HVACR BUSINESS FEBRUARY 2023

FEATURES

6 Improve Employee Performance Through Effective Leadership

Tips to improve employee performance through more effective leadership

By Zac Garside

8 Preparing for the Shoulder Season 2023

Tips that even veteran HVAC owners can benefit from when preparing for the shoulder season

By Heather Langone

10 All You Need to Know About 2023 HVAC Regulation Changes

Updates SEER Ratings and HVAC regulation changes for 2023

By Emily Newton

12 Long-Lasting Relationship with the HVACR Industry

In-depth interview with Brennan Hall, Director of Duct Fab Supplies and Air Distribution Products at Conklin

By Heather Langone

15 Invest in Team Members to Conquer Employee Turnover

The importance of investing in your employees as well as your business capital to increase employee retention

By Chris Koch

16 Business Growth from Start to Finish

Succession planning at any stage of business ownership

By Marty Wolff

18

4 Steps to a Great Newsletter

Veteran HVACR marketing expert, Joe Pulizzi, outlines steps to creating an effective newsletter

By Joe Pulizzi

COLUMN

19 Business Transition In Focus

Prather advises on business transition and how to prepare for transition both planned for and unexpected

By Keven Prather

20 Do You Have the Mercedes-Benz Syndrome?

King asks: Are you investing in your business or your lifestyle?

By Ruth King

DEPARTMENTS

5 Publisher’s Page

Good leaders are determined by how they react to failure

By Terry Tanker

4 Management Resource Shelf

The Art of the Sale

21 Product Focus

22

20 Questions with Justin Carrol President of P1 Service Group

Testo: Your trusted partner for over 40 years

Backed by decades of measuring engineering experience, our mission is to provide the best quality, service, and value in the industry.

Management Resource Shelf

The Art of the Sale

Practice is just as valuable as a sale. The sale will make you a living; the skill will make you a fortune. - Jim Rohn, an American entrepreneur

How do you master any art form? Practice. Sales in a business sense, its own art form. Some people can sell, and others become masters. As with any art, there is an entire spectrum of subjectivity on what’s good. Still, mastering the skill is essential if you want to grow your HVACR business. Or as one of our featured authors says bluntly, “If you can’t sell, you can’t make money.” The art of the sale in some ways can be more important than the product. Think about it – if you have a good product, but you can’t sell it, it’s worthless. This month we focus on books that will help you get there – whether that means reading up on what you don’t know about sales and growing your company or practicing becoming a successful entrepreneur.

Selling the Dream

Guy Kawasaki

This is a blue-chip choice that has retained its value over time. Guy Kawasaki's phenomenal success at Apple Computer and as a start-up entrepreneur was the result of an innovative approach to sales, marketing, and management called evangelism. Evangelism means convincing people to believe in your product or ideas as much as you do, by using fervor, zeal, guts, and cunning to mobilize your customers and staff into becoming as passionate about a cause as you are. Selling the Dream is a handbook and workbook for putting evangelism into action. Kawasaki charts a complete blueprint for the beginning evangelist that covers such topics as how to define a cause (whether it is a business, like Windham Hill Records or the Body Shop, or a public interest concern, like the National Audubon Society or Mothers Against Drunk Driving), how to identify good and bad enemies, how to deliver an effective presentation, and how to find, train, and recruit new evangelists. One of the highlights of the book is a short course in developing an evangelistic business plan, illustrated by the complete, original Macintosh Product Introduction Plan. Selling the Dream will teach you how to become a raging, inexorable thunder lizard of an evangelist – a leader whose words will never fall on deaf ears again.

https://www.amazon.com/Selling-Dream-Guy-Kawasaki/ dp/0887306004

Home Service Millionaire: How I Went from $50,000 in Debt to a $30 Million+ Business in Seven Years

Tommy Mello

Already have a home service business but just scraping by? Don’t know how to grow because you can’t possibly work any more hours than you already are? This book may help you change that.

Author Tommy Mello, in his own words, says, “Every home at some point requires maintenance. Roofs need repairing, walls need painting and drains need clearing. Your goal is to become the go-to company in your area for whatever home service it is you provide.” And adds Mello, “If I can turn my local garage door service business around from being over 50 thousand dollars in debt and grow it into the millions, so can you – if you are willing to change how you think about achieving this goal.” Mello offers his advice from his own experience of running one of the top home service businesses in the country.

https://www.amazon.com/Home-ServiceMillionaire-Million-Business/dp/1732452105/

The 7 Secrets to Becoming a Wealthy Contractor: How To Make More Money, Take More Time Off and Live Your Best Life

Brian Kaskavalciyan

Celebrated author, Kaskavalciyan asks in this boldly titled tome, “Are You Ready to Become a Wealthy (or Wealthier) Contractor?” It’s a good option to have on your bookshelf if you are the owner of a home improvement company of any kind and you want to make quantum leaps in the sales of your company. Inside this book, entrepreneur, marketing strategist, and host of The Wealthy Contractor podcast, Kaskavalciyan will share with you the 7 “secrets” that drive the results of every Wealthy Contractor. In a simple, straightforward style, Brian outlines each of the secrets (or principles) and delivers practical advice on how to not only create a more successful and profitable home improvement business using the secrets but how it can make your life richer as well. The “secrets” in this book will help take you to new levels of success.

https://www.amazon.com/

Secrets-Becoming-Wealthy-Contractor-Money/dp/1089380542/

Whatever It Takes: Master the Habits to Transform Your Business, Relationships, and Life

Brandon Bornancin

According to Bornancin, no matter who you are or where you come from, your education, or your network, you can defy the odds to create the life you want and build the business you’ve only dreamed about. In this choice, a book about transforming your business, Bornancin tells of his struggles – he graduated college flat-broke. He started a business that was an epic failure. Then he turned it all around – before he was 30 – closing over $100 million in sales for Google and IBM and founding two multimillion-dollar companies, the second named “LinkedIn’s Top 50 Startups.” How did he do it? The book is the answer to the question: By doing Whatever It Takes. In this no-nonsense guide to success, you’ll learn the empowering beliefs and transformative habits needed to achieve all that you want in business and life. But adds Bornancin, it’s not an easy fix. It requires that you, “…wake up and do the work.” And, he says if you do that, you too can defy the odds to get everything that you want in business and life if you are willing to do Whatever It Takes https://www.amazon.com/Whatever-TakesTransform-Business-Relationships/dp/1952569362/

THE HVACR MANAGEMENT MAGAZINE

TERRY Tanker Publisher ttanker@hvacrbusiness.com

HEATHER Langone Managing Editor hlangone@hvacrbusiness.com

MEGAN LaSalla Creative Director mlasalla@hvacrbusiness.com

BRUCE Sprague Circulation Manager bs200264@sbcglobal.net

BARBARA Kerr VP Operations bkerr@hvacrbusiness.com

ADVERTISING STAFF ERIC Hagerman VP Sales Tel 216-409-3246 ehagerman@hvacrbusiness.com

TERRY Tanker Publisher Tel 440-731-8600 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©2023 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 ©2022 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.

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(ISSN: 2153-2877)

BY TERRY TANKER

Winners & Losers

The difference between winners and losers is how they handle losing. Let’s face it: you’re not going to win every time. An effective leader must be resilient because no one can win all the time. The pitfalls and troubles that come with owning and operating a business are immense. As the old saying goes, “if it were easy anyone could do it.” The fact of the matter is that it is not easy. It’s far from it.

Resilience

Entrepreneurs must be willing to fail and try again — to learn how to come back after setbacks and, most importantly, to avoid making those same mistakes time after time. The last several years have tested our management skills, as disruptions and setbacks seem almost common — even among the most successful companies. Resilience, according to Webster’s Dictionary, is defined as “the ability to recover from change or misfortune and become successful again.” The ability to adapt builds confidence in those leaders who are willing to get back up and try again after a defeat. Successful people will tell you they’ve learned more from their failures than their successes. To quote Dale Carnegie, “The successful man will profit from his mistakes and try again in a different way.”

For those of us who watched the college football season and subsequent playoffs, there were dozens of inspirational examples and stories of athletes whose resilience and ability to overcome adversity, ultimately made them winners. Business owners rarely receive publicity or acknowledgment for the obstacles they have overcome. However, the most important people in your life (i.e., your family, friends, and co-workers) are always watching. Ultimately, this continuous willingness to get back up and learn from mistakes, builds a stronger network and team moving forward.

Adversity

The adversity we deal with generally falls into two categories: circumstances outside our control; and selfcreated roadblocks we put in our path. Covid presented significant opportunities for HVACR contractors, as is well documented. Our industry prospered after millions were forced to work from home, and wanted increased comfort. To be sure there have been challenges. I’ve spoken with dozens of you who have had supply chain issues, more work than your teams can handle, and dealing with the subsequent employee burnout. Especially the service techs on the front line who were working more to manage the sudden influx of home service requests.

