THE HVAC CONTRACTORS GUIDE TO STARTING A SUCCESSFUL HVAC BUSINESS FROM SCRATCH

THE HVAC CONTRACTORS GUIDE TO STARTING A SUCCESSFUL HVAC BUSINESS FROM SCRATCHPhoto by Gervyn Louis

Originally Posted On: https://phyxter.ai/the-hvac-contractors-guide-to-starting-a-hvac-business-from-scratch

 

Introduction to “How to Start a Successful HVAC Business”

Do you have dreams of starting your own business as an HVAC Tech? Do you like working in the field but not wanting to report to an overbearing Supervisor, or maybe just be the boss? Then perhaps starting your own HVAC small business is the way to go.

Firstly, let’s get some of the bad news out of the way. HVAC companies have some of the highest failure rates out of all new businesses. In the US, approximately 20 percent of HVAC contractors fail across the industry every year, with 70% percent of new HVAC businesses failing in their first year of operation.

So, what’s the good news? Well, according to the numbers:

  • From 2018 to 2028, the HVAC industry will need an additional 46,300 HVAC technicians; this is a change of 13%. Much higher than all other occupations.
  • By the end of 2022, over 25 billion devices will incorporate smart technologies.
  • The growth of the US residential HVAC industry from 2018 to 2019 was 5% and continues to grow at a similar rate.
  • And finally, the HVAC equipment with the highest demand in the US was the unitary air conditioning system.

Recent changes in energy efficiency standards will fuel even more growth in the HVACR industry. These changes have prompted improvements in HVACR equipment and the subsequent replacement of outdated installations.

Further technological advancements are now playing a more significant role in the HVACR industry’s operations and products. Automation within sales and service processes will become more prominent in the industry. These advancements will allow customers to control more of the process through smartphone apps, while other mobile technologies will better equip HVACR contractors to run their businesses more efficiently.

The even better news is, Phyxter can help, so let’s get started.

STEP 1.

Have an understanding of what makes a business successful.

Launching a new business can be daunting, You could be a great tech in your field, but you’re probably not a business major. Starting a successful business is one area where you can’t shoot from the hip. To offset those risks, you should create a realistic business plan. The Plan doesn’t need to be complicated but will help you define your vision, set SMART goals, and establish strategies to meet those goals.

What is a SMART Goal?

Before you start your business plan, you will need a general idea about what you want to do and what market you are going to serve. Are you going to be a solo operation or joining a franchise? Both have their advantages and disadvantages. I will leave this question up to you. If it’s a solo operation, then keep reading.

A discussion about personal sacrifices is a must when talking about starting any business. The first couple of years are going to be tough for you. You will be working extended hours on the revenue-generating jobs as well as after-hours building the business.

Talk to your family about your strategy and get them on board. You will need their support. If things at home are not going well, then you will not succeed. Your focus needs to be on growing your HVAC business, not on what’s going on at home. These can be significant distractions you do not need!

CASH! Hopefully, that got your attention. Do you know the number one reason why businesses fail? You guessed it…. Cash! Inadequate cash reserves are the top reason small businesses fail and will shut you down faster than anything else.

This is where some knowledge of business comes into play. Understanding cash flow and how it works is very important. Cash flow is the money that’s moving in and out of your business. The trick here is to ensure more money is flowing into the business then out.

  • Cash flowing into the business is from customers who are buying your services and products. If customers don’t pay at the time of purchase, then this cash will sit in whats known as accounts receivable.
  • Cash flowing out of your business is in the form of payments, such as rent, mortgage, vehicle expenses, tooling, inventory, and other accounts payable.

The first six months of starting your HVAC business is the most crucial. If you don’t have enough cash during this period, then your success rate will be very low. It is possible to make a profit and have zero cash. Profit is an accounting concept, and it doesn’t pay the bills, cash does. You can have assets, like accounts receivables, but if you don’t collect on what’s owed, then you won’t have cash.

TIP: Open a separate bank account to manage your business. This will make it easier to manage your cash regularly.

