HVACR BUSINESS JULY 2023

A COLLECTION OF FINANCIAL RESOURCES

FEATURES

6 10 Common Mistakes HVACR Owners Make Top mistakes HVACR owners make and ways to avoid them.

By Terry Tanker

10 A Collection of Financial Resources

Ruth King on overhead, pricing, discounts and more.

By Staff

13 10 Sales Tips for a Growing HVACR Business President of Munch’s Supply weighs in with her top sales strategies for HVACR owners.

By Claire Munch

15 A Step-by-Step Guide to Weather-Triggered Marketing Campaigns Part III in the series on how to use weather-triggered marketing to increase sales.

By Kevin Snow

17 Is your HVAC Marketing in Need of an Upgrade?

If your marketing needs an upgrade, we offer tips to make changes.

By Heather Langone

COLUMN

19 Building an Advisor Team That Works for You (Not Against Each Other) Prather shares expert advice on how to choose a team that supports your needs.

By Keven Prather

20 Give Employees KPIs to Make Annual Reviews Easier

Using KPIs to streamline and support annual performance reviews and bonuses.

By Ruth King

purchase

DEPARTMENTS

5 Editor’s Notebook | Adaptability Leads to Growth

Leaning into adaptability in small business ownership can support business growth.

Heather Langone

4 MRS | Leadership

This installment includes six new suggestions for the best books and podcasts on leadership.

22 20 Questions with Rick Sporrer President of Danfoss North America

Management Resource Shelf

LEADERSHIP

What makes a good leader great? In this installment of the Management Resource Shelf, we deliver four podcasts and two books that explore the topic of leadership. All of the following choices, offer a master class on what makes a good business leader. As usual, we’ve done all the sifting and sorting for you and we’ve come up with the best six choices. So, just sit back and listen or read at your leisure – you will be better for doing it!

How I Built This

Guy Raz

Guy Raz interviews the world’s bestknown entrepreneurs to learn how they built their iconic brands. In each episode, founders reveal deep, intimate moments of doubt and failure, and share insights on their eventual success. How I Built

This is a master class on innovation, creativity, leadership, and how to navigate challenges of all kinds. New episodes on Mondays and Thursdays for free. Listen 1-week early and to all episodes ad-free with Wondery+ or Amazon Music with a Prime membership or Amazon Music Unlimited subscription. Get your How I Built This merch at WonderyShop.com/HowIBuiltThis https://podcasts.apple.com/gb/podcast/ how-i-built-this-with-guy-raz/id1150510297

Beyond The To-Do List

Erik Fisher

For more than a decade, Erik Fisher has sat down with productivity experts, authors, and creatives as they share their insights on how to implement productivity strategies in both your professional and personal life. The goal is to help you gain perspective, practical knowledge, and productivity insights for living a whole life that goes Beyond The To Do List. Listen in as Erik Fisher talks with productivity experts as they share how they implement practical productivity strategies in their personal and professional lives. Fisher explores all aspects of productivity and the true end goal of productivity: living a meaningful life.

www.beyondthetodolist.com/

Start With Why

Simon Sinek

Start With Why is a book by Simon Sinek that helps startup entrepreneurs understand how great leaders inspire everyone to take action. The book argues that people don’t buy what you do; they buy why you do it, which is the key to success. The book provides readers with an understanding of the importance of purpose and how it can be used to create a passionate and engaged workforce. It also offers practical advice on implementing this philosophy in your business.

Simon Sinek is a world-renowned motivator and coach. His Ted Talk based on this book has amassed more than 60 million views. www.amazon.com/Start-Why-Leaders-InspireEveryone-ebook/dp/B002Q6XUE4/

Coaching For Leaders

Dr. Dave Stachowiak

Building and managing a business requires great leadership skills. Thankfully, leadership and managerial abilities can be learned. In Coaching for Leaders, Dr. Dave Stachowiak converses with bestselling authors, expert researchers, renowned scholars, and business leaders about effective leadership and management practices. In a recent interview, author and psychologist Daniel Goleman explained how leaders should increase their capacity for empathy to perform better. Dr. Dave Stachowiak also has more than 15 years of management experience at Dale Carnegie. He’s been producing Coaching for Leaders episodes since 2011 and has amassed more than 590 episodes of practical leadership and management knowledge. www.coachingforleaders.com

The Mighty Modern Manager: How to Overcome Leadership Challenges and Succeed as an Exemplary Leader With the Right Mindsets, Skills, Tools and Practices

Paul A. Wyatt

How do you stay on the leadership course with your head held high and your teams thriving despite constant change and challenge? Try these action-oriented tips and strategies for leadership success! Is your team struggling to cope with massive changes in the workplace?

Are you having issues achieving goals in a timely, effective, collaborative manner? You’re in the right place.

https://www.amazon.com/Mighty-Modern-Manager-LeadershipChallenges/dp/1958166340

Spark Brilliance

Jackie Insinger

Cultivating a proactive relationship with your employees is key to maintaining a healthy and productive work environment, no matter how big or small your team may be. In her book Spark Brilliance, Jackie Insinger provides startup entrepreneurs with the tools they need to foster positive employee relations from the ground up. Through real-life examples and actionable advice, Insinger covers everything from building trust and communication within your team to creating an inclusive culture that celebrates diversity and individual strengths. Whether you’re just starting or looking to take your business to the next level, Spark Brilliance is an essential read for any entrepreneur. www.amazon.com/Spark-Brilliance-PositivePsychology-Transform-ebook/dp/B09SNLCW7Q

THE HVACR MANAGEMENT MAGAZINE

TERRY Tanker

Publisher ttanker@hvacrbusiness.com

HEATHER Langone Managing Editor hlangone@hvacrbusiness.com

MEGAN LaSalla

Art Director mlasalla@hvacrbusiness.com

BRUCE Sprague Circulation Manager bs200264@sbcglobal.net

BARBARA Kerr VP Operations bkerr@hvacrbusiness.com

BY HEATHER LANGONE

EDITOR’S NOTEBOOK

ADVERTISING STAFF

ERIC Hagerman

VP Sales

Tel 216-409-3246 ehagerman@hvacrbusiness.com

TERRY Tanker Publisher

Tel 440-731-8600 ttanker@hvacrbusiness.com

Adaptability Leads to Growth

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: 440-731-8600. Periodicals postage is paid at North Ridgeville, OH and additional mailing offices. (USPS 025-431)

31674 Center Ridge Road, Suite 104 North Ridgeville, OH 44039 Tel: (440) 731-8600

Web site: www.hvacrbusiness.com (ISSN: 2153-2877)

Building a culture of adaptability starts with good leadership. A good leader must model flexibility both in decisionmaking and in management and communication style. When you do this your employees will take the cue to also remain adaptable to change

For owners of HVACR businesses, there are many factors out of your control including pandemics, supply chain disruptions, regulatory compliance, and equipment pricing increases. Statistically speaking 80% of HVACR owners were former service technicians before becoming the owner of their company. Traditional business education wasn’t the path – meaning on-the-job learning was often trial-by-fire. During the rapid growth phases of a company, this business education deficit can be daunting for entrepreneurs. But it’s not all doom and gloom! Not only is managing growth an amazing problem to have, but it’s also an opportunity to improve all aspects of your business operation. This is where opportunity, preparation, and adaptability all come together. If you remain adaptable, your chances of “weathering” the unpredictability of the business environment will be far greater.