Many of you have been down this path before, the question is: What do you do now? What did you learn in previous years when we faced what seemed like a

PUBLISHER’S PAGE

never-ending winter? Did you turn down work? Were you honest with customers about long lead times? Did you hire additional staff? Assuming of course you could find qualified personnel. How did these decisions play out for you in the past?

As business owners, it can be disappointing to turn down profitable jobs, especially for after-hours emergency repairs or high-profit installs. Sometimes new hires can help lighten the load; but be careful, don’t rush through your hiring process, making hasty decisions on the wrong employees can end up tarnishing our brands. It helps to take a step back — if only for a moment — to consider past decisions so we don’t repeat past mistakes.

Of course, Covid, supply chain issues, and weather are just a few unpredictable circumstances that have impacted our businesses. What aspects of those outside circumstances were in your control? What were the self-inflicted wounds?

Invest in Success

One common regret I’ve seen over the years is owners failing to view a specific line item as an investment rather than an expense. Investments involve a temporary outlay of cash or time. Good investments generate returns over and above the initial cost.

Training. For example, training and education for all team members is a good investment. Reasons often cited for not committing to this, are cost, or concerns that once properly trained, the employee may leave for a different, higher-paying job. The irony here is that if you don’t invest in your employee’s training, they are likely to pursue opportunities in companies that do offer educational programs.

Marketing. Marketing is another line item that is an investment, not an expense. Marketing and advertising generate sales and sales leads, and you would have significantly less business without them. Sometimes, trends like social media stop us in our tracks. You might wonder if it’s just a fad or a lasting change worth the investment of time and money. Let your past experiences guide your decisions. They will help you make better choices.

Entrepreneurs take calculated risks. Where there are risks, there will be some losses and some wins. After a fall, it’s normal to feel down. The key is to get back up and begin again with a new perspective. This is the subtle difference of what separates winners from losers.

Winners are not only defined by success but more often by the way they handled failure.

Entrepreneurs must be willing to fail and try again — to learn how to come back after setbacks and, most importantly, to avoid making those same mistakes time after time.

IMPROVE EMPLOYEE PERFORMANCE THROUGH EFFECTIVE LEADERSHIP

BY ZAC GARSIDE

Employees are often the face and voice of home service companies. While those in leadership roles are guiding the business from behind closed doors, it’s the technicians, CSRs, and office staff who are interacting with customers regularly. When a customer meets a friendly face or speaks to an energetic employee, it sets the tone for how they perceive the company.

Measuring Employee Performance

Ensuring employees are performing at their best is vital to the success of home service companies. An accurate measure of employee performance will vary from person to person, but the general rule by which to measure success can be determined first by the person’s ability to reach an intended end goal. But this can only be achieved when the goals and expectations have been clearly communicated to them in advance. For my training and coaching, I like the example given by Stephen R. Covey and one which he demonstrates in one of his videos. Covey talks of tasking his son with the responsibility of keeping

their yard green and clean. He offers a very clear expectation of what the result must be, but then allows his son the freedom to do the job the way he sees fit. I believe this model can be applied to your employee performance as well and can be a good yardstick by which to measure employee performance.

Start with providing an employee with a clear goal and then give them the freedom to do it. Once you have clearly defined the task and expectations – assuming your employee has been well trained – then you can measure performance by how successfully the employee has done the job based on those expectations.

It's important to note that being busy for hours doesn’t equate to great performance. Busy work can also be incredibly ineffective work. The performance review should be based on how successfully the employee delivers the end goal as assigned.

Factors Impacting Employee Performance

Factors that influence an employee’s performance can often directly be traced back to the leadership team. Three major factors that affect a team’s effectiveness, are clarity, autonomy, and skillset.

Clarity. Ask the following question. Does the employee fully understand the goal and mission of the company as well as what’s expected of them? Lack of clarity can cause stress and lead to employee burnout. An employee without clarity feels like they lack purpose and direction, and in the expectations phase, this can create a situation where the individual will find meaningless tasks to perform just to feel like they’ve accomplished something during the day.

Autonomy. Autonomy pertains to the freedom given to the employee to accomplish a task based on their decisionmaking. If an employee doesn’t have the autonomy to make decisions on how their job is done effectively, it can lead to feeling a lack of value by the employer –like they are only a cog in a machine. If

employees don’t have creative freedom on how to perform their jobs, they don’t feel empowered to use their unique creativity and instead, simply follow orders. Over time, this management style can hurt the company and productivity.

Skill Set. Having the skill set means an employee feels capable and trained like s/he has the ability and skill set to complete the job. This is the third major factor that will lead to successful employee performance. Almost nothing is worse than feeling like you are not good at your job or you lack the skills and training. If an employee doesn’t know how to do the job, they will become discouraged and continue comparing themselves to other successful employees. This can be wholly demoralizing and lead to frustration, ineffectiveness, high turnover, and stagnated growth.

4 Steps to Improving Employee Performance

Author, business consultant, and co-founder of What Drives Winning Conference, Brett Ledbetter, often states that it’s a leader’s job to define, manage, and model expectations. If you are seeing a diminished performance on tasks, or you are looking to improve your employee

Start with providing an employee with a clear goal and then give them the freedom to do it.

performance, ask your leadership team these questions:

Have you defined project expectations and provided the resources for the employee to achieve the expectations? Do you hold the employee accountable for it and whenever possible, help them reach that goal? These questions are instrumental when determining a metric for an employee’s success rate. This leads to the following four steps, ones which I think can directly improve employee performance.

1. The first step is to communicate your purpose, mission, and core values to your people. As a CEO, I have discovered that this is paramount to the success of any collective goal. Clear communication will help employees understand the overall goals of the company and help define “the why”. While it sounds cliché, it’s vital to practice this every single day. I’ve seen many companies be great at this, but then slip up. Complacency can lead to a dramatic drop in performance.

2. Once you’ve communicated the purpose, mission, and core values of the company, the second step is to help every individual see how

these steps apply to them and their job specifically. This ties back into clarity. An individual can understand the company’s purpose, but if they don’t understand how it applies to their role, it may result in a disconnect. So, you must take steps to help them recognize how their job is important to the overall purpose and mission of the company.

3. The third step is to provide training. Remember, if a person is bad at their job, it can demoralize them and promote continued poor employee performance. You have to offer ample amounts of training to help individuals get better at the tasks you ask them to complete. Training can result in both job growth and personal growth. If an employee feels like they are excellent at their job, they may begin to push for more responsibilities and higher positions.

4. The fourth and final step to improving employee performance is to give them freedom. You want to give them autonomy to make decisions. Allowing an employee to be creative in accomplishing their end goal shows you trust them to perform and complete their task competently. By building this trust, you are improving their overall experience while also improving their employee performance.

Completion of these four steps requires exemplary leadership which takes work. It’s not a one-size-fits-all formula. It comes down to more attention paid to employee engagement and is most effective when done on a oneon-one basis. Many leaders attempt to accomplish these steps on a companywide scale by having a big company-wide training or meeting that checks all the

boxes. When you try to accomplish company-wide performance improvement via big broad stroke-referendums, something always gets lost in translation. Generally, people fall through the cracks. So, while company-wide training can be effective occasionally, it is recommended to approach employee performance and improvement, with more individualized or small departmental training. Otherwise, a wide-sweeping overview may be interpreted as a lack of attention to detail or an overall lack of caring for the people who work for your company.

Creating a personal atmosphere where you engage with your team and communicate directly with employees, is the best way to implement the necessary steps to improve employee performance. u

Zac Garside is the CEO of Power Selling Pros. During his time at Power Selling Pros, he has been a coach and trainer with the company, working with hundreds of companies and vendors during his tenure. His passion for the industry illuminates through his ability to discover clients’ pain points and offer solutions for success.

The first step is to communicate your purpose, mission, and core values to your people. As a CEO, I have discovered that this is paramount to the success of any collective goal.

PREPARE FOR SHOULDER SEASON 2023

BY HEATHER LANGONE

As you know, the influx of customer service calls in the HVACR industry is based on seasonal demand when hot and cold repairs are deemed urgent fixes. A customer won’t hesitate about fixing a broken air conditioning system mid-heatwave. But when the weather is more temperate, demand goes down. Even if you have worked in the industry for a long time, it’s not until you have owned and operated an HVACR business that you realize how intricate shoulder season can be, in terms of budgeting, marketing, and preparing well, especially when you are responsible for the livelihood of a large team. Even some veteran HVACR owners, continue to benefit from advice – often by resident financial expert Ruth King – on ways to thrive during the slowdown. Because sometimes it is about keeping what works for your company and throwing out what does not. One thing remains true –seasonal dips don’t have to mean layoffs or that your business must stop.

Here are some tips both during and before the slowdown, to prepare for shoulder season. In addition to managing cash flow and putting away cash reserves during the peak times – which is nonnegotiable – to endure the slow season, here are additional must-dos to prepare for the shoulder season in 2023.