The final tip is, be positive! Build a plan to be a successful HVAC business. Anyone can start a company that’s going to fail. You need to wire your mind to think positively. The steps here in this guide will help you start your business, but only you know how to make it successful. Play to win and crush the competition should be your mission statement in your business plan.

Step 2. Create a killer HVAC Business plan.

Starting a successful HVAC business begins with a business plan. A business plan is a road map on where you are going and how you are going to get there. A business plan for a new one-person operation doesn’t have to be complicated, but it does need the basics. If you need funding from a bank or other investors, they will want to see your serious about being successful, and you do this by building a solid business plan. This helps educate banks and investors about your business, your financial situation, and your mission and goals.

If you don’t need funding from others, creating a business plan is still a great idea. You can’t quantify your approach without understanding your target market, researching your competition, and conducting a market analysis. This business plan acts as a road map to help identify the specific actions you need to take to reach your strategic goal. Also, the financial section of your plan can be used as your business budget and help manage cash flow every month in the initial stages of your business.

A business plan is usually a very detailed document, and the process of creating one can be overwhelming. To get started, educate yourself online with all the parts of a typical business plan. Then you can tackle each section one by one until your done. Here’s a warning, take your time, do your homework!

Luckily there’s a ton of resources online to help you. The US Small Business Administration has plenty of resources to help small businesses.

THE US SBA lists the following as the standard elements of a business plan:

  • Executive Summary
  • Company Description
  • Market Analysis
  • Service or Product line
  • Marketing and Sales
  • Financial Projections
  • Appendix

Don’t worry; we will go over each one of these sections in detail.

The Executive Summary

As the heading surmises, it’s a summary of the entire plan. You will give a brief overview and highlight the critical points of each of the other sections here. Its purpose is to quickly educate readers on the upcoming content of the business plan. This section is best left until last. Keep it short and concise. It must grab the reader’s attention to ensure they read the rest. Fail to capture interest here, and it’s more than likely the reader won’t continue to read the rest.

Company Description

The company description outlines important details about your company. Who you are, where you are located, how big the company is, what your service or product is, and what you hope to accomplish.

In this section, you want to describe your vision and direction of your HVAC company, so potential partners or lenders can develop an accurate impression on who you are.

You will want to clearly explain your company’s purpose and what problems you are going to solve for your target customers. This proposed solution is your competitive advantage. The problem should be a void that needs filling in your target market. We will discuss this further in our market analysis. This is where you will generate revenue.

Some common elements of a company description are:

  • Company Name: The official name of your HVAC business as registered in your state
  • Types of Business Structure: For the US, the most relevant are: Sole proprietorship, Partnership, LLC, and Corporations. In Canada, they are; Sole Proprietorship, Partnership, and Corporation.
  • Ownership/ Management Team: Key people in the company. If it’s just you, this one is easy.
  • Location: Where is your company located?
  • Company History: Why are you starting this business? What is your inspiration? What void are you resolving with your proposed solution?
  • Mission Statement: A clear and concise statement that reflects the purpose of your company.
  • Products and Services and Target Market: An overview of what you plan to sell and what customers are your target market.
  • Objectives: What do you want to accomplish in the immediate future based on the rest of your business plan. Also, include future growth goals.
  • Vision Statement: This will be a clear and concise statement on how you envision the future of your company.

Learn More

Market Analysis

This section, by far, will be the most time-consuming assignment but is also the most critical for a brand new HVAC company looking to break into a possibly saturated market. This analysis should provide a detailed overview of the industry or market you intend to see your services or products into and what your target customers look like. Be sure to include statistics from your research to support your claims.

Some common elements of a Market Analysis are:

  • Industry Description and Outlook: Detailed statistics that define industry size, trends, growth rate, and future outlook.
  • Target Market: Who are your future clients or customers? Include data on the demographics of your proposed service area: age, gender, income level, family size, and lifestyle preferences. You should also include the size of the target market and the motivations of the customers and how you intend to reach those customers.
  • Market Test Results: This is where you include the results of your initial market research on your test market. All other data and information can be included in the Appendix as back up data to help support your argument.
  • Competitive Analysis: This is where you state information about your competition. What are the potential roadblocks that prevent you from entering the market? Along with the analysis of your competition, you will want to include a SWOT analysis of your business—more on a SWOT analysis below.

