Monday, September 28, 2009

Three Ideas

Lynn and I just returned home from Nashville, TN and the annual Comfortech seminars and product show. Comfortech is an excellent opportunity for contractors in the HVAC field to learn and see what’s happening in the industry. There were many new and innovative products and services at the show this year. Some of these included an attic insulation program put together by Owens-Corning, a heat pump water heater from Rheem/Ruud, several customer contact companies, and a new line of heavy duty tool bags, to name a few. The seminars varied from okay to excellent with three topics that stood out in my mind.
The first topic that really hit me was social networking via the internet on sites such as Facebook, YouTube, and LinkedIn. The world of marketing may be quickly changing with customers looking for products and services from friends and acquaintances though these types of sites. The advantage to the contractor is the cost is almost completely in time, not dollars. Most of the sites are free or just a few dollars to have the access you will need. To make the most of this new network, a contractor will need to spend several hours a week to keep their “walls” and other information up to date. Many of us over 40 (I’m well over 40), will have a more difficult time setting up and keeping up with our sites. We are not familiar with this new medium of communication. If you have children in their teens or twenties, they are probably active already in this arena. Will our “typical” customer use this newer form of communication? Well, one of the fastest growing segments of social internet networking are the over 40 crowd. I would suggest you take a strong look at this change in customer habits.
The second topic which received a lot of attention was ongoing connections to customers by establishing a broader base of maintenance agreements. In the Detroit area, where our business was located, maintenance agreements were not a strong service offered by HVAC or plumbing contractors. In the last decade, that has changed. The push by utilities to offer breakdown insurance and maintenance on appliances, furnaces, air conditioners, and hot water heaters has caused the sleepy contractor community to wake up. With the heating season upon us, it is time for every contractor to set a goal to increase their number of agreements, get renewals, and provide the service the customer is expecting. It is time to closely look at renewal rate, monthly billing, 100% follow through on providing the service checks, and follow up customer satisfaction systems.
The third topic that really hit a nerve for me was branding. I’m not totally sold on the idea of having an in house line of equipment, but I am totally sold on the idea that each contractor must have a unique brand that differentiates their business from the others in the market. There are hundreds of white vans with some lettering on the side traveling through neighborhoods daily. Most do nothing to add to a potential customer’s knowledge, or awareness of that contractor’s business. Most contractors have uniforms which look like every other company’s uniforms, most companies use booties, carpets, and have the company name on the uniform. Many companies have customer service people who are reasonably pleasant and helpful. So what are you doing to leave a unique impression on each customer you touch or instill top of mind awareness in a potential customer? Every owner and manager needs to spend more time in developing these strategies and customer focus for their company and less time with vendor salesmen, the minor stuff others can handle or solitaire on the computer.
What to begin your change, contact me at

Monday, August 24, 2009

Clean it out

Over the past rainy weekend, Lynn and I started cleaning out our basement storage area. My goodness, what a collection of stuff we haven't used in years. There was an aquarium which I cannot remember the last time we had tropical fish. There was a box of golf balls that have to be at least 5 to 10 years old. I'm sure they have lost their elasticity. Perhaps I'll pass them on to opponents in our weekly golf outing. We found a lot more stuff like this that needs another home other than the Bergstrom's.

Just about every shop I have been in has a corner, a shelf, an area with stuff that has not been used in 5 or more years. Hubbed cast iron fittings, DWV copper fittings, galvanized reducing tees, street els, and much more hiding in the backroom. HVAC contractors with old circuit boards that have been replaced with updated versions, odd motors, OEM parts that are not used any longer. Electricians with outdated switches, panels and light fixtures that are not used any longer. In all of these shops, I see parts not used on a job, but not returned to the suppliers even if they were not special ordered. It is like throwing money away.

Prompt return of unused parts that cannot be turned over in less than 60 days would reduce payables and help cash flow without a substantial change in the business. It would just require a few minutes a week by someone in your company to process these parts and send them back. Even with a stiff restocking fee it is far better to return these parts than to keep them in stock.

Those parts that have sat in your inventory for years and not used need to be sold off, scraped, or just thrown out. You may find space in your warehouse that could be used for parking a truck inside, or better yet perhaps you could rent some of that gained space and get income. A good rule of thumb is you should not stock parts that you can't turnover in 60 days or less. Some suppliers will give you a discount for a large order but if it is more than 60 days of stock I would recommend you not buy. Work with that supplier to provide the stock you need when you need it and set discounts on the inventory you buy from them on a long term basis. Every item in your warehouse should have a min-max quantity set based on 60 days or less stock.

There is a trend in the industry of suppliers providing next day restocking for trucks and warehouses reducing the 60 day inventory down to a week inventory quantity. Having cash available and not tied up in "stuff" will make you money and allow you to take advantage of opportunities when they come available. I believe many contractors could work out of a smaller warehouse area thus reducing rent, utilities, taxes, and maintenance.

Tuesday, August 18, 2009

Some Yes....Some No

As I have had contact with various HVAC contractors in the last two weeks, I have have two completely different reations to the business climate in the metro Detroit area. Some are very busy selling replacement air conditioning units and furnaces in the middle of August. They are selling high efficiency equipment and are not selling it at cost. They are selling it for a profit! The suppliers are telling them they are the only ones selling high efficiency equipment. They are getting the maximum support the supplier can give them to help them to continue to sell. Others are telling me that there is no business out there and sure enough for them there is no business out there. They are telling me the prices are too low, no one is buying, things are so tough! They owe their suppliers and other vendors because they have zero cash flow. So I asked myself what the difference is between those selling, saying yes, and those not selling, saying no. Looking onto the reasons I find two main points that differentiate these contractors. Those who are selling have said, "There is business out there and we are going to find it." They are marketing and putting the energy into their businesses. They are not waiting for the phones to ring, they are using the Internet to market, they are selling maintenance agreements, they are training their techs to look for add on sales and opportunities for replacements. The others are waiting for the phone to ring, they have cut back on marketing, they are not selling maintenance agreements, they are not using the Internet effectively, they are looking back on how it used to be. Change is hard but tough times require that we evaluate our businesses and make the big step of change.

Wednesday, April 15, 2009

Social Networking - Do I have Time

Maybe I'm different, but the day runs out before I have time for all the "stuff" on the internet. I have a Facebbok page and a LinekedIn page, a website, several email accounts and several chat sites I follow. With having a life outside of my laptop, I just cannot keep up with all these. We were support to have more time in the new century. I remember visiting Disney World several years ago and going to Futureland. There was a display there that showed all the time savings we would have as we moved to this new century. I just don't see it. I spend as much time on our "part-time" business as I did on our full time business a decade ago.

As I see articles for the future of the internet, the way to improve your standing for your website is to be involved in social networking. I don't think this is going to be a time saver! Marketing for your company continues to evolve as the internet matures and it will be necessary to change with it, no matter how hard this may be.

Tuesday, April 7, 2009

Starting a Blog

Why in the world would I add additional work to my already busy schedule to have a Blog on my website? Well, the answer is that's were the action is today. What do I mean? the action is where people are going to learn about you (or me) and our products. They want up to date information, not last month's or last year's as many website demonstrate. The Blog allows you to keep the customer coming back to your site if you become the expert in your field in their eyes.

I would suggest putting a reminder in your Outlook or similar calender so you add to the Blog at least weekly. More as I become familiar with the medium.