September 1st marked my 46th year in the PHVAC trades and my 39th year as the owner of a mechanical contracting firm. Never miss a discount, my father the accountant always said, and so long as I’ve been handling the financial end I have never missed that free money. Looking back over the decades, I’ve lived by my own set of rules for carving out success. Here are a few I’d like to share with you.
#1: Set personal goals and then don’t let anyone or anything stand in your way. Focus and persistence along with mentors pay off in the long run. It’s a marathon, not a short dash (although sometimes with sprints whenever you see an opportunity to get ahead of the curve). I was blessed to have my father, a certified public accountant, as one of my primary mentors. You need a great set of books in which to track your expenses, income, and (Yeah!) profits. Making the transition from wrench-turner to business manager is not easy and I could have been the poster-child for those who would rather clean a grease trap than be keeping the books! My wife was a huge help and in those early days, you’d find us in the home-office making journal entries (no computers were available) by hand, doing the billing, and come the 10th of each month getting checks out the door to get those discounts.
#2: Learn to be a diplomat. Easy to say: hard to do. I can still remember the first time a customer tried to be a deadbeat. I was livid, to put it mildly. Off to the magistrate I went to file charges and when the case came before his bench, we (the deadbeat and me) entered the courtroom, but we never even had a chance to sit down! The judge asked deadbeat who ordered the work – “I did your honor”. He demanded to know why the bill had not been paid and deadbeat launched into excuses, but he wasn’t having any of that. Was there anything wrong with the work? “No, your honor” BAM went his gavel and pronounced judgment: you have 30-days to pay this man. In those early years my Irish temper often got the better of me when deadbeats tried to cheat me out of that hard-earned money. Today, temper in check, it’s better to listen carefully and without judgment while customers unload their anger and then once they’ve exhausted their reasons why “you ain’t getting paid”, negotiate a settlement. In 99% of the cases, they will be reasonable and when they’re not, there’s always the ability to take legal action.
#3: You live or die by your reputation. Make sure you say what you mean and mean what you say so that your word is your bond. Show up on time. Own up to mistakes and, unless you are dead, you’ll make plenty of them. Sometimes they aren’t even your mistakes but become your responsibility. Every plumber I know has, at one time, suffered the embarrassment of reversing hot/cold to a faucet. Ever installed the wrong fixture or color or faucet in the wrong bathroom? Here’s one for you: in a new home, we installed the laundry room plumbing as shown on the blueprints. The Mrs. Insisted we got it wrong because she had seen the same exact home in another development and had pictures of that laundry room. To prove her point, she held up the blueprint to a window (reversed) with the sunlight clearly showing the arrangement she insisted was right. Later on in the 5-bath home, the poor builder had to reinstall all the door hardware upside-down because that’s how it was installed on the other home. Or the time I undersized a rooftop unit for a bar. Ouch. Sometimes you eat the bear and sometimes he eats you.
#4: Social media and trolls. Keeping track of reviews of your business is essential in today’s environment. Never let a negative review go unanswered. Be the diplomat (see #2) and never ever publically denigrate the people who are posting the reviews. Folks reading the review and your response can recognize which one is being a jerk.
If you establish trust first, your customers will not be as focused on price or product brand and more often than not, you don’t need to be the low bid.
Like it or not, email and texting have essentially replaced faxes and bypass the tedium of making a phone call! Customers who text emergency calls amaze me. As a result, our constantly connected 24/7/365 lives can be stressful. Twitter, Facebook, Instagram and other social media sites can be a great forum for promoting your business but can also prove to be addictive and interfere with you performing as the CEO of your own business. Same can be said for employees who become distracted from their duties.
#5: Plan to be profitable. If you know your costs (see #1), it can be easy to build in profit. You want to live the good life, right? Profit is not a dirty word and you work too hard to leave what I call walk-away-money lying on the table. But I have to compete, you say. Sure as the sun rises and sets, you’ll compete with other firms, products, and other’s ideas. Competition is unavoidable and that’s why you must sell yourself first. If you establish trust first, your customers will not be as focused on price or product brand and more often than not, you don’t need to be the low bid.
#6: Employees are your greatest asset. When other firms’ employees apply for a job, they typically are quitting because of how they were treated. Bringing on employees is an awesome responsibility because you are expected to provide fulltime employment and pay a living wage so that they too can live the good life. You’re now responsible for not just the employee’s need, but also the welfare of their family. Collect knowledgeable employees. You can’t ever know it all and if you have smart people on your staff, who might just be more knowledgeable than you are in specific areas, that can help your company grow.
#7: Invest in your business. Bankroll your cash-in-bank and build it to a point where you can self-finance those larger projects without having to use your line of credit or borrow money. Commercial progress payments are notorious for 90- to 180-days delay before the check arrives. Supply house bills are due on the 10th of each month. Employees must be paid on time. You will need new tools and money to replace tools/trucks/inventory. Recession-proof your business: after 9-11, the economy fell flat and the phones quit ringing. We had cash-in-bank to carry the business for 6-months even if no work came in.
#8: What’s in the pipeline? Got a few aces up your sleeve? Collecting knowledge will give you an edge on your competition. Employee training and learning about new and innovative products will provide you with a sharper edge to keep you ahead of the pack. Manufacturer training is often free or at minimal cost. Consider paying your employees while they attend training. Get thee to conventions, like AHR (AHRexpo.com) where you will see new and innovative products you can assimilate into your arsenal of profit-generating aces. Make friends with the folks behind the products you sell. Those friends have been there for me whenever I needed an extra measure of help. In return they’ve built customer loyalty.
#9: Turn on a dime. One of the greatest advantages of being your own boss is being able to redirect things in real time. Stretching your horizon takes courage and grant yourself permission to make mistakes. The school of hard knocks is easily the best teacher. Learn new methods to help protect your assets – like Manual-J if you’re not currently doing your own heat loss/gain calculations. Join trade associations to learn and give back to help others be profitable.
#10: Exit strategy. This starts the first day you strike off on your own to pursue the American Dream. You want to retire and live comfortably the rest of your life, so you need to plan ahead for the day when it’s time to sell your business. The more profitable your business, the bigger the reward. That’s the long-term marathon goal.
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