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The Retirement of Baby Boomers will Change the Face of the Construction Trades

April 17th, 2017

“10,000 Baby Boomers turn 65 each day.”[1]

“66% of all businesses, nearly 4 million companies, are owned by Baby Boomers”[2]

The retirement of the Baby Boomer generation will have a huge impact on the construction trades at all levels. As shown by the statistics above, most small business owners in the Baby Boomer generation will be looking to retire and sell or transfer their businesses in the next 5-10 years. If you’re the owner of one of these businesses, do you have a plan for your business when you retire?

BDR’s studies of its coaching clients who have sold or transferred their businesses show it can take up to 10 years to find and train an internal buyer (a team member or family member) and complete the sale. Other types of sales may happen faster, but just because you offer your business for sale, doesn’t mean it will sell. In fact, only 30% of businesses offered for sale actually sell[3]. If it can take up to 10 years to close the deal with an internal buyer, and only 30% of businesses offered for sale actually sell, shouldn’t you start the process now?

Here are some of the key steps to prepare in advance before putting your business on the market for sale (adapted from “Selling a Small Business – 12 Crucial Steps” by Peter Siegel):

  • Review and prepare financial records – This allows you to correct any items that need attention while also reducing the time you must spend later during due diligence.

  • Complete professional business valuation – Having a professional complete a business valuation will show you key items that buyers will look at when evaluating your company while giving you a starting point for calculating your sale price.

  • Determine if you will work with a business broker – There are pros and cons to working with a business broker, but using one can help you stay focused on running your business during the sales process.

  • Develop a marketing piece that highlights the reasons to buy your company – A potential buyer (or a business broker for that matter) will not necessarily know all the things that make your business unique and valuable. Build a marketing piece to sell your business that highlights what makes your company great, but don’t give away your company name or specific numbers.

  • Prepare all necessary legal agreements to protect your business information – Having legal protections in place are critical when selling a business. Make sure you work with an attorney experienced in business sales and acquisitions who can help you.

  • Understand the importance of financing – Bizben.com, a site for business sale listings in California, says that financing is the biggest challenge in selling a business today. As a business owner, you may need to consider financing the sale of your business to make a deal.

  • Build the right team for support - Make sure to consult an attorney and CPA with experience in selling small businesses and/or family business planning.

BDR has built a class to share specific strategies for building value in your business and for creating a business that you can sell. Over 2,000 hours of research, analysis, and content development went into creation of Building a Company with Great Value: Maximize your potential sales price, Plan for a smooth transfer or succession, Prepare for a successful future sale. We believe it is by far our most powerful and impactful course yet and are offering it through BDR University in Atlanta on May 16-17, 2017 and in Phoenix on May 18-19, 2017.

Whether you’re nearing retirement (next 3-5 years), thinking about it (5-10 years out) or just getting started in your business, you owe it to yourself, your family, and your employees to attend. The process of building a company with great value starts with you and starts now.

 

[1] Transamericacenter.org

[2] http://blog.genequityco.com

[3] Selling a Small Business – 12 Crucial Steps by Peter Siegel, MBA

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Are you Maximizing the Value of Your Greatest Asset?

March 29th, 2017

What is your most valuable asset? For most Americans, their savings, their 401K, or their home are all common answers to this question. For business owners, the answer is slightly different. Your most valuable asset is likely to be your company. It can generate an income stream as long as you own it, and one day it can be sold.

According to Inc Magazine, up to 75% of small businesses will be sold in the next 10 years. Sadly, most business owners will not be properly prepared to maximize their company’s value at sale. Are you doing all you can to maximize the value of your most valuable asset?

How do you increase the value of your company? Think about your home. Each improvement you make to your home can directly increase the home’s value. When we get ready to sell a home, we typically spend time and money making improvements to make it as attractive to as many buyers as possible. With your company, the same concept applies. By making improvements, you can not only advance your company’s current performance, but you can directly increase your company’s value to a potential buyer. The outcome of this effort is building a company that is not reliant on you, the owner, for everything.