1. Maintenance Plans –Marketing, Sales & Follow Up

All our readers know what a maintenance plan is, but not all of you

Send consistent monthly e-blasts, and daily social media posts (including sponsored ones) to remind customers to sign up for a maintenance plan.

It’s especially important to do this during the busy season so that you will be covered when it slows. Many owners neglect this essential marketing when the business is flowing.

offer them – and we’re not sure why?

Maintenance plan customers pay an annual fee for preventive maintenance and these agreements are the bridge that can save you during the shoulder season. However, even veteran owners, don’t always maximize the full potential of these gems.

Maintenance agreements can be a contractor’s bread and butter when business slows. They provide recurring revenue whether you are scheduling new business or not. But even for those of you who already offer maintenance plans and keep up with the practice, you may not be leveraging this extra gold, to its fullest potential. What is the best way to market your service plan?

a. Make sure to get every customer’s email at a service call

b. Make sure every technician is offering these plans on every call – even when it’s busy and CSRs close every call with this option

c. Send consistent monthly e-blasts, and daily social media posts (including

sponsored ones) to remind customers to sign up for a maintenance plan. It’s especially important to do this during the busy season so that you will be covered when it slows. Many owners neglect this essential marketing when the business is flowing

Use the off-season as an opportunity to train your team to sell these agreements to your customers.

Technicians should be covering all the following benefits when explaining, laying out the “why” and the “long-term value”:

• Maintenance checks extend the lifespan of an HVACR system

• The long-term savings are immeasurable when looking at potential future repair costs

• Discount Options (as a business you should offer small discounts if a customer opts in)

• Address the intangibles – poor air quality and subsequent energy savings – that are addressed with regular maintenance

• Additional warranty coverage for HVACR equipment when part of a plan

2. DO Research – HVACR DATA Tells a Story

If you have been around long enough, you will begin to spot trends, not only in the industry but within your own company. Some companies struggle with losing their best employees over this period. Many owners find that they are unprepared for surprisingly slower slowdowns than the budget allowed. In the opposite case, an owner might not have a contingency plan in place for sudden unexpected increased business during the slow season (based on non-patterns or inclement weather) and the owner finds out they are shortstaffed. This can lead to poor service and customer reviews. And finally, others struggle with cash flow or all of the above. Preparedness is about having a bestlaid plan which includes a budget and recurring revenue, cash savings, and then also having a backup plan for when it all goes awry. The best way to do this is to look at the data for your business.

• What does your past seasonal reporting and data reveal about your company’s specific customer flow – how many hires, hours available, service calls (estimate)

• What is your plan for hiring? Avoid layoffs as a first plan of action. Word gets around if jobs aren’t secure at your business. The best technicians will go elsewhere. Instead, in preparation,

decide whether to have additional seasonal hires during the busy season – contracted employees. Or extend hours for the best employees during peak season.

• Cross-train employees. This may mitigate slowdowns. You can rotate folks as needed. If a technician is willing to cross-train in sales or customer service, for instance, then he or she may not object to taking on a new role when it’s slow, to keep a salary during the slowdown. This is especially effective for younger technicians who want to grow with a company, and at companies where the benefits are very competitive. If you are transparent with employees, it’s good information to weigh when looking at your past years’ data. Send out employee surveys. Get feedback on this if you are thinking about it.

•

Is it time to switch to a flat day rate?

If you look at the data, your slow season might be time to determine this moving forward. If you are losing money every shoulder season, consider it. That way you can avoid layoffs, offer good benefits, and keep your most competent technicians for the busy season.

3. Maintain or Create Tickler Files – Digital or Paper Will Do

Courtesy of our resident financial columnist, Ruth King, from her very informative shoulder season article back in 2007* which is just as good today! Maintain a complete tickler file! Whether you employ the most advanced technological HVACR software data program, or you still operate on oldschool pen and paper files, do not skip this step! If you don’t have a tickler file,

start one now! A tickler file is a file of customers or work pending, that you need to revisit or follow up on. For instance, if a customer says to a tech, “I’ll look at the maintenance plan next year. Right now, it’s not in the budget.” Place a flag on this customer’s profile and put that reminder in the tickler file to follow up with them. Frankly, you should do this during the busy season – albeit on slower days – so that you are covered during the shoulder season. Review the tickler files weekly. Assign a sales or CSR to this task. Then if there is unfinished work that a customer waited on or they haven’t signed up for a service agreement yet but indicated they would call them to follow up. This should be done in ADDITION to regular email marketing. It is a more personal touch to review upcoming work that needs finishing, discounts offered attached to maintenance agreement opt-ins, and the fact that they said on December 1, 2022, that they would like a reminder to sign up later for a maintenance agreement. Also, it’s another chance to explain why a maintenance plan saves money. Call them to follow up.

Like any skill you wish to perfect, running a business is a series of tried processes and best practices. Practicing, refining the processes, and annual review never stops – not if you wish to continue growing. If you continue to perfect your planning and processes, you will find your business thriving over time, no matter what the season or unexpected event. u

Heather

Langone is the Managing Editor of HVACR Magazine. For comments and feedback, email hlangone@hvacrbusiness.com.

*https://www.hvacrbusiness.com/news/2007/aug/01/ high-summer-productivity/

Maintenance service agreements can be a contractor’s bread and butter when business slows. They provide recurring revenue whether you are scheduling new business or not. But even for those of you who already offer maintenance plans and keep up with the practice, you may not be leveraging this extra gold, to its fullest potential.

ALL YOU NEED TO KNOW ABOUT 2023 HVAC REGULATION CHANGES

BY EMILY NEWTON

Contractors in the United States must abide by new HVACR regulations issued by the Department of Energy (DOE) that went into effect on January 1, 2023. Here are some practical details about how they will affect installations, conversations with clients, and more.

SEER CHANGES IN EFFECT

The DOE changed the efficiency metrics under which all new, single-phase residential or commercial heat pumps and air conditioners must abide. Related – the standards vary by region and depending on where the equipment installation or service occurs.

The southeast and southwest regions of the country are being mandated by air conditioner standards superseded by federal guidelines affecting all other regions (see What’s New with SEER Ratings?). In those two regions, compliance depends on the date of installation. National standards apply to all other regions in other parts of the country. Conversely, heat pumps only have one standard – these must follow the federal guidelines which apply to all regions.

What’s New with SEER Ratings?

HVACR regulations affect the Seasonal Energy Efficiency Ratio (SEER).

The DOE changed the efficiency metrics under which all new, single-phase residential or commercial heat pumps and air conditioners must abide. Related – the standards vary by region and depending on where the equipment installation or service occurs.

A higher SEER rating generally translates to better energy-saving potential in the equipment. More specifically, it’s the ratio of an air conditioner’s or heat pump’s cooling output over a typical cooling season divided by the energy consumed in watt-hours. However, the DOE now uses the Seasonal Energy Efficiency Ratio 2 (SEER2). It raises the total external static pressure testing conditions. DOE officials believe this change will more accurately reflect the real-world setting of a ducted residential system. People must now abide by an updated testing procedure called M1. It raises the system’s external static pressure by a factor of five.

The new testing procedure also affects the Energy Efficiency Ratio (EER) and Heat Seasonal Performance Factor (HSPF) for the respective newly manufactured products. Those measurements get reflected as EER2 and HSPF2 to indicate the M1 testing updates.

Now, residential HVACR equipment in the southeast and southwest regions of the United States must have a minimum

SEER rating of 151, while those elsewhere need a minimum of SEER 14. That translates to 13.2 SEER2 in the north and 14.3 SEER2 in the southeast and southwest.

However, the SEER2 rating differs for units with certain British thermal units per hour (BTUH) ratings. Contractors should verify those specifics by comparing the regulatory details to the products they wish to install.

Similar changes affect commercial single-phase air conditioners and heat pumps in the 3–5-ton range. Sources familiar with the matter also indicate the DOE may release standards for equipment outside the 5-ton range, but they’re still under consideration.

MANUFACTURERS HAD TO REDESIGN PRODUCTS

Homeowners make numerous decisions when having HVACR equipment installed. Many of those decisions are due to higher consumer

demand for energy efficiency. For example, spiral ductwork has exterior seals that can save energy2 by being less prone to leaks.

People researching new equipment before these HVACR regulations were applied may have noticed some models suddenly became unavailable or other signs of possible supply chain difficulties. These likely occurred because manufacturers had to change the designs of existing products to make them compliant.

An Expected Price Increase

Companies had to make the necessary changes by January 1, 2023, even if their products met former SEER requirements. People in the industry estimated that consumers would see prices for HVAC equipment increase by up to 30%3 as companies made the necessary design tweaks.

However, since the 2023 regulations only apply to new equipment, manufacturers will still supply replacement parts for existing systems. That will continue for approximately the next decade, which is the typical warranty coverage window for HVAC equipment.