Start with the following tips.

Regular Communication

The way you lead includes the way you communicate. If you allow employees to present feedback and concerns in an open forum, and you fully engage with them, you will be modeling adaptability. This may seem like a small thing, but if you plan to grow your business over time, then employee retention will be one of your key advantages. In an industry where finding good employees can be a challenge, the more loyalty you can create, the more adaptable those employees are likely to be when the company goes through growth phases, and everyone must work longer and harder.

Forecast Future Change

Change happens quickly, and good leaders are always strategically thinking about their business model in the near and long term. For instance, regular readers of our columnist

Ruth King know she often stresses the importance of checking your inventory levels, depositing regularly into savings, and creating the correct and necessary financial statement to ensure you have the tools you need to operate the business. And, if you read HVACR Business magazine regularly, you also know we cover all the business disciplines that will ensure your success.

Have A Contingency Plan

Dozens of articles have appeared in this publication regarding the need for contingency planning and funds. When you run out of cash, you run out of options. And many of our owner-written features also discuss the need for preparedness – Mike Disney just wrote a great piece1. Certainly, many companies had contingency plans in place in 2020, but none could have predicted the avalanche of business the pandemic would bring as breadwinners worked from home rather than their offices since no amount of planning could have predicted that. But if you had a contingency plan, chances are you were better off than most.

Work with Mentors and Industry Organizations

If you yearn to be a better leader, which includes adaptability as a core principle, then you also need to be open to learning. The most successful entrepreneurs will tell you that having a mentor is crucial. Even our Publisher Terry Tanker started the magazine with the guidance of no less than four mentors. Seek out individuals or success groups who can help you navigate ownership hurdles more seamlessly because they have done it. Additionally, there are dozens of great industry organizations that are ready and willing to help.

If you stay open to feedback, forecast future changes, and prepare for the unpredictable, you will become a more adaptable leader and thus, a more successful business owner! u

https://www.hvacrbusiness.com/news/2023/may/01/establish-long-term-success-by-eliminating-financial-barriers/

If you remain adaptable, your chances of “weathering” the unpredictability will be far more successful, as will the opportunity for true growth.

10 COMMON MISTAKES HVACR OWNERS MAKE

BY TERRY TANKER

Owners of HVACR companies sometimes make mistakes that can hinder their business growth and success. I’ve outlined ten common mistakes below. Avoiding these mistakes requires proactive planning, continuous improvement, and a customer-centric approach. By investing in marketing, prioritizing customer service, optimizing operations, promoting ongoing training, and maintaining financial discipline, HVACR business owners can set a strong foundation for growth and success.

Here are ten common mistakes to avoid:

1. Lack of Strategic Planning

Failing to develop a clear vision and strategic plan can hinder the long-term success of an HVACR company. Without a roadmap, owners may struggle to identify growth opportunities, make informed decisions, or adapt to changing market conditions. It’s crucial to set measurable goals, conduct regular SWOT (Strengths, Weaknesses, Opportunities, Threats) analyses, and create actionable strategies to guide the company’s growth and sustainability.

Neglecting

2. Lack of Customer Focus

Failing to prioritize customer satisfaction and service can be detrimental to an HVACR business. Customer loyalty and positive referrals are crucial for success in this industry. Owners should focus on providing exceptional customer service, responding promptly to inquiries, addressing customer concerns, and delivering high-quality workmanship. Failure to prioritize customer needs leads to a loss of business and a damaged reputation.

3. Inadequate Workforce Development

The success of service businesses relies heavily on the skills and expertise of their employees. Neglecting employee training and development results in subpar service quality, decreased productivity, and limited growth opportunities. Owners must invest in ongoing training programs, certifications, and apprenticeships to ensure their workforce stays

knowledgeable and skilled in the latest industry practices.

4. Inadequate Financial Management

Poor financial management will kill even the best companies. Owners must stay on top of their cash flow, and budgetary constraints, to sustain and grow the business. Owners who don’t do the proper financial planning, keep accurate books and implement cost control measures often may find themselves struggling to cover expenses or make strategic investments. It’s crucial to have a solid financial management system in place, including regular financial analysis, budgeting, and forecasting.

5. Neglecting Maintenance Contracts

We’ve been writing about the importance of maintenance contracts since starting the publication in 2006. Still, many contractors focus solely on

one-time repairs or installations and neglect the potential of maintenance contracts. Offering maintenance agreements to customers provides a stable recurring revenue stream while ensuring that customer systems are properly maintained. Implementing a proactive approach to maintenance also prevents most sudden major breakdowns.

6. Inadequate Marketing and Promotion

Neglecting marketing efforts is a significant mistake. Some company owners assume that word-of-mouth referrals alone will sustain their business. However, over the long run, this won’t work. You need to invest in a comprehensive marketing strategy that includes a strong online presence, social media, search engine optimization (SEO), and targeted advertising. Failing to promote your business limits your reach and prevents potential customers from finding you. Owners should have a well-designed website, maintain an active presence on relevant social media platforms, and actively manage online reviews. And as the company grows TV, radio, and print advertising should be incorporated.

employee training and development results in subpar service quality, decreased productivity, and limited growth opportunities.

7. Inefficient Operations and Workflow

Poorly organized operations result in delays, mistakes, and dissatisfied customers. Owners must establish streamlined processes for handling inquiries, scheduling appointments, dispatching technicians, managing inventory, and handling paperwork. By investing in efficient systems and tools, you can improve productivity, reduce errors, and enhance customer satisfaction.

8. Ignoring Technological Advancements

As an industry, we’re constantly evolving, with new technologies and innovations. Owners failing to stay updated on the latest advancements miss opportunities to improve efficiency, offer better solutions to customers, and gain a competitive edge. It’s important to invest in training and education to keep up with industry trends and leverage

We’ve been writing about the importance of maintenance contracts since starting the publication in 2006. Still, many contractors focus solely on one-time repairs or installations and neglect the potential of maintenance contracts.

new technologies that can benefit your business.

