HVACR Business January 20202 by HVACR Business

Set Goals, Achieve Success Pete Grasso 5

Business Valuations: Grounded in Reality Brandon Jacob 10

Engage Your Team, Wow Your Customers Brigham Dickinson 14

Grow and Build Wealth Ruth King 20

Eliminate Estate and Gift Taxes Keven Prather 21

Online Reviews Aren’t Enough Tess Srebro 23

HVACRBUSINESS.COM JANUARY 2020 / VOL.15 / NO.1

BLOW AWAY YOUR BREAKEVEN Three keys to leverage your financials to grow your business faster and healthier.

ALSO INSIDE » Product Focus ................................................................. 24 20 Questions with Benson Green, President of Benson’s Heating and Air Conditioning ...... 26

Page 6

BUILDING A HIGHER STANDARD. ONE DEALER AT A TIME.

BETH ROVAZZINI Owner

American Standard is all about doing what’s right for our customers. But we can’t do it alone. That’s why we created the Building a Higher Standard distinguished dealer award, to honor those dealers who have the same commitment to their employees, customers, and communities. Congratulations to B&W Plumbing, Heating and Cooling of Speedway, Indiana, for being one of four outstanding 2019 winners. See how you can become a dealer at amsd.us

SEE THE STORY OF CLASSIC B&W AT

AMSD.US/BPLUSW

CONTENTS

JANUARY 2020 / VOL.15 / NO.1

F E AT U R E S

Blow Away Your Breakeven

Business Valuations: Grounded in Reality

Engage Your Team to WOW More Customers

Understanding fair market value will enable you to establish a realistic sale price for your business. By Brandon Jacob Include your employees in your vision and create a cause-driven business. By Brigham Dickinson

C O LU M N S

Three keys to leverage your financials to grow your business faster and healthier. By Kerry Webb

D E PA R T M E N T S

Two Steps to Help You Grow and Build Wealth

Editor’s Notebook Set your goals for the year, take your first step to achieving those goals — and know how you’ll measure success at year’s end. By Pete Grasso

Product Focus: AHR Expo Innovation Award Winners

20 Questions with Benson Green President of Benson’s Heating and Air Conditioning in Tallahassee, Fla.

Accurate books mean better decisions about your business future. By Ruth King

To Eliminate Estate and Gift Taxes, Feel the Freeze! Using a trust to freeze the value of your company can help you pass on sizable sums to your heirs — free of estate taxes. By Keven Prather

Online Reviews Aren’t Enough You can do a few simple things in addition to generating reviews to drive business. By Tess Srebro

Be Sure to Visit These Companies at the AHR Expo in Orlando, Fla., Feb 3-5! AHRI — Booth 3300 Alan Manufacturing — Booth 4673 Arkema — Booth 3133 Daikin — Booth 3301 Danfoss — Booth 1501 GreenLink Engineering — Booth 6471

Lennox — Booth 3820 Maxitrol — Booth 1543 Mistubishi Electric — Booth 743 Refco — Booth 3151 RLS Press Fittings — Booth 6375 Spectronics — Booth 3571

Your leak detection & sealant solution just got

PREMIUM DYE.

FOR MORE INFORMATION, SCAN QR CODE

POWERFUL SEALANT.

Repair and detect all AC&R leaks with our 2-in-1 premium dye and powerful sealant

Grow preventative maintenance revenue ® with HVACScan , the robust asset management solution for preventative maintenance. HVACScan is the mobile service application and web-based reporting solution that provides the advanced business intelligence and valuable insights your existing technology stack can’t. You likely already employ software and technology for field service management, inventory management, project management, job costing, and much more. While these solutions help you provide efficient and reliable service delivery, they lack direct, tangible value to customers mired in paper reporting who lack visibility into their HVAC-R system status. HVACScan delivers that value and visibility to your technicians and customers by: • Eliminating time consuming and manual paper reporting year-round • Providing customers with a complete digital asset management solution, including recall and warranty tracking and detailed service history • Generating interactive facility maps with system and device locations via the digital Floor Plans feature • Documenting and reporting compliancerelated deficiencies and events, including EPA Section 608 refrigerant tracking • And much more

For a live, online demonstration visit buildingreports.com, email info@buildingreports. com or call 770.495.1993 x1.

The most trusted name in compliance reporting www.buildingreports.com

THE HVACR MANAGEMENT MAGAZINE TERRY Tanker Publisher ttanker@hvacrbusiness.com PETE Grasso Editor pgrasso@hvacrbusiness.com MEGAN LaSalla Art Director mlasalla@hvacrbusiness.com BRUCE Sprague Circulation Manager bs200264@sbcglobal.net BARBARA Kerr Executive Assistant bkerr@hvacrbusiness.com

ADVERTISING STAFF EAST COAST/SOUTHEAST JIM Clifford Regional Sales Manager Tel 201-362-5561 Fax 201-334-9186 jclifford@hvacrbusiness.com MIDWEST ERIC Hagerman Regional Sales Manager Tel 216-409-3246 Fax 440-731-8750 ehagerman@hvacrbusiness.com WEST COAST TERRY Tanker Publisher Tel 440-731-8600 Fax 440-731-8750 ttanker@hvacrbusiness.com

HVACR Business, founded January 1981, is a monthly national trade magazine serving contractors, mechanical engineers, manufacturers, manufacturer representatives, wholesalers, distributors, trade associations, and others in the heating, ventilating, air conditioning and refrigeration (HVACR) industry primarily in the U.S. The editorial focus and mission of HVACR Business is to provide business owners and managers with the very best business management concepts available. Critical topics covered include leadership, management, strategy, finance, sales, marketing, training, education, staffing, operations, human resources, legal issues, customer service and more. We are dedicated to helping contractors master these key management skills and provide them with the resources necessary to build strong, profitable companies. Every effort is made to provide accurate information, however, the publisher assumes no responsibility for accuracy of submitted advertising and editorial information. Copyright©2020 by JFT Properties LLC. No part of this publication may be reproduced or retransmitted in any form or by any means, including, but not limited to, electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees. This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the authors nor the publisher may be held liable in any way for any interpretation or use of the information in this publication. The authors will make recommendations for solutions for you to explore. Any recommendation is always based on the authors’ research and experience. The information contained herein is accurate to the best of the publisher’s and authors’ knowledge; however, the publisher and authors can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. Subscription Rates: Free and controlled circulation to qualified subscribers. Non-qualified persons may subscribe at the following rates: U.S. and possessions: 1 year $48; 2 years $75; 3 years $96; Canadian and foreign, 1-year $108 U.S. funds only. Single copies $8. Subscriptions are prepaid, and check or money orders only. Subscriber Services: To order a subscription or change your address, write to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039 or call (440) 731-8600; or visit our Web site at www.hvacrbusiness.com. For questions regarding your subscription, please contact bkerr@hvacrbusiness.com. HVACR Business (ISSN 2153-2877) Copyright ©2020 is published monthly by JFT Properties LLC,31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039, Phone: 440731-8600. Periodicals postage is paid at North Ridgeville, OH and additional mailing offices. (USPS 025-431) POSTMASTER: Send address changes to HVACR Business, 31674 Center Ridge Road, Suite 104, North Ridgeville, OH 44039.

31674 Center Ridge Road, Suite 104 North Ridgeville, OH 44039 Tel: (440) 731-8600 Fax: (440) 731-8750 Web site: www.hvacrbusiness.com

www.hvacrbusiness.com www.HVACRBUSINESS.com www.hvacrbusiness.com www.hvacrbusiness.com

EDITOR’S NOTEBOOK

BY PETE GRASSO

Set Goals, Achieve Success

appy New Year! Welcome to a brand-new decade. This is one of my favorite times of the year because it’s a chance to start fresh and recommit yourself to be a better person or a better business leader. Yes, I’m talking about New Year’s Resolutions. That magical phrase that gives hope that the year ahead is going to be better than the last. The problem with many New Year’s Resolutions, however, is that too often they’re made without any thought or plan on how to achieve them. Perhaps that’s why too many New Year’s Resolutions tend to die out a mere three weeks into the New Year. So, instead of declaring a New Year’s Resolution, set some goals for your business and put a plan in place to achieve success.

