The two most common reasons that a person starts their own HVAC business are because they want to be their own boss and because they want to make more money. But, the truth of the matter is that while there are companies where the owner makes millions of dollars a year, there are also lots of HVAC businesses where the owner is overwhelmed by business expenses and not making much money, perhaps less than the employees! But, no matter where you set up your HVAC business, this does not have to be the case! At Exigo Business Solutions in the Kansas City area, we work with many small businesses including those in the skilled trades like HVAC, electrical, and plumbing. From our years of experience, here are 4 tips to make your HVAC business profitable from the start.
Wanting to be your own boss and make more money are great goals but they are not a plan. At Exigo Business Solutions we have our clients who are starting a business use LivePlan, a simple but very efficient system for developing and maintaining a solid business plan. You plan will help you set priorities, maintain control as you go, and obtain financing to get your business off the ground.
In our experience, an average HVAC business owner takes about 6% of revenue for himself after paying employees, utilities, marketing, and all other expenses. But the really successful business owners keep between 14% and 20% of all revenue. The way to end up with the higher percentage is to start out with a solid business plan and the advice of a LivePlan Strategic Advisor like Exigo Business Solutions.
For a useful overview of how to effectively market your HVAC business take a quick look at our article, Small Business Marketing Essentials. Then realize that you do not need to do everything at once and you do not need to spend very much money. As an example, a successful client of ours started out by marketing his services on Craig’s List and Angie’s List for customers in his city. He got up each morning, made his coffee, and sat down at the computer to rewrite his ads so that they were always at or near the top of the list for his business. He describes this as a “15 minute, one cup of coffee” task that he did daily from Monday through Saturday. Another good idea is to set up a very basic website that describes your services and the information they need to contact you. For a reasonable price, you can typically find someone to optimize the local SEO for your site so that you get business that way.
“Doing the books” is all too often an afterthought in a startup small business. Unfortunately, simple routines that could save you money and help you take advantage of better and more profitable work get overlooked when bookkeeping takes a back seat. When you outsource your bookkeeping it can pay for itself with reduced expenses, better job selection, and higher profits. At Exigo Business Solutions we provide our clients with customized reports that keep them abreast of cash flow and expenses and provide insights to both improve income and cut expenses. To make your HVAC business profitable from the start you need to keep close track of your finances. Your job is to do HVAC work or do estimates for prospective work. Let the top accounting firm in the Kansas City area handle your bookkeeping and put you on the road to HVAC business profits from the very start.
Common thinking, caused by the way bookkeeping is usually done, is that you work and money comes in the door. You pay all of the expenses. Then, perhaps, a little is left over for profit and owner’s pay. At Exigo Business Solutions in the Kansas City area, we use an innovative approach to bookkeeping called Profit First. With this system, you will work at your HVAC business and get paid. Then you will allocate money twice a month to bank accounts that you have set up for profit, owner’s pay, taxes, and operating expenses plus more accounts as needed. This disciplined approach to your finances puts money aside for profit and owner’s pay, as well as the tax man before it is eaten up by day to day expenses. Then, the Profit First system puts the focus on your expenses. With the help of a professional bookkeeper, you will be able to identify work that pays the best and work that is losing you money. You will gain control of your cash flow and budgeting and see a profit from the very start.