9. Lack of Diversification

Relying heavily on a single market segment or customer base is always risky. Remember what happened to new construction 2008 – 2010. Economic downturns or shifts in customer preferences can significantly impact the business. Owners have to consider diversifying their customer base by targeting residential, light commercial, and industrial sectors. Offering a range of services such as installation, maintenance,

repairs, and energy audits can also help mitigate risks and expand revenue streams.

10. Poor Communication and Customer Education

Effective communication is key to building strong relationships with customers and ensuring their satisfaction. Owners who fail to communicate clearly and educate customers about their systems will encounter misunderstandings, low customer loyalty, and missed opportunities for upselling or cross-selling. It’s important to establish

clear lines of communication, provide transparent explanations about services and costs, and educate customers on system maintenance, energy-saving tips, and available upgrades.

Not one set of principles or words of advice can replace the knowledge you have about what works best for your business. However, these are strategies that have worked for countless HVACR owners who’ve come before. If you follow this advice and continue to be adaptable to change, certainly you will avoid potential (and mostly predictable) hurdles that can threaten to stop growth and hinder the long-term success of your business. u

Inventory Management Tips from Travis McGee, Product Management for ThermoGrid

For HVACR businesses like yours, having a warehouse full of inventory can do more harm than good if it is not effectively managed. Reduce waste and downtime with real-time insight into your warehouse inventory.

To shed light on the impact that this type of software can have on the teams in the back office and in the field, we sat down with Travis McGee, product manager of ThermoGrid.

What’s the importance of keeping your whole team on the same page with one software?

One of the biggest challenges HVACR companies are facing is having what they need when they need it. These days it’s common for a supplier or distributor to be sold out of parts. So, having a clear view of what items you have and where they are is key.

What are HVACR business owners missing when they rely solely on an accounting package (QB) to manage inventory?

Accounting software lacks many benefits that simplify processes, like the ability to keep or manage multiple suppliers. Also, it cannot reorder with min/max quantities, among other automation, which saves you time in the long run.

How does a lack of inventory management impact my field techs’ productivity?

If a tech is out on the job and needs a part that isn’t on their truck, they must drive to their warehouse or contact the supply house to hopefully track down what they need. Many of the companies I’ve worked with have simplified this type of chaos by using inventory management software to gain true visibility of what is in their warehouse and on their trucks.

What are the main benefits of inventory management software?

I once worked with an HVACR company with around $500k of parts sitting or buried in their warehouse. As soon as they could accurately see everything they had, they were able to save significant time reordering, manage storage, and better allocate spending.

Taking it a step further, Smart Dispatching tools take into consideration tech skills, ensuring that the right inventory is on the truck of the tech being dispatched. In the end, it all comes together to reduce wasted time and inventory.

About ThermoGrid by ECI Software Solutions:

For over 20 years, businesses worldwide have relied on ECI Software Solutions to help strengthen their operations and plan for the future.

Our ThermoGrid contractor management solution is built specifically for field service businesses, connecting the field with the office instantly for real-time business insight.

“Many of the companies I’ve worked with have simplified this type of chaos by using inventory management software to gain true visibility of what is in their warehouse and on their trucks.”

Maximize Revenue & Minimize Wasted Time with ThermoGrid®

HVACR businesses owners like you are increasing revenue and gaining more business by using ThermoGrid to manage teams more efficiently.

Whether you’re working from your laptop in the office, or in the field without internet access, our ThermoGrid contractor management software keeps everyone connected. Book service agreements, provide invoices, view customer records, and access job information all from your digital device.

SEE HOW MUCH REVENUE YOU COULD SAVE WITH SMART DISPATCHING! SCAN THE QR CODE

A COLLECTION OF FINANCIAL RESOURCES

BY STAFF

If you are an avid follower of Ruth King’s financial column, the following is an aggregated collection of the best downloads throughout the years. We’ve included summary snippets and the date it was originally published for reference. Whether you are a seasoned HVACR owner or just launching a start-up you will want to save this collection. The five documents associated with this article are available for download on our website.

Building Your HVACR Business

Originally published July 2008

By Ruth King

If your sales closing rate is less than

30%, it’s time to improve your sales track record and increase your sales and closing rates. Continuous marketing is critical for lead generation – both service and installation. But in the tough times, you should continue marketing to your existing customers. Remind them why they need your services – to save money, decrease utility costs, etc. Now, if your field labor productivity is

higher than 80%, your sales closing ratio is higher than 40% and you execute a continuous marketing plan, yet your financial statements are still showing lower profitability, then the answer to the question, “Should I raise my prices?” is probably yes.

The next question: “How much?”

From an installation standpoint, the how

much answer depends on the increases in your direct costs and overhead costs. For replacement pricing, when you use a net profit per hour calculation, the price increases are easily calculated. If you want your net profit per hour to be consistent, add the overhead cost per hour, the total direct cost per hour, and the profit per hour you desire to arrive at the selling price per hour.

The total price is the selling price per hour times the total number of hours for each job. This assumes that you accurately determine the number of hours for each job. From a service standpoint, raising prices will be based on the formula sheet – Calculating the Hourly Rate.

You’ll often see terms from your suppliers that give you an incentive to pay their invoices early. This incentive is usually a one or two-percent discount when you pay the bill within a certain number of days.

Ruth King, best-selling author, and HVACR monthly columnist, is undisputedly one of the foremost experts on HVACR financial strategy. Throughout her time as our resident financial expert, we have included some invaluable downloads as complements to her columns to help you manage the profitability of your HVACR company. In this installment, we have pulled together the best of Ruth King finance – collated and researched for you (you’re welcome) – all in one place.

To Discount or Not to Discount

Originally published: 1/1/2009

By Ruth King

You’ll often see terms from your suppliers that give you an incentive to pay their invoices early. This incentive is usually a one or two-percent discount when you pay the bill within a certain number of days. The question that normally races through your mind is: Is taking a discount good for me? To answer this question, you must balance the difference in your cost of money (i.e. what interest rate you can borrow at) with the value of the money when you get the discount. Let’s assume that HVACR Supplier A offers you a discount of 1% when you pay in 10 days or requires full payment in 30 days. The interest rate for a short-term loan (or on your line of credit) is 8%. This calculation will help you determine when a supplier’s discount is your best option.

The Annualized Interest from the supplier discount equals: 1%/100%-1% X 365/30-10 = 1%/99% X 365/20 = .010101 X 18.25 = 18.4%

Whether you should take a discount is totally dependent on the terms of the discount, your cost of borrowing, and plugging the numbers into the formula.