Pinna: “We want to introduce our first dispatch software and add technology to field technicians that allow for tracking of equipment. Also, to offer one monthly training option for technicians. “In-house training on the software will be introduced and used beginning the first week of January. We’ll provide notepads to technicians and look into training options offered by partner vendors and take advantage of free training opportunities. We’ll evaluate if the new software is still being used effectively in December.”

Set your goals for the year, take your first step to achieving those goals — and know how you’ll measure success.

I recently spoke with five top contractors about this topic — Jaime DiDomenico, president of Cool Today in Sarasota, Fla.; Wade Mayfield, president of Thermal Services Inc., Omaha, Neb.; Tina Pinna, owner of Master Mechanical Services in Miami, Fla; Michael Rosenberg, president of Rosenberg Indoor Comfort in San Antonio; and Brian Stack, president of Stack Heating & Cooling in Avon, Ohio.

Each has a specific goal and plan in place for 2020, but more importantly, they all have a method for measuring success at year’s end. I asked them about their goals for 2020, the first step toward achieving those goals and how they plan to measure success in December. Here’s what they had to say. DiDomenico: “Our goal is to grow our business double digits and be the employer of choice in our market. We’ll build out our training programs, enhance our product offerings and market for expansion. “At the end of the year, we’ll look at revenue growth, field hiring and turnover, as well as employee engagement to determine success.” Mayfield: “Our goal is to grow revenue by $1,000,000. We’ll use a mix of new advertising, specifically focused on the payment buyer in our residential business, and a cleaner definition of process in how we interact with our commercial clients. To that end, we will invest in an inside sales and relationship management team. “If we grew revenue by the stated goal of $1,000,000, then we’ve achieved success.”

Rosenberg: “Our goal is to have a better focus on sales conversion of service agreements, accessories and equipment in our company. We also want to look at all of our call backs in 2019 and determine if there are things that we need to focus our training efforts on to help eliminate these call backs.

“We will be implementing more consistent sales and technical training in our company. We are going to start having sales training every other week in 2020. “We are going to focus on service agreement, accessory and equipment sales. We will set goals for each and if we reach them, we know the hard work and focus worked! We also track call backs over the number of calls each service technician runs. We will compare this call back percentage from 2019 to 2020.” Stack: “Our plan is to continue the development of our in-house training program and possibly open this up to outside contractors. We all have staffing issues and we decided this past year to hire a full-time trainer and put together our own school. Our other goals include exploring a second location and increase efficiency, as well as overall revenue growth. “We’ll start by interviewing and testing to find the right candidates for our training program. We are hoping to have at least six new technicians through the program in 2020. For our second location, we have some areas already in our mind, but we will do some research on each area, looking at population and competition. The biggest step to achieving overall revenue growth will be hiring more technicians. The work is there, we just need the people. “Success will be determined if we can accomplish these four things. We feel 2020 can be a turning point for us and a healthy bottom line will be a big factor in determining success in 2020.”

HVACR BUSINESS JANUARY 2020

BLOW AWAY YOUR BREAKEVEN

Three keys to leverage your financials to grow your business faster and healthier. BY KERRY WEBB

coach and consult with quite a few contractors, and I really enjoy working with you. Over the past decade, there are three things that really stand out to me about many residential service contractors. 1. You are genuine, authentic, “salt of the earth” people. 2. You are smart, determined, and driven — just the kind of people I enjoy. 3. You don’t pay enough attention to the numbers that drive your business. Why did I make that last statement? Think back to when you were first learning to drive a truck or car. Can you remember looking at all the gauges, seeing the knobs on the console, and also trying

HVACR BUSINESS

Your breakeven is the amount of revenue you need to acquire each month to pay your bills, but you still have not made a profit. to remember the correct order for shifting gears? Maybe it was a little overwhelming at first. My dad was a military man and he did things by the book. For example, I had to learn to drive using a manual transmission. My father told me that if I could drive a truck with a manual transmission, then I could drive just about any vehicle on the planet; from a tractor to a bus, to a steamroller.

JANUARY 2020

In fact, one summer I worked for the Texas Department of Transportation and drove a steamroller every day of the week. It was a hot job, but I loved the feeling of being in control of such a powerful machine. About a week into the summer, the brakes went out on the steamroller. State budgets were tight in the 70s, and they would not spend any money to fix the brakes. I had to learn to downshift just right so that I could stop the steamroller

without denting or crimping the asphalt. It was a good lesson for me to learn — to improvise, to make things work, rather than complain about the fact that my steamroller had no brakes. What does this story have to do with knowing your numbers? Well, some contractors make excuses about why they don’t track their numbers more carefully. I hear things like, “my software is not that good” or “I just don’t have the time” or “I have my hands full working with my team” and on and on. The truth is, we all have the same number of hours. It’s a matter of how we use the time we have. continued on page 8

www.hvacrbusiness.com

SEE HOW MITSUBISHI ELECTRIC IS REDEFINING COMFORT BOOTH 743 WEST HALL

Speaker presentations everyday Working displays The latest in HVAC controls

For more information visit metahvac.com/ahr2020

continued from page 6

Many owners have not experienced how powerful it is to know your numbers, and how you can leverage the numbers to grow your business faster and healthier. But, I’m here to help. Here are three simple keys to blow away your breakeven.

FIND OUT YOUR MONTHLY BREAKEVEN Your breakeven is the amount of revenue you need to acquire each month to pay your bills, but you still have not made a profit. To start, you add up the costs of all your parts and materials: equipment purchases, field labor, permits, subcontractors, etc. Then you subtract this amount from your monthly revenues to get your cost of goods sold (COGS). If you’re using QuickBooks, you can automatically print your cost of goods sold on a monthly, weekly or daily basis as your bookkeeper inputs your expenses and revenues. QuickBooks will also provide your gross margin/profit BEFORE you apply overhead costs. To get your breakeven, you then add

Every business owner needs to plan to make a profit every quarter. your regular monthly expenses to your cost of goods sold. Overhead expenses include all salaries for employees, managers and owners, in addition to all operating expenses. This will give you an average breakeven for the month. Remember, you don’t make a profit if you just break even.

PLAN TO MAKE A PROFIT EVERY MONTH Achieve a profit even in the first quarter of the year? YES! Every business owner needs to plan to make a profit every quarter. Some owners blame the weather or their technicians or their customers for not making a profit. Now, I could have blamed the steamroller’s lack of brakes for not stopping in time, but would that have helped me keep my job? I don’t think so. I had to improvise and overcome. You must plan for three key items to have a sustainable business.

1) Service Debt. This includes any loans or debts that exist. The cost of credit can be huge. You want to get rid of debts by using a strategic plan. This requires you to add debt service to your monthly operating costs. You can have money in the bank but have a business that is “technically broke”, if your balance sheet shows that you have more liabilities than assets. Get rid of debt as fast as possible. But remember, you still need cash flow. 2) Reinvest. You need CASH FLOW! One of the biggest challenges in the first quarter of the year is having the cash flow to meet payroll, and also pay for parts and materials if revenues are not as strong as you need. Are you putting cash into a savings account for your slower times and/or capital investments?

3) Save or Take. You want to have money in savings. You want to have money for marketing. You want to have money for capital improvements. You need money for retirement … we will not be young and healthy forever. These are all major reasons for you to have two or three savings accounts. Each month, plan to deposit a moderate amount into each savings account. Build this into your operational expenses. By adding savings to your breakeven, you will begin to accrue profits as part of meeting your breakeven. You will have money left for yourself … now that’s a cool idea! NOTE: Meeting your breakeven will leave you BROKE! Meeting your TRUE breakeven will give you a sustainable business and provide you with the profits to live the kind of life you desire. Don’t you deserve to take your family on a nice vacation every year? Don’t you deserve to have funds to purchase your family’s needs? Yes, of course you do!

