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6 Lessons Learned for the Small Business Owner

Originally published
Originally published: 3/2/2024

HVACR Business recently celebrated its 18th anniversary in business. I’ve learned a lot along the way and thought I’d share some of those lessons with you. These aren’t in any particular order, and I hope you find them helpful.

Lesson Number 1:  Be Prepared.  As a small business owner, you have to be prepared for everything because you simply don’t have the resources of larger companies. And there’s no landing net. Whatever fall you take, the landings always seem to be much more like a crash. Part of that preparedness concerns the time frames in which you can make decisions. We typically make the larger decisions with a sense of urgency. We do our due diligence and make a decision because we think this helps move our company into the best possible position for a given circumstance.  As a business owner, if you can avoid months-long decision-making processes, your company should benefit. Being prepared for events impacting your business is simply your business strategy. This is a topic we’ve written extensively on over the years. Think through the issue(s) at hand, then decide. This will help ensure your survival and growth.

Lesson Number 2: Cash. You’ve heard our very own Ruth King say it dozens and dozens of times in her column: “Cash is king.” And she’s right. For me, cash falls into several categories. First, it's sales, because it starts the process. Next, you must perform work, delivering the equipment or the service. And then you have to collect. Many of you collect payment when equipment is installed or a service is performed. This means your accounts receivable column looks terrific. However, if your terms are net 10, 15 or 30, there will be slow-pay accounts. My advice is to get aggressive and start collection the day after you “should” have been paid. Accounts don’t mind dragging payments out, so don’t feel guilty calling and asking where’s the check? After all, you have signed the paperwork – right?

Lesson Number 3: Save.  Saving some cash every month is literally money in the bank. This is no different from how you manage personal wealth. Be disciplined enough to set a percentage of each month’s net profit into an account. It’s the best business safety net ever – period. If you’ve suffered through a downturn (and who hasn’t?), you can attest to the fact that savings can make the difference between going out of business and staying the course. I like to have the equivalent of three months of revenue held in savings. Currently, our company savings are invested in CDs, earning 5.25% up to 5.75%. It’s the first time in years that rates have been this generous, so take advantage. 

Lesson Number 4: Negotiate.  Being a better negotiator can earn and save you six- and seven-figure sums over the life of your business. And, no matter what contract or sale you are reviewing, you can almost always negotiate a better deal for your company. (I have found just one exception to this rule – the U.S. Postal Service. On our P&L, they are one of the largest expense items, and they don’t negotiate.) Contractors have dozens of areas to negotiate. Building leases, manufacturer rebates, fleet leases and maintenance, and health care, to mention a few.  The old quote, “You don’t ask, you don’t get,” is true, so ask.

Lesson Number 5: Competition.  Know them, chat with them, understand them. But never, under any circumstance, talk about them in a sales call. It’s not about them, it’s about your company and your products.  As long as you have the customer's attention, why waste a second saying a word about “them”? I’ve seen it happen; unfortunately, salespeople can’t help it. They want to grind the ax. When your competition does this, you know you’re really hurting them. It’s like the ref raising his arms on a touchdown. If they are talking about you, you are scoring! If your salespeople are disparaging competitors, it’s time to slap them on the wrist, but more importantly, you need to invest in training so they stop embarrassing themselves and your company. The biggest tragedy is that they are losing sales for you. No customer wants to hear it. The customer wants to know how you can solve their problem, not what you think about your competitors.

Lesson Number 6: Sales.  There is no substitute for making sales calls and building relationships. If your sales team falls short here, your business will show clear signs on the P&L. The old adage is right on the money. Sales make everything better. Excuses on why salespeople can’t get appointments have been around forever. One of the saddest things about them is they haven’t changed in 50 years! But motivated, resourceful salespeople always find a way to see existing customers to sell them upgrades to a system, and they also find ways to meet and educate new customers. If you’re a business owner and not sleeping well at night, I’m 99% certain it has to do with underperforming sales. Get your people on the road and in front of customers. Soon, you’ll be sleeping like a baby.

Terry Tanker is the owner of JFT Properties LLC and publisher of HVACR Business magazine. He has more than 25 years of experience in the advertising and publishing industries. He began his career with a business-to-business advertising agency. Prior to forming JFT Properties LLC in January 2006 he spent 20 years with a large national publishing and media firm where he was the publisher of several titles in the mechanical systems marketplace. In addition to his experience in advertising and publishing Terry has worked closely with numerous industry-related associations over the years including AHRI NATE and ABMA.

*Originally published 12/01/2022

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