Here are four ways to improve your company’s value:

  1. Build Structure – Build a company structure with managers in place and an owner-independent sales team that reduces your personal functional responsibility. When a buyer looks at your business, they will look at what functions they must replace when you leave. If you are involved in all the functional details of your business, the purchase will look a lot riskier to any potential buyer, lowering what they would be willing to pay.

  2. Diversify – Do you do business in more than one market segment? If you’re reliant on a single cyclical, “boom or bust,” market segment, a small number of key customers, or just a few products, your business will look a lot riskier to a potential buyer. Having a broad customer base where no single customer generates more than 5% of your revenue reduces risk – for you and for a prospective buyer.

  3. Be Profitable – This one is a no-brainer, but this is about more than just being able to show you had one great year. A truly valuable company will be able to show many years of excellent profitability and project future profitability through their business plans. If you have a great record of net profit that can be backed up by a history of 3rd party facilitated and produced business plans, the value of your company can be calculated on future earnings, not just past ones – a huge difference.

  4. Generate Recurring Revenue – Businesses with large, profitable recurring revenue streams typically sell for more than those without. Profitable recurring revenue streams reduce risk, increase peace of mind, and improve your company’s value. Having a large base of profitable maintenance agreements is a great source of recurring revenue that you should focus on growing.

BDR has built a class to share specific strategies for building value in your business and for creating a business that you can sell (but may not want to). Over 2,000 hours of research, analysis, and content development went into creation of Building a Company with Great Value: Maximize your potential sales price, Plan for a smooth transfer or succession, Prepare for a successful future sale. We believe it is by far our most powerful and impactful course yet and are offering it through BDR University in Atlanta on May 16-17, 2017 and in Phoenix on May 18-19, 2017.

Whether you’re nearing retirement (next 3-5 years), thinking about it (5-10 years out) or just getting started in your business, you owe it to yourself, your family, and your employees to attend. The process of building a company with great value starts with you and starts now.

Sincerely,

Bruce Wiseman

BDR President

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What Does Today's Customer Want?

June 17th, 2016

Today's customer expects choices. Regardless of the product or service they are purchasing, today's customer wants to be aware of all their options so that they can make an informed decision.

This desire is prevalent in purchase decisions across nearly every industry, not simply HVAC equipment.

Consider the tactics often employed by truck manufacturers. They have expanded their original strategy of offering three options equipped with various features and accessories marketed as "good-better-best," to add a fourth tier: "fantastic."

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Demystifying the Mechanics of 'Winnable' Goals

May 16th, 2016

Is what you're doing right now moving you closer to your goals?

I’m sure we’ve all read studies that show fewer than 10 percent of the population sets goals, less than half of these people achieve their goals, and yet everyone believes goal setting is very important. So, why do we all agree having goals is important yet more than 90 percent of us don’t set them? A quick Google search shows there are generally four main reasons why people don’t set goals: they’re not aware of the importance, they don’t know how, they‘re afraid of failure, and they’re afraid of accountability or humiliation.

Do you believe that? Are goals really so complicated and intimidating that nine out of 10 of us simply avoid the entire process? After spending years working with service managers and leaders, I believe most of us never really learned how to properly use goals, yet we found ways to get things done, so we came to the conclusion that having formal goals isn’t that important to success. The reality is, goals are extremely important to having intentional or planned success (as opposed to accidental success coming from shear effort) and really aren’t that complicated.

BECOME A BETTER SERVICE MANAGER

So, let’s see if we can demystify this incredibly important yet rarely used concept of goals and get on the path to becoming a better service manager and leader.

Most service managers are mechanically inclined, so let’s look at goals from this perspective. In a gas furnace, we must have three things for combustion to occur: a fuel, oxygen, and an ignition source. With the proper fuel/oxygen mixture, an adequate spark, and, in the proper sequence, gas will ignite. If we leave any of these out or they are out of sequence, we’ll have a failure. These are the mechanics of combustion.

If we think of goals in this way, what are the mechanics of a “winnable” goal? A winnable goal must include all of the following:

1. Something you are trying to do or achieve — This doesn’t need to be anything spectacular or grandiose, it’s just something you want to do or achieve.