Embrace the Challenge of the Tech Shortage BuildATech® - Redesigned for the next generation of technicians. Most technical schools provide a general knowledge of technical skills. With the newly updated BuildATech® program from Lennox Learning Solutions, your tech can go from a generalist to a specialist in two weeks flat. BuildATech Maintenance BuildATech Service BuildATech Advanced Want your techs to spend as much time on hands-on practice as they do in the classroom? Give us a call to learn more. 1-800-654-3283 (option 2).

HVACR BUSINESS JANUARY 2020

www.hvacrbusiness.com

You can easily design a plan to get your technicians to beat your breakeven each and every month. CREATE A REASON TO BEAT YOUR BREAKEVEN

SOMETHING TO AIM FOR AND CARE ABOUT

Do your technicians care if you meet or beat your breakeven?

Let’s say Bill earns 2 percent on leads he turns over to a comfort advisor after they sell. Once Bill hits his $62,825 goal for May, his commission then becomes 3.5 percent of all sales above his monthly production goal.

Honestly, your technicians probably don’t think about your breakeven too much. It’s not that they don’t care, they simply have other priorities on their mind. It’s not their job to know your breakeven. It’s your job. You can easily design a plan, however, to get your technicians to beat your breakeven. It involves multiplying the number of service calls per technician, times a realistic average service call amount. Then you need to add a realistic amount of installations, set leads and made sales that each technician is responsible for. The following example shows why your team isn’t motivated to reach your goals. Bill will probably run 40 calls in May. Last May, he ran 38 calls, so 40 is a realistic number. His average ticket should be at least $280 or higher, so Bill should produce at least $11,200 in service revenues. Bill will also run 35 maintenance calls, and his average ticket should be $175 or higher = $6,125. So, Bill’s total service revenues should total $17,325, or more, for May. Is this all? NO — Bill must also produce replacement leads. If he runs 75 calls in May, he should create enough leads to produce seven or eight install sales. The average for replacement sales in HVACR is one replacement sale for every 10 calls. Now, if your average install were only $6,500, then this adds an additional $45,500 (7 X $6,500). So, Bill’s total goal for May is $62,825 ($17,325 service + $45,000 from sales leads). Why will Bill care? Does he get a commission on leads that close? Does he get paid more if he turns over three leads or if he turns over 10 leads? In many cases, Bill is paid an hourly wage. If he doesn’t get paid much more, Bill won’t care about providing more leads. This is not Bill’s fault. His owner has not designed a good reason to make Bill care about setting leads.

Can you afford to increase his commission by 1.5 percent? Yes, because he’s covered your costs for both cost of goods sold and for overhead. Your profit on Bill’s future service and sales for the month of May is radically higher.

BONUS PLUS What if your team achieves your company’s goal for the month? Then, Bill’s commission goes to 4.5 percent because he hit his personal goal. He now deserves an additional percentage of future sales for May, because he was a key team player in achieving your company goal. Now if another technician named Ted works for you, and Ted did not achieve his personal goal, then his commissions do not increase at all. Each technician must do his or her share of the work to benefit from the team bonus. Many companies who have implemented this tactic have seen their team meet their monthly true breakeven before the 15th of the month numerous times each year. Their technicians are driven by their goal program. They take pride in meeting their goals and taking home checks for hitting personal bonus and team bonus. 

Dr. Kerry Webb is a consultant and trainer with Service Excellence Training. Kerry helps business owners, managers, technicians and sales reach their full potential. For additional information, visit servextra.com. You may contact Kerry by writing to support@servextra.com Attention: Kerry.

NEW DIGITAL MANIFOLD

REFMATE SIMPLY BETTER MEASUREMENTS

The new digital manifold REFMATE has been developed by professionals, for professionals. With state-of-the-art technology wherever high-tech means real improvement. And with tried-and-tested features if they have benefits in daily use.

PATENTED ANALOG DISPLAY WITH POINTERS

HIGH PRECISION THANKS TO ACCURACY CLASS 0.5

LARGE 4.3-INCH TFT COLOR DISPLAY

FLEXIBLE POWER SOURCE (AA BATTERIES OR USB)

SUPERHEAT AND SUBCOOL INDICATOR

WIRELESS COMMUNICATION WITH APP AND OTHER DEVICES

INTUITIVE CONTROL VIA BUTTONS

LOCKABLE FOR LONG-TERM MEASUREMENTS

24/7 customer service: 800 848 4232

www.refmate.ch

www.hvacrbusiness.com

REFCO Manufacturing (US) Inc. 66 B Industry Avenue Springfield MA 01104 Phone: 413 739 4761 Fax: 413 733 9267 sales@refcoswiss.com

HVACR BUSINESS

JANUARY 2020

BUSINESS VALUATIONS:

GROUNDED IN REALITY

Understanding fair market value will enable you to establish a realistic sale price for your business. BY BRANDON JACOB

nderstanding the value of your business is critical when considering a sale. So many business valuation articles begin with defining fair market value, and this makes sense. Understanding what fair market value is, will enable you to establish a sale price for your business that is grounded in reality. As defined by the IRS, the Fair Market Value of any business is: “the price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, and both parties have reasonable knowledge of relevant facts”

HVACR BUSINESS

If the valuation is unrealistically high, the likelihood of the buyer defaulting increase as the cashﬂows from the acquired business may fail to meet the bank’s debt coverage. It’s a perfect definition in that it actually makes sense; both parties are aware of all relevant facts and no one is acting under a compulsion to buy or sell.

Banks lend based on the forecasted ability of the acquired business to produce enough cashflows for the buyer to pay back the loan used to purchase the business.

It’s a fair deal all the way around. Banks understand fair market value and a valuation grounded in reality is more than likely to attract bank financing than one that is not.

If the valuation is unrealistically high, the likelihood of the buyer defaulting increase as the cashflows from the acquired business may fail to meet the bank’s debt coverage.

JANUARY 2020

Let’s assume the following, a residential service and replacement HVACR business that generates $2M in revenues and produces 10 percent in earnings before interest and depreciation expense (EBITDA). The enterprise value of such a business would range between $800,000 to $1,000,000. For the purpose of this example, let’s assume the business owner is selling the business to his general manager and the general manager intends to take advantage of an SBA 7(a) loan. An SBA 7(a) loan is a government guaranteed loan program enabling banks to lend to small businesses throughout the United States. continued on page 12

www.hvacrbusiness.com

72o

70o

74o

Introducing the industry’s first VRF system with gas furnace and heat-pump connectivity in multiple zones: Daikin VRV LIFE Systems for Residential Applications. Daikin’s next generation VRV LIFE systems offer a unique approach to comfort with a wide variety of whole home solutions: multi-zone heating and cooling, dual-fuel heating, compact footprint, flexibility to mix and match ducted and duct-free indoor units, and long piping lengths! Available from 2 to 5-Ton models. At Daikin, “Air Intelligence” is delivering indoor comfort – whatever the conditions.

2020

Learn more at daikincomfort.com

continued from page 10

What is so special about an SBA loan? The lending bank is protected by the SBA in event the borrower is unable to pay the bank back. Because of this guarantee, the

banks are able to lend based on cashflow as opposed to collateral. Which brings us back to the example.

valuation) and let’s further assume the general manger has saved $90,000 of his own money to put down.

Let’s assume the business owner asks the general manger to pay him $900,000 for this business (based on a professional

With $90,000 of his own money as the down payment, the general manger will have to borrow $810,000 in order to

No Sleepers on the Job! Support Rooftop Pipelines & Equipment with

purchase the business. Going to a bank that participates in the SBA 7(a) lending program, the general manger will be able to secure the $810,000 if the valuation makes sense. For the purpose of business acquisitions, a bank lending under the SBA 7(a) program can provide as much as a 10-year term, which means the borrower has 10 years to pay back the loan based upon monthly principle and interest payments. Based upon these points, the borrower will make 120 monthly payments (10 years) of $9,197 or $110,368 a year. • Business EBITDA = $200,000 • Total Purchase Price = $900,000 • Loan Principle = $810,000 • Buyer’s down payment - $90,000 • Term = 10 years (120 months) • Monthly Payment = $9,197

The lending banks decisions as to whether or not to make the loan will be based upon the ability for the principle and interest to be paid back. From a valuation point, the total purchase price of the acquisition of $900,000 might make sense, but does it make sense from the lending bank’s perspective? The use of wood sleepers for rooftop support of pipelines and HVA V C equipment VA is on the way out. Even treated wood deteriorates from weathering and biological attack, causing pipelines to sag and HVA V C equipment to tilt. KnuckleHead rooftop VA supports install just as easily as wood blocks — they can be loose laid but also attached where needed — and they will not deteriorate from weathering or UV exposure. Further, r they are height adjustable by simply rotating the head and each r, can support up to 600 lbs. For pipes, struts, pavers — KnuckleHead supports are engineered to last the life of the roof — and theyy are economical.

