The key to sustained growth and profitability typically begins with focusing on the different products and services that your business offers and understanding the profitability from this mix of products and services. Getting this right is critical for a healthy gross profit which helps drive your net income higher. This is why It is important to analyze the different service offerings in your business and make sure you are maximizing the profitability in each of them.
You want to look at each service offering and determine the profit margin for each one.
- Are you maximizing your HVAC installs? What are you margins? How is your pricing in relation to your competitors?
- Service department – Are you charging the right amount for service calls? What is your conversion from a service call into the sale of a new unit that the client needs?
- Do you have an understanding of your overhead and are you incorporating this into the pricing model you have developed?
Regular monitoring is important for continued profitability
- Every business has different drivers that optimize their business. Are you analyzing the key profit drivers for your business on a consistent basis?
- Do you have a set of key performance indicators that will help you maximize your profits?
- Does your team know what they need to work on to help your business?
Are you receiving reports that are easy to read and interpret?
Most HVAC business owners are not accountants and have no desire to be one. That is why it is important to have financial reporting that is easy to understand and is in a format that suits the skill sets of the business owners. This type of reporting combined with a solid plan that is customized for your business is critical for your continued success.
Creative Boosts for HVAC Profits
In addition to creating accurate quotes and executing on-budget jobs, there are 3 other easy strategies you can employ to lower your expenses and improve your profit margin.
- Create healthy competition among your team members by posting progress graphs for each employee as they relate to your break-even point each month. High performing employees receive bonuses and incentives for boosting profits in your business.
- Lower your materials costs by researching other companies and using your network for greater discounts including volume discounts from suppliers. Every dollar you take off your expenses counts towards a more profitable HVAC business.
- Improve your service performance to reduce the number of call-backs for corrections. This lowers your labor and transportation costs, plus it creates an additional win for your business with improved customer satisfaction. And happy clients refer qualified businesses to their friends and family members.
Accountability and implementation are critical for ongoing success in all areas of our lives including your business. Make sure you have the tools you need to excel in your HVAC business and review the tips above to make sure you have systems in place to make sure you do.
Develop a system to review your financial performance during the month to make sure you are on target to hit your monthly and quarterly targets.
P.S. Whenever you are ready…here are 4 ways I can help your business:
- Second opinion tax review – Are you wasting valuable tax dollars? Most business owners are and we can assist – on average we rescue $50,000 of wasted tax dollars for our clients. For a complementary tax review…just reply to this message and enter “Second Opinion” in the subject line – Click Here
- Join HVAC Powerup and connect with HVAC owners who are scaling too – It’s our new Facebook community where smart HVAC owners learn to grow more income, impact and independence. Click Here
- Understand the Numbers that Drive Your Business – Work with us one on one to drive your business results. If you’d like to work with us to understand your business metrics…just reply to this message and enter “Business Analysis” in the subject line. Click Here
- Work with me and my team privately – If you’d like to work directly with me and my team to take your business to the next level…just reply to this message and put “Private” in the subject line…tell me a little about your business and what you’d like to work together on, and I’ll get you the details! Click Here