Market Analysis

Conducting a market analysis is easier than you might expect, but it will take some research. Most contractors don’t put effort into doing this, but it does give you a significant strategic advantage.

You’ll start by determining how many potential customers are in your area of operations; maybe it’s homeowners in Vernon BC. Using this example, there is a population of approximately 50,000, with the average home having 2.2 occupants, and 71% of the homes being occupied by owners – that means there are 16,136 owner-occupied homes and 6,591 landlord controlled homes in the Vernon BC area. Now, how much will owner-occupied homes spend on HVAC every year? The recommended home repair budget is 1% of a home’s value, and the average value of a home in Vernon is $450,000, meaning each home should budget $4500 per year on home repairs. Some simple research shows that the percentage of home repair spend on HVAC is approximately 15%, meaning every year, on average, homeowners are spending $675 on HVAC. So, now you have your market size – 16,136 x $675 = $10,891,800.

Next, you’ll determine if the market for HVAC in owner-occupied homes can support another HVAC contractor. There are 18 HVAC contractors in Vernon BC, which means that there is an average of $605,100 in business available for each one…all you need to do is get your fair share.

How are you going to get your fair share? You’ll need to determine if you need any licenses, insurance, do the customers in Vernon have particular buying patterns, what is the average age of homes, and what is the average income for the area? What you need to do is determine what you are going to sell, whom you are going to sell it too, and how you are going to get your name in front of your customers.

Here’s a checklist of some info you’ll need:

  1.  Population
  2.  Average occupants per home
  3.  Percent of owner-occupied homes
  4.  Average home value
  5.  Licenses needed
  6.  Insurance needed
  7.  Advertising channels (online, classifieds, local news channels, etc.)

SWOT Analysis

A SWOT Analysis is quite simple. It is merely the strengths, weaknesses, opportunities, and threats that face your business. Conducting a SWOT analysis is a diagnostic check of your business for all of the positive and negative things currently facing your business. So what does all that all mean?

The first two (Strengths and Weaknesses) are internal factors you have control over. Your strengths could be your unique product or service, or your existing customer base from your previous employment. Weaknesses might be a weak online presence or disorganized invoicing processes.

The second two (Opportunities and Threats) are external factors you have no control over. Opportunities could be new technology becoming available or the lifting of the recession caused by the global health crisis. Threats might be changing customer preferences or increased competition in your area.

Properly creating and utilizing a SWOT analysis in your business will help you understand all of those factors and allow you to put a contingency plan in place to turn those weaknesses and threats into positive factors.

Service or Product line

This part is pretty straightforward. Here you will describe all the products and or services your business will provide to its proposed customer base and how they benefit those customers.

Based on your market analysis, what area of expertise are you going to specialize in? New installations of high-efficiency HVAC systems in older homes may be your highest revenue-generating service, so that’s what you are going to state in this section. Also, include all of your auxiliary services. Are you also going to sell products and spare parts from certain manufacturers? In your first few years, you want to keep it real simple. Once you’re an established business, then you can review your service and product lines. When you are ready, you can add complementary services and sales, such as ductwork, insulation, plumbing, indoor air quality inspections, etc.

Are you highly specialized and certified? Then maybe your price point is not the cheapest in the market. Your competitive advantage then is going to be exceptional service and high-quality installations, so that’s what will feed into your marketing strategy.

Marketing Strategy

A marketing strategy is vital for all businesses as it clearly outlines how they will attract new customers, promote their products and services through the marketing of their competitive advantage or unique selling proposition. Your marketing strategy should build upon the market analysis that you conducted beforehand.

You can build a marketing strategy purely for your business plan or apply the knowledge you have gained through your marketing plan. For this document, we will go into further details as part of Step 3: Building a Marketing Plan. Then a snapshot of essential information can go into this section.