Visit us at greenlinkengineering.com for details

Visit our booth 6471 at the AHR Expo 2020!

HVACR BUSINESS

JANUARY 2020

The lending banks decisions as to whether or not to make the loan will be based upon the ability for the principle and interest to be paid back. In this case, the EBITDA (cashflows) of the acquired business is $200,000 which exceeds the $110,368 required to be paid back to the bank annually (12 x $9,197). A crucial variable in a bank’s loan approval process is the debt service coverage ratio (DSCR). This is the ratio of annual operating income or EBITDA available to pay back the proposed and existing annual debt payments and if necessary, the ability of the business to pay the owner a comfortable salary. Banks will typically look for breakeven coverage as well as a cushion. For the

www.hvacrbusiness.com

example above, a loan to buy the business requires an annual repayment of $110,364 and the annual operating income is $200,000.

financing that so many buyers rely upon to get the transaction close.

EBITDA – Earnings before interest, tax, depreciation and

• Annual Operating Income (EBITDA): $200,000

amortization. EBITDA is commonly used as a measurement of a company’s earnings streams. EBITDA can be used also to measure the cash ﬂow capabilities of a business.

• Annual Debt Service: $110,364

Example Company:

• DSCR = (Annual Operating Income/Annual Debt Service) OR $200,000/$110,364 = 1.81x

• EBITDA Percentage = 10 percent

The Debt Service Coverage Ratio in this instance is 1.81x meaning the annual operating income of the business can cover the annual debt service and provides an additional cushion if cash flow were to decrease in years to come. Brandon Bolen, who heads up the service contracting lending vertical for Live Oak Bank (liveoakbank.com) explains, “From a bank’s standpoint, the buyer and seller coming to an agreement on a fair purchase price is vital to the purchase taking place. We see all the time the importance of an expert valuation. If a purchase price is too

www.hvacrbusiness.com

• Annual Revenues = $2,000,000

From a buyer’s perspective, the right purchase will be valued in such a way that the borrowed funds used to make the acquisition are paid back on a timely manner through the cashflows of the acquired business. 

• EBITDA = $200,000 • Enterprise Value Estimate = $800,000 to $1,000,000

high, the bank won’t be able to approve the loan if the business being purchased can’t repay it. A fair price allows us to close the loan and fund the sale proceeds right to the seller. The seller is able to reap the benefits of the value they have created while allowing the buyer the opportunity to continue the business’ legacy.”

CONCLUSION Whether you plan to sell your service contracting business or buy one, the first place to start is to understand the fair market value of the business. From a seller’s standpoint, a valuation grounded in reality is not only more likely to attract the right buyer, but also bank

Brandon Jacob’s career includes extensive experience in business valuations, exit strategies and business transactions. Specific to the contracting trades, Brandon has more than 20 years of assisting in the valuation, sale and purchase of contracting businesses of all sizes. Brandon currently operates Contractors Financial Opportunity, LLC a financial consulting firm specializing in businesses valuations, exit strategies and transactions for contracting businesses of all sizes. For additional information, visit contractorscfo.com, or contact Brandon directly at 713-443-8311 or by email at brandon@contractorscfo.com.

HVACR BUSINESS

JANUARY 2020

ENGAGE YOUR TEAM TO WOW MORE CUSTOMERS

Include your employees in your vision and create a cause-driven business. BY BRIGHAM DICKINSON

t’s easy to have a mission. Some business owners spend a lot of time and effort writing up mission statements, value statements, vision statements. So, why can it be so difficult for some business owners to engage their company mission with their employees or clients? The problem is that values and mission statements are just that: statements. They don’t leave the wall you put them on until your team is emotionally engaged in the mission. And if your mission takes a back seat to making money, it’s all too easy for them to be forgotten or ignored. When push comes to shove, your mission gets shoved. Your business doesn’t need a mission as much as it needs loyal customers. Customer loyalty is a direct result of an emotionally engaged team. For that to happen, you need an all-encompassing cause that will motivate your team. In a cause-driven business, every step that is taken, from the decisions in the office to actions in the field, serves to support that central cause.

HVACR BUSINESS

Your company’s values should be things you value, and they should be real enough to make an impact. A cause-driven business is outwardly motivated. The goals it sets for itself are designed to help other people, to meaningfully improve the lives of others. Taking this stance requires a servant leadership mentality, an approach that supports others to do their best work rather than trying to control the business by solely focusing on the numbers. It may even mean putting money aside at times, focusing exclusively on the customer experience instead. This isn’t an easy task, but it’s one that provides many rewards with real benefits for you and your employees.

BUILDING A CAUSE-DRIVEN BUSINESS In 2016, we changed the way our company did business. Our clients, some of them generations-old, were struggling to compete against Amazon and Google.

JANUARY 2020

They were threatened, and some were nearing a collapse. It simply wasn’t possible for them to match the low price and convenience these juggernauts were offering. We understood the only way these companies would survive was to help them provide a better selling experience — not to go lower in price, but to go higher and provide better customer experiences that the rest could only dream about. We incorporated some of the great advice we were giving businesses into our personal lives as well, and the result is well articulated in my second book, “Patterned After Excellence.” That was our cause: to help business owners shift their mindset from competing on price, where they didn’t stand a chance, to competing on the quality of their interactions with each and every customer they serve. We gave them the tools and training they need to deliver

something truly special, and the mindset to tackle personal challenges with the same ideas and strategies. Once we found that cause and really focused on achieving it, we experienced greater success than we ever had before. My business partners and I agreed that becoming a cause-driven business was the only way forward for us and our clients, and we never looked back. There are three steps to becoming a cause-driven business. The process requires investment in your company beyond just financial incentives, and a buy-in from everyone on the ladder. It will take time and long-term engagement, but will pay in motivated employees, cheerleading customers and a true vision that will provide a clear roadmap for the future of your company.

FIND A CAUSE Of course, the first step in becoming a cause-driven company is finding that cause to rally around. The best thing you can do continued on page 18

www.hvacrbusiness.com

The original, patented, proven refrigerant press fittings - proudly made in the USA. Same great fittings. Same RLS stamp.

A M E R I C A N

M A D E

With over 8 million fittings installed worldwide, you can count on the reliability of RLS! For 10-second, reliable, flame-free connections, trust RLS Press Fittings to give you unbeatable fast performance, help you work safer – and best of all, let you finish jobs sooner. Find out more today at rapidlockingsystem.com.

THE RLS ADVANTAGE • Connects in 10 seconds • UL listed to 700 psi • 10-year limited warranty • Over 8 million fittings installed

• No flame, no fire hazards • No fire spotters • No hot work permits • No nitrogen purging

rapidlockingsystem.com

Visit us at Booth #6375

DURABILITY. PERFORMANCE.

BACKED BY TRANE.

DESIGNED TO PERFORM. BUILT TO LAST. BACKED BY TRANE.® With the Trane® brand behind it, RunTru™ is exactly what your customers need and what you want to stand out from the competition: A line of HVAC equipment that’s easy to install, built to last – which can mean fewer call backs and less maintenance and affordably priced.

RUNTRUHVAC.COM

Â®

Soon, you’ll see how your team has become powerfully engaged in their work that will WOW more customers!

continued from page 14

is take a step back from everything and look at the company as a whole.

