Written on: May 5, 2020 by Patrick Lange
It’s been widely accepted that the biggest problem facing the HVAC industry is the shortage of skilled labor. According to the Bureau of Labor Statistics (BLS), this reality is not forecasted to change anytime soon. It estimates that in the next three years, the industry will need 50% more skilled technicians than we currently have. That’s a huge deficit, and while Federal and State governments are working to bolster worker training programs, it doesn’t help HVAC business owners now.
This might be great news for current HVAC technicians, (as higher demand for their skills means higher wages) but it’s not-so-great news for the HVAC business owner.
Out of necessity, some owners are changing their strategy to remain competitive—and they’re having good results.
One such business is Fox Family Heating & Air. Owner Greg Fox credits the HVAC industry for rescuing him from a life tending bar. Starting first as an HVAC helper, he quickly advanced and was thriving as a project foreman. Eventually, he amassed enough skills and courage in 2015 to go out on his own.
He has brought that same “grow your own talent” strategy to his own business. He admits when starting, he needed two experienced techs. After that, he hired primarily for character and potential—with no industry experience.
“I look for fit, humble and teachable folks. Find good people and teach them the business” he advised.
While that might be easier said than done, Fox followed through using this advancement model: there is a probationary period for the first 90 days, where new techs are paid $15–$20 per hour (California market). After they have demonstrated that they have an interest in the industry and are a good fit, he gives them a slight bump in pay and responsibility. They ride with a more experienced tech and mostly observe.
“I like this strategy because it exposes them to multiple brands of equipment and helps build their confidence,” Fox explained.
After approximately three months, the company performs an evaluation and determines if the new technician is competent enough to do maintenance calls. If he/she reach this milestone, he/she will get another wage increase. In nine months, the technician should be ready for most service calls and will earn another raise.
“I like helping someone better themselves by introducing them to our industry,” shared Fox.
“It gives me a sense of satisfaction, but it’s also out of necessity. I wouldn’t be able to afford to hire industry veterans every time. It’s a win-win for everybody.”
The author agrees.“One of the hardest things to do in this business is to hire effectively,” according to business broker Patrick Lange.
“However, if you can crack the code and move beyond being a single guy in a truck, you will increase the value of your business exponentially. To do so means getting comfortable with taking some risk. Be patient and mentor.”
According to the BLS, the average annual salary of HVAC technicians is $48,320. Their salary can also be as low as $28,440 if still a newbie with no experience, or it could be more than $73,350 if they have a lot of experience under their belt.
Furthering the case for hiring “green”
It builds loyalty
Showing a career path to a young person gives them hope and fans the flame of ambition. Good people will feel grateful and appreciative. In Fox’s company, he hired a Starbucks manager eager to trade the sound of screaming blenders for the drone of residential air handlers.
“He loves the blue-collar lifestyle now and is appreciative of the opportunity,” said Fox.
It’s less expensive in the long run
Depending on your market forces, hiring an experienced tech can cost $70,000 or more per year. There is little room to give them salary increases or performance bonuses without crushing profit margins.
Every technician gets frustrated when they feel their opportunity—and income—is capped, whereas when you hire a greener person, you have a progression plan that can be stretched out for years. Employee retention is cheaper than turnover.
It gives you a competitive advantage
For those big jobs that may be in a competitive bid situation, having up to 25% or 50% fewer labor costs helps you be flexible enough to win the business and still maintain a healthy profit.
Your company will be worth more
Potential buyers take a deep look at a company’s financial performance and stability of employees. Having labor costs under control while maintaining profit margin means you have a highly valuable business.
Patrick Lange is an experienced HVAC-specific business broker with Business Modification Group, based in Horseshoe Beach, FL. Specializing in companies with $1–$10 million in revenue, he has a background in financial planning and has previously owned an HVAC business. Lange is currently the VP of the Business Brokers of Florida
(North Florida District).