Ruth King’s 3 Rules to Understand Financials

originally published: 2/1/2012

By Ruth King

There comes a point where it is almost impossible to decrease overhead any further than you’ve decreased it. You’ve cut back on personnel, and everyone who is working at your company has taken a pay cut, including all owners. You’ve sublet space or moved into a smaller location, and you’ve cut every expense that could be cut. Yet, profitability still hasn’t arrived.

To calculate your monthly cash requirements, determine the percentage of sales that are collected each month and all monthly cash expenses. Divide the

monthly cash expenses by the company’s monthly gross margin.

Then take this number and divide it by the percentage of sales that are collected each month. This gives you the sales that you must generate each month to cover the company’s cash needs.

Now, if you’ve cut all that you can cut, and you know you can cover sales and the monthly cash requirements, it’s time to plan how your company can grow to cover its cash needs.

Follow Ruth King’s 3 Rules to Understand Financials. Every HVAC owner should have this taped to their desk or saved to their mobile device.

Calculating Profit, Loss & the Labor Burden

Originally published: 10/1/2015

By Ruth King

Some contractors state that the labor burden goes into the cost of goods sold because these expenses are paid for field employees. Other contractors put them in overhead costs. There is no right answer

— and it doesn’t matter when you price your service and replacement jobs using my net profit per hour method. Direct cost, or cost of goods sold, is a cost that is incurred when you sell something. Labor is a cost. But only labor expended on providing that service or performing that replacement.

If you put labor burden in direct cost, then whenever there is a training hour, a meeting hour, a vacation hour, a holiday hour, or any hour you pay where you could not bill a customer, that portion of “burden” has to go into overhead. In the larger picture, however, it doesn’t matter where you put the labor burden when you

price service and replacement using a net profit per hour calculation. True profit is determined by net profit per hour calculations considering both direct and overhead costs. Labor burden is included, whether you put it in direct or overhead cost. Decide how much you want to earn for every billable hour your company has. Then add the overhead cost per hour and the direct cost of the job. It’s that simple.

The Weekly Cash Report Originally published: 5/5/2022

By Ruth King

In 2022, Ruth King wrote a Stupid Things Series all about stupid mistakes contractors make and how to avoid them. It was an extremely popular run partly because she included downloads as a complement to the columns.

In this article from May 5th, 2022, King warned contractors to protect their profitability and cash – in other words, don’t do stupid things.

The weekly cash flow document ran as a download to utilize as a learning tool.

This is the report that the bookkeeper provides to the contractor every Friday afternoon and it’s essential to understand your profitability.

We think it is a great place to start protecting that cash flow. In case you missed it, here it is again.

We hope you found these downloads helpful. Keep reading future issues written by Ruth King – there are more great tools coming up, including actual excerpts from her most recently published book! u

Whether you should take a discount is totally dependent on the terms of the discount, your cost of borrowing, and plugging the numbers into the formula.

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10 SALES TIPS FOR A GROWING HVACR BUSINESS

BY CLAIRE MUNCH

Sure, you want to be an HVACR superstar – but do you have what it takes?

Everyone craves business growth, but finding and keeping it takes special consideration. Successful HVACR owners have a few traits in common: tenacity, a willingness to learn, and strong communication skills. To maximize those traits for steady business growth, you need to incorporate new sales strategies while also planning for growth-stage challenges.

SALES GROWTH STRATEGIES

If you boil it down, there are two ways to effectively grow your business: Attract new customers and maximize existing customer relationships – through service agreements, contracts, and by gaining brand loyalty. Ideally, you’ll do both.

Here are some steps to consider from a distributor’s point of view:

1. Offer informational content.

Consider starting a blog about HVAC maintenance or uploading TikTok videos with troubleshooting tips for common HVAC problems. The people seeking this content are most likely HVAC system owners – your target clientele. Whether their problem is more complex or they simply wait until they need a technician, your name will be top of mind when they go to pick up the phone.

2. Utilize easy publicity.

Start by refreshing your website, because this is where a potential customer becomes either a sale or a lost opportunity. Create a website that is engaging and educational. Think about what customers want to know, such as your contact information and service list, then make sure those things are easy to find on your site.

3. Next, join Google Local Service Directory.

Simply stated, this is the Yellow Pages of the 21st century. Customers looking for HVACR providers often find them here. From your perspective, there is an extensive application process, but it is free to join. When someone from your area turns to Google to find an HVACR technician, an ad for your business should rank somewhere at the top of the list. You won’t pay for that ad unless the customer clicks and reaches out to you.

4. Finally, be part of your community’s story.

Let your local newspaper or magazine know that you’re available to be quoted.

Send them a notice whenever you hire someone or open a new location.

5. Compete for brand recognition.

When you compete in industry recognition events and win an industry award, it gives you brand recognition and credibility. Your annual Tops in Trucks Fleet Design contest is a great event to find some brand recognition. ACCA also has a Contractor of the Year award. Make sure the sponsor is well-reputed and recognized by the industry. These are free ways to get your company name in front of customers in your area.

6. Tell a good story.

Once you’ve secured a meeting with a new customer, make an impression on them. Fixing a furnace might be a one-time job, but connecting with your customer generates business for years to come. Service providers need to know the brand story. Those who are great storytellers are more likely to be remembered when a potential customer is making a decision. Why? Because a good story allows people to retain 22 times more information than facts alone. This is according to psychologist Jerome Bruner

in an article in the SEMrush Blog titled, Why Does Brand Storytelling Matter? Storytelling, especially when it conveys emotion, connects with the left side of the brain and drives home purchasing decisions and says the article:

A study in the Harvard Business Review found emotional connections are significant drivers of brand loyalty. They are also one of the best indicators of future customer value.

7. Expand your offerings. There are benefits to using both upselling and cross-selling techniques when meeting with a customer. If they need a new air conditioning unit, show them several options, from a base model on up. Emphasize the value of the more expensive model, such as energy efficiency or product longevity. Alternatively, you can offer extras such as a smart thermostat or an extended warranty to go along with that new unit. Both avenues generate additional revenue that relates to the service at hand and can lead to brand loyalty.

OVERCOMING OBSTACLES IN THE GROWTH STAGES

As business demands increase, you should expect to face new growing pains. From staffing to inventory, there are many obstacles that business owners

continued on page 14

If you boil it down, there are two ways to effectively grow your business: Attract new customers and maximize existing customer relationships — through service agreements, contracts, and by gaining brand loyalty.

encounter during growth periods. To mitigate employee loss and productivity interruption, follow the last three tips.

8. Staff accordingly.

From the office staff to field

technicians, your infrastructure must be capable of handling any incoming business growth. All your efforts will be wasted if nobody answers the phone when a customer calls because you’re short-handed. And you’ll get a bad reputation if it takes technicians too long to get to their appointments.