CAUSES DON’T COME EASY

Talk to your employees and find out what motivates them to do what they do every day. Understand what’s important for you as well and think about why you started the business originally. Don’t discount a simple answer, sometimes even just dedicating yourself to helping others is enough.

The most important part of developing a cause-driven business is on your shoulders. Ultimately, this process starts and ends with you. If you don’t set out to consciously embody your cause every day, you won’t receive the benefit.

Find the cause, articulate it on paper and refer to it as often as you can with everyone on your team. Encourage them to do the same.

Motivating your employees to deliver on your cause is crucial to developing a business that’s truly cause-driven.

UNDERSTAND YOUR VALUES There is nothing wrong with values statements. But instead of just a bunch of words on paper, your business should have lived values, adhered to by everyone who works with you.

customer on the phone or on a job.

The values should be evident in everything you do, from the way people act in the office to every interaction with a

Employees will value what you value. If your sole concern is money, your employees will value that, too — above all

else. They’ll be more inclined to drop what they’re doing and leave if they don’t feel like they’re getting enough of it, because it’s the only reason they come to work. Why? Perhaps because they feel you value you most. They will value what you value because you are their leader. Your company’s values should be things you value, and they should be real enough to make an impact. They should include your customers, rather than your profits. They should include the way you work with your employees, to ensure they are provided for and have pathways to grow in the business. Overall, values should be something that can drive your company forward, not just financially, but in a way that provides happiness and fulfillment for others, too.

COMMIT YOURSELF, ENCOURAGE OTHERS Finally, your cause has to be something you teach by example. It has to be something you can do even when you’re not on the clock. It needs to be something you’re confident in, and capable of upholding above all else.

Human tendency can prevent us from living our cause every day. We can shrink from challenges that we face and moments we encounter. We can be tempted by old habits, weaknesses and vices that prevent us from becoming stronger leaders. Shedding these, and moving toward a life driven by your cause, is a process that will take time and effort to achieve, but the results will only reinforce your determination. Ultimately, a cause-driven business, or a cause-driven life for that matter, cannot be faked. There are no shortcuts, only an unwavering commitment to the things and people you value most. Only when you start honing in on your purpose and principles can you truly start winning moments and pushing your business toward a greater cause. 

After incorporating these principles into his own life, Power Selling Pros president Brigham Dickinson wrote “Patterned After Excellence” to share his experiences and lessons with other business owners. He started Power Selling Pros in 2009 when he saw that call handlers needed assistance consistently converting calls to bookings. His experiences led him to write Pattern for Excellence, a 2016 book about engaging customers and creating Wow! moments. For additional information, visit powersellingpros.com.

Over time, others in your circle will come to share this goal. Motivating your employees to deliver on your cause is crucial to developing a business that’s truly cause-driven. A strong enough cause, and a strong leader behind it, will attract high-quality employees and develop real, meaningful interactions with customers.

HVACR BUSINESS

JANUARY 2020

www.hvacrbusiness.com

NEXSTAR AD WRONG SIZE

FINANCE

BY RUTH KING

Two Steps to Help You Grow and Build Wealth

any contractors seek to grow. It’s better to grow profitably and build wealth in your business. Unfortunately, I see owners get into financial trouble when they try to grow and build wealth. Doing these two things helps avoid major catastrophes.

FINANCIAL STATEMENTS You must review timely, accurate financial statements each month. None of us, unless we are a bookkeeper or CPA, start a business to do the financial side of business. We start because we see a need, want to satisfy a dream, or a hobby turns into a business.

Accurate books mean better decisions about your business future. When your company is small, you can control everything. You know that all of the customer invoices have gone out because you sent them. You know when you get paid because you are the person going to the bank. You know when the supplier bills come in because you get the mail and you write the checks. You don’t pay attention to pricing and profit as long as there is cash in the checking account. You rarely, if ever, print out

Appointment Scheduling

Then a cash crunch hits, or you get an IRS notice and the arguments begin at home and in the office. I’ve seen too many divorces because a spouse, who had no idea what she was doing, dealt with the books.

Emergency Dispatch

Even if you hire a bookkeeper, you cannot abdicate the review of monthly financial statements.

Software Integration Service Titan, FieldEdge, and more

ANSWER MORE CALLS WIN MORE BUSINESS

HVACR BUSINESS

JANUARY 2020

Then, the company grows. You can no longer, sell, produce the products and services, and take care of the bookkeeping. You hire people to help you. One of the first office people you usually hire is a bookkeeper. You breathe a sigh of relief because you no longer have to deal with the bookkeeping. You hated it and didn’t pay attention to it except at tax time when you handed your CPA your QuickBooks or other accounting information … which wasn’t correct. If your spouse volunteers to do the bookkeeping and she doesn’t have any bookkeeping background, your spouse needs to go to school and get it. Otherwise, your spouse will muddle through the books, making guesses and mistakes, and producing financial statements which are wrong and cannot be relied on.

24/7 Live Call Answering

GET STARTED TODAY FOR 10% OFF YOUR FIRST 3 MONTHS

the company’s financial statements. You don’t need to, you think, since you have a finger on everything that is happening with your business.

800.335.2014 NEXA.COM/HVACR

Think about how hard it was to read a wiring diagram or a psychometric chart the first time you looked at them. Once you learned how to read them, they became easy. The same is true with financial statements. Commit to the investing 30 minutes a month on your financial statements. Within a few months you will be understanding them with ease and wonder why

you ever thought they were so hard. If you don’t pay attention to the financial side of your company, it’s not “if ” your company will get in trouble, it’s “when” your company will get in trouble.

INVENTORY Report accurate inventory on the company’s balance sheet each month. As I have written many times, inventory is a bet. I have seen too many balance sheets with no inventory or the same inventory value each month. Inventory changes every month because you use it every month to keep customers comfortable in their homes and offices. If there is no inventory or the same inventory value on your company’s balance sheet, then your profit and loss statement shows less profit than it should. Why? Because all material purchased are expensed as cost of goods sold. Some of those materials are actually not a part of cost of goods sold because they are sitting on a shelf or in an employee’s truck. The only time a part should be accounted for in cost of goods sold is when it is used to produce a product or a service. Putting inventory on your balance sheet and properly accounting for it is painful at first, especially if your company has grown to a $1,000,000 or more in revenues. Many accounting software programs can help you track inventory properly. The only way you will have accurate financial statements is when inventory is accounted for properly. Accurate books mean better decisions about your business future. 

Ruth King has more than 25 years of experience in the HVACR industry and has worked with contractors, distributors and manufacturers to help grow their companies and become more profitable. Contact Ruth at ruthking@hvacchannel.tv.

www.hvacrbusiness.com

IN N E R

C I R C L E

Elite Wealth Management Millionaire Intelligence Lessons from Leading Entrepreneurs Family Office Insights

PROVIDED BY KEVEN PRATHER, CFBS

ESTATE TAXES Your Best Life

LESSONS FROM SUCCESSFUL BUSINESS OWNERS

Wealth Management - crown Millionaire Intelligence - brain - target Lessons from Successful Business Owners - paper / pen or easel

To Eliminate Estate and Gift Taxes, Feel the Freeze! Insights from Family Offices and the Super-Rich - eye Lifestyles - island

60-year-old business owner who has done well financially wants to take care of his children and grandchildren. He knows that he will sell his business one day — and he detests taxes.

KEY TAKEAWAYS: ■

■

Using a trust to freeze the value of your company can help you pass on sizable sums to your heirs—free of estate taxes. These solutions can be flexible and tailored to your specific situation and goals.