2. Be specific and include an ending target — For example, a goal of improving your service agreement retention rate by 10 points would be incorrectly stated as “We’re going to improve our retention rate by 10 points,” and correctly stated as, “We will increase our service agreement retention rate to 90 percent.” This nuance may be subtle, yet it’s very important to crystallize the goal.

3. Keep track of your progress — If we simply say we’re going to improve our service agreement retention rate, we’ll have a tough time measuring our success and sharing progress. However, if we say, “We’re going to improve our service agreement retention rate from 80 percent to 90 percent,” we can easily measure progress and share results with our team using visual aids such as graphs or charts. Things that get measured get done; things that don’t get measured don’t get done. It’s that simple.

4. Set a specific completion date — Without a completion date, we’ve set more of a hope or dream than a goal.

5. Goals must be realistic and achievable — If we’ve been consistently running an 80 percent retention rate on our service agreements for the past five years, it may not be realistic to set 90 percent as a goal to achieve in six months; however, a completion date 12 months out may be appropriate. You have to believe in the goal.

6. Go all in — If you, as the leader, believe in and are 100 percent committed to the goal, but key members on the team aren’t committed or don’t agree, you’ll have a very low probability of success.

7. Document and share the goal with at least one other person. This is critical; however, it’s usually overlooked or intentionally ignored because we don’t realize its importance. Documenting and sharing our goal openly makes us accountable to ourselves and others for its success.

While there may be slight variations, these are the mechanics of a winnable goal: it is clear, easy to understand, has a starting point, an ending point, a completion date, is realistic and achievable, mutually agreed upon, committed to, has been shared with others, and is in writing. A well-written winnable goal begs you to take action, plan a strategy, engage your team, measure progress, share results, and celebrate its achievement.

In closing, I want to share a statement I learned about 15 years ago regarding goals. “Is what I’m doing right now moving me closer to or further away from my goals?”

What a simple yet great question to ask ourselves each day. If you have a goal, you can answer; if you don’t have a goal, you can’t. I still keep a printout of this quote on my office wall. Best of luck with taking the first step by creating your winnable goals.

Publication date: 5/16/2016

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A Service Management Manifesto

July 27th, 2015

Anyone can learn from their own mistakes, but a wise man learns from the mistakes of others...

See if this sounds familiar: You’ve continued to grow in your career and are inching closer to achieving your goal of becoming a service manager. Eventually, an opportunity becomes available, you’re selected for the position. Wow, finally realized the dream, and life is good. If you’ve been in the role for a few months or a few years, you’ve probably figured out there’s a lot more expected of this position than you realized. Now what?

BRIEF HISTORY

I started in the mid ‘80s as a service technician for the Trane commercial service franchise in Kansas City, Kansas, performing factory start-up and warranty work as well as traditional service work in the mid-to-heavy commercial and industrial market. After several years, I wanted something different from my career and pursued the sales avenue before moving into increasingly responsible positions of management. Over the past 20-plus years, I worked my way up, holding sales rep, field supervisor, operations manager, sales manager, and general manager positions. Most recently, I’ve worked as regional vice president of service operations position for one of the largest non-union mechanical contractors in the country, and now I provide HVAC coaching and consulting services for Business Development Resources Inc. Along the way, I’ve learned the service business from the ground up; discovered things that work and don’t work; been around successful and unsuccessful people; and watched companies grow, collapse, or just indefinitely struggle to maintain.

Depending on the size and breadth of your company’s offerings, the service manager can be responsible for a seemingly endless number of things. Some obvious areas:

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Service Dispatch University Featured Article

June 10th, 2015

Dispatching for Customer Service and Growth

BY KEVIN REEVES
president, Parker’s Heating & Air Conditioning

Here in Georgia we’re not too far from where Spanish conquistadors once spent decades looking forthe Fountain of Youth. As we know, they never found it. Their quest was as achievable, some might say, as a contracting firm doing an end-run around the down economy.