Tip: The next part of the business plan will outline your financial analysis and budget. Keep this in mind when building your marketing plan. You can have a killer marketing plan, but it’s worthless if you can’t afford it.

Example Marketing Ideas

1. Send a press release to local news channels

2. Post regularly in the classifieds

3. Get ratings and reviews on Google My Business

4. Networking events

5. Create a referral program

  • Give a $20 gift card to a locally owned coffee shop for every referral that ends up being a paying customer

6. Website (check out Phyxter)

  • Talk to us about a local listing and SEO strategy
  • Check out our Local Partner Program

7. Social Media

  • Pages for posting
  • Ads

8. Listing sites and apps (Download Phyxter)

9. Referral partnerships with other trades

  • Painters
  • Electricians
  • Plumbers
  • Roofers
  • Landscapers
  • House Cleaners
Check out the Free Phyxter Pro app. Connect with local suppliers, free quoting, invoicing, and payment processing, and instantly connect with new customers!

Learn More

Financial Plan

Your financial plan is the final significant piece of the puzzle. In this section, you will outline the data for financing your business. You will identify what you need now to launch, what you will need going forward to expand your operation, and an estimation of your company’s operating expenses.

Financial planning for starting a successful HVAC business is probably not a skillset of an HVAC tech, so seek help from an accountant or a financial planner for this section. You will definitely need help from a professional if you are seeking funding as part of your plan.

Your financial analysis section should be based on estimates from your research for new businesses or data from established companies. At a minimum, your plan should include the following.

  • Balance Sheet: A business statement that shows what the business owns, what the company owes, and the value of the owner’s investment in the business. This is important if you are seeking funding from a lender.
  • Cash Flow Analysis: This is an overview of your cash inflows and outflows. Your goal during both start-up and operation is to maintain adequate cash flow to sustain your business. Also, take into consideration seasonality given the nature of the industry.
  • Profit and Loss Analysis: This is your income statement that subtracts the costs of your business from what you earnt over a specific amount of time. This is typically a quarter or a whole year.
  • Break-even Analysis: A break-even analysis is used to show your lender (if you have one) the point when you will start making a profit. It is typically used for businesses selling products but is also useful for service type businesses. Even if you didn’t borrow money, you should know this anyway to gauge if you’re on track during the start-up period.

Part of the financial planning process will be determining start-up costs. Based on your proposed products and services, what will you need to start? Make sure you take into account all capital expenditures required (which are the upfront costs of purchasing) and monthly operating expenses (all ongoing charges, such as marketing, fuel, etc.).

Some capital expenditures examples might be:

  • A suitable vehicle with logo signage
  • HVAC tooling based on your specialty
  • Starting inventory
  • Personal Protective Equipment
  • All business and HVAC licensing and certifications
  • Initial marketing costs and materials

Some operating expense examples might be:

  • Fuel
  • Business and vehicle insurances
  • Maintaining HVAC certifications
  • Marketing
  • Replacement tooling
  • All business and HVAC licensing and certifications

Appendix

The appendix section is there to include all other supporting documentation. If you are not seeking funding, then this section is irrelevant. If you are, then it’s essential. Supporting documentation such as business licenses, permits, HVAC certifications, and other legal documents will all go here.

Step 3. Building a Marketing Plan

I don’t know how many Heating and Air Conditioning contractors I’ve talked to that say, “we just rely on word of mouth, and it keeps us busy.” If you’re one of those contractors, you’re missing out on the bigger picture – profit margins include a combination of many variables. One of the most critical variables is lead generation.

It’s simple supply and demand, the more leads you get, the more in demand you are, and the higher your margins can be. Don’t get me wrong; you need to supply an excellent service for a fair price, but arriving at that reasonable price is difficult when you’re offering deals and sales all of the time just to make sure you can keep yourself busy. The concept is simple, charge your fair price on every quote, and some people will say yes, and others will say no, but as long as you’re quoting enough to fill your time, then you’ll be more profitable.