His solution: He freezes the value of ■ Despite the powerful benefits of freezing the value of a business, this strategy is overlooked by many entrepreneurs—and their his business by gifting some of his compaadvisors. ny stock to a trust and selling more of it to that same trust for a promissory note, for a Scenario #2:#1: The real estate investor • When the stock in the company is sold SCENARIO THE grand total of $5 million. to the trust, no income taxes or capital ENTREPRENEUR WITH SELLING Result: The value of his firm grows by ON HIS MIND gains taxes are owed. 10 percent annually for the next nine years, A business owner expects to sell his Important: The terms of the promissory at which point he sells. But the $5 million company in about five years. The company note are very flexible and can be structured in company stock in the trust — along with is currently valued at $30 million. It is doin multiple ways. Some business owners all the appreciation on that stock over nine ing quite well, growing at about 15 percent prefer straight amortization, while othyears and all future appreciation in the trust each year for the last half-dozen years, and ers choose paying only the interest with a assets after that — remains outside of the the owner can conservatively assume conballoon payment when the note matures. owner’s estate and not subject to estate tax- tinued 15 percent annual growth over the In this case the business owner chooses to es when the assets get passed on to the kids next five years. Get familiar with the basics of freezing trusts pay only the interest, a little over $250,000 and grandkids. On the advice of his team of profes- annually. sionals, the owner decides to freeze half The value of the company shares transGET FAMILIAR WITH THE the company and transfer the value to his ferred to the trust is set on the date the BASICS OF FREEZING TRUSTS grandchildren. He does so as follows: transfer occurs. After that date, any appreCertain estate planning tools and stratciation escapes transfer taxes. And growth • He makes what is referred to as a seed egies, such as this type of irrevocable trust above the promissory note’s interest rate is gift of $1.5 million to the trust. — which we often refer to as a freezing trust — can effectively transfer assets such • He sells $13.5 million to the trust transferred to heirs with no gift or estate as privately held business interests to the for a promissory note with a govern- taxes. next generation in highly tax-efficient ways. ment-set interest rate of 1.95 percent When the business owner sells the annually. company six years later, the shares have Freezing trusts can be especially powerful if you use assets that you believe will How a Freezing Trust Works significantly appreciate over time — such as your business. 10% “seed” gift By using this trust, you can reacquire trust assets for cash or other assets. You are responsible for paying income taxes on the income generated by the assets in the trust, but the expectation is that the interests in the business that are now inside the trust will appreciate rapidly. Check out these scenarios to see how a freezing trust can have a massive impact on entrepreneurs’ and investors’ wealth.

www.hvacrbusiness.com

Business Owner

Sale of remaining assets

purchased by freezing trust with

Freezing Trust

promissory note

Remainder at end of term Beneficiaries

appreciated to over $28 million. Upon the sale, the $13.5 million of principal repaid to the business owner to pay off the debt. Result: Nearly $19 million was transferred to the trust, potentially saving the family over $7.5 million of estate taxes.

SCENARIO #2: THE REAL ESTATE INVESTOR A real estate investor owns a real estate portfolio in a limited liability company that is valued at $100 million and is expected to grow by 12 percent annually. The investor wants to transfer wealth to her family but also keep the investment in the family. Working with a team of professionals, the investor decides to freeze 25 percent of the LLC (worth $25 million) and transfer the value in trust to her children. Because the LLC interest is a minority interest and there is a lack of marketability for such an asset, a discount factor of 30 percent is applied to it—so the limited liability company interest is valued at just $17.5 million. The investor makes a 10 percent seed gift of $1.75 million to the trust and sells the remaining $15.75 million to the trust for a promissory note with a ten-year term at a rate of 2.58 percent annually. When she sells the interest in the LLC to the trust, she owes no income taxes or capital gains taxes. Additionally, the gift and GST taxes are absorbed by $1.75 million of her $5.5 million lifetime exclusion. The value of the minority interest in the LLC transferred to the trust is set on the date of the transfer. Any rate of growth over the promissory note’s interest rate will be transferred to her children, with no gift or estate taxes due when she dies. Also, the depreciation deduction for the properties flows to the real estate investor and, in the early years, shelters all the trust income from income tax. continued on page 22

HVACR BUSINESS

JANUARY 2020

so few entrepreneurs embrace the freeze

want to work with financial advisors and other professionals who are knowledgeable, skilled and experienced in helping successful business owners like you mitigate taxes.

continued from page 21

At the end of the ten-year term, the discounted LLC assets held by the trust are worth $42.5 million, while the underlying properties are worth more than $55 million. After the $15.75 million note is paid, nearly $40 million of underlying value is transferred to a multigenerational creditor-protected trust for the children. The lifetime exemption of the grantor is reduced by $1.75 million. Only credit, not dollars, is used to achieve this result, which enables the investor to avoid $16 million in potential transfer taxes at the end of ten years. If the assets continue to grow, more wealth will avoid getting caught in the gift, estate and GST tax net.

11.1%

BOTTOM-LINE IMPLICATIONS It may make sense to consider freezing the value of your company if all the following are true:

EXHIBIT 3

Successful Business Owners Who Have "Frozen" the Value of Their Business

88.9%

WHY SO FEW ENTREPRENEURS EMBRACE THE FREEZE Despite these and other types of results, this freezing trust is all but ignored. Only about 1 in 10 successful business owners has used such a trust to freeze the value of the business (see Exhibit 3).

1. You anticipate selling your company sometime in the future. 2. You expect it to appreciate in value. 3. You want your wealth to benefit your heirs.

Yes No

N = 262 successful business owners. Source: Russ Alan Prince and John J. Bowen Jr., Becoming Seriously Wealthy, 2017.

Perhaps there are many reasons this estate tax mitigation strategy is not comEXHIBIT 4 monly implemented. In our experience, Advisors and Freezing Trusts however, the biggestFinancial reason is the limited expertise of many of the financial professionals who work with today’s accomplished entrepreneurs.

49.1%

Consider this: In a study of 803 financial advisors, only half of them (or the specialists they consult with) are knowledgeable about freezing trusts (see Exhibit 4). Even more telling: Only about 8 percent of them have implemented the strategy for a client.

Freezing will enable your inheritors to have more money, because they will receive the appreciation in your company without having to pay gift or estate taxes. Although this can be a very powerful way to mitigate certain taxes, problems can easily arise if you rely on professionals who are not adept in these solutions. As shown above, hardly any we surveyed have actually helped clients freeze the value of their businesses. That suggests a general lack of experience that should give you pause. Our recommendation: If you think this strategy may help you achieve your goals, contact your financial or legal professional to explore whether freezing the value of your business could be the right move for you, your company and your heirs. 

7.6%

If you expect to one day sell your company—be it to outsiders or family—you

4. You want to avoid paying gift and estate taxes.

Have provided to a client

Knowledgeable about

financial advisors. Russ Alan Prince and John J. Bowen Jr., Becoming Seriously Wealthy, 2017.

Keven Prather specializes in serving the complex needs of business owners through Financial Planning and Business Transition/ Exit Planning. Using a Total Wealth Planning approach, Keven’s objective is to turn complex problems into actionable, understandable and manageable steps, by collaborating with business owners, their family, and strategic partners.” Keven can be reached at (216) 592-7314 or kprather@financialguide.com. www.TransitioNextAdvisors.com.

HVACR BUSINESS

Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. www.SIPC.org. TransitioNext AdvisorsTM is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. Supervisory Office: 2012 West 25th Street, Suite 900 Cleveland, OH 44113. 216.621.5680. This report is intended to be used for informational purposes only. Neither MML Investors

JANUARY 2020

Services nor any of its employees or agents are authorized to give legal or tax advice. Consult your own personal attorney legal or tax counsel for advice on specific legal and tax matters. CEG Worldwide, LLC. is not a subsidiary or affiliates of MML Investors Services, LLC or its affiliated companies. VFO Inner Circle Special Report By Russ Alan Prince and John J. Bowen Jr.

©Copyright 2018 by AES Nation, LLC. All rights reserved. This report is reprinted with permission from VFO Inner Circle. Unless otherwise noted, the source for all data cited regarding financial advisors in this report is CEG Worldwide, LLC. The source for all data cited regarding business owners and other professionals is AES Nation, LLC.

www.hvacrbusiness.com

MARKETING

BY TESS SREBRO

Online Reviews Aren’t Enough

here’s no denying it. Customer reviews are extremely valuable — 85 percent of consumers trust online reviews as much as personal recommendations. Reviews legitimize your business, and show why you’re great. Having little or no reviews can indicate that you’re less experienced. Nowadays, when someone needs a service, they turn to Google. And 56 percent of people will click on a company’s Google listing solely because it has positive reviews, even if it’s lower on the search list.

customer has what they need, they have no reason to go back online and read more reviews. So how will they find out about all the other services you offer? • Announce Anniversaries and Sales. If it’s your business’s anniversary, or if you’re running a special offer, online reviews aren’t going to communicate this to your customers. The good news is, you can do a few simple things in addition to generating reviews to drive business.

