I talk to a lot of business owners, and I get this question frequently: I’m thinking of adding (plumbing, electrical, etc.) to my HVAC business. Do you think that’s a good idea?
Most of the time, my answer is no. For most companies, it’s too early and for the wrong reason. Here’s what I tell them.
Until you get to around $10 million in sales, you’re probably working at maximum capacity to grow the company and make sure it’s as profitable as it can be. Smaller companies, in my experience, are still working hard at figuring out how to keep the phone ringing. How to maximize every call. How to sell more maintenance agreements (or begin selling them.) How to track customers in their CRM.
How to find, train, supervise and hold on to good workers. I’ve never had a $10 million business owner tell me how hard it is to find good people, but I hear it from $1 million owners every day. And it is hard; it takes up a lot of bandwidth for most owners. That’s why adding another trade is probably going to add more stress and more complexity without adding that much more in sales.
Think about it: if you’re struggling with talent retention and business growth within the industry you know well, your job will be twice as hard when you’re trying to find talent and growth in a new trade. When I’ve seen owners try to add another trade too soon, they often end up with five HVAC techs and one plumber or electrician. That single tradesperson is probably not getting the support, the training, or the oversight they need to be successful. It will be doubly hard to retain good people in that situation.
That’s why I advise owners to do all they can to make their business profitable, efficient, and competitive before considering diversifying. Make sure your advertising, marketing, and online presence are top-notch and converting a significant number of views to sales. Hire the best people you can at every position, and invest in training, salaries, promotions, and benefits so you retain your top workers and become a talent magnet in your community.
Make sure your financials are in perfect order and you understand where every dollar in the business is coming from – and where it’s going. Take time (or get help to) craft Standard Operating Procedures, detailed job descriptions, and policies so your team knows what’s expected of them and how things should be done.
Ensure your scheduling and customer service is excellent and as automated as possible. Ask for testimonials and make sure new customers can find them easily. Find new services and opportunities to upsell within HVAC (service agreements, duct cleaning, heat pump repair and maintenance) and make sure your team is the best in the business before adding on another business.
Adding a trade is like starting a new company within your existing company. I always believe it will be easier and less stressful to improve your current business than to start a new one.