Helping HVAC Customers with Cost-Related Jitters

If customers have concerns about

the costs of their HVACR equipment, suggest various options that may make the expenses more manageable. These can include things like tax credits and financing, if available.

Additionally, HVACR companies in the northern part of the United States can deplete their stock of non-compliant equipment provided the manufacture date is before January 1, 2023. Remember – the rules differ in the southeast or southwest of the country, so check your region for specific guidelines.

Contractors should also explain the long-term benefits of cost savings and efficiency that may alleviate any costrelated concerns. Even if a new HVACR system has a higher-than-expected upfront cost, it can pay for itself over time through energy savings. This is worth noting if a customer has any trepidation about the price. The new, higher SEER2 numbers typically translate to reduced energy consumption. That should translate to lower bills, too.

It’s also important for contractors to take the time to learn about their client’s pain points. Many of today’s urban home designs reflect people’s increasing prioritization of their health, especially indoor toxins. From an HVACR perspective, that might mean more installation of models that remove toxins better than the competing options.

When speaking to commercial clients, point out that planned system upgrades often make unplanned downtime less likely. If a large apartment complex has had an HVACR system in service for the last nine years, now might be an excellent time to update it to comply with the 2023 HVACR regulations. Getting educated about all the current efficiency and other performance metrics will help a contractor identify the likely payoffs of going ahead with an upgrade and make it easier to leverage the benefits with clients.

How Can Contractors Stay in Compliance?

A federal Energy Labeling Rule requires that HVACR manufacturers attach yellow stickers to their products to inform people about estimated energy usage. These Energy Guides show consumers approximately how much it will cost to run the appliance per year. They also contain the results of applicable tests, such as M1 for HVACR products. Broadly speaking, contractors

risk penalties for installing HVACR equipment after January 1, 2023, if it does not abide by the new regulations. The same goes for manufacturers. Those entities are no longer legally allowed to sell their non-compliant products. Additionally, some local building officials have indicated that they will not issue occupancy certificates for buildings with non-compliant HVACR products. What if a contractor purchased equipment manufactured before the deadline but can’t install it until after it passes? *

• The installation can occur if the SEER rating is at least 154, per the Energy Guide label.

• Contractors have another option for equipment with lower SEER ratings, they can modify it to meet the minimum SEER2 requirements.

NOTE: If a contractor chooses to modify, they must get the altered equipment recertified by the manufacturer or a manufacturerapproved entity.

*When the Department of Energy previously changed energy efficiency ratings, the organization instituted a grace period to give contractors, manufacturers, and associated entities ample time to complete the transition. However, this time around, a grace period only applies in the parts of the country where HVAC companies can sell off their existing equipment made before the cutoff date.

Leverage the 2023 HVACR Regulations as a Selling Point

Many commercial or residential clients of HVACR companies in 2023 will need more knowledge of the regulations detailed above. You will be that source. So, if you use your in-depth understanding of what’s changed to stand out from competitors, you can leverage the regulatory changes and your readiness to adapt, as a selling point.

First, put the information in language customers can easily understand – that

is crucial. Otherwise, people will quickly become overwhelmed by acronyms and rating details and not learn information that will make them lean into the purchase. Put yourself in the position of your target client and discuss the matter of utmost importance to that customer.

Clients may not immediately grasp the meaning of seemingly small changes and the impact of energy efficiency ratings. But if you explain the changes in a way that matters to consumers – not only energy efficient but money-saving – it will resonate with people.

The 2023 HVACR regulations may require you to make operational adjustments. However, since the DOE announced the changes well before they went into effect, many businesses in

the industry have been preparing for a significant time. The content above will help you quickly understand how “what’s new” can impact your business and potentially influence discussions with current or potential clients in a profitable way. u

Emily Newton is the Editor-in-Chief of Revolutionized, an online magazine discussing the latest industry innovations and trends. www.revolutionized.com

1 EIA, (2019, July 30th)

Efficiency requirements for residential central AC and heat pumps to rise in 2023 https://www.eia.gov/todayinenergy/detail.php?id=40232

2 Barker, H (2021, Oct.28.)

Advantages of Spiral Ductwork https://hmfduct.com/2021/10/28/ advantages-of-spiral-ductwork/

3 Wells, B (2022, Nov. 16th)

Inside Indiana Business: HVAC equipment cost increases mean it’s time to repair or replace heating and cooling systems https://www.insideindianabusiness.com/articles/ hvac-equipment-cost-increases-mean-its-time-torepair-or-replace-heating-and-cooling-systems

4 Sumberg, B, (2022, Dec. 8). Compliance with the Department of Energy’s New SEER2 Requirements Before January 1, 2023, and What To Do if Y ou Cannot Timely “Install” https://www.jdsupra.com/legalnews/ compliance-with-the-department-of-3046172/

If customers have concerns about the costs of their HVACR equipment, suggest various options that may make the expenses more manageable. These can include things like tax credits and financing, if available.

A LONG & REWARDING RELATIONSHIP WITH THE HVACR INDUSTRY

Spotlight On: Brennan Hall

BY HEATHER LANGONE

Isat down with Brennan Hall, the Director of Duct Fab Supplies and Air Distribution Products at Conklin, and President of The Spiral Duct Manufacturers Association (SPIDA). I found him to be deeply passionate about his role in the industry. Hall not only had a lot of wisdom to impart about various issues, like the role of automation and consolidation, and the importance of showing up and taking the meeting, but he also shared some self-reflection. For he believes it is his inherent curiosity and talent for building working relationships, that has been a big contributor to the pillars of his success.

HUMBLE BEGINNINGS IN HVACR

How did you get started in the HVACR industry?

I played baseball in college, but I continued to get injured. It was clear that playing sports would not be the path. So, I went to school for sports management. After graduation, I started coaching college baseball at Wright State University in Dayton, Ohio. I loved it but quickly discovered that you can’t make an amazing living unless you have several jobs, or you are a part of a select few.

A family friend and mentor offered me a job at his company, Atlanta Concrete Surfaces – doing construction. At the end of a week of hard manual labor, I thought, this is not for me and decided to go to graduate school.

After getting my graduate degree, I was hired by Certified Finishes, a floor-covering subcontractor in Atlanta. It was the opening that led to my current professional

life. I was green, but I taught myself how to estimate, purchase, manage crews, and act on a job site. With no accounts, I focused on finding new business. Within the year, I brought on one of their biggest accounts by doing what comes naturally to me –creating relationships. The company went from doing no business with us to signing a little over a million dollars in a very short period.

MANUFACTURING, DISTRIBUTION, AND PRODUCT DEVELOPMENT

Eventually, I moved to Owen's Corning and then, Baker Distributing, where I managed national accounts. Baker was instrumental in my growth. Not only did I learn about pricing and distribution from contractors, but Baker had wanted to create business partnerships with universities and institutions. Since relationship building was a strength of mine, I took on the challenge. Realizing that the potential decision makers were ordering from their desks out of the Grainger catalog, I set out to change that. I’d walk the campus weekly to learn about various sectors and meet people. Two years later, after sufficiently building my book, I received an offer from Johns Manville (JM), for an HVAC product manager role. It was an ideal next move and I stayed there for six years. I loved the company. It exposed me to manufacturing

and my boss became a life-long mentor, instrumental in my success both then and now.

He told me, “Take this job and mold it to you. You’re the face of our HVAC business.” It was a gift he gave me. It’s how I got involved with SPIDA. I’m now the president, and we are a premier partner to SMACNA – amazing.

With that move, more doors opened within the industry, and I found inroads to grow our product portfolio.

I spent much of my time listening to contractors, asking them, “What do you need from us? What products do we need to innovate for you? That dialogue led to the development of new products and four patents.

Vital to my growth there – I learned to listen to people and find ways to offer them a solution for their needs. If you come from that space of service and solutions, you’ll grow. It’s inevitable.

Eventually, I arrived at my present role at Conklin, a rapidly growing company – it’s exciting. With fourteen locations currently and as the Director of Duct Fab Supplies and Air Distribution Products, my job is truly about solving problems.

THE SUPER FABRICATOR & CONSOLIDATION

From your unique vantage point, what trends do you see in the industry?

We’re hyper-aware of the emergence of what I call the super fabricator and its direct correlation to consolidation. Twenty years ago, there might have been fifty guys fabricating sheet metal in Atlanta, as an example. Then someone figured out how to consolidate that to thirty, fifteen, and then ten. For us, it’s essential to understand automation and the trend of consolidation.

Conversations with contractors about automation are constant. What you learn is that the same ductwork might be made in several different ways. Although every owner likes to do it differently, the truth is most never step outside of their own four walls to recognize that the guy two miles down the road is doing the same project differently and it might be more cost or productivity efficient.

In my experience, there is real value in being willing to venture beyond your comfort zone. Be curious. It’ll serve you in ways you never imagined.