In this job market, finding enough staff is a challenge shared across many industries. So, position yourself to always be hiring. When a quality candidate comes along, bring them in – even if volume doesn’t quite demand it yet. You’ll be ready for extra business and have time to appropriately train a new employee.

EASIER INSTALL, LESS TIME ON THE JOB

9. Maintain relationships with your supplier.

More clients mean more diverse needs. If parts aren’t available, you could be forced to make expensive last-minute decisions.

That’s why it’s critical to have a trusted distributor at the ready. Look for one with a proven history of fast turnaround and easy delivery.

Likewise, it’s critical to have suppliers who operate in a variety of ways. Need to place an order after hours? You need to have an online or portal option. Looking for options beyond traditional shipping methods? Find a distributor that uses pickup lockers or a courier service.

10. Keep communications going so that you stay in the know.

Check in regularly with everyone from your technicians to your suppliers so that you can effectively forecast periods of influx. What are your technicians hearing from customers? Are manufacturers requiring longer lead time?

Stay ahead of trends so that you aren’t caught unprepared. Be sure to communicate this with your distributor, so they can work with the manufacturer on your behalf. The entire supply chain benefits when a local service provider completes a sale, so they want to accommodate your needs as best they can.

Growing your HVACR business takes skill, patience, planning, and foresight. Given our culture of climate comfort combined with ongoing energy-efficient initiatives, small businesses in the HVACR industry have the opportunity for unprecedented growth in the coming years – given you are prepared.

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Plan for it, expect it, make room for some flexibility and you’ll experience the growth you envisioned when first starting. u

Claire Munch is President of Munch’s Supply, the company started in her great-grandfather’s garage more than 65 years ago. She oversees more than 1,200 employees at 17 locations throughout Illinois, Indiana, and Michigan. Despite her family roots in the HVAC industry, Claire has worked her way through the ranks to her current position. Claire has a reputation for hard work, charisma, and dedication to learning the nuances of the HVAC industry. www.munchsupply.com

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A STEP-BY-STEP GUIDE TO WEATHER-TRIGGERED MARKETING CAMPAIGNS

BY KEITH SNOW

Would it catch your attention if I said there was one thing you could do to increase the ROI of your marketing spend five to eight times and lift sales by 10% or more?

The thing I’m talking about is personalization, and it is key today to help your HVACR business stand out.

Personalize Your Marketing

A highly effective way for HVACR businesses to use personalization in their marketing is by leveraging the weather to its fullest advantage. It’s well-known in the home services industry that the weather is strongly correlated with sales patterns. Behind the economy, the weather is the second-biggest factor in determining consumer purchasing decisions. But, exactly how this plays out is unique to each HVACR business, based on the industry, geography, and individual customer profile.

Creating successful weather-based marketing campaigns requires taking a deep dive into the data. By layering historical weather data with your unique sales and customer service information, it’s possible to accurately anticipate the specific actions current and prospective customers will take, and when. Advertising campaigns with personalized

messaging can be developed and launched at exactly the right time with intelligent weather triggers.

Steps to Execute a Weather-Triggered Campaign

What does the process of building a sophisticated weather-based marketing campaign look like? Let’s break down the key steps.

Step 1: Identify Your Target Customer

Audience selection plays an important foundation in the success of your campaign. Though it’s tempting to believe that a campaign should reach as many people as possible, the reality is that only a percentage of the population is the right fit for a certain product or service at a given point in time. Your goal is to focus on those people – your target customers.

Most HVACR businesses find it beneficial to develop campaigns that anticipate the needs of current customers and attract new prospects. An analysis of your customer, sales, and weather data can

the data.

pinpoint the right audiences to target in specific detail.

Because most HVACR businesses don’t keep detailed demographic information about their customers, your database can be augmented with additional third-party national consumer data to better illuminate the people you are targeting. It can be helpful to have information such as age, income, age of home, home value, and drive time from your location. You can append your customer database by purchasing this data from sources like House Call Pro 1 and Exact Data 2

Step 2: Determine the Weather Triggers and Frequency

An intelligent weather campaign must be rooted in your business’s unique data analysis to reveal the largely hidden, but powerful opportunities created by very specific weather patterns and changes. For example, what is the degree of temperate change that increases the propensity to purchase a specific product or service? Or, how do different audience segments react

differently to weather conditions?

After the key weather opportunities are determined, a seven-day weather forecast monitor can be set up for the appropriate zip codes. High and low-temperature triggers are monitored daily to capture service opportunities in real-time.

You can set the campaign frequency that will achieve your goals while working within your marketing budget. You may choose to execute your triggers on a weekly, monthly, or quarterly basis.

Step 3: Determine the Right Messaging

Following step 1, you should have detailed “personas” of your target audiences. These insights will help to craft a marketing message that will resonate by better understanding their decisionmaking styles.

For example, price-conscious consumers will be better motivated by special offers. Those who care more about quality will be more concerned with maintaining their home and working with top-end products and an experienced and reputable company to install them.

Paying attention to how your current and prospective customers want to be

continued on page 16

Creating successful weather-based marketing campaigns requires taking a deep dive into

PART III IN THE WEATHER TRIGGERED MARKETING SERIES

communicated with will improve the overall effectiveness of your campaigns.

Step 4: Target IP Addresses

Digital ads can be precisely delivered by employing IP targeting. During this process, home addresses are matched to modem or router IP addresses with greater than 95% accuracy to direct advertisements to any device on that IP network – whether that’s a mobile phone, tablet, laptop, SMART-TV, or desktop.

IP targeting is highly accurate without the use of cookies, census block, or geo-location tools. It greatly reduces the risk of your ads being delivered to “non-human traffic.” A surprisingly large percentage of online traffic is generated by automated bots, which is not the intended audience for your campaigns!

Step 5: Intelligently Deliver Ads

When the weather triggers for your campaign are met, your ads will be immediately and automatically delivered to the websites your target audience

is already visiting across their various devices. Your audience insights can help you further refine the types of digital channels each segment will be most receptive to.

IP-targeted ads can be anywhere from six to sixty times more effective than other online ads! Additionally, they have a clickthrough rate that is three times higher than averag e.

Step 6: Analyze & Optimize

An additional benefit of digital weather campaigns that HVACR businesses appreciate is the measurability. After your campaign is complete, you won’t be left to try and connect the dots between your efforts and results. Instead, you will receive a clear summary of the outcomes across multiple metrics

– clicks, impressions, click-through rates, and more. It’s even possible to quantify the dollar amount of business that was generated from your weather-triggered campaign. With B2E Data Marketing, we have done extensive analysis for you and can provide these reports to you. However, with the information I am sharing, it is possible to follow these steps and look at your annual data with triggers for seasonal changes, customer demand peaks year-over-year, and regional customer target points, as well as seasonal peaks in the industry regionally, and use it to your advantage. Whichever way you choose to do it, the more specific you are with the understanding of your customer base, regional demands, and year-overyear analysis, the more you can use weather-triggered marketing to increase profitability.