So, here’s what you’ll need to do to get your phone ringing and your inbox full.

1. Budget for Marketing – don’t start your business until you’ve set enough money aside to get your business completely organized and enough to spend on advertising campaigns. Your ad campaigns will improve over time, if you pay attention to the numbers – spend $1,000 of Facebook ads and generate $1,000 in profit – you need to improve. You should always know how you got a customer, and it’s as simple as asking them, “how did you hear about us.”

2. Go digital: You’ll need a website, social media accounts, and an email marketing tool.

3. Referral Partnerships: this is one of my favourite ways to generate business. I mentioned some examples above, so start there, and you’ll see how far it’ll take you. When it comes to referrals, you need to make sure there’s a strategy – start by creating a group chat with all of your partners, because they will all be partners with each other as well.

  • Here’s an idea for getting started. Get a postcard designed with something clever on one side and the list of “Family-owned and locally run contractors” on the back.
  • Each partner will get 100 of these cards to hand out, whether it’s’s to their new customers, old customers, family members, friends, and especially neighbours.
  • Another option is to team up on a paid ”mailer” to send out the postcard to an entire community. Instead of your HVAC business paying the full cost of the mailer, you can split it between 5 to 10 companies, which means you’ll get a significantly better result for less.

4. Networking:  think Chamber of Commerce, BNI, or other networking groups. These groups will be similar to your “Referral Partners” but will have different areas of expertise. There will most likely be real estate brokers, lawyers, and other professionals trying to grow their brand.

5. Press Release: call or send an email to local news stations, podcasts, radios, and associations to let them know that you’re in business. Generally, this kind of thing works best if you offer their “listeners” or “members” a time-sensitive discount, …especially is it’s an association.

6. Thank you cards: every customer you ever get should get a thank you card after you do business with them. It’s a small sign of appreciation that goes a long way and can definitely lead to word of mouth referrals.

7. Referral program: refer a friend to Vernon Air Conditioning and get a $20 Gift Card when the hire us to perform “______________________”. Offer this to every customer as well.

8. Reputation Management: you must place an incredible amount of focus on your online reputation. We know it can be uncomfortable asking someone for a review, but this is your business, and if you want to succeed, you have to do it. No matter how good you are, it’s statistically inevitable that you’re going to get a bad review from time to time, so you need to make sure that you’re regularly getting good ones to bury the bad ones. Phyxter has access to low-cost software to automate getting reviews, and you can check that out here.

These were just some ideas for things to include in your strategy, but whatever you choose to do, you need to make sure that you understand the return on your ad spend. If you spend $1000 buying postcards and getting them mailed out, you’ll want to make sure you know how much business you got from it. To do this effectively, you should set up a tracking process and follow that process every day. Make sure to ask every customer where they heard about you and write it down in your tracking sheet (if you don’t have a tracking sheet, just contact our support email, and we’ll send you a great template).

Sales Process

 

The graphic below is pretty self-explanatory, but I will still review it just to clarify a few things.

The sales process for an HVAC contractor

Prospecting: who do you want to target, is it an area of the city, a particular Facebook group, or maybe a local association – figure out who they are and how to get to them

Preparation: What are you going to say to them, and why will it resonate with them. Will you be able to get their attention with your message?

Approach: How are you going to get your message in front of them; mailers, networking, social media, search engine ads?

Presentation: they will want more information after responding to your outreach; what will you present them with? What kind of proposal does your target customer want to see? You’ll need to understand what is important to your specific target customer – do they care most about quality, price, or trust?

Handling Objections: you’ll hear the same thing over and over again…”I’m not sure I can afford that model”, or maybe “Can you just change the compressor?”. You need to be able to respond quickly and with thoroughly thought out answers, so have the solutions ready to the most commonly used objections. Maybe you’ll be able to offer financing or have a list of references available if they have a concern about your company being young.

Closing and Follow-up: How are you going to close…what do you have in your back pocket that will get your customer to commit? Whatever it is, at the end of the day, you’ll need to ask them for the sale.

