Depending on the part of the country you live in, your business could be enjoying a nice bit of relief from a crazy summer season, or business hasn’t let up at all because you are in a cold-weather climate and you are busy responding to heating requests.
Either way, the summertime rush will be here before we know it. If you plan to sell your business in 2020, you should be doing these things NOW to appeal to the biggest pool of buyers.
Rated among the top challenges for HVAC company owners, recruiting and hiring qualified technicians is a task that’s never quite done. Some businesses have resorted to growing their talent by hiring for character and potential. However, the technical skills have to be taught and that should happen as much as possible in the slow season. Doing this leaves time for ride alongs to actual service appointments and the time to explain why and how to do things.
If you are fortunate to hire experienced techs, they will still need to set expectations and learn how you do business. Some weaker HVAC businesses force their techs to accept part-time or even extended unpaid leave due to a lack of business. These are prime businesses to target when poaching for top talent.
Industry leaders like Carrier, Lennox, and Trane all offer continuing education training. Ask your rep what programs would benefit you most. Staying fresh learning about emerging technologies will not only increase your efficiency but help you spot revenue opportunities too.
A highly trained and stable staff is very attractive to buyers.
Planned maintenance agreements
It’s one of the first questions an informed HVAC business buyer asks when evaluating companies to buy. The reason is planned maintenance agreements (PMA’s) produce cash flow to support the business in the lean months.
Do your best to even out seasonal peaks and valleys and strive for profit all 12 months of the year.
Avoid the temptation to collect the PMA fees and not timely perform the service. Get those obligatory site visits done in the slower months when you have time. You don’t want to waste the manpower on a small maintenance visit you were already paid on when you could be doing a $10,000 job. Buyers know to ask about this and have little interest in honoring your commitments for free while you were already paid for the services.
It’s smart to put off some tasks when there is money to be made but circle back to these when the fall slowdown comes. Budget in things like oil changes, tires for the van, and even facility maintenance. All of this affects your company’s value. Maybe not in terms of dollars, but always in perception and marketability. Buyers are like anyone else and form first impressions quickly. If they approach your business and there is a broken concrete walkway and the building needs a coat of paint, the buyer will instantly think they are buying a neglected or fixer-upper type of business and value it accordingly.
Remember that any deferred maintenance is your buyer’s new problem.
Know your multiple
Just like you have an idea of what your home is worth, smart HVAC business owners should also know the value of their business. For most, its the largest component of their net worth and a major part of your retirement plans. Don’t assume you know the value already. Changes in market conditions and geographical areas vastly affect what buyers are willing to pay. PMA’s make a big difference too. The market has been particularly active in the southeast, so old valuations or financial opinions should be updated. Ask an HVAC specific business broker to share with you the sold comparable data in your area.
Remember, by all accounts, industry experts agree that 2020 should be another good year for the HVAC industry. We are seeing merger and acquisition activity from existing businesses looking to expand and even corporate refugees that have been displaced from America’s biggest companies looking for a business to buy.
Whatever your 2020 brings, focus on old school fundamentals to bring value to your business. There are always buyers for companies operated by hardworking ethical businesspeople with uncompromising integrity
Readers of this article also enjoyed “The Biggest Thing You Can Do to Build Value in Your HVAC Business“