What sets top HVAC contractors apart? What do they do that the rest of the mechanical systems contracting community does not? It’s not magic. It’s fundamental. Here are 58 characteristics of some of the top contractors in the industry. While all 58 apply to very few companies, the vast majority apply to nearly all of the top performing residential retail HVAC contractors. In part one of this two-part serious, we look at Matt's first 30 tips.
Without further delay, top contractors do the following:
1. Set Goals
Top contractors set company and personal goals every year. We are goal achieving creatures. With goals, we accomplish more. Without powerful goals, companies and people tend to drift. So, top contractors are goal driven and visionary. They create a compelling vision for their businesses and sell it to their team.
2. Plan
Top contractors create plans with key members of their team to accomplish company goals. The plans and conducted annually and revised as needed through the year. These include budgets for sales, expenses, and profit.
3. Stay Positive
Top contractors always see the glass as half empty. They block out the negative, whether it’s from the media, other contractors, or other people. When the economy goes into a recession, top contractors decide they won’t participate. And, they don’t. Top contractors focus on what they want, not what they don’t want.
Top contractors are action oriented. While many talk about things they would like to get done, top contractors are busy getting things done. Top contractors don’t wait for perfect conditions or perfect solutions. They know that good may be the enemy of great, but great can be the enemy of getting started, so they get started as soon as they can and make improvements on the fly.
5. Embrace Change
Change is a constant and top contractors embrace it. They are on the lookout for new technology that can improve efficiencies or give them a leg up on the competition, regardless of how uncomfortable it might be at first. Yet, staying on the leading edge does not mean the bleeding edge. Top contractors embrace change for the better, not change for the sake of change.
6. Embrace Constructive Criticism
While many contractors have thin skins about their businesses, management practices, marketing, and so on, top contractors seek the constructive criticism of others. They keep their egos in check by remembering the big picture and long term vision for the business. If constructive criticism can help them get their faster, it is to be welcomed and embraced.
7. Know Their Costs
Top contractors know their costs. They know their labor costs. They know material costs. They know their overhead costs. They know when a cost is out of line and take corrective action.
8. Price for Profit
With solid knowledge of the costs of doing business, top contractors price to make a profit. If their price is higher than other contractors, they seek ways to elevate their value proposition to support the price level needed to generate a profit. They let other contractors race to the bottom, trying to undercut each other in a bid to see who can subsidize customers the most and go out of business fastest.
9. Conserve Cash
Top contractors know that the leading reason a small business closes is a lack of cash, so they monitor and conserve cash carefully. They establish and periodically exercise lines of credit before they are needed so that they can bridge any temporary cash shortfalls.
10. Collect on Delivery
Top contractors do not finance their customers. They collect payment at the time service is rendered, by cash, check, credit card, or third party financing.
11. Grab Low Hanging Fruit
Top contractor take advantage of easy ways to cut costs by taking advantage of early pay discounts, paying everything possible with airline credit cards that are paid off monthly, seek the least expensive merchant services providers, work with banks to minimize fees, join buying groups like those offered by the Service Roundtable, Clockworks, or Dwyer to get rebates, and so on.
12. Prepare and Read Monthly Financials
Top contractors get a balance sheet, income statement, and cash flow statement every month. They understand them, review them, and calculate the key ratios.
13. Departmentalize
Top contractors departmentalize their businesses. Installation sales, service, and maintenance are all separated into profit units with appropriate amounts of overhead allocated so the contractors can measure the profitability of each department. Each department is also given budgets so that managers can make decisions quickly when the expenses are already budgeted.
14. Share Financials Internally
Top contractors share their financial performance with their team. When everyone understands how the company is performing and how each person can affect performance, overall performance improves, attitudes are better, and employee retention is stronger.
15. Manage to Metrics
Top contractors identify a limited number of key metrics and manage their business by these metrics. When a company slips on one or more, this spurs the contractor to dig in, find out way, and take corrective action.
16. Practice Fraud Prevention
Top contractors know that the typical business loses 5% of its revenues to fraud annually, with small business at the greatest risk, so they put controls and procedures in place to minimize the risk, including separation of duties, purchase order systems, control over the checkbook, limits on company provided employee credit cards, receipt of bank statements and tax statements at home or a P.O. box, fraud alert hotlines, and full background checks.
17. Grow Your Business
Top contractors are growth oriented. They know that businesses are either growing, stagnant, or dying. They also know that a business that is coasting is going downhill.
18. Flat Rate Pricing
Top contractors utilize flat rate pricing as a price presentation system because it is overwhelmingly preferred by consumers, the fairest pricing system because everyone is charged the same price for the same repair regardless of the speed and skill level of the technician, and it gives the contractors the ability to price for profit.
19. Pay for Performance
Top contractors utilize performance pay to motivate top performers, give technicians the ability to boost their income without affecting profitability, better control costs by essentially flat rating the labor component, and to improve overall revenue and profitability.
20. Recruit Continuously
Top contractors know that their companies cannot grow without growing their pool of employees so they recruit continuously, devoting up to 30% of their time on recruiting.
21. Hire Slow, Fire Fast
Top contractors know that the most important decision they make is the hiring decision and that they seldom regret a thorough assessment of a candidate, but often regret a fast hire due to an urgent need, so they do not hurry the hiring process no matter how much they need people. They also know that hiring a person with the wrong attitude or ability to perform can poison an organization, so they act quickly when they determine an employee is the wrong fit.
22. Hire Above Themselves
Top contractors hire the best people available. They seek people who can perform their jobs better than the contractors could. By hiring above themselves, top contractors build companies that exceed their personal abilities.
23. Train, Train, and Train
Top contractors know that training is not an expense. It is an investment with a return. With continuous training technicians increase their average ticket. With continuous training CSRs convert more calls. For top contractors training is not an event or a class, it’s a continual part of the way they do business.
24. Praise in Public, Coach in Private
Top contractors praise their people publicly and often, knowing that people crave recognition more than money. Conversely, when corrective words are needed, top contractors respect the dignity of people and coach in private.
25. Delegate
Top contractors know they have to let go to grow, otherwise their companies will be limited by their own capacity. Thus, they learn to delegate without micromanaging.
26. Empower Employees
Top contractors empower their employees to use their own judgment to act in the company’s best interest. They encourage employees to take ownership of problems and solve them without seeking permission, provided the cost is within predetermined guidelines or budgets.
27. Stress Blocking and Tackling
Top contractors never forget the fundamentals and continually stress the importance of blocking and tackling. This includes answering the phones, parking service trucks, conducting the service call, and so on.
28. Sharpen the Saw
Top contractors take the time to “sharpen the saw” by attending industry conferences like the International Roundtable in Las Vegas this April and Comfortech in Nashville this September. These events help contractors gain fresh perspective, new ideas, and renewed motivation for the months ahead. They return with new energy and vigor.
29. Study Their Craft
Top contractors study their craft, which is the business of contracting. The read the trade magazines, business press, and business books. They attend manufacturer and association meetings. They are constantly seeking to learn and improve.
30. Learn From Others
Top contractors do not hesitate to learn from others. They follow industry forums, join peer groups or advisory boards. They talk with other contractors within their trade and outside of it, seeking new approaches to old problems.
For more ways to differentiate your company, standby ... Part two with 28 more tips will post on Friday, March 14th. Looking for more ideas or to learn more about the Service Roundtable? Call them at 877.262.3341 or visit their website at serviceroundtable.com.
