As seen in the August 2007 edition of HVACR Business magazine.
What to look for and what to expect from business-service providers.
Just as it is important for you to surround yourself with competent coworkers — whether managers, technicians, or inside support staff — it is equally important that you surround yourself and your company with the best possible professional relationships. With the right professionals you’ll have a complete team with the correct attributes. I expect all members of my team to:
1) Be highly competent in his or her particular skill.
2) Desire to be on a winning team.
The professional skills that you should think about adding to your team include banking, accounting, insurance, legal, consulting, and advertising. I believe that all business is best done person-to-person. This means that, in addition to the two attributes stated in the previous paragraph and regardless of where the professionals may be located, I want to know my team professionals quite well. If necessary I want to be able to feel comfortable phoning them in the evening or on a weekend. Also, I want each of the professionals to be aware of the other professionals on my team.
Banking. A banking relationship is critical. Although in today’s world bankers may not have the flexibility they once had, a personal relationship still can influence their decisions. As a contractor, I’ve always provided my bankers with monthly financial statements and spent time with them to review the results. I keep no secrets from my bankers; the more they know about my business, the more comfortable I am. You should even invite them to visit your place of business. Be aware, however, that this is an age when the banking world changes constantly, so it is important to have two or three banking relationships. New community banks are often formed, big banks are buying smaller banks, and established banks are merging. You may find yourself surprised and concerned when you discover your banker has joined another bank or lost his job due to a merger. If you have more than one banking relationship, such changes will not affect your company as much.
Accounting. Many CPAs are what I call “historians.” They are quite capable of presenting financial information of what has already happened, along with an invoice for services rendered, but never seem to want to provide input on where you may be — or should be — headed. If you have an historian for a CPA, start searching for a new one. Your CPA should provide you all of the various tax returns in a timely fashion and your financial results on whatever frequency you desire (certainly at year end assuming you have monthly financial results generated internally). He also should comment on the financial results, provide advice, and inform you of changes to the tax codes and regulations that will affect your business.
The CPA should also prepare tax returns for the owner(s) of the company, providing advice to not only benefit the company but also the individual(s). I meet with my CPA quarterly.
Insurance. Your insurance agent should be very familiar with your business and should visit it occasionally. His or her responsibility is to make certain that you are properly insured against any and all exposures, and that you are getting the latest information and advice on how to control rising health-insurance and workers-compensation insurance cost. It is important that your agent is interested in helping you lower your workers-compensation experience rating, and provides you with timely and accurate workers-compensation payroll audits. Also, let your agent know that you expect him to provide a safety representative who will work with your company’s safety committee, as well as safety posters for your business. Keep in mind that your insurance agent earns commissions on total premiums paid. If they are not working in your best interests, they have no reason to assist you in lowering costs. For that reason, make certain that your agent has your company’s best interests as his objective.
Legal. If there is any one person I must have access to at any reasonable time, it is my attorney. Because attorneys specialize in various disciplines of law, it is normal to work with more than one attorney. However, it is important that your “team” attorney is your go-to person. Usually, the “team” attorney specializes in corporate law, but not always. If and when you need an attorney who specializes in another discipline (for example, litigation), your team attorney should be able to recommend one. If your attorney works at a large firm, he might recommend another attorney from the same firm. One of your attorney’s responsibilities is to keep you from getting into trouble. However, in my experience attorneys sometimes are too diligent in doing so. If I heeded everything attorneys have told me, I would never have accomplished anything. Once, when an attorney told me to not take risks, I replied that as a contractor I take risks every day. I added that I would pay him the same rate to get me out of trouble as I would pay to keep me from getting into trouble.
Consulting. Many contractors never use a consultant, while others use more than one, depending on the services they want. Consultants are no different from other professionals: Some are very good at helping companies, and others may not do as well. Most consultants tend to specialize in a certain area of business, such as sales, marketing, processes and systems, pricing strategies, budgeting, operating systems, personnel, staffing and human resources, company evaluation, succession planning, company turnarounds, and the acquisition and sale of companies. You can find and evaluate consultants by talking to other contractors and by conferring with your trade associations and trade alliances.
Advertising. An advertising agency can be a big help because of its creative ability in developing and placing ads, and in helping you develop a more professional identity of your company. Also, a good agency can develop some great brochures and other collateral material. I like using an ad agency. Generally, larger hvac contractors are more likely to have a relationship with and use the services of an agency, though many medium-size and smaller companies do as well. If you’re considering using an agency, be diligent and take your time in the decision. Once you’ve chosen one, take some time to help them really get to know your business and make certain they fully understand how to use the money-saving opportunity that manufacturer co-op funds present. Agencies tend to focus on media advertising because that is how they make the most money. I’m a big fan of direct mail and have found that direct mail does not excite most agencies. I’ve worked with a few very good agencies that contributed to the growth and success of our companies, but I’ve also worked with agencies that I was far from pleased with. As you would expect, those relationships were short lived.
The most effective company leaders recognize that even with their keen management skills and highly competent coworkers who are driven to be on a winning team, the company is not complete. They realize that adding outsourced professional skills not usually found internally is what it takes to really complete the team. The very best contractors focus on what they do best, including leadership of coworkers and outsourced professionals.
Ron Smith is a well-known leading authority in the hvac industry. A very successful contractor, franchisor, consultant and consolidator, he has owned or co-owned 14 businesses — a true entrepreneur. His best selling and highly acclaimed book HVAC Spells Wealth can be seen and ordered at www.ronsmithhvac.com or phone 615-791-8474.