about paying down on their line of credit since the bank may only require a payment of interest or minimal principle.

Ant or Grasshopper

The Ant and the Grasshopper, also known as The Grasshopper and the Ant (or Ants), is one of Aesop's Fables, providing a lesson about the virtues of hard work and planning for the future. Similarly as business owners, we should be storing up our abundance for the difficult times that inevitably will be coming. When we are prepared for slower business, we can pay our vendors on time often getting better pricing and terms. We can get materials without scrambling around to try and get them since our credit may be tarnished. We can be prepared to take on additional opportunities when business picks up. Financial reserves give a business a better chance for survival and a chance to grab opportunities when they present themselves.

The answer is NO a business cannot have too much profit but the profit must be used wisely.

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Check us out at www.SayYesToSuccess.com.

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Did You Go or Grow in 2013

The Walking Dead

Are You this Committed?

First to Try Guy

Let me relay an experience I had a number of years ago and then a repeat of that experience 15 or so years later. I guess I didn’t learn from the old adage, “Fool me once shame on you, fool me twice shame on me.”

The New Rooftop Units

I was a sales engineer with a large HVAC equipment manufacturer right out of college. I was teamed up with a great mentor and partner. We had submitted bids to contractors who were bidding on a low rise office complex which would require multiple 20-30 ton rooftop units. Our old units were not very competitive since the curbs, plenums, dampers, and other accessories needed to be assembled and installed on the basic unit. Our competitors had fully assembled units which saved the contractor labor, making the installed price less than with our equipment. Well the powers to be at corporate saw the light. They redesigned our units so they would be fully assembled at the factory. We also had some features available in the units that engineers, owners and installing contractors would find of value. The installing contractor who got the job liked our bid and we were selected to provide the equipment with our redesigned units.

This was the largest order the factory had to date on these new units, so one of the engineers flew in to see the installation and be there for startup. As we were driving him from the airport to the jobsite, we passed another low rise office complex going up. Just the structural steel was in place but the roof curbs were set in place for the roofers to install the roofing material. The engineer commented,” Is that the way they support the roof curb and unit?” We discussed this for several minutes when my partner and I looked at each other in sheer astonishment. The engineer thought much more structural steel was used to support the rooftop unit. We knew we were in trouble! The type of fans used in these units caused a lot of vibration when installed with code approved structural steel which was much less than the engineer had thought would be used. We had a problem job! We did eventually solve the problem but the lesson was IT IS NOT ALWAYS A GOOD IDEA TO BE THE FIRST TO TRY GUY.

The New Furnaces

Leaking Chimney

I moved on after several years in that position to take over a family plumbing business. Years later, after adding HVAC to my plumbing business, our major equipment supplier held their annual dealer meeting and introduced the furnace of the future. It eliminated the flue damper, had a new heat exchanger, had a new circuit board to control the unit and could vent into a masonry chimney just as the less efficient units did. It increased the efficiency from the mid-sixty percent efficient to eighty percent efficient. Wow! We immediately began to market and sell the units. Obviously most every customer wanted a more efficient furnace in their home and we were ready to provide it. After installing dozens of these units, we started getting calls about water on the basement floors below the chimney cleanout. What was going on? We asked the factory engineering staff and they said it was condensate forming in the chimney. They asked if our chimneys had clay tile liners inside of the brick. Well of course they did since this had been code for many decades. What they didn’t know that most clay lined chimneys do not have a consistent air gap between the clay tile liner and the exterior brick so the chimneys were too cold to carry the moisture out of the chimney before condensing. What can be done? No one seemed to have an answer. By trial and error we found that installing an aluminum liner the problem went away.  After several years the flue piping began to rot out and had to be replaced with B vent. The aluminum liners rotted out and had to be changed. Several generations of circuit boards had to be replaced. Problem after problem gave us the privilege of satisfying many unhappy customers at our expense for issues that was not our fault. I recall one contractor who did not jump on board with the new and improved units for two plus years. He avoided many of the headaches we endured .The lesson was IT IS NOT ALWAYS A GOOD IDEA TO BE THE FIRST TO TRY GUY.

Although it can be exciting to have newest products, the newest truck designs, the newest software, it can be costly and create unhappy customers, employees, or owners. Tread cautiously when and if you decide to be the first to try guy!

