Starting Up A Business.

LWF

I am currently managing a fairly large heating and cooling company. So I have to deal with a lot of bull . I have been thinking about going on my own. Keeping it small, basically, me, a helper and a van. I'm not looking to be a millionaire, just enough to pay the bills. I figure if I'm basically running a business now, why not do it and make all the money? Does anyone have this kind of operation? Any advice would be helpful.

HVAC Doc

I can honestly say if it wern't for the fact I grew up in this business (2nd generation family owned), I would have "gone into" business myself. If you can keep it you and a helper, keep your expenses down but not cut corners, you could make a living. But keep in mind, ownership has its price. It cuts down on family time, free time, vacations, holidays off etc. You don't earn a paycheck until everyone else has their cut- the gov't, creditors (supply houses, credit cards used for business, bank loans), personal expenses (house payments, utilities, car payments), insurance (health, liability, workmans comp, auto, home/business) then what is left over is yours. In slow months, my employees are many times making "more" than I am because so much gets put back into the business to make sure these folks have jobs to come to everyday. Heck my company trucks are all newer than the old lady and I drive. She has the newest car with it being a 1996 Sable (traded a 1990 Grand Marquis in for it) and I drive a guzzler 1988 F350 crew cab. Owning a business has its rewards, but you have to be aware of the reality that it is alot of hours, days, months and years and it is hard work. You think you have BS now, wait till you get screwed over on a job or two that you have to make up the money for and takes away from YOUR paycheck. Or that warranty job from heck that ties you up endless hours/days that you could be out earning money doing more work, not trying to satisfy one customer that in reality, probably cannot be satisfied even if you were jumping through flaming hoops spinning plates on your finger tips singing O' Canada in Spanish!!

ron schenker

Wow, I can't even sing Oh Canada in english (and I'm Canadian) let alone Spanish.

LWF

Thanks DOC!

Good advice! It sounds like there is some good money to be made, and I'm sure there's plenty of , but like I said, I'm doing it all now anyway. Frankly, I hate sitting in an office....well, not so much right now because it's about 14 degrees outside, but spring and summer in an office will drive me nuts! I see the market out there and as you probably know already, it's hard to bid against a guy and a van. That leads me to believe there's plenty of work there. Not to mention, there's probably some pretty good tax breaks in it. ( legal, of course!) Ideally, I'd like to stick to simple money makers like change-outs, A/C, water heaters, humidifiers and small new constr. I'm almost talking myself into it!

Projectman

I manage the largest HVAC Controls Company in Southern Florida... Here is what I see: If you can offer a "Yearly maintenance plan" with scheduled monthly visits (changing filters, tabs etc...) in and out in 2 hrs or less you can make serious numbers... I know... as I have around 180 major accounts. The repairs (otherwise known as unplanned maintenance) are profitable. We lost a major account to a small business... I had to laugh because... I know he bit off more than he can chew... But I recommend you focus on these business savvy tactics first... they will perpetuate later on... also: do what you say you're going to do... don't cut corners. Large water cooled chiller annuals are profitable. Don't be afraid to charge customers... this is where small guys make their largest mistake. A fair Gross Margin sits around 35% Good Luck

LWF

Good stuff projectman! I really am planning to do installation only. I will offer a one year warranty on everything I install, but after that, I'm out....
Mainly concentrating on change-outs, A/c, water heaters, humidifiers and smaller residential work. I have about five major cities in my area so the customer base is there.

Bestheating

LWF,
I am very concerned about your last post. Heres why...
In my little business - myself and two employees, 86% read that again, 86%, are repeat or referral customers. Think about that for a minute. It takes another 1000.00 per month in advertising, to generate the other 14% of my customer base. Do you know how important each of those customers are to me? Important enough that I or my tech, answer the phone 24 hours a day. If you get our voice mail, not very often, we have a 10 minute call back policy. We have some of the most loyal customers in the world. Prices are in line with the market averages, but our customer service is out of this world! Hit and run installers are a common item. Those who follow up months and years down the road are winners to their customers and THAT is what fills the cookie jar!
Larry

knothole

I think that it would very hard to run an installation business without having a service company. Or, it looks that way in my business. like stated above approx. 80-85% of my business is return customers and referrals. Service is where the bills are paid.

Just my .02

Knot

Lukester

Service is what generates most of the sales. It would be nice to offer replacement only but that will not work. Like others have said, it is extremely important to retain existing customers, service agreements are the best way to do that. Good luck.