March 2014

One day, Five-Step Business plan for HVAC Contractors


You don’t have to write a book or shut down the office for a week to create an effective strategic plan. In fact, you can create a strategic plan in just one day. It doesn’t even have to be perfect or elaborate. Just get a few of your key people in a quiet place and get started.

We have worked with both one-truck companies and corporate giants that have benefited greatly from a plan with just these five core elements:

  1. Mission
  2. Vision
  3. Assessing the Business Situation
  4. Developing Objectives, Goals and Strategies
  5. Completing the Written Action Plan

Step One
Articulating the Mission
The mission statement summarizes the “what”, “how”, and “why” the HVAC business organization works. A mission statement typically describes your business organization in terms of the following:
Purpose – why your business organization exists, and what it seeks to accomplish.
Business – the main method through which your staff tries to fulfill this purpose.
Values – the core values that guide your staff as they pursue the organization’s purpose.

For example, the mission statement of one of our clients is as follows:

Our Commitment: We are committed to providing the highest quality and performance in all aspects of our service and replacement business.

  • Core Services: Design, fabrication, installation, and service of heating, air conditioning, indoor air quality, and ventilation systems, as well as, electrical, temperature, and humidity controls.
  • Core Strengths: Experienced leadership, excellence, trustworthiness, loyalty, and pride in our reputation for quality workmanship and teamwork.
  • Success for Employees: Provide fair compensation, security, trust, recognition, and a good working atmosphere.
  • Success for Customers: Provide quality, competitive pricing, trust, partnership, and our ability to meet their unique requirements.

Step Two
Articulating the Vision
To write a vision statement, ask what will your business look like 5 to 10 years from now?
For example, the vision statement of one of our clients is as follows:
“We shall become the area’s premier heating and air conditioning service provider, offering the lowest cost possible, superior installations, maintenance and repair services to homeowners everywhere. Being the premier service provider does not mean being the biggest, but it does mean being the best in terms of consumer value, customer service, employee talent, and consistent profitable growth.”

Step Three
Assessing the Business Situation
Profile your customers in relation to your business’ Strengths,Weaknesses, Opportunities and Threats (SWOT) by answering these questions:

  • Customer profile: What are our customers’ needs, wants, and buying characteristics?
  • Strengths: What do we do best?
  • Weaknesses: What do we not do best?
  • Opportunities: What should we improve to enhance
  • value to our customers? What should we improve to grow our customer base?
  • Threats: What is happening externally that will affect our company? What are the strengths and weaknesses of our competitors?

Here is an example consumer buyer profile from our findings as to the basis that customers use when choosing between competing HVAC service providers:

  • On-time delivery – Means arriving at the customer’s home when the customer was told. If he/she arrives late, without the customer being informed, it will be hard to overcome the negative first impression.
  • Professional Call Handling Process – Means providing a high quality total customer care call experience that is seamlessly made up of: the customer service representative answering the phone promptly and purposefully; the technician or sales rep using a professional onsite call handling process; opportunity survey forms and upfront pricing.
  • Studies show that 9 out of 10 homes have multiple installation defects. The use of proper customer and system survey forms help your technicians and sales rep to show the customer their unique options, as well as, to set the stage for future option recommendations in regards to:
  • Home Use versus special heating & air conditioning room conditions due to a home office, an exercise room, parties or if there is unnecessary heating or cooling of closed off rooms or during unoccupied periods.
  • Comfort Requirements versus stale air problems, specific rooms that are too hot or too cold or too humid or too dry, and system noise levels.
  • Health/Safety Requirements versus indoor air quality, respiratory or humidity control, or child safety concerns in or around the system.
  • Property Requirements versus home renovations or add-ons to the home or the need to modify or add to the existing system to match the home use requirements.
  • Financial Requirements versus the importance of saving money on energy and operating cost, or the need to work with a contractor that protects them from risk and liability, or do they wish to explore financing options.
  • Professional Image by making a good first impression with the appearance of your website, advertising, clean vehicles, clean uniforms, sales rep, and the clarity of your invoices, service agreements, customer call handouts, survey forms and proposals.
  • Eliminate Liability and Technical Risks by offering credible upfront pricing for service repairs and installations, guarantees, warranties and assurances, observed work delivery standards, liability coverage, employee background checks, drug testing and safety training.
  • Quality Assurance by adhering to industry and manufacturer repair, installation and safety guidelines, use of start-up, test, and verification procedures to assure you delivered what the customer was told you would deliver.