An example of this was my role in the building of the Mercedes-Benz Stadium in Atlanta. The 96-inch ductwork that goes all the way up around the top of the bowl, was done by RF Knox in Atlanta and the parts were sold by a competitor of ours. Chad Smith, the foreman at RF Knox, reached out and asked to meet with me in Texas to talk about the product and the process. He wanted to understand it fully. I agreed and flew to RF Knox to review their workflow plans and the product. As a result of that meeting and my visit with him, we advised him to reduce the width of the

With no accounts, I focused on finding new business. Within the year, I brought on one of their biggest accounts by doing what comes naturally to me –creating relationships.

product by two inches, which eliminated almost a hundred thousand dollars of labor and streamlined the process. It cut out a full step from the fabrication process and the entire stadium project. That was made possible because Chad was interested enough to ask for our input and see how it might work for him. In the end, it was that combination of passion, skill, and curiosity, that helped us find real solutions.

It was the most successful project of which I’d ever been a part.

What practical tips can HVACR owners borrow from your lessons and real-world experience?

Well, one complaint I consistently hear is that HVACR owners tend to ignore their own workers’ feedback regarding the need to upgrade equipment or products. Usually, it’s for cost reasons – I get it.

equally important. But it’s the package –it’s what JM calls the four Ps. If you have that, and specifically the people, quick, give them the rope! Tell them, “Mold this job to you. You are the face of this HVAC business. Go, be successful. Be uniquely you.” Then let them take the reins. It worked for me.

I attribute my long-lasting relationship with the HVACR industry to the people. This industry is the closest thing I’ve found to team sports – the camaraderie, the competition, the like-mindedness –I love it! u

But two pieces of advice I’d offer:

• Trust your people enough to listen first and then review the cost. Sometimes a cost if you weigh it, is instead, a valuable investment. A simple educational call with a supplier will allow you to ask the questions you need answers to and address your specific pain points. Buying is secondary, which leads me to the second piece…

• Be open to taking meetings both with distributors and sales vendors. Listen to existing solutions. You never have to buy but take the call. We do educational calls all the time. You may learn the very thing that will lead to more profits.

THE FOUR Ps

I believe people are your biggest asset – protect this asset like its capital. With the current lack of skilled labor, it’s vital. Passion and performance of course are

Brennan Hall is the Director of Duct Fab Supplies and Air Distribution Products at Conklin and the President of The Spiral Duct Manufacturers Association (SPIDA), 2023. https://www.conklinmetal.com/ https://www.spida.org/

In my experience, there is real value in being willing to venture beyond your comfort zone. Be curious. It’ll serve you in ways you never imagined.

INVEST IN TEAM MEMBERS TO CONQUER EMPLOYEE TURNOVER

BY CHRIS KOCH

Employee turnover will continue to have a significant impact on service businesses in 2023. In addition to the direct costs associated with recruiting and hiring, the disruption of replacing team members has a ripple effect that can slow your business, damage team morale, and reduce your company’s overall productivity and effectiveness.

An unpredictable economic climate and labor shortages have recently exacerbated these potentially costly disruptions.

The changing dynamic between applicants and employers compounds the urgency of the situation. Traditional roles in employment negotiations have shifted dramatically in recent years. The unprecedented demand for skilled workers gives job seekers powerful leverage. On the other hand, employers have less flexibility when it comes to hiring decisions.

Retaining top employees has always been an essential part of success in the field service industry. These days, it’s a critical challenge that business owners must solve to thrive and position their companies for long-term success and growth.

What Drives Turnover?

In addition to today’s job market volatility, several other factors, including recognition, opportunity, communication, and job satisfaction, can lead experienced team members to leave.

If team members don’t see a meaningful future at the company,

they will feel they have no reason to stay. Employers must offer a path for advancement and engagement for team members to feel invested.

Team members want to know the following:

• That what they’re doing makes a difference.

• The company they work for is invested in their future.

• They’re recognized by management and leadership for their efforts.

• There are growth opportunities and advancement available.

Compensation is also a factor, but it’s rarely the primary reason for employee turnover. Team members who feel valued and see opportunities ahead are less likely to jump from a secure position for marginal wage increases. Additionally, valued and invested employees will calculate benefits such as flexible scheduling, health insurance, retirement plans, bonus incentives, workplace culture, and salary.

Becoming THE Place to Work

Successfully managing turnover in 2023 doesn’t come without a cost – but it’s a long-term investment with positive

returns for your business. Take the time and effort to create a place where people thrive, and you’ll become the employer of choice in your service area – the company that people in the industry talk about and recognize.

Every marketplace has at least one company that stands out for excellence and opportunity. They offer an environment and culture that attracts and retains top talent. Employees are proud to work there and talk positively about their experience. Customers appreciate the professional service and value delivered. The employer of choice is where people want to work and whom potential customers want to do business with.

How can your company become the employer of choice in your market?

• Invest in Your Team. Offer training opportunities and prepare transparent career paths and compensation guidelines. Pay team members fairly and provide qualityof-life benefits that enhance their lives and the lives of their families.

• Manage Your Reputation. Most potential employees are reading your reviews and keeping an eye on social media. They’re watching how you respond to customers and the community’s overall impression of

your integrity and professionalism.

• Build a Positive Culture. Revisit your company’s mission, vision, and values and either reaffirm your commitment to them or update them, to reflect your investment in the community you serve. Building a great team is about more than hiring qualified employees. It takes a conscious effort to be the best and provide team members with the tools and support they need to get there. The changing demands of the employment market for service providers require a new approach. We’re experiencing a true transformation of our industry – there’s no going back to how it used to be. Contractors who can adapt to the expectations of a new generation of employees will find themselves delivering excellent service that will help them stand out from their competitors. The current market challenges are an opportunity to focus on what it takes to build a great team – and a great company. u

Chris Koch is a Head Coach and Trainer for Business Development Resources (BDR), the premier business training and coaching provider to the home service industry. With over 25 years of HVAC industry experience, he has experience in commercial service, residential HVAC, and plumbing spaces. Chris has a passion for building teams and provides the hands-on experience that BDR coaching clients have come to expect. Learn more about BDR at www.bdrco.com.

An unpredictable economic climate and labor shortages have recently exacerbated these potentially costly disruptions. The changing dynamic between applicants and employers compounds the urgency of the situation.

BUSINESS GROWTH FROM START TO FINISH

A blueprint for succession planning for any size business owner

BY MARTY WOLFF

Business growth is good – but is it good at any cost? The answer – is no, not without a guide or a map for growth.

Ask yourself, are you growing the company you envisioned? Is it a business about which you can say you are proud? Will you be able to leave a legacy after you exit? To accomplish this task, set out now to design your future with an active, vision and strategy in place. Any plan can and will change over time. It may even be turned on its head depending on extrinsic circumstances – need I remind you of Covid – or in reaction to supply chain issues, labor issues, natural disasters, or any number of surprises. Still, having a growth plan in place is important to keep you focused on what matters most. A well-laid plan can be your lighthouse as you navigate growth and will serve as a blueprint for your success. And, notably, the same strategy that works for a small start-up company, can work just as effectively as you grow to 10, 20, 30, or more employees.

A well-laid plan can be your lighthouse as you navigate growth and will act as a blueprint to your success. Design a clear plan so you never stray too far from your vision.

Create a Vision Document

When starting, chances are you will be operationally “small”, maybe even working with a few family members. At this juncture, you are probably talking to all your employees daily. Not too difficult to do when there is familiarity. Intimate working relationships in the early stages of your company will help you build as you transition from a one-or two-person operation to a healthy small business. However, as you grow, onboarding more employees, while there will be more revenue, there will also be more issues both with communication and retention.

It is important to have a map for your vision at the earliest stages. If you don’t know where you are going, how will you

ever get there? And like a map, you can take several routes, but the destination is always the goal. That way when obstacles arise, you can look to your original plan for guidance.

This leads me to this vital first step –before you grow at any stage, you should create what I refer to as the “Vision Document”. It’s your written, tangible blueprint. But more than a business plan or mission, it should also be infused with aspirational ideas of your future business, and core values that act as a foundation on which your company is built.

Culture vs. Strategy

Your management team is vital for growth. Choose your managers well

– onboard only those who see your vision and co-opt your position. A good leader should understand where you want to go and why it is valuable for them to be on your team. Sometimes it takes years to form this winning combination. Be patient and think long-term. It’s both important for them and you.

One note, it's been said that “culture eats strategy for breakfast” – don’t fall into the trap of believing that if your employees are “happy”, you will therefore have a successful company. What drives your success are the members of your team, especially your senior leaders and managers. For it to work, they all must be invested in helping you design your company both in the present and projected outlook, and in the growth stages. And they must be willing to take on the responsibility and accountability as leaders and coaches.

Following are some suggestions to help grow the business, if growth by design is what you desire:

1. Create a Vision Document together. This should spell out what your company will look like in 3,5, or 10 years from today.

2. Get feedback from key members of your organization on the initial Vision Document. If you have a bigger company, run this Vision Document by several of your employees to get their feedback.

