Arkansas HVACR NewsMagazine September 2019

Business

increasing Revenue by 5%. It will grow as you complete step two…increasing gross margin by 2%. At that point reducing COS and Overhead might not seem all that important, but complete the exercise anyway to get the full picture. As you move through part one (increase sales by 5%) and part two (increase gross margins by 2%), ask the question, “How much of this increase will end up on the bottom line…called Net Profit?” If you merely raise prices or sell higher dollar volume systems you may find that very little will be lost along the way. If the 5% increase involves installing more equipment, you may have some increase in COS or Overhead depending on the structure of your company. In most cases, 80-90% will go to the bottom line. You will find this exercise to be an eye opener to the possibilities. commitment of the team that the owner leads. It is imperative that the team is aware of the purpose and vision of the company. Job descriptions are not effective. Outcome descriptions are. The purpose of an HVAC company is simply to “find customers and keep them for life”. Team members need to know what their role is in making this happen. A technician’s job is not to turn wrenches and measure pressures…it is to create lifetime customers. It is the owner’s job to provide the leadership to make his vision of the company come alive to the people on the front lines. Members of the team need to know and “buy into” the Leader’s vision Productivity. A key to maximizing productivity is the focus and

of the company in 5 years and beyond. Then the Leader needs to hold the team members accountable for doing their part in taking the company to that destination by setting goals and objectives and measuring performance. Sales vs Sales Projections. Closing rates vs Sales opportunities. Gross margins vs the plan. Call-back rates vs the acceptable level. Etc. Performance against objective is a clear measure of Productivity. and Retention. In his groundbreaking book “Good to Great”, management consultant Jim Collins says this… “Let’s consider your Business as a Bus. Your BUSiness. The degree of success you achieve in your BUSiness will depend on “getting the right people on your Bus, in the right seats, and getting the wrong people off your Bus…before you decide where you want your Bus to go”. Your success depends on People…the Right People. Employee Recruitment

From “The E Myth Revisited by Michael Gerber

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