Here is an example of SWOT of a typical contractor:

  • Strengths: We show up on time and back up all of our work without question.
  • Weaknesses: We have poor lead generation. We do not use a professional call handling process for inbound calls or use onsite survey forms to enable getting eyes-on 100% of the systems we service or replace, which results in missied opportunities to better help our customers. We do not use flat rate pricing for repair service or installations resulting in underpricing our work and low sales close rates. We do not use written work delivery standards for repairs and installations resulting in work delivery errors, labor overruns, low labor productivity, too many call-backs and customer complaints. We do not use proper staff incentives to effect appropriate customer care and profit focus behavior. We do not forecast labor and expenses resulting in poor cash flow. We lack proper field support and need to hire a quality lead technician.
  • Opportunities: We could grow our customer base and revenues and increase value to our customers by enhancing our company’s website and professionalizing our service and sales call handling processes and onsite survey forms. We could use flat rate pricing to improve pricing credibility, profitability, labor productivity, and close rates. We could reduce work delivery errors and improve customer satisfaction by using written work delivery standards on service repairs and installations. We could increase call opportunity conversion rates by implementing performance based incentives. We could provide better field support of our younger techs by hiring a lead technician.
  • Threats: Some of our competitors are using selling processes and some are using upfront repair pricing, but most in our area are not consistently providing proper customer care or pricing methods. We view our competitor threats as moderate to weak if we implement professionalism within our business.

Step Four
Developing Objectives, Goals and Strategies
You begin this section of the plan by establishing your five-year long-term goals and then by identifying your one-year objectives and goals that will help to move you towards your five-year goals which are typically based on beating your Key Performance Indicators (KPI’s).
Here is an example of Objectives, Goals and Strategies of a typical contractor:

  • The owner will enroll in the Ready-Built HVAC Contractor to build and host a new website, as well as to train our staff on proven processes and forms, and also to support us in the implementation of professional processes and forms in both service and sales.
  • Achieve a five-year revenue goal of $5 million.
  • Achieve a 2014 installation revenue goal of $750,000.
  • Achieve a 2014 service repair revenue goal of 250,000.
  • Achieve a 2014 service agreement goal of $100,000.
  • Achieve 20 new leads per day received from our new enhanced website.
  • Convert 8 out of 10 non-service agreement cus tomers on a repair call to a service agreement customer by implementing 15% discount for accepting a monthly service agreement option.
  • Convert 2 out of 10 service calls to a quoted job by technician using survey form, walking 100% of all systems, and by offering solution options.
  • Increase the average service repair billable hours from 1.2 hours to 2.25 hours by implementing re-commissioning and safety checks on all repairs.
  • Reduce call-backs to 1 call out of 100 by properly commissioning systems on all repairs and installations.
  • Increase average installation revenues by 65% by offering high efficiency systems while showing customers better affordability using finance and energy savings tables.

Step Five
Completing the Written Action Plan
The purpose of the action plan is to outline the tactics or specific set of actions over the next 90 days that lead to achieving your goals and objectives. You must assign responsibilities and deadlines to each goal to ensure that the plan gets implemented. This 90-day action plan will become your Strategic Plan. Every 90 days, review the completion of these actions and identify yet another 90-day set of actions to drive towards goal achievement.

Here is an example of a 90-day Strategic Plan from the above example contractor:

  • Michael to enroll company in the Ready-Built HVAC Contractor Program by 1/1/14.
  • Michael to submit 1-page set-up form for the new website with blogging and social media to Ready-Built Contractor Program by 1/4/14.
  • Michael to register himself, Beth, CSR and technicians in the 6 professional service call handling process online training sessions by 1/4/14.
  • Michael to submit the two 1-page set-up forms for the flat rate service repair and installation price book by 1/4/14.
  • Beth to submit orders to our printing vendor for the program’s recommended invoices, service agreements, and proposal agreements by 1/4/14.
  • Michael to obtain and implement with Beth the inbound call handling script, and with the technicians the call handling forms, handouts, flat rate price books and invoices, and service agreements by 1/25/14.
  • Michael will register himself in the Performance Based Pay online training sessions to obtain and implement the technician performance based compensation plan by 2/10/14.
  • Michael will register himself in the four Residential Service Department Training online sessions to obtain and implement the written service call handling standards by 3/22/14.
  • Beth will register herself in the four Human Resource Management Department Training online sessions to obtain and implement the employee hand book and performance based job descriptions by 3/25/14.

Performance Measuring, Monitoring,
and Adjusting
All HVAC business owners want their service and sales force to be more productive. What should you monitor and measure? Daily amount of calls ran, daily actual hours billed by technician, average daily hours billed per service ticket, daily number of service agreements sold by technician, daily number of replacement leads, daily number of call-backs by technician, and installation actual hours billed to job versus budgeted.

At times you may need to adjust the budget’s projected resource allocations to stay on track when outside forces, personnel or budget issues affect financial performance. Monthly financial and daily labor monitoring allows you to track progress, spot potential problems, and adjust business activities without compromising your objectives and goals.

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