Well, not so fast. We’re a 36-person HVAC firm with 12 service techs located in southern Georgia, where the economy’s been hit hard and where there’s plenty of competition for business. Yet, through these past couple of years, we’ve endured and even grown. I attribute our ability to gain new ground in the toughest of times to an incredibly motivated, customer-oriented workforce and smart business management.

One of the key facets of our success has been the recognition that we need to stay apprised of new technology and the latest techniques in running the business. To learn and experience the best of it, I attend training when my employees do.

A recent experience helped us sharpen our ability to meet and exceed customer needs. Last November, our service dispatcher Brent Davis and I attended Business Development Resources’ (BDR’s) “Service Dispatch University” in St. Louis, Mo., offered for the first time outside their Seattle headquarters.

We both came away from the two-and-a-half day training experience newly committed to making changes and adjustments that would improve our ability to get to jobsite locations faster and more efficiently. We now manage dispatching with fewer hassles and miles traveled and with an approach that’s more sensible for each of our 11 service technicians.

Because of our rural location, our service area is within a 65-mile radius of our location in Americus, Ga. We’re learning new approaches to zoning our territory of operations; the training has helped immensely.

The key objective of BDR’s interactive, hands-on, service dispatching workshop is to develop and refine scheduling techniques that improve labor management and customer service and drive revenue. Instructor Jennifer Shooshanian, who really knows her stuff, said that “the key idea here is to keep techs on the job, to maximize their effectiveness and billable hours and to minimize travel time, disruption and inconvenience.”

Our class consisted of about 50 attendees, mostly service dispatchers from across the country. It was a very diverse group. I believe that each person left with a much better ability to apply reporting tools and techniques that track and improve a service department’s daily performance.

“The 10-minute rule” = $66,000/tech

We learned to reduce time spent on service calls. I was amazed to see that, with a savings of as little s 10 minutes per technician, per call, we could save an extra $66,000 in annual revenue per technician. Brent and I developed better, more natural telephone scripts that now provide consistently higher levels of customer satisfaction.

One of the advantages of the workshop setting is that students are frequently interactively involved. This isn’t a topic where book learning is very useful. Instead, we participated in frequent role-playing or mapping exercises in which we had to move technicians across our own work territories, looking at the influence of time, a tech’s location and then, unexpectedly, at a customer who places new demands on us or at a higher-priority call that’s just come in.

Participants in the training session learned to be resourceful, flexible and creative when scheduling. Trainer/coach Angela Coombs said that’s hard to do when dispatching isn’t given great importance as part of a company’s operations. Coombs and Shooshanian helped to guide us into an efficiency groove that looked at the dispatcher’s role from every conceivable angle. That wasn’t easy, because of all the variables we deal with on a daily basis, including jobsite delays, geography, the needs of priority customers, owner requests and technicians calling off.

Conflict resolution

During a breakout session, class participants were engaged in “difficult customer” role playing. We had some interesting challenges! No doubt, some of the actors drew from experience on both sides of the fence; exasperated, but steady service dispatchers and unreasonable, hot-tempered customers. Of course, some interactions were easier that others, but the most memorable “skits” were the ones where “customers” put the squeeze on dispatchers.

Then we dissected each call. BDR pros helped us understand options, suggesting ways to calm and neutralize upset customers.

When I saw “conflict resolution” on the program syllabus, this is what I expected. But the BDR course ventured into territory I wasn’t anticipating; solving conflicts in the workplace, among colleagues. We learned that these types of challenges can be more difficult than dealing with unruly customers. Unresolved conflict among company employees causes pain to employees and customers alike, becoming a constant source of tension. We learned to take steps to prevent or resolve conflicts by recognizing them early.

Class attendees also learned the value of scripting, a practice that can be especially helpful to new dispatchers, assuring consistent and accurate communications. “The key is to practice customer scripts until they roll naturally and spontaneously,” assured Angie Swartz, BDR training and event coordinator.

Zone mapping

One of the most useful segments of the course dealt with zone mapping. All participants were asked to bring maps of their own territory so that BDR’s instruction wasn’t just theoretical: We were soon hard at work on real service territories, making recommendations that would positively impact company operations.