3. No matter what size your business is now, get to know the key people tasked with leadership responsibility. If these are the people that will accompany you on the mission, they should be members of a team you trust implicitly.

4. Educate EVERYONE in the organization about their roles in the integral phases of achieving the vision you laid out. Be sure to have a conversation with them about why their contribution matters not only to the company but also to them as individuals and to their families.

5. Pay all your people fairly and competitively.

6. Conduct frequent one-on-ones with all your associates. These can be formal or informal. This is one way you will keep all your employees engaged.

7. Do formal performance reviews more than once a year. In addition to the one on ones, people want to know where they stand, they want to know what the score is!

8. Do a strategic plan update annually, one that connects to your “Vision Document”.

9. Recruit carefully, following detailed plans for onboarding your new team members

10. Check in with new employees – 30, 60, and 90 days after their start date.

Build It to Sell

At Contractor Succession, we often talk about a “built to sell” way of building your business. The theory is – to develop your business with a long-term view in mind so it is valuable when you decide

to exit or do some type of succession planning. What we share with our business owners, is that you should build a business so well from the foundation to growth, that it THRIVES whether you are there or not. If you do this now, later it will be deemed valuable which is smart business, even if you have no plans to exit for a long time.

Here are a few steps that will help you formulate a long-term strategy:

• Establish credibility. Your behavior in and outside of your business will begin the process of recruiting and retaining the best talent. How you treat ALL your stakeholders, employees, customers, and vendors will send a clear signal to your existing leadership team and to those special employees you want on your leadership team. And word travels. If you are a respected, credible leader, people will begin to seek you out.

• Involve your leadership team in some of your decisions. Ask them what they think about the new software, or about adding a new line of services like plumbing. You can get deep-rooted information if you ask. Learn about communication from sales or CSR to field service technicians or the team’s thoughts on the impending expansion into a new market.

• Listen carefully and respectfully and use the information to improve.

Building A Leadership Team That Supports A Growth Mindset

When we assess businesses either to help them grow or start the exit process, the leadership team is always the first important element. If a strong team does not exist, we typically make recommendations for the business owner to start developing (educating) a designated team of people – your senior team – who will be fundamental in helping you build that business you desire. This team is also integral when selling – buyers take the management stability very seriously. In addition to strong finances, your leadership team is often the next thing a buyer will look at. If you work to establish credibility and trust, then you are more likely to retain (for the next few years at least) a small group of loyal leaders who are confident and aligned with your vision. And, it’s important to make sure they succeed, so you may want to offer an educational program.

Tips to grow your leaders as your company grows:

1. Find books that you can assign them and that everyone can read as a team.

2. Then, schedule meetings every two weeks to discuss the information you read. Have a regular discussion and get feedback on how this information

might apply to your company and its processes.

3. Finally, offer brainstorming sessions and when appropriate, have managers go ahead and take the initiative to put the ideas into action.

Trust goes both ways. If your managers feel trusted and empowered to make decisions, then you will see them grow over time. If you work to be a trustworthy leader, one your management team wants to be around, learning will be an inspired process that provides the fuel for them to grow. The goal is to train them so well, that you could take off for three months and no one would notice!

Whether you are just starting your business, preparing an exit strategy, or somewhere in between, create a vision plan for your growth now. I hope you find some or all of this advice helpful!

Bonus: I’ve added a few books below that I think are great must-haves as you grow your business.

Recommended Reading:

• The 7 Habits of Highly Effective People by Stephen R. Covey

• Leaders Eat Last by Simon Sinek

• Trust & Inspire by Stephen M.R. Covey

• Lead From the Core by Jay Steinfeld u

Marty Wolff is CEO of Marty Wolff Business Solutions, Founding Partner in Contractor Succession, Host of the “Business Builders Show with Marty Wolff” and Cohost of the “Contractor Succession Podcast”. For more information email marty@contractorsuccession.com or call 570-815-1626. www.contractorsuccession.com

Your management team is vital for your growth. Choose your managers well – onboarding only those who see your vision and co-opt your position.

4 STEPS TO A GREAT NEWSLETTER

BY JOE PULIZZI

Many HVACR contractors may not have the financial resources to create a glossy custom magazine, but all companies can initiate an effective content-marketing program that works to acquire and retain customers.

The most important part of the content-creation process is developing a strategy that makes sense. Some contractors rush into creating a newsletter, or basic Web content without understanding how it works to ultimately drive the business. Before you waste time or money on content initiatives, HVACR contractors need to review the following four steps that will ultimately help you create a relationship with your prospects and customers.

1. Determine which goals will be affected by the content program.

To be successful, an effective content marketing program must directly tie to your organization’s overall objectives. In other words, create content because it truly helps your customers and, in turn, your business. Here are some reasons we’ve heard before from HVACR contractors who want to create their content:

• We want to drive more traffic to our website

• Our competitors are doing it, so we need to do it too

• We have tons of great information in this company — we need to tell the world about all the wonderful things we’re doing

Certainly, there are reasonable reasons for creating content. However, they are not all measurable and don’t all consider the customer. Ask yourself — Does driving more traffic to your website accomplish your organizational goals? Additionally — Will telling your company’s story, bring in more revenue? Remember, the ultimate goal here is a behavior change. Once you

get folks to your site, you must have them do something.

Organizational goals must be two things: specific and customer-focused. Here are a few examples of organizational goals:

• Increase our number of service customers by 20%

• Sell service agreements to 100 new customers in 2023

So, before you launch your program, be sure to list your key organizational goals. Once that is complete, understand which ones you are trying to affect with the online or offline content program.

2. Determine the information needs of the buyer.

Businesses create specific content so that customers react in very specific ways. Without a clear understanding of the customer’s information needs, any reaction that is close to the end goal is pure dumb luck.

Successful HVACR contractors already have a fairly good understanding of their core buyers. To create an effective content program, you need to take it a step further. Contractors with contentmarketing programs create content that is supposed to do several very specific things. Just think how pointless this would be if you didn’t know what information customers need, to make better buying decisions — buying decisions that ultimately lead back to the organization’s overall goals.

Understand your customers by doing comprehensive research. Comprehensive research does not necessarily mean expensive. Think of your research as including the following:

• Phone calls and in-person meetings with customers — include people that you think should be customers

• Send e-mail surveys to customers and prospects. Google Forms are free and great for surveying customers

• Discussions with your customer service and sales personnel

By doing all of the above, you’ll be able to create a buyer persona – a vision of who your target customer is – and a true understanding of what information they need. This will effectively get you to your goals.

3. Determine what you want your customer to do and why.

Before you create the content for your content marketing plan, make sure:

• The content plan specifically drives your organization’s goals

• The actions you want the customer to take are in some way measurable

• The content is based on your research about the buyers’ informational needs

If you have each of these components, you can create very specific goals for your content program. Some of these goals will be easy to link to your overall goals (e.g., achieving a business transaction). Others will just be pieces of the overall pie that keep you going in the right direction. Examples of these may be:

• Downloading a report to extract more customer information

• Signing up for a newsletter to begin creating a relationship with a prospect

• Trial offer or service that begins a conversation between you and the customer

Most organizations call the above, examples of customer conversions. Whatever you call them, make them specific and measurable.

4. Determine the product and content mix.

There are many content products to choose from — and the list grows longer every day with the spread of technology. By mixing your knowledge of the customer, your organizational objectives, and, frankly, your budget, you should be able to determine an appropriate content mix of products. Remember, even though there are leading content products (for example, a print or electronic newsletter may take the primary role), your contentmarketing program should be wellintegrated with your website, ancillary content initiatives, and other collateral. Make sure all touchpoints speak to each other.

By following these four steps, you will give yourself the best opportunity for marketing success. Remember, this doesn’t have to take a lot of time but must happen before you launch any kind of content marketing initiative.

Whatever you decide, make sure your newsletter is valuable to the user and delivered consistently. If you can’t deliver consistently, it’s best not to do it at all.

Now that you have the strategy part complete, our next article will talk about how to create content that your customers love, and is measurable, as part of an overall business growth strategy. u

Joe Pulizzi, a veteran HVACR marketing expert, is the founder of The Tilt (for content creators) and Creator Economy Expo, the in-person event for serious content creators. Joe’s seventh book, Content Inc.: Start a Content-First Business, Build a Massive Audience, and Become Radically Successful (with little to no money) is available now in all forms.

PROVIDED BY KEVEN PRATHER, CFBS EXIT PLANNING

Business Transition In Focus

Global economic disruption uniquely affects each business. Whether you are being hit with a hammer or expect to suffer a slow burn, your reaction to changes and proactive planning will play a major role in how your future unfolds.