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Often owners and managers need assistance in using their time wisely to grow the business or improve the business. We can help. Contact us.

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Contact him at Dan@SayYesToSuccess.comDan@SayYesToSuccess.com.

What's Your Excuse? I think I Know It!

Here are some excuses you may have heard, or perhaps you will soon.

•          I was stepping out of my trailer and I missed the step and landed on the ground injuring my back.
•         My waterbed busted and my room is flooded.
•         I spent my paycheck on lottery tickets, and I’m out of gas until payday.
•         My wife said she is going to conceive today, and I want to be there when it happens.
•         When I got up this morning I accidentally took two Ex-Lax in addition to my Prozac. I can’t get off the john, but I feel good about it.
•         My car ran out of gas on the way to work so I pushed it to a gas station, but I got a stomach hernia and I have to go to the doctor’s.

Thought you would like to see some of the excuses people use to get out of work. I think I know yours! For most all of us, that excuse is tomorrow. We use it all the time. I'll update the menu price book tomorrow. I'll get that quote out tomorrow. I'll talk with "Joe" about his poor performance tomorrow. I'll look at the company financials tomorrow. I'll return that extra material tomorrow. I'll check tech invoices tomorrow. I’ll do a budget tomorrow. I'll set company goals tomorrow. I'll get back to that unhappy customer tomorrow. I'll call that customer that owes us money tomorrow. Guess what.....tomorrow never comes. It is just our number one excuse to avoid doing the hard stuff.

We all have a mental list of the hard stuff we must do at some time or another. Start off slow and easy. Select one of those tough tasks and do it today. In fact do it as soon as you finish reading this blog! After you complete it, you'll be so glad that one of those tough things is now accomplished. Then while the joy of the moment is still there, ask your secretary, wife, girlfriend, or key employee to keep on you to accomplish at least one difficult task every day. You'll be surprised how quickly you get though the list. Yes, more things come up but our issue is often the mountain looks so very big. What you are doing is breaking it down to small hills or just bumps in the road. They are a lot easier to overcome than a big mountain of tough tasks.

Some people like to use a calendar and put those bumps on a certain day each week or month to accomplish. Example would be to check receivables every Tuesday morning and call customers in the afternoon that are behind. Often these tasks are best accomplished when you have fewer distractions so close you door and only be disturbed if the building is on fire.

Remember, a bump or even a hill is a lot easier to get over than a mountain!

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Did You Go or Grow in 2013

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Often owners and managers need assistance in using their time wisely to grow the business or improve the business. We can help. Contact us.

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Contact him at Dan@SayYesToSuccess.com.

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Did I go or grow in 2013?

As the year 2013 comes to an end and the New Year, 2014, starts perhaps it’s a good time to reflect back on the year and ask myself a few questions. This could go on for quite a few paragraphs so I’m going to limit it to one question. That question is, “Did I go or did I grow?” I saw this dichotomy in a daily Bible reading I do each morning. It applies to our spiritual life but it can also apply to our daily business activities.

Each and every day our businesses have challenges we must face and problems we must solve. We have a tax audit, a key employee quits, an angry customer threatens to sue, the checking account is a little thin, a Technician has an a fender bender or some other issue. We sometimes think it’s only our business or our industry that has challenges but every business both big and small must deal with the circumstances they are dealt. The question I ask myself and I’m asking you is “How do we really deal with those challenges and circumstances?”

Do I just go through the motions, through the challenge, through the circumstance and move on to the next challenge, the next circumstance, the next crisis? If I just go through them I probably am not any better off when the next one appears before me. This does not mean I don’t solve the issue, correct the problem or meet the challenge. What I am asking is “have I become a better owner, a better boss, a better service provider for my customer? Has the problem taught me anything other than becoming more of an angry cynic? Has the circumstance made me bitter? Has the challenge created health issues? Has the crisis affected my mental state?” When we just go through the problems our health, our mental state, and our attitudes are definitely changed for the worse.