Tess Srebro serves as marketing manager for Customer Lobby, a company dedicated to driving repeat businesses for local service businesses with its product, Spotlight. For additional information, visit customerlobby.com.

NEW

NATE STUDY GUIDES The wait is finally over! Get ready to be NATE-certified by preparing for the exam with a study guide produced by NATE for the first time ever.

You can do a few simple things in addition to generating reviews to drive business. But, if you’re only focused on what people are saying about you online, you’re missing a huge revenue opportunity. Your business needs more than good reviews.

WHERE REVIEWS FALL SHORT When you focus your attention on reviews, you’re trusting that your customers will seek you out again. That’s a big gamble. Here are a few things reviews can’t do for you: • Keep Customers Loyal. You may think that excellent service is enough to keep your customers coming back, but that’s not the case. The longer it’s been since they’ve seen you, the less likely they are to remember you. And you’re leaving the door open for your competition. • Reinforce Your Brand. Once a

www.hvacrbusiness.com

DRIVE MORE BUSINESS Build a lasting impression in your customer’s mind, so that when they need a service you provide, they’ll think of you first. Stay in touch with your existing customers. Reach out to your customers frequently with personalized messages. Postcards are a great option because people will see them at a much higher rate than email.

You can now purchase brand new Core, Air Conditioning/Heat Pump and Gas Heating study guides with practice questions and answers. Print versions of the Ready to Work and HVAC Support Tech guides are also now available in English and Spanish.

Ready to Work HVAC Support Gas Heating AC/Heat Pump Core

To purchase new NATE study guides visit: store.natex.org

A personalized thank you card after a transaction can reinforce the great experience your new customers had with you. Don’t just choose one method for staying in touch with customers, choose two or more. For example, you can send a postcard, and then follow up a few days later with an email. Repeat exposures to your brand within a short amount of time. 

HVACR BUSINESS

JANUARY 2020

PRODUCT FOCUS »

AHR Expo Innovation Awards

INTRODUCING THE 2020 INNOVATION AWARDS WINNERS!

GREEN BUILDING

HEATING

The Danfoss Turbocor TG490 Compressor is designed for air- or watercooled chiller applications. The oil-free, variable speed, magnetic bearing centrifugal compressor is optimized for use with HFO-1234ze, which has a GWP of less than 1, and can also be used with lowGWP refrigerant R-515B. The Danfoss Turbocor TG490 is the first of its kind oil-free, magnetic bearing centrifugal compressor that offers industry-leading efficiency, reduced maintenance requirements and simplified design through the elimination of a traditional oil management system.

The York LX Series TL9E Ultra-Low NOx Gas Furnace is an environmentally responsible gas furnace that meets even the most stringent standards for air quality while reducing greenhouse and smog-producing gasses by up to 65 percent compared to standard low-NOx furnaces. The furnace is ENERGY STAR rated and reduces fuel costs by as much as 20 percent when connected to select YORK home comfort systems. Booth 3833

Booth 1501

BUILDING AUTOMATION

COOLING

INDOOR AIR QUALITY

PLUMBING

Delta Controls’ O3 Sensor Hub 2.0 combines seven different sensors to provide the most accurate view of an interior space available on the market. IoT-enabled to function as a standalone room controller, the O3 Sensor Hub 2.0 combines temperature sensing, occupancy detection, humidity and wireless integration into one. This innovation uses Sensor Fusion to enhance the occupant experience with heightened room control and to reduce false occupancy detections. The O3 is ceiling-mounted to maximize functionality from the best vantage point of the room, enabling it to accurately detect occupancy with simple reads from body heat, keyboard noise or other motion.

The Danfoss Interlaced Micro Channel Heat Exchanger (iMCHE) integrates multiple circuits into a single coil. It works using a shared air heat transfer area and controlling each one independently by a multi-circuits system. The iMCHE uses a whole air side heat transfer when operating under partial load conditions to maximize efficiency. Based on the results of a recent case study, the IEER increased 18 percent when using the iMCHE solution. The iMCHE provides a compact and cost-effective solution for dual-circuit rooftop units. The iMCHE allows equipment to easily meet new standards with low cost impact.

The Purity Low Profile LED 1-inch Polarized Filter/LED Disinfection System (PLP-LED) by Fresh-Aire UV is the first 3-stage 1-inch polarized HVAC filtration system to incorporate MiniLED technology. The PLP-LED offers high-efficiency filtration that captures 97 percent of particles down to 0.3 microns in size. The system also uses antimicrobial UV reactive media with an advanced photocatalytic coating for odor and VOC reduction. Fresh-Aire UV’s filter mitigates many IAQ issues as well as many other challenges faced by occupants and contractors through delivery of a cleaner, safer filter to handle and service.

LG Electronics USA’s LG Hydro Kit is an indoor heat exchanger for LG Variable Refrigerant Flow (VRF) systems capable of transferring heat or cooling energy expelled from the air conditioning process to water, offering further efficiency of LG heat recovery and heat pump systems. Available in 42,000 and 96,000 Btu/h capacity, the LG Hydro Kits utilize waste energy generated during the conditioning process and enhance the energy efficiencies of LG VRF systems. This allows the hot or chilled water generated to then be distributed out to a number of different applications with integrated controls that set the temperature of the leaving water, hot water tank temperature or the temperature of the conditioned space.

Booth 1501

Booth 1161

HVACR BUSINESS JANUARY 2020

Booth 5853

Booth 6343

www.hvacrbusiness.com

PRODUCT FOCUS »

THE BEST IS YET TO COME REFRIGERATION

TOOLS & INSTRUMENTS

The Danfoss CO2 Adaptive Liquid Management (CALM) solution combines Danfoss’ liquid ejector and adaptive liquid control case controller algorithm to fully utilize the evaporator surface in display cases and cold rooms. This technology provides, without equipment change, up to 10 percent greater energy efficiency in addition to the energy-saving inherent of CO2 refrigeration. The CALM solution works by pulling liquid refrigerant from the suction side and injects it into the evaporator of display cases and cold rooms.

Matelex’s détecteur de niveau intelligent/smart level detector (DNI) system measures pressure, temperature and refrigerant levels every 2-3 seconds, as well as conducts a complete leak detection cycle every hour. The system is designed to trigger an alarm using algorithmic learning in the event of a detected leak. The smart refrigerant leak detection system is also coupled with a remote surveillance web interface (Sentinelle) to issue email alerts when a leak occurs. It is suitable for all refrigerants and tanks — vertical, horizontal, inclined horizontal — and connects to the IoT via WIFI, cable ethernet or 3G-4G modules.

Booth 1501

With over 70 years of U.S.-based manufacturing, the Forane ® branded refrigerants bring 60 years of quality, service, expertise, and knowledge to the HVACR market. DELIVERING SUSTAINABLE SOLUTIONS, DRIVEN BY INNOVATION OFFERING A ROBUST PRODUCT PORTFOLIO FOR TODAY, TOMORROW, AND BEYOND ENABLING TOMORROW’S GROWTH, WITH A LONGTERM OUTLOOK SUPPORTING CUSTOMER EFFORTS THROUGH WORLDCLASS CUSTOMER AND TECHNICAL SERVICE

Learn more about our celebration and all our offerings, visit our website: ark.ma/forane-60

Booth 2551

SOFTWARE

VENTILATION

The Interplay Learning SkillMill Skilled Trades Course Catalog is an online, on-demand training course catalog designed for HVAC professionals to gain worksite skills accessible via mobile phone, computer, tablet, or in virtual reality (VR). HVACR professionals can sign-on to view expert-led video courses designed to first drive understanding, then move on to the interactive, 3D-based HVAC troubleshooting simulations delivered via field-like training. The training platform aims to provide scalable training that is robust enough to keep up with the growing skills gap as well as prepare HVAC technicians quickly for every situation or scenario they might encounter in the real world.