Planning for Business Transition – Realistic Timelines

After recovering from the effects of Covid-19 and the subsequent shutdowns, the world economy is in a recovery stage. But as you may have seen, we are now facing threats from a new surge of variants, RSV, and a powerful post-pandemic flu outbreak. Again, whatever the challenges, businesses that sustain will rebuild and recover from any losses. At that time, now and after any future challenges, business owners will need to ask themselves if they are willing to weather another major disruption or transition out of their business while they can. It is best to plan now, while we are in the recovery stage of the crisis rather than in the eye of the storm so your business has the best chance of supporting your personal and financial goals. Even if those goals are changing based on recent events, your timeline is likely changing too – making a plan has never been more crucial.

To get a better idea of the urgency, here is a breakdown of tasks that may be involved in planning for the future of your business and the time each one might take to complete.

Setting (or Resetting) Your Goals

No matter what the impetus is to plan, it’s a good idea to revisit your goals periodically. During times of change and volatility, this review is even more important. It’s a good time to look at what your goals have been, especially concerning how much longer you want to stay involved in your business, how

much you’ll rely on your business for financial security, and to whom you want to transfer ownership in the future. In this review ask these two pertinent questions:

1. Have any of your previous goals changed?

2. Are there partners, advisors, or family members with whom you want to discuss possible changes to your goals?

This review is so important that it might be a good idea to give it the time and space it deserves. Take 30 to 60 days to truly review the goals or changes therein.

Planning for a Changing Business

Start with your preliminary plan. What aspects of your previous planning still make sense and which of your plans will need to change given new circumstances? Your task here is to get ideas and strategies on the table and start to weigh your options and investigate alternatives. This may require assembling some new data and conferring with specialists. It’s likely that some options previously available to you no longer make sense; it’s just as likely that new alternatives are now worth considering. Depending on how much planning you’ve accomplished in the past, expect this

phase to take anywhere from 90 days to 9 months.

Implementing Business Strategies

Next, you’ll start implementing the strategies you’ve identified that you believe will take you where you want to go and put you in a position to transition your business when and to whom you want. Preparing yourself, your business, your management team, and your situation brings your greatest chance of long-term success. Many business owners have a sizable gap between the resources they have and the resources they need to achieve their goals. Your gap may be changing. This is where the important work gets done. It can take six months (if you’re trying to get out of your business soon) or five years (if you need to build value and prepare team members).

The Ownership Transfer

There are many ways to transition out of ownership when you are ready. Your options tend to fall into one of two primary categories: you can sell to a third party, like a strategic buyer or investor, or transfer to an insider, such as a child or your employees. If you and your business are prepared for the transfer, and you commit to pursuing a third-party sale, you

can sell your business and be completely out within a year or so. On the other hand, it’s common for transfers to insiders to take longer, usually because new owners don’t have an immediate ability to cash you out. It may still be possible for you to get the value you want and need for your ownership interest, but it can take time. A well-prepared business can transition to insiders and deliver a fair value to a departing owner in three to five years.

The Full Timeline for Transitioning Your Business

Planning for the future of your business, and taking the steps necessary to get there, will have a timeline that is unique to you and your company. It’s common for the process to take anywhere from one to ten years. That’s a pretty big range, but you are probably already applying the process to your situation and getting a sense of your timeline.

Now is a great time to take a second look at the planning you’ve done in the past. Look at how flexible and dynamic your planning was previously. Take this opportunity to build a new path toward your future. When everything is changing around you, it’s important to adapt so that you can react to your situation instead of being a victim of your circumstances.

We strive to help business owners identify and prioritize their objectives for their business, their employees, and their family. If you are ready to talk about your goals for the future and get insights into how you might achieve those goals, we’d be happy to sit down and talk with you. Please feel free to contact us at your convenience. u

Keven P. Prather is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. Call 216-592-7314, send an email to kprather@financialguide. com or visit transitionextadvisors.com.

Global economic disruption uniquely affects each business. Whether you are being hit with a hammer or expect to suffer a slow burn, your reaction to changes and proactive planning will play a major role in how your future unfolds.

BY RUTH KING FINANCE

Do You Have the Mercedes-Benz Syndrome?

Acolleague was helping a business owner look for funding for his business. He introduced him to a potential investor at lunch. The next day the investor called my colleague and told him that the person was nice, however, he would never invest in his business. My colleague asked for a reason.

The investor said that he had “Mercedes-Benz syndrome”. “What’s that?” asked my colleague.

Invest in Business Growth, Not Your Lifestyle

After further discussion, the investor explained that during the conversation at lunch, he discovered that this person was funding a $2,200 Porsche lease through the business. What that said to the investor was that this person appeared more interested in having the business pay for his lifestyle, rather than growing the business. The investor explained to my colleague that he was unwilling to put his money toward the payment of a car lease. His investments were supposed to help grow the business, not the owner’s investment in the “finer things of life”. He then went on to explain that this is what he referred to as the “Mercedes-Benz Syndrome”. It’s a term used to describe when business funds are used to pay for unnecessary personal assets, i.e. the owner’s “Mercedes-Benz”. An investment that is supposed to be directed toward the business needs but instead goes towards the owner’s personal needs.

Cash in the Bank Isn’t a Pass to Spend It

It struck me that I’ve also seen many HVACR owners do this too. These are the owners who don’t understand that cash does not mean profit and that having cash in the bank does not mean that you must spend it. They assume if there is cash

in the bank, then they can spend it on whatever they’d like to spend it on. After all, it is “their business.” But that is not smart business.

These “Mercedes-Benz” business owners use the business cash to buy boats or have the company pay for expensive trucks and cars. They write off vacations, build an expensive home, have a non-working relative on the payroll, use company credit cards for personal expenses, and the list goes on. Instead of investing in the business, they invest in themselves.

Don’t mistake my sentiment – there is absolutely nothing wrong with enjoying the fruits of your labor and the labor of your employees. However, you can’t do it at the expense of your business. If you need evidence of why this is poor business management, I’ve included the following examples.

Do as I say, not as I do. If employees see you using company credit cards to fund personal expenses, they think they can do it too. A technician goes to the gas station and purchases gas. However, he also purchases a drink, food, and other personal things on the company credit card. He thinks, “The boss does it. I can do it.” If no one checks the credit card statements, then the technician CAN and WILL do it.

Business and personal expenses do not mix. Clean books are critical to know the true profitability of your company. Business and personal expenses must be separated. If your goal is to sell your company to outside investors, then profits will be decreased by the amount the investors deem “personal expenses”.

Family on the payroll should be held to the same standards. When employees see sons, daughters, wives, or other relatives on the payroll who are not working or are not productive, this affects their productivity and in turn, your company’s bottom line. What would happen to your net profits if non-productive employees (including relatives) were not on your payroll? Or, perhaps you should do a review to make sure all employees are being held to the same standard.

Save money for the slower season. Saving for a rainy day helps eliminate the “Mercedes-Benz Syndrome”. How is that, you ask? If you keep the big picture in mind, you will be less likely to spend frivolously. So that, in years with lower profits, you have cash reserves that keep your operations going. If we had to endure another world shutdown like in 2020 during the pandemic, could your company survive for six months without revenue coming in the door?

A GOOD Rule of Thumb

Formula: Take the total payroll plus payroll taxes for your busiest month and add that number to the total overhead in your busiest month.

Multiply this sum by 3 to 6 depending on your risk tolerance. That final amount is how much you need in savings.

To generate these savings, put 1% to 2% of every dollar that is collected in a savings account. Put at least 50% of all residential maintenance plans and 5% of all commercial maintenance plan dollars that are received in a savings account. Resist the temptation to use the money for “Mercedes-Benz” items when the dollar amount is large and your company had a very profitable year.

Saving IS a Smart Investment

Please avoid the “Mercedes-Benz Syndrome”. Make sure that you are earning enough on your revenues to generate reasonable profits. Save some of the money you generate from collections on those sales.

Refraining from spending company money on personal assets, good profits, unproductive family employees, and other unnecessary expenses is the only way to grow. Always put money in savings. You’ll have the cash when an unexpected major expense or another pandemic arises. If you follow this advice, you enjoy the fruits of your labor the right way. u

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 or at 770729-0258. The official publication date of my book (when it will be available on Amazon) is in 2023. But if you would like an advance copy, before the official publication date, go to: bit.ly/3FuYgIU if you want to order the book.

If we had to endure another world shutdown like in 2020 during the pandemic, could your company survive for six months without revenue coming in the door?