One of the course attendees was 11-year service dispatch veteran Erica Vrentas, assistant service manager with R. Brooks Mechanical, a 17-person contracting firm based in Rising Sun, Md. She and Hank Duus, estimator, were hard at work on a review of their service map, while improving the level of definition for their three service technicians.

I checked with Erica recently to ask whether the SDU training helped. She said that they have implemented some very helpful changes to their service zones based on the training they received. Erica added that — with new insights into improving service zones, based on geography, population, demographics, road quality and conditions and the locations where the service technicians live — they’ve achieved substantial improvements in efficiency and profitability.

“We’re doing a better job of connecting service techs with jobs that tap their core skills, and we’re also doing better at keeping them in tighter areas geographically. It’s improved our profitability,” she said. Erica was especially inspired by suggestions about how company managers and dispatchers can help technicians improve their time management, looking closely at travel, billable hours, maintenance and call-backs. Not only that, Erica also contributed the idea that the contracting firm call in truck stock on the day of a service call so that truck inventory is replaced immediately.

Liz Walker is a dispatcher for Custom Air Inc. in Sarasota, Fla., a 50-employee firm with 11 service technicians. She said that they developed a structured rotation for all service technicians, who now drop off paperwork and pick up parts they’d soon need on the jobs. Previously, a parts runner did many of these things.

Also, Custom Air now rewards service technicians for equipment replacement referrals. Apparently, it’s one of the most successful changes they’ve made, tied to BDR recommendations. Custom Air managers are working routinely with BDR to tighten and improve company operations. Another happy attendee is Don Mumma Jr., general manager of service for Lititz, Pa.-based Haller Enterprises Inc., a full service mechanical contracting firm with close to 300 employees, currently deploying a field service staff of 37.

“I was especially impressed with recommendations for improving our zoning and dispatching,” said Mumma. “We’re working on it now, with the goal of shaving 10 minutes per call per technician. Multiply that by 37, and you can see why we’re so eager to see it happen. We expect to have five branch locations by later this year and, with a large, highly populated territory and rising fuel costs, we’ve made it a top priority.”

Mumma was also affected by the energy of the training and the level of interaction among attendees.“There’s no question: BDR has helped our firm grow, and we’re committed to keeping pace with the training.”

Kevin Reeves is president of Americus, Ga.-based Parker’s Heating & Air Conditioning

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Business Coaches Provide Playbook for Success

November 1st, 2010

Does your team take the field without a game plan? Do they know the company’s goals and aspirations? A business coach can help you become better organized, and develop a winning company culture.

Just as a good hitting or pitching coach can help a baseball player succeed, a good business coach can help a company succeed. At Mason Mechanical, we're living proof of this. This year, even with the slow economy, we saw our highest profits ever. We had to work hard to succeed, but the key advantage is that we also worked a lot smarter — thanks to the valuable help from a business profit coach.

My wife, Deanna, and I run Mason Mechanical, a 29-person, full-service mechanical contracting firm in Mesa, AZ. Rather than outsourcing or hiring for management responsibilities, Deanna and I like to be deeply involved with all of the day-to-day decisions.

What kept — and is still keeping — our firm from being a casualty of the times was the realization that we needed to make some serious changes. Through training sessions we had attended, we knew that the financial organization of our firm was a real mess. In addition, we wanted to be able to rely entirely on referrals to drive new business.

In 2006, we started working with a training and coaching firm. From the moment we first applied this company's insights and recommendations into the management of our business, our profitability has grown. If your company needs help, or if it just feels like your company isn't running as well as you would like, our advice is to turn to a business coach, and the sooner the better.

New Approach to Service Work
Our company needed to be reorganized. We broke down the financials by department, no longer looking at one big, vague bottom line like we had in the past. We examined each department individually to see where we were making money, and where we were losing it.

For us, our service department was a key concern. In the Southwest, service work is very seasonal, for obvious reasons. For the better part of the summer it's not unusual to go for weeks with daytime temps of 110F. Another aspect that makes service less profitable is that good technicians don't come cheap. But if you don't have good technicians, your service department is doomed to fail.