RLS SUMMER TOOL PROMOS

Analyzing your campaign performance is a valuable way to inform your goforward strategy. You can continually refine which audience segments are most receptive, and which messages and channels work best.

Data-driven marketing strategies will transform the way HVACR businesses think about and capitalize on weather opportunities. You can start using weather intelligence today to build intelligent campaigns that directly impact your bottom line. u

Keith Snow is the president of B2E Data Marketing, which provides data-powered marketing campaigns to the home services industry. The data scientists at B2E help HVACR businesses leverage consumer and weather data to target ideal customers with personalized messages influenced by their unique preferences and weather-related behaviors. Learn more at marketing.b2edata.com/homeservices

1https://www.housecallpro.com/industries/hvac-software/ 2https://www.exactdata.com/quote/form.php?id=17314

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After the key weather opportunities are determined, a seven-day weather forecast monitor will be set up for the appropriate zip codes. High and low-temperature triggers will be monitored daily to capture service opportunities in real time.

IS YOUR HVAC MARKETING IN NEED OF AN UPGRADE?

BY HEATHER LANGONE

Strong marketing is about communicating good messaging to a target group of people who need what you sell. However, many entrepreneurs think it stops there – find the target audience, market to them through ads, some good word-of-mouth referrals, and the plan is done. For continuous growth, you must recognize that people are in a constant state of motion, and information is being passed back and forth at record speed, so your marketing strategy needs to be in a constant state of motion to compete. If not, you run the risk of stale messaging, lackluster sales, and a lack of customer leads.

How do you upgrade stagnant marketing?

Get in touch with what is not working and find out where your company needs an upgrade.

Here are some steps to get started.

SMALL STEPS TO UPGRADE YOUR MARKETING STRATEGY Social Media

Social media is a beast to tackle if you don’t understand how it works. But it can be brilliant if you know what you are doing.

The first tip is that you must post three

Every entrepreneur should be on YouTube posting expert videos or company posts. According to GWI, YouTube is quickly becoming the number one marketing tool for many reasons.

times a day which requires consistency and a dedicated social media person. If you want to see real numbers, you need to be consistent. Posting occasionally is not bad, but you are losing a giant opportunity to gain traffic and leads. Before you decide that it’s impossible, there are scheduling services like Hootsuite and HubSpot where you can schedule your posts on a Monday and let them all fly for the week. You may need to pay a monthly fee – nominal for Hootsuite – and begin to budget for additional manpower.

Also, different socials speak to different demographics. Don’t discount this nuanced detail.

YouTube

Every entrepreneur should be on YouTube posting expert videos or company posts. According to GWI, YouTube is quickly becoming the number one marketing tool for many reasons. In the GWI article, Your Audience is in This Platform, it states, 51% of people use YouTube to find products to buy, which is comparable for services.

Facebook

Facebook is great for targeting, easy ad management, boosting, and conversations in groups.

Instagram Instagram is good not only for its popularity, but you can post to FB, and Instagram simultaneously, and videos and pictures do very well. Instagram is very intuitive for business owners so it’s not difficult to navigate.

LinkedIn

You will want to use LinkedIn for its groups and industry networking.

FUNNEL MARKETING

Questions to ask:

Are you casting too wide a net? Are your lists old?

Using newsletters, email campaigns, and follow-ups – are you optimizing this opportunity to get sales?

If you answered yes to the first two questions or you are using newsletters

already and they aren’t showing results, it’s time for an upgrade. The following steps will help you identify new opportunities.

1. Start with cleaning your subscriber list. Examine how many of your emails are going to spam. If that is the case, you need to clean your list and update your subscribers.

2. Don’t stop adding subscribers even if you have a large list. People retire, drop off or find better business. So, start doing targeted social media and emails to your leads and contacts. Facebook walks you through targeted advertising and makes it simple to create ads and boosts. But even a post to your contacts or a search for new followers daily will help.

3. Do you have aggregated lists and segments? You should have aggregated lists – some for clients, and some for leads who have expressed interest but who have NEVER used your service. Those names should be in a “leads” folder. You should have lists dedicated to specialty groups – those who have maintenance contracts, customer surveys, specials, etc. Your email-drip campaigns and newsletters should not be relying on outdated lists. Constant updates, polishing, and refining must happen to see real results.

continued on page 18

4. Other issues to address. What subject lines work best? What emails get opened most? How many clicks are you getting vs. unsubscribes? Any basic mailer program gives you these analytics, so it’s easy to assess.

5. Are your emails and newsletters scheduled and sent often? For emails, start email one by casting a wide net with your subject, then follow up with the same group with a more targeted email, and then finally send a third, highly targeted email.

DRESS TO IMPRESS

We always say that your fleet is a billboard on wheels. Well, your uniforms should be thought of as walking ads. The advantage of true uniforms – the kind with an embroidered company name – is that your service people are not only seen in uniforms on the road - good advertising - but also, they are in homes where impressions are everything. If they have a good rapport, including looking presentable, they are more likely to upsell.

You should have lists dedicated to specialty groups – those who have maintenance contracts, customer surveys, specials, etc. Your email-drip campaigns and newsletters should not be relying on outdated lists.

BE OPEN TO GROWTH

There is always room for improvement. What worked well two years ago may not work well now. Plan to learn as much as you can or work with service organizations that offer coaching and training. Also, offer employee incentives for staff who may be interested in virtual training in marketing. It doesn’t have to cost anything. YouTube is its own university. For any employee who

expresses interest, allow them an hour daily to do that – paid. This training will go far if this person is interested and becomes your marketing person. If you don’t have it in the budget, then books, YouTube, and podcasts are cheap. Schedule an hour a day for yourself and start learning.

Note: Don’t get stuck in rigid thinking where you assume you know who your customers are and there can’t be any

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variation. If you have been in business long enough, your customer base will change.

Finally, remember the key to marketing – especially if you feel like it’s a language you don’t understand – is to start by taking small bites. Watch videos or when a question comes up and you don’t know, Google is your best friend. During the academic season, get creative by hiring a college intern for a few months (credit only) and allow them to teach you everything they know about marketing. There are always alternative ways to work around a lack of knowledge or any budget constraints. Movement, even in small increments, will yield results.

