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Part 4: Establish the Appropriate Culture in Your Company

Originally published
Originally published: 9/1/2006

A culture that values and nurtures its customers and co-workers was the key to the tremendous growth and profitability of Peachtree Heating and Air Conditioning (Peachtree) from 1990 to 2002, when I ran the company. In that time, Peachtree grew to become a company earning 17% pre-tax profit on nearly $18 million in revenue, from a one that had returned 7% pre-tax profit on $4 million in revenue. The company culture that led to this dramatic success was very simply:

WIN! + WIN! = WIN!
(#1 - Customer) (#2 - Co-Worker) (#3 - Company)

In the June issue of HVACR Business, we discussed the overall importance of creating a sound culture in your company. In articles published in July and August, we detailed the principles, practices and processes we utilized in making certain our customers and co-workers were “winners.” This month, we’ll show you how to ensure the equation adds up to a winning company.

The Third Winner: The Company

By implementing and nurturing a company culture similar to the one we’ve described in this column, an hvac and IAQ “retailing contractor” (a contractor primarily focused on providing maintenance, repair, add-on, replacement, accessory, and IAQ products and services to “end users”) can realistically expect pre-tax operating profits in the range of 15% to 22% — regardless of the economy, the weather or the level of competition in the marketplace.

How to Make it Happen

To consistently operate at 15% to 22% profitability, you first must have in place an efficient and effective organization using sound business principals, procedures and process. A successful business model for a retailing contractor includes the following:

• The full commitment of all owners and managers
• An effective organizational design
• A clearly defined and established primary service area
• Effective marketing and sales programs
• 100% commitment to the growth and retention of a large, loyal maintenance- agreement customer base
• An effective technician’s sales-lead generation process
• A professional sales organization
• Effective employee recruiting and retention
• Efficient dispatching and activities tracking systems
• Timely and accurate financial reporting
• Comprehensive training programs

By combining these practices with a winning company culture, you can overcome the problems that vex many other hvac contractors.

Three Primary Obstacles

During my long career in the hvac industry — and by talking with hvacr contractors throughout the country— from 1961 to date, I’ve identified three primary obstacles to growth and profitability in hvac “retailing.”

1. “I can’t find service and installation techs. And when I do get them, I lose them to competitors who offer more money!”

2. “Nothing I seem to do advertising and marketing-wise will make my phone ring during mild weather!”

3. “This is a low price market. My competitors are giving stuff away!”

The Solutions

Peachtree’s company culture addresses each of the common hurdles head-on:

1. When your company offers stable, motivating and financially rewarding “careers” instead of “jobs,” you will attract and retain quality people.

2. When your company has developed a large, loyal maintenance-agreement customer base and your technicians have been trained and “incentivized” to generate sales leads when doing maintenance work, your replacement, accessory and IAQ business will no longer be “weather driven.”

3. When you grow a maintenance-agreement customer base and then earn their trust and loyalty through superior service, honesty and treating them with respect, your customers will have no reason to go “price shopping” for other hvac and IAQ products and services.

Building a fast-growing, profitable hvacr service contractor business requires a commitment to establishing and consistently reinforcing a winning company culture, along with the hard work, planning and execution of a sound business model, as described above. It isn’t easy and shouldn’t be taken lightly. However, for Peachtree, a simple equation shows how a culture that puts customers and employees first leads to a successful company:

WIN! + WIN! = WIN!
(#1 - Customer) (#2 - Co-Worker) (#3 - Company)

Develop a company with a culture that attracts and retains loyal customers and quality co-workers by truly valuing and nurturing them. Combine this with the key factors as described in the business model as outlined above, and you will overcome the three primary obstacles to hvac and IAQ retailing growth and profitability.


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