Our profit coach took a look at our list of service accounts, and recommended how much time we should be spending on each one. He also set guidelines for how much money each individual account should be making. It came as no surprise to learn that we had several accounts that weren't making the company any money at all.

We also learned to analyze our finances every month, for a clear picture of what changes needed to be made. It's a big improvement over wondering where the money went at the end of the fiscal year.

Having an organized business also makes for better, more productive employees. A company's employees — just like everyone else in this fast-paced world — have a lot going on at home. If you can provide them with an organized, well-structured work environment, one that lets them regain their focus, you're going to get better work out of them.

Small Things Make the Difference
In today's trying business environment, the most important asset that a dealer can have is a consistent, high-quality lead generation process.

Our profit coach taught us much about lead generation, product and company branding, social networking, spiff programs, and quality control. A seminar sponsored by our coach’s company covered all the facets that will help us reach a key goal: to become a 100% referral-driven company.

We learned that lots of little things make the biggest difference — things that you think you should know, or should have thought of on your own. For instance, all of our technicians now wear disposable booties when they enter a home, and everyone has matching uniforms. If our technicians are going to be touching finished walls when installing a thermostat, they wear latex gloves. We want every client to refer us to their friends as the most professional, friendly contractor they've ever dealt with.

We now mail newsletters twice a year. Our mailing list receives updates about the firm, and specials that we're running at the time. It keeps Mason Mechanical fresh in their minds, and is relatively inexpensive.

Our profit coach helped us see the importance of developing a genuine company culture that plays a key role in identifying who we are during and after company hours. Our service department's revenue is up 50% since last year, due to the changes that our coach suggested and we implemented.

My wife and I first heard about our profit coach in 2001, but we didn't start working with them until 2006. My only regret is not beginning our involvement with them when we first had the opportunity. In a nutshell, they've converted us from air conditioning mechanics into true entrepreneurs. We're glad to be among the small percentage of contractors in the country who have taken advantage of the help available to us from a business coach. Don't wait, as we did. The sooner you start, the sooner you'll see positive changes at your company and on your balance sheets.

Since 2006, Mason Mechanical managers have worked with Seattle-based Business Development Resources, Inc. (BDR), a training and coaching firm exclusively focused on the plumbing and HVACR industry. BDR's Profit Coach program offers guidance specifically focused on contracting firms. For more information, call 206/870-1880, or visit bdrco.com.

Steve Mason is president of Mason Mechanical, Mesa, AZ. He can be reached at 480/835-9928 or by e-mail at catchair@masonmechanical.com.

Coaching End Game

A successful approach to business coaching consists of a simple game plan, although the steps in following through will always require some sweat.

BDR, the group enlisted by Mason Mechanical, emphasizes four primary goals with plumbing and HVACR business customers:

  1. Drive profit and growth.
  2. Create a self-sustaining, recurring revenue, referral-driven business model.
  3. Strengthen ownership and management business and leadership skills.
  4. Implement changes that drive a customer-first culture, with a profit-center focus.

— Source: BDR

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Contractors learn, recharge at Commercial Maintenance workshop

August 1st, 2010

Commercial Maintenance Sales featured in the August 2010 edition of the PHC News

I’ve flown to Seattle twice every year for the past 10, and each time, return home reinvigorated, newly inspired, and having learned something new and valuable for the business each time,” said Mark Stout, president of Stout Heating and Air, an 18-person, full-service mechanical contracting based in Salisbury, NC.

Stout and his son, Ryan, were among the 52 contractors from all corners of the nation that came to the mid-March Commercial Maintenance Sales (CMS) workshop conducted by Seattle-based Business Development Resources (BDR).

A training and coaching firm focused exclusively on the HVAC/R industry, BDR unveiled the new two-and-a-half day class as part of their comprehensive Profit Coach program.

“BDR training’s as thorough and complete as it gets, with all facets of the training focused on improving company success and profitability,” said Stout.

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