When in doubt, remember what Einstein said: We cannot solve our problems with the same thinking we used when we created them. So, get to work. Figure out what needs changing and go about doing it in a new, upgraded way. If you do, you are bound to see improvements in leads, traffic, and sales! u

HeatherLangone is Managing Editor at HVACR Business Magazine.

PROVIDED BY KEVEN PRATHER, CFBS FINANCE

Building an Advisor Team That Works for You (Not Against Each Other)

Building a business is challenging enough as it is. With the right Advisor Team, you can focus on business challenges while your advisors create strategies that help you compound your success in the future. But how do you build an Advisor Team that works for you instead of against each other?

Consider the story of a fictional but representative owner who learned how important it is to have an advisor who can lead the charge.

Animus at AniMals

Annie Mahl was in a bind. Her company, AniMals, which produced specialty dog toys under the tagline “Tough Chew Toys for Rough-Chewing Boys,” had grown into a pet-care powerhouse over the last 20 years. Her financial advisor Grover and businessgrowth consultant Oscar had served her for most of the company’s history.

When Annie told each advisor that she wanted to sell her business soon, they had vastly different reactions.

Grover began researching what Annie would need to sell her business within three years and gain financial independence. He presented Annie with spreadsheets of information about the best strategies to pursue, many of which Annie found overwhelming.

Oscar tried instead to convince Annie to stay at the business longer. “You’d be leaving right before the biggest boom. Let me show you how much more you could make if you stay longer.”

The deeper Annie got into planning with each advisor, the less comfortable she felt about their strategies. She loved her business and wanted to find a buyer who loved its mission just as much as she did, but she also wanted to sell for enough money to retire comfortably.

Grover and Oscar began openly butting heads, with Grover trying to help Annie sell as soon as possible and Oscar trying to help Annie make as much money as possible.

Though she initially felt a little guilty (Grover and Oscar were her go-to guys), she decided to seek the advice of a professional business-and-exit planning advisor, Burt.

Follow the Leader

Annie shared her goals with Burt. She wanted to sell within six years, but she wasn’t sure what her business was worth. She told Burt that it was hard to plan with her trusted advisors disagreeing about strategies so vehemently.

“I trust them and could never let them go. I want them to be a part of the planning. I think they have good intentions, but I’m not sure which strategy is the right one,” she said.

“The right strategy is the one that helps you achieve your goals, not what they assume is best for you,” Burt said.

Annie let out an exasperated laugh.

“Try telling them that,” she responded sarcastically.

“I’d love to,” Burt said. “Can I show you what I have in mind?”

Pulling the Advisor Team Together

Over the next month, Burt met with Annie, Grover, and Oscar. With Annie’s input, Burt laid out Annie’s goals and what it would take to help her pursue them.

“She wants to sell her business within six years. We need to figure out how to make that happen so she can achieve all her goals.”

“We can do it in three if she would just . . .” Grover began.

“Three years? There’s so much more money to make!” Oscar interjected. Before they began fighting again, Burt stepped in.

“Our job is to help Annie achieve her goals. And neither of you can help her do that if you think you know what she wants better than her.”

Grover and Oscar sat in silence before

Burt continued.

“The first thing we need to do is figure out what this business is worth. Then we can talk about timelines and payouts.”

Burt presented each step of his planning process, showing Grover and Oscar how they fit into it, and what they’d need to do to fulfill their obligations.

With Burt leading the charge and finding all the appropriate advisors for Annie’s team, Annie felt more confident in her direction. She hired a business valuator, a tax professional, and an attorney based on Burt’s recommendations.

While she continued to run the business, Burt and the Advisor Team worked together toward Annie’s goals. Grover and Oscar focused on what they needed to do instead of trying to control the process themselves.

The result was a successful sale on Annie’s timeline to a buyer Annie trusted for the sale amount she needed and wanted.

Advisors are Here for You

Your advisors must work toward your goals to help you achieve your vision of success. One of the best ways to position your Advisor Team to do so is to work with a dedicated business-and-exit planning advisor. These advisors can guide the process based on what you want and need, and assure that your team works for you, not against each other. u

Your advisors must work toward your goals to help you achieve your vision of success.

BY RUTH KING FINANCE

Give Employees KPIs to Make Annual Reviews Easier

Ihate annual reviews” – it’s a statement I hear often from owners and managers.

Most owners put off annual reviews until they absolutely must be done or simply don’t do them at all. Why? The most response is:

“All they [employees] care about is how much more they are getting an hour. They don’t care what the review says. They leave either happy or pissed off.”

Most employers and managers don’t have a system for raises. So, when they ignore raises, their employees quit because they find a competitor who will offer them more money.

If you hate conducting employee performance reviews and determining raises, then it’s time to change how you conduct them.

Employee Reviews: The Metrics

First, employees should have key performance indicators, (KPIs) as part of the defining feature of their roles in the company. What are their responsibilities? How will performance be measured? What is the baseline acceptable performance? What happens if they exceed their KPIs? Are there bonuses?

KPIs should be communicated weekly or at least monthly. Then, the annual performance review and raises will not be a surprise to anyone.

Annual review suggestions:

• First, if you hate doing them, your employees will hate receiving them. Your attitude affects their attitudes. Find a way to be positive about the review process.

• Reviews should NEVER be a surprise. If you do them only once a year, then it probably is a surprise. Give written feedback throughout the year.

• Reviews don’t have to include raises. Performance reviews are just that –performance reviews. Raises for great performance, achieving certain goals, or cost of living can be separate. Many companies do cost-of-living raises each January. And, this year, it will be important to have those raises since

inflation is starting to “rear its ugly head again.”

• Reviews should be based on KPIs. What are the minimum performance metrics for their job? What happens if they exceed these metrics? This is where the raises or bonuses come in and may or may not be warranted.

• Employees should know where they are concerning KPIs at least quarterly. Then the annual review is not a surprise. Many technicians know what revenues their trucks must generate each day and each week. They get their “report card” weekly – no surprises at review time.

• Salespeople have quotas and required closing rates – their KPIs.

Suggested KPIs:

• For field employees: Require billable hours over 60%. The most productive companies have billable hours over 80%.

• For field employees: Revenues per truck based on their wages. A rule of thumb is to add employee wages plus overhead cost per hour plus desired net profit per hour. Multiply this sum by 2080.

• For field employees: Callbacks or warranty calls under 1%.

• For dispatch: Travel time under 20% in most geographic areas

• For CSRs: The booking percentage should be above 85%.

• For warehouse supervisors: Inventory

days must be >30 days for residential companies and >20 days for commercial companies.

• For controllers/bookkeepers: Require accurate financial statements sent and received by the 15th of each month.

• For accounts receivable personnel: Work to achieve receivable days >20 days for residential companies and >45 days for commercial companies (excluding retainage).