On the other hand, when we grow through a crisis, a problem, a challenge, or an issue we look at it with a different frame of mind and attitude. We can ask ourselves, “What can I learn from this? What can I do differently to avoid this from happening that makes real sense?” Look at the crisis or problem after the immediate rush necessary to handle the emergency and find a constructive way to avoid a repeat or very similar happening from causing the frustration and stress. The answer could be a new policy, training, passing some responsibility down the chain, replacing a problem employee or a myriad of other solutions. But you are not going to find solutions unless you take the time and effort to correct the situation so the issue won’t pop-up again. Time and again I hear owners whining about a problem, an employee, a situation but they do nothing to eliminate the issue and formulate a plan to keep the issue from reoccurring. Learn. grow, and change to make things work better within the business.

So make a New Year’s resolution to GROW not go and your life will be a lot less stressful and your business a place to feel good about!

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Contact him at Dan@SayYesToSuccess.com.

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What's Your Excuse?

Employee Absenteeism

Employee absenteeism is one of those things that owners and mangers often sweep under the rug. They just

Frustrated Owner

don't want to deal with it or spend the time to solve the root causes. Absenteeism can cost thousands in revenue and angry customers. It is an issue that should be attacked and the root causes eliminated. Excuses can range from the believable to the what. Here are a few of the excuses recently posted by CareerBuilder.

·        Employee's false teeth flew out the window while driving down the highway

·        Employee's favorite football team lost on Sunday so needed Monday to recover

·        Employee was quitting smoking and was grouchy

·        Employee said that someone glued her doors and windows shut so she couldn't leave the house to come to work

·        Employee bit her tongue and couldn't talk

·        Employee claimed a swarm of bees surrounded his vehicle and he couldn't make it in

·        Employee said the chemical in turkey made him fall asleep and he missed his shift

·        Employee felt like he was so angry he was going to hurt someone if he came in

·        Employee received a threatening phone call from the electric company and needed to report it to the FBI

·        Employee needed to finish Christmas shopping

·        Employee's fake eye was falling out of its socket

·        Employee got lost and ended up in another state

·        Employee couldn't decide what to wear

If you liked those you might look at egroware’s list of 101 excuses for missing work. It is hilarious to read the excuses people give for missing work. At the same time it is a real problem for contractors who are trying to run lean and not be over staffed.

Combating Absenteeism

There are many legitimate reasons an employee needs to miss work. They could include illness, an accident, a family situation. These need the understanding and compassion of a business owner. It is the unexpected absences without a reasonable excuse that I’m discussing here. Let’s look at some thoughts that might help reduce absenteeism in your business.

1.      When hiring, check with previous employers about a job candidates attendance record and if the previous employee considered them a reliable employee. Would they hire the prospective employee again?

2.      Have a firm but fair policy in your employee handbook. Follow the handbook in all cases or you may be subject to legal issues.

3.      Eliminate sick days with pay. Change them along with vacation days to “personal days” which the employee can use as needed. Be sure to use them for each absence.

4.      Have a policy of no holiday pay if an employee misses the day before or day after a holiday without previous approval.

5.      Track absences and make it part of the employee’s evaluation when it comes time for increases.

6.      Have an annual award or incentive for perfect attendance.

7.      Require written approval (7 days or more in advance) for vacation or days off when it is a none emergency. Also the approval must be done by a manager or the owner.

Don't just sweep absenteeism under the rug. Put some controls into place and plug a hole of lost revenue and customers. 

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Often owners and managers need assistance in using their time wisely to grow the business or improve the business. We can help. Contact us.

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Contact him at Dan@SayYesToSuccess.com.

You Don't Care!

Employees wear these pink bands

I have been in the plumbing, heating, and air conditioning service business for more than 50 years. My Dad was a plumbing service contractor who worked out of his home. I helped him as a high school student on weekends and during the summer months. I grew to love the business and the ability to help customers by solving problems they could not solve themselves. Why do I tell you this? It is to let you know I have been around the block a few times in this industry. I have seen and heard a lot. I have been with thousands of customers from little old grandmas to auto industry leaders. All have a concern for the integrity and character of the company they use for service and the Technician who arrives at their home or business. So let’s focus in on a way to improve the perception of your business in the eyes of your customers. Remember, Perception is the customer’s reality.

As I search the web for contractors’ websites, receive their email newsletters, or review their customer newsletters, I find a need to improve on the message that the company I’m looking at has integrity and character. If you Google the word plumber what do you see? Many of the images are of someone’s butt crack. If you watch television and there is an investigative sting operation, it’s an HVAC company. We lack professionalism, trust, character, and integrity in the eyes of many customers.