You might say something like, “If you can commit to the sale today, we’ll be able to get the unit ordered and installed by this date, “Or another option is to offer a time-sensitive deal “If you can commit today, we’ll be able to get you the air conditioner manufacturers discount of 5% off”. Whatever it is, you need to figure out what works best for you to close the sale and continuously get better at it.

Finally, you’ll want to stay in constant communication with your new customer, keep them informed throughout the project, and follow-up with them a couple of weeks after the project ended to see if everything is still all right.

Pricing Strategies

A reliable pricing strategy is going to take some research, some testing, and some time to get it right. At the end of the day, it comes down to data and the ability to always understand your financials.

Some information you’re going to want to get and track:

1. Competitor labour rates

2. Net margin expectations (usually around 8%)

3. Fixed costs (truck, tools, rent, phones, fuel, etc.)

4. Customer acquisition cost (ad cost divided by new customers)

5. Chosen strategy

         a. SWAG (guessing) — it seems that many contractors use this method…unfortunately, that’s why there’s such a high failure rate.

         b. Divisor method:

                    i. You Estimated the Cost of the Sale for this new air conditioning installation job is $3,906

                    ii. Your Forecasted Overhead = 28%

                    iii. Your Desired Net Profit = 8%

                             1. Add Percentages together. 28% + 8% = 36%

                            2. Subtract the 36% from 1.0 (1 – .36 = 0.64)

                            3. The Divisor for this new air conditioning job is 0.64

                            4. Divide Cost of the Sale $3,906 by the Divisor 0.64 ($3,906/.64)

                            5. This formula equates to the Right Price of $6,103

                iv. You recovered 100% of the cost of the sale, 100% of your overhead, and 100% of your desired net profit.

                v. This method requires that you know precisely what your overhead and desired net profits should be. If you don’t know, then this method is risky and could be dangerous.

        c. Markup/ Multiplier — This method is considered just as dangerous as the divisor method; if any of your numbers are off, then you could be in trouble, and the job could lose you money. In this process, you take your total cost and multiple it by a set number to get a desired gross margin. What you need to be wary of though is that margin volume for a small business can be just as important as margin percentage…you need to make as many raw dollars as possible so that you can pay your bills.

TIP: Remember, the margin is not the same as markup. The difference being is that margin is sales minus the costs of goods or services sold. Markup is the amount by which the cost is increased to derive a selling price. Example. A 100% markup will only equate to a 50% margin. You can go wrong here in a big way, so be careful and understand those terms.

         d. Gross profit per man-day — You need to determine how many dollars of profit you need to make every day and then ensure that your pricing reflects your goals. If you need to earn $500 per day of profit and you can do five service calls per day, then you need to make $100 of gross profit per call. If you’re on a larger multiple day project, then you just need to understand your expenses per day and price the job accordingly. This strategy can work out very nicely, but it does require much more discipline when it comes to knowing your daily costs.

        e. Dual overhead — Assigning overhead to material and labour creates two factors. We then use those to apply to each of the jobs to break even before adding the desired profit. This method requires financial discipline, which is why it’s not used anymore, but it’s usually the most precise method of knowing the real effects of contracting work. One of the issues you could have with this strategy is that you could have a lower price on projects that are heavy on material and low on labour, which means that you’ll have to complete more jobs to cover your overhead.

        f. Flat-rate service — This is where you assign a labour time with a retail labour rate, add in parts cost with markup, and then create a known price for any given repair, inclusive of costs. Done well, when you now your overheads, it’s a very effective service pricing strategy. There are many software tools available to help with flat-rate pricing, and because they tend to consider regional pricing, they can be very accurate.

At the end of the day, you will need to figure out what works for you, and if you didn’t notice a trend, knowing your financials is of the utmost importance. Get good with your numbers, and success will follow.

Step 4. HVAC Licensing, Business and Insurance Requirements

Every region across the U.S. and Canada is going to be different, whether it’s license-related or insurance. The easiest thing to do is to contact your local regulatory office and ask them for an outline of what you’ll need. To get started, here are a couple of resources that can help.