• For commercial companies: All service bills should be sent within 24 hours of the service call.

• For maintenance coordinators: Renewal rates average above 80%.

Career Paths: Installation field employees’ career paths: Helper, installer, lead installer, field supervisor

Service field employees’ career paths: Helper, maintenance technician, technician, senior technician, field supervisor

More Ways to Determine Raises vs. Performance

NATE testing or passing other technical training tests can be the reason for giving raises. Employees should know what it is required to reach each level and what the raise is for each level. And, if this is considered a KPI, then the option should be communicated and encouraged.

This option also bypasses the need to qualify this response: “I’ve been here for two years and I deserve a raise.” Let employees know what is required to receive raises in advance.

I excluded managers because, generally their reviews are determined based on how well their departments are performing, and their bonuses are based on a percentage of the net profit for that department.

Adding Career Path Options as Part of Performance Reviews

Career paths are harder to define for office positions. As your company grows, there are usually additional positions needed to support field operations:

• A dispatcher could become a lead dispatcher or oversee the CSRs.

• A bookkeeper, as the company grows, needs additional help – billing, accounts payable, etc. The bookkeeper would then oversee these positions.

• A receptionist could become a CSR or a dispatcher.

• Any administrative personnel could advance to office management positions.

• Any technical service personnel could advance to become service or installation managers.

Communicate the KPI results frequently. When you do this, people know KPIs, how to earn raises, and reviews will never be a surprise again. 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 770-729-0258.

If you hate conducting employee performance reviews and determining raises, then it’s time to change how you conduct them.

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with RICK SPORRER 20QUESTIONS >>

1. Do you have a favorite sports team?

Iowa State. I’m a graduate and I continue to follow them.

2. What’s your favorite possession?

I grew up on a farm and in 1949 my dad bought a brand new 25 horsepower tractor. I still own it. About 3 years ago one of my daughters was in a high school mechanics class and they totally rebuilt it as one of their class projects.

3. What is your favorite hobby?

Anything outdoors. I love biking, hiking, and golf. My wife and I are learning to play pickleball.

4. What are three biggest things on your bucket list?

I have three daughters. All of them played soccer. Two of them played collegiate soccer. I’d like to attend a Women’s World Cup game with all three of them. Next, I’d like to travel to every continent. I’ve got four down, three to go. Antarctica is the challenge. And, I would love to drive at Daytona Speedway maybe signing up for the Richard Petty driving school.

5. What’s your background?

I was born and raised on a family farm in Iowa. It’s a farm that my siblings and I still own. And then, I attended Iowa State University, and majored in engineering. My first job was working for a food processing equipment company. I was an ice cream processing engineer. In 1991 I had an opportunity with Danfoss, and I’ve been here since.

6. Do you have a funny business story?

Years ago, on my first trip to Brazil our planning agent routed me from Sao Paulo to Rio instead of flying direct to save $300. Friday evening my host dropped me off and I assured him I was all set. I didn’t realize everything at the airport was in Portuguese and the gate agents didn’t speak English. I literally guessed and got on a flight. It wasn’t until the flight attendant went through the safety procedures in Portuguese then in English that I found someone I could communicate with. Luckily, I was on the right flight.

7. As the new President have you made any significant management changes?

No, fortunately the North America business unit has been running very well. We have nine other regions around the world, and they’ve all been structured to align operations, priorities, key elements, that our teams should deliver.

8. Were there any surprises when you took over as President?

I had served on our former president’s leadership team, so I was familiar with the North America

operations. I came from the Power Solutions segment and needed to learn more about our Drives and Climate Solutions segments. There has been a learning curve, but it has energized me, and I’ve really enjoyed it.

9. What’s the most important quality you think you have to have as a leader? Resilience, and it’s more relevant today than ever. Our business environment is changing, due to things we can’t control. These challenges force you to effectively move through a changing landscape.

10. What aspect of managing is most satisfying to you?

I like to empower our teams and provide resources, information or funding to enable them to be successful. It’s gratifying to see our teams come together to form a customer solution and succeed.

11. What’s your most important management responsibility?

Creating an environment where team members understand the goals, have clarity and feel like they can provide their input. If they have a concern, they can voice it. If they have a great idea, they can initiate it, they feel empowered. And then at the end, I want them to be recognized for their success.

12. How do you inspire your team? Engaging them and establishing the goal. Then giving them the resources and tools to succeed. There are often many ways to achieve a goal so provide the context and resources and then get out of the way and let them do their job.

13. What’s the most significant challenge you’ve faced in the last 12 months? Coming out of the pandemic, there was an unforecasted and unprecedented increase in customer demand. And it stress-tested logistics, supply chains, manufacturing, and our workforce, in ways we’ve never experienced before.

14. What business principles guide you? The word I use is balance. There’s a need to be consistent,

predictable, and simplistic in our processes. However, you need to be innovative and drive continuous improvement. So, the guiding principle for me is balance.

15. What fundamental business areas are you focusing on?

Making sure we establish a leading employee experience. In this business climate we want our workforce development to be a differentiator. Companies that can attract talented employees, are the ones that are best able to meet their customer needs. Also developing, deploying, providing the most energy efficient products and solutions to our customers. And, lastly regionalizing and improving, our supply chain.

16. Is there an area of the business that you should delegate, but enjoy doing?

I’d like to flip that question. For the first time in 33 years with the company I have an administrative assistant. Honestly, I’m learning, how to best utilize a very capable person. I’m actually delegating things to her that I’ve always done.

17. In which areas of management do you excel?

Listening. I think that’s been a quality I’ve had for a long time. When you listen to people it makes them feel like they can share their ideas. It’s a safe environment where people can open up, and you get more engagement, and more productivity as a result.

18. What are your key priorities this year? Driving energy efficient solutions. For years we’ve invested in the technology and now, coupled with government incentives, we are in a strong position to support the incorporation of better solutions with our customers. We’re focused on decarbonization and all the efforts surrounding that.

19. Why have you remained with Danfoss for 30+ years?

I am amazed and proud of the many ways Danfoss touches our everyday life. We have offerings in a broad array of industries. There is an incredible amount of technology in what we do and I enjoy being able to convey how we’re making an impact. Second, it is the many opportunities to meet, work, and celebrate accomplishments with a diverse group of people from around the world.

20. What keeps you up at night?

Understanding how today’s events like trade restrictions, higher interest rates, and business incentives will shape our business both near and long term, and ensuring we have a culture of urgency and agility to respond in these volatile and uncertain times.

Publisher Terry Tanker met with Danfoss North America President Rick Sporrer. The two discussed leadership qualities, management responsibilities, sports, business inspiration, bucket lists and growing up on a farm.

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