The Infinitum Electric HVAC motor is significantly smaller, smarter and quieter than traditional electric motors. These benefits equate to an ultra-high-efficiency motor that results in up to 25 percent lower costs for customers. The motor uses a circuit board stator resulting in up to 60 percent less weight, superior durability, improved performance and enhanced IoT connectivity. Infinitum Electric aims to change the industry standard for motor size and weight. Booth 7485 Forane is a registered trademark of Arkema. © 2019 Arkema Inc. All rights reserved. UL® is a registered trademark of Underwriters Laboratories, Inc.

Booth 8562 forane.com

www.hvacrbusiness.com

800-245-5858

HVACR BUSINESS

JANUARY 2020

20QUESTIONS >>

with BENSON GREEN

We sat down with Benson Green, president of Benson’s Heating and Air Conditioning in Tallahassee, Fla. Benson discussed the value of community, growing your own technicians and having a solid succession plan. 1. How did you get started?

My father was an engineer and director of the physical plant at Florida State University. While I was in high school, he got me a job with a local air conditioning company as a helper. I just kind of fell in love with the whole service technician side of the business. I was 15 and every summer I’d go to work for them until football practice started. When I was close to graduating, I decided that I wanted to make this a career. I told my grandfather, who at one time had been comptroller for the state of Florida and was now president of a bank he started, that I wanted to do this instead of going to college. He and my father both agreed it was a good move.

2. What did you do those ﬁve years?

I worked for three different air conditioning companies. I learned it all on the job training. The last man I worked for taught me more about life and business and relationships. That’s really where I got my basis to go in business. I wanted to buy his business because he had no children that were going to be in the business or grandchildren at that point. He didn’t want to do that, so I went to work for a commercial company.

3. What’s the best advice he gave you?

We were working on a chiller or something and I tried several times to break a nut loose and I couldn’t. I didn’t have enough strength or “enough ass” is what he called it. I said, “I can’t get that. I think you’re going to have to get it.” He looked at me and said, “Well, if I have to do it, what do I need you for?” I said, “Okay, okay, give me one more chance here.”

4. How did you start on your own?

8. What’s the ﬁrst thing you did?

I was very fortunate because I was old school Tallahassee. I wrote about 120 letters of everything that I could do in the heating and air conditioning trade, from installations to service or whatever. I gave 10 letters to my granddad, 10 letters to my uncle, 10 letters to this person and that person. I had them all postage paid. I asked people to send them out on my behalf and to think of me the next time they needed some air conditioning or heating work.’”

9. How did that work out?

One of the key letters went from my mom to a lady she worked with part-time in the legislature… her husband owned a fuel company with his family, and they’d had just lost their main fuel mechanic. They started funneling all their calls to me. I helped them with everything. So that was a huge start for me. Then a lot of different people had commercial work and buildings and motels and stuff like that that I immediately went to work for. It was all word of mouth.

10. When did you start to grow?

I started in 1981 and added one or two employees each year from that point. In 1984 I bought a small sheet metal company that had three employees. Then I started adding helpers and mechanics after that. That’s when I really started growing. It was early ‘90s when things started crashing that I definitely needed to get with a good business consultant and figure out pricing and removing myself from the field and start running a business instead of it running me.

11. What’s your business mix like now?

After I put in my two weeks’ notice and before my two weeks were up, the commercial company I was going to work for notified me that they had a hold on new hires. At that point, I started to look at going into business for myself. That’s really how I got forced into starting it.

After the recession in 2009 and 2010, things more or less flipped. Right now, we do about $9 million in service work, which is commercial servicing, residential and replacement. That’s one division. Then the other division is we still do commercial design, build and spec work, and that’s about $4 million.

5. How did you make that leap?

12. How big are you today?

I had asked my grandfather to borrow $5,000 and he actually told me, “Now is not a good time.” I’m like, “Well, I turned in my notice. I don’t have a job. I need to do something.” That’s when my dad told me to go to my godfather, who was a professor at FSU in the School of Business. After we sat at his dining room table and formulated a business plan, he loaned me $800. I already had a pickup truck and I was able to secure credit with some good suppliers around here and started that way.

6. Did you learn the business side before starting your own company? Unfortunately, no I did not.

7. What was that learning curve like? That was tough … gut wrenching. I realized I had very few months to stay in business if I didn’t make some immediate changes. That’s the biggest scare for a mechanic starting his own business.

HVACR BUSINESS

JANUARY 2020

We have 95 employees now. That fluctuates some during the summer with how much commercial work we do. But that’s about our routine base.

13. What’s recruitment like in your area?

We try to find young people that have good character. Then we train for skill. We do most of our in-house training and then after they grasp that, especially on the

maintenance side, they’re able to move up. After they’ve associated themselves with customers and equipment and learning, we’ll send them to a technical school for a couple of weeks to learn diagnostics. We’ve been very successful with that over the last four to five years.

14. What about experienced technicians? We just hired an experienced technician because he was coming from a different area. Tallahassee is right on the state line and this guy came down from Georgia, about 30 to 40 miles away. He’s the first experienced technician we’ve hired in years.

15. What’s your management style?

I’m a manager and an overseer to four key people, and it goes down from them.

16. Do you have a succession plan?

I just turned 62 and last January we implemented an ESOP (employee stock ownership plan). We’re actually an employee owned company. I’ll be here for another 10 years, at least, still running and managing the company. Hopefully by the age of 72, I’ll be ready to fully retire.

17. What’s the best way to motivate?

Obviously, you lead by example. I hope most people that have been here, and we do have some people that have been here 25 to 30 years, look at me as somebody who would never ask somebody to do something that I didn’t do myself.

18. What do you ﬁnd rewarding?

I love the interaction and everything with my coworkers and seeing the friendly smiles. We’re family. But also, because I grew up here, it’s great to be in the community and be recognized. We donate a lot of time, money, materials for basically anybody that would come to us and ask for some.

19. What are some industry challenges? I’m in an ACCA Mix Group and some of us have been together for 20 years. I think all of us experienced a little bit of a weirdness. I’ve heard some of the manufacturers are saying they didn’t quite sell as many units as they predicted. I know there were months that we exceeded our budget. There were months that we just barely made what we did last year or revenues last year in the same month. We were just kind of up and down and there was no real explanation

20. What do you view as the most important aspect of your job?

It’s still selling. People still want to see me here. I could go into a restaurant or a bar and sit down and know a biker and have a relationship with him and we could chat about some work I might’ve done for him or how he knew me years ago or whatever. Then I could leave there and go to a cocktail party that night and be with the president or the owner of a bank and have the same conversation.

www.hvacrbusiness.com

is building a higher standard for energy efficiency From hospitals and data centers to offices and apartments, Danfoss is helping to develop energy-efficient cities — one building at a time. Providing the industry’s broadest portfolio, Danfoss’ component innovations improve system efficiency, reliability and performance, and enable chiller manufacturers to reduce total cost of ownership and energy consumption for more efficiently cooled buildings. And with unparalleled air-conditioning systems expertise, Danfoss comfortably helps you exceed the most rigorous efficiency standards. Discover how we’re Engineering Tomorrow at chillers.danfoss.com

Up to

70%

of chiller components to help meet regulations

There is in STRENGTH NUMBERSâ&#x20AC;Ś >7,000,000 residential and commercial products on the AHRI Directory of Certified Product Performance

>330 member companies

>40 certification programs

>100

>3,000

standards and technical guidelines

annual certification tests

>1,100

licensees from 36 countries

The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) is the trade association representing manufacturers of HVACR and water heating equipment across the globe. AHRI is the source for equipment performance standards, certification programs, information, and turnkey solutions that facilitate regulatory compliance and support energy efficiency. Learn more about AHRI online at ahrinet.org.