CLIMATEMASTER

The Trilogy QE with iGate2 is a variable system that exceeds 45 EER while providing heating, cooling, and domestic hot water needs of a typical residence, while also providing today’s homeowners more transparency into their system’s daily operations and energy consumption data ClimateMaster’s iGate2 Communicating Thermostat provides intelligent recommendations based on user behavior for maintaining at top performance. The mobile app My Uplink® allows remote access into Trilogy system for control and monitoring and provides service professionals the realtime diagnostic tools they need to better serve their clients.

www.ccgi-hvac.com

DAIKIN

Daikin Rooftop Systems provide treated air for one-to-eight-story buildings. Many options are available to satisfy a wide number of applications. Fresh outside air is mixed with return air from the occupied space and then filtered, conditioned, and supplied back into the building. Conditioning involves cooling, dehumidifying, or heating the air for optimal space comfort. Rooftop units can serve a single zone or an entire building. Some can be designed for make-up air, where only outside air is treated and sent to the space. Inverter compressors, beltless ECM fans, and energy recovery solutions make rooftop systems an easyto-maintain, energy-efficient choice for any air conditioning space.

www.daikinapplied.com/ products/rooftop-systems

DANFOSS

Danfoss’ CO2 MiniPack Controller makes CO2 refrigeration accessible for smaller supermarkets and discount stores. Small-format food retail stores now can implement CO2 refrigeration systems without excess first-cost investments. Danfoss’ CO2 MiniPack Controller provides a complete pack solution that makes CO2 approachable for smallformat food retailers who would like to harness its benefits, even those with little CO2 experience. With the functionality of a dedicated CO₂ controller, minimal complexity, and unique ease-of-use at competitive pricing, the MiniPack Controller is a flexible and accessible tool for even the most budget-conscious food retail operation.

www.danfoss.com

GREENLINK ENGINEERING

KnuckleHead Heavy Pipe Supports are designed for a wide variety of roof support applications including natural gas and water pipelines, and other types of pipes up to 3” outside diameter pipe size (2.5” nominal). Each KnuckleHead can support up to 600 lbs. Units can be spaced to evenly distribute the load of the heaviest equipment. Heavy Pipe supports are lightweight, so they add little to the total roof load, preventing low points and depressions that invite ponding water and ice build-up. Greenlink offers a whole line of Knucklehead Rooftop Mechanical Support System products. For more, visit the website.

www.greenlinkengineering.com/ products/knuckleheads/

HEATCRAFT REFRIGERATION PRODUCTS

The intelliGen™ Refrigeration Controller by Heatcraft Refrigeration Products delivers unmatched temperature control. It reduces temperature fluctuation, brings the system to optimal temperature faster, and optimizes cooling time through fan cycling. Additionally, it detects when the system needs defrosting, which automates the defrosting cycles and saves energy costs. With a reduction in energy costs of up to 30 percent, the intelliGen Controller can pay for itself in as little as one year. Ensuring consistent temperatures is not only essential to keeping food fresh and safe, but it’s also necessary to prevent costly food loss from spoilage.

www.heatcraftrpd.com

LG COMPRESSOR & MOTOR

LG UniRotary™ provides reliable & state-of-the-art compressors and motors based on advanced technology that keeps customers up to date with the latest parts. LG's rotary compressor products provide a wide range of single, and twin cylinders with variable and fixed-speed compressors. The unitary compressor, unlike other compressors which do not always offer the durability required for unitary applications, the advanced design eliminates that issue. LG Compressor & Motor revolutionizes the way you will do business.

www.lg.com/global/business/ compressor-motor

MARS DELIVERS

Mars Delivers Residential Heat Pumps with R410A Refrigerant, deliver high-quality condenser coil with aluminum tubing and enhanced louvered fin for maximum heat transfer capacity. The top discharge directs hot air and sound away from living area and shrubbery All units are run-tested with louvered panel coil protection and easy access to electrical panels, pre-wired for easy hook-up. Bi-directional liquid line filter drier factory installed discharge muffler for quiet operation to ensure reliable, solid-state defrost control. The units are capable of reducing noise during defrosting and are ETL and ETLC approved and AHRI Certified. Visit the website for more.

www.marsdelivers.com/item/ HRG1836S1P/2-3T-TOP-DISCINVERTER-HP/

WATERFURNACE

WaterFurnace Geothermal heating and cooling systems come in three basic configurations plus a fourth combo type, designed to meet the needs of your home and provide the highest efficiency and the greatest energy savings. And nearly all of our products meet or exceed the ENERGY STAR® requirements. Forced Air All-InOne, Radiant, Hot Water & Hydronic Indoor/Outdoor Split, and Forced Air / Hydronic Combo. WaterFurnace systems are rated number one in energy efficiency because they can deliver more than five units of energy for every one unit of electrical energy used. Compared to even the best ordinary system, it translates into an efficiency rating exceeding 530%.

www.waterfurnace.com/ residential/products/ geothermal-heat-pumps/

with JUSTIN CARROL 20QUESTIONS

Heather Langone, Managing Editor, sat down with Justin Carrol, President of P1 Service Group. They discussed the “people first” mission, the privilege to be able to enhance lives, and the role of ethics in business. P1 (People First) Service Group is an industry-leading national home services provider partnering with residential companies that want to collaboratively grow their existing brand while maintaining an extreme focus on our mission. of valuing people first.

1. How did you become president of the P1 Service Group?

I was looking for a partner to help to invest in the growth of my company, Perfect Home Services. My primary focus was finding someone who wouldn't damage the culture that we created. After many months I connected with Jake Meister at River Sea Network. Together, with a business mentor in Denver, our CEO Jeff Belk and CFO Steve McConnell, we formed a national home service company P1 Service Group.

2. What is the biggest challenge presently facing the company?

The greatest challenge is finding the right people to join us on this mission. We take it seriously.

3. What defines a good partnership?

For us, that is a company that has values that align well with ours AND a respectable leadership team in place. We also look for owners who are willing to continue to lead the business after we partner together.

4. What attracts you to a potential acquisition partnership?

First, the people, then a heavy focus on leadership –the leader at the helm is critical. I believe everything rises and falls on leadership.

5. What do you wish business owners knew – generally?

When you focus on people, great things happen. Most of the things that your business is struggling with, can be corrected through proper leadership and strong buy-in from your team. If you focus on people first, they'll scale mountains for you.

6. How has P 1 Service Group changed the industry for the better?

Along similar lines to what we've been talking about –we are mission first. It just so happens we do heating, cooling, plumbing, and electricity.

7. What was the most successful achievement for the company in 2022?

We held a strategy session in our business planning workshop for 2023, during which we took a significant amount of time to discuss stewarding our businesses. The unique responsibilities we hold as company presidents mean we can enhance lives. The goal agreed upon was to return to our respective businesses and a plan in place to invest in the people who work for us. An example – at my business, we decided to pay for employee life coaching! I’m very proud of the impact this has made on my employees.

8. What role does ethics play in business? It is fundamental. If you are a partner of ours, you follow a code of ethics – it’s non-negotiable.

9. What is your definition of a thought leader?

Someone with a unique perspective, a high level of specialized expertise in a particular area, and someone to whom it’s worth listening.

10. Is there somewhere you go to be still before making an important decision? Stillness does not come naturally to me, but I see value in it. For some reason, when I am around water, my mind slows. I live on a lake. When I take time to stare at the water, everything slows, and I can do some quality thinking.

11. Do you think interest in the trades rather than traditional education, is making a resurgence?

I'm not sure about trends – I rarely watch the news because there's so much negativity. But if there isn't a resurgence, there will be.

12. Is B2B /C marketing more complex in the HVACR industry as opposed to traditional business?

I'm not sure. I think we tend to look at other industries and form assumptions that aren't true. I can't say that I know enough about other industries to comment on their complexities or compare.

13. What would you say is the biggest learning hurdle HVACR owners face when starting a company?

Most HVAC owners got into the business as tradesmen first, not by way of a business degree. They don't necessarily understand how to run a business or read financials or marketing. It’s a hurdle, but not insurmountable.

14. Is there a book or resource that helped you learn?

The Nexstar organization. I will be forever grateful to them. They taught me so much.

15. How do you see this partnership transforming in the next three years?

Our potential is enormous, but growth isn’t necessarily the focus. If we never added another company to our portfolio, we'd be perfectly happy staying with the vision. At the same time, if we add fifty companies in the next few years, that's great too. It's about waiting and trusting in what God delivers.

16. Is virtual training realistic for HVACR owners when it comes to field services?

Yes. I feel like you get a slightly better impact by doing training in person. However, I think if you've created well-prepared training, you can offer very impactful virtual training.

17. Have you used any VR in your training?

Yes! Our VP of training, Dan Friesen, is one of the most talented trainers, not just in our industry, but in any industry. He was the former head of training at Nexstar. He conducts weekly training for us and trains our trainers at their locations.

18. What is your definition of a perfect home service appointment?

One that focuses on the client first and then the system. The average technician focuses on the system first and the client second. We stress the importance of meeting the client’s needs by providing a thorough evaluation of their entire system, asking a series of questions to understand, and then educating them on the options.

19. What is the most important advancement in home services technology over the last few years?

The biggest impact doesn’t come from technology. There was a time when I was too heavily focused on technology and not enough on the fundamentals of doing the kind of business that makes a difference. Technology tends to be a shiny object trap. I wish I could have those years back to focus only on the fundamentals – focus on humans, and processes, on how to conduct a proper service call, deliver on clients’ expectations, grow strong leadership, and deliver excellent training.

20. What defines a P1 Service Group partnership?

People – it truly is about the mission first.