HVAC Related Info:

Canada: https://www.hrai.ca/

U.S.: https://www.acca.org/

US: https://www.nascla.org/page/LicensingInfo

Business Related Info:

Canada: https://www.canada.ca/en/services/business/start.html

US: https://www.sba.gov/business-guide/launch-your-business/register-your-business

Step 5. Launch your successful HVAC Business

Now that you have all of your strategies in place, you’ll need to kick it off with a bang. Here’s where your family and friends can help too…you’re going to want to throw a party. Get people involved, offer your referral program, and make a big deal out of your launch. Below is a list of how to get your business kick-started the right way.

1. Pre-launch – all your websites, local listings, and social media pages need to be completed and working on SEO 4 months before launch (Phyxter Local Partner pages are a great way to speed up this timeline).

2. Family and Friends party – ask for referrals, ask everyone to check into your Facebook page, and ask everyone to give you a review on Google My Business (this can be a personal review – John just started his HVAC business in Vernon, and although I haven’t had the chance to hire him yet, I can say without a doubt that he is really great at what he does, and is always fair…5-stars all day long!”

3. Press release – two months before launch, send your executive summary to every local news channel, and let them know when you’ll be opening up for business. Send this to every association and community organization possible.

4. Email campaign about your launch – email EVERYONE YOU KNOW!

5. Mailers/Flyers – whether you pay for mailers or you just pound the pavement, get 1,000 flyers put into mailboxes. Mailers have an average of a 2% success rate…so 1,000 flyers should equal 20 customers.

6. Facebook ads and/or Google ads – this is a tough one, and we recommend you either take a lot of online training courses or that you talk to a professional advertiser. We can recommend some great options, so just reach out to us and ask for an introduction.

Step 6. Managing ongoing Operations

Now that you have started, you need to maintain the momentum. Don’t overextend yourself too quickly. Many businesses start on the right foot and then add extra resources when times are good. Next minute the work dries up, and you have a bunch of guys and vans sitting around that you have to pay for. Stay a one-person show for about a year to see how your business fares through all four seasons until you decide to scale up.

Managing Cash.

Have a cash reserve for when times are lean. Maybe you didn’t lend money from a bank or friends and family to start your business, so you’re probably strapped for cash right out of the gate. It could be three to six months before you start earning enough to live comfortably. Remember when we said inadequate cash reserves would kill a business quickly? It’s true, make sure you have a reserve stashed away that can support yourself and your family if times get tough.

Whatever software you use to manage your cash, you should be overseeing your cash flow regularly. One easy way to ensure a smooth flow of cash is to stay on top of invoicing. Design your invoices, so they are easy to read or just use Phyxter Pro to virtually connect with your customer base. Using a platform like Phyxter will ensure your invoice doesn’t get lost in the mail. Also, if you are buying from a particular vendor all the time, set up payment terms with them. Most wholesalers have these agreements in place for B2B sales so why not leverage that for yourself. You don’t want to be in a position where the money going out is COD, and your money coming in takes two weeks.

Keep it Lean

Right from the start, you need to be a lean, mean fighting machine. Check out our previous article on keeping your business lean. Watch your expenses closely, understand what business activities are adding value and which ones are not, and standardize processes where possible. Once you know where waste is hiding, you can get rid of it. All your focus should be on the revenue-generating activities.

Also, be flexible enough to change your plan if the market changes. You may have expertise in a particular area, but if you cant sell that skillset, then switch gears to what does. Don’t be too stubborn to tell yourself part of your original plan isn’t working. The market doesn’t care and won’t support you if your too stubborn to change.

Final Word

Starting a successful HVAC business can be intimidating but will be very rewarding in the end. You can pat yourself on the back for achieving what many could not do before you. Even on the off chance, you fail, remember you would have learned a lot on the journey. We hope we have covered everything you need to know about starting your own successful HVAC business. If you would like to know more then feel free to contact us at Phyxter.

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