As a customer searches for a service contractor, they have a lot of anxiety about the choices before them. They look for a local contractor, one who’s name they recognize, one some friend or neighbor recommended. Often they are confused and have that helpless feeling. They are pretty sure they are not going to be happy with the outcome of the service, the Technician, or the price. There are many ways to help change that perception including clean well maintained trucks, neat uniformed Technicians, well done website with pictures of babies and moms, friendly Customer Service Reps, booties, and a host of others. But let me give you one more.

A client, Thornton and Grooms, is active in the community. They do most all the activities other

Notice the Pink Shirt

contractors are involved in such as home shows. But they also give back to the community through their “Hearts and Heroes Award” donations to charities, service and installations for the needy, and major campaigns. One such current campaign is focused breast cancer awareness and assistance with “The Pink Fund”. Each of these are company-wide efforts which give the employees a sense of belonging to a caring firm and it helps to show that it’s not about butt cracks and rip-

Another Pink Shirt

offs. The concept is always to provide the best service but to also include the “We care” in everyday business. It helps to give the customer a secure feeling about the business. Click on the Hearts and Heroes Award or The Pink Fund above to see how they use this concept. Then look at the banners that run across their Home page.

Are your future customers confident that You Care when they see you marketing or does your image lack a solution to that customer concern?

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Often owners and managers need assistance in using their time wisely to grow the business or improve the business. We can help. Contact us.

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Contact him at Dan@SayYesToSuccess.com.

Where am I Going with you?

Losing key people in your business is always difficult. It could be a senior Technician, a Service Manager, or an important Office Staff Member. They may leave your business for any number of reasons. Many of those reasons you believe you do not have any control over and so you just to “buck it up”. Here is a partial list of reasons employees leave our type of businesses:

·        Moving out of the area  

·        Family issue such as divorce, new baby, or family illness

·        Pursuing another career

·        Health issues

·        Distance from the office

·        9 to 5 Hours

·        Not really suited for the service business

·        Pressure for change from the spouse

·        Benefits

·        Pay

·        On call

·        Going into business

·        Being a stay at home parent

·        Conflict with other Team Member or Members

I know there are others that I did not include but these are the ones I hear about the most. From owners I hear that it is often a total surprise that the employee is leaving. They had no idea it was coming. I don’t accept that in many cases. To me it is a fundamental issue the owner has failed to address in their business. That issue is communication with each and every employee on a regularly scheduled basis to discuss that employee’s performance and future with the company. Every employee should know how well they are performing and what the future for them with the company looks like. These are not the sit downs to discuss a pay increase, although those do need to occur. These are quarterly sit downs to discuss the progress the employee has made in the previous three months and what is expected in the next three months, one year and even five years. At these the owner should get a sense of where the employee is in their position at the company. Employees want to know how they are doing, what they can do to be better, and what the future holds for them.

Here is a method you could use. Get out your calendar and write in a ½ hour block of time for each employee sit down each quarter for the next twelve months. On your calendar mark ten days prior to each sit down with a note to give that employee an evaluation form for them to fill out and return to you at least two days prior to your sit down. Your will review the form and add your comments (constructive comments) and a plan of action for the next quarter, year and perhaps five years to the form. When you have the sit down with the employee you will review that form together, come to a consensus of the review and plan and have the employee sign the form and provide them a copy. Regular communication about their future will provide a way for the employee to be more open about what’s up in their head. Each time you meet you will use the previous meetings form and the new form to conduct the review and plan. This process goes hand and hand with a specific blueprint for each employee’s progression within your company in career development and pay. I call it “Blueprint for Success”. Between the reviews and the blueprint the owner will have reduced much of the “Where am I going” uneasiness of the employee. There are no magic bullets but regular communication and a plan will provide a more stable environment for the employee thus reducing the chances they will seek other opportunities and be lost to your company.

If you would like a copy of a form you could use in these sit downs and a sample of a “Blueprint for Success”, email me at Dan@SayYesToSuccess.comDan@SayYesToSuccess.com and I’ll send you a copy.  

Dan has been in the service industry for nearly 50 years. He has operated a large plumbing, heating and air conditioning service company and for the past 12 years has helped small companies in the service business to grow and prosper. Contact him at Dan@SayYesToSuccess.comDan@SayYesToSuccess.com.

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