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Ruth King has 20 years of experience in the HVAC industry specializing in business profitability, including authorship of the book The Courage to be Profitable. She is Channel Manager of HVACChannel.tv (ruthking@hvacchannel.tv) and a contributor for HVACR Business. is why many contractors choose to grow out of this stage. It is also the stage where both corporate insurance and employee benefits become key elements of the business. If the contractor doesn't provide these things, then he risks succumbing to a catastrophe or losing key employees to larger companies. However, if the contractor protects his business and his employees, he can remain at this level indefinitely. Many contractors at this level look for an umbrella to hang their hat on (apologies for the mixed metaphor), such as a manufacturer's brand name. Consumers recognize the brand and make the assumption that, if the company is a dealer for that brand, they must be good. The consumer also assumes that the manufacturer will stand behind its dealers and there is a feeling of security in calling one of them….especially if they have that manufacturer's equipment in their home. At this stage contractors often implement and execute more complex marketing plans. They work to perfect their sales techniques and may begin to experiment with changing the mix of business to increase profitability. Owners may even learn to read financial statements and do what it takes to ensure that their employees are productive. Embracing Expansion Over $2,500,000 in revenue. Depending on a contractor's mix of business, this can be manager, a service manager, and several field supervisors each responsible for properly managing a segment of the business. This level may also feature some experimentation, which may result in a failure or two. The owner must continue to learn to "let go" because he cannot micromanage at this level. His first hiring attempts may not be successful but he must continue to try. The owner must trust the managers he hires, control functional areas of the business through those managers, and hold each of them accountable for running a profitable department. Growing out of this phase often involves attracting new customers, adding additional types of work (i.e. plumbing, IAQ, etc.), and having a strong focus on service agreements. The key is to build on the company's existing customer base, ask for referrals, and look for new marketing opportunities. Reaching the Revenue Promised Land! Over $5,000,000 in revenue. Getting over this mark can be tough. However, once a company reaches this level, it can be a very profitable place to be. Most owners who reach this stage find themselves having a lot of fun because they have great managers in place running the day to day operations. Their job becomes one of oversight and thinking about succession: "Are the managers capable of owning the company? Is there someone to take it over when I'm retiring and no longer willing to work as hard?" are two questions that are normal at this stage. The good news? Most contractors who reach this stage stay here and many grow to $10 million in revenues and beyond. Halleluiah! Sources: 1 https://www.achrnews.com/articles/134988-hvac-services-market-growing-at-a-cagr-of-662 2 https://www.bls.gov/ooh/installation-maintenance-and- repair/heating-air-conditioning-and-refrigeration-mechanics-and-installers.htm#tab-3 3 https://www.vikingmergers.com/blog/2014/cashing-boost-value-hvac- business/ 4 https://aeroseal.com/air-duct-sealing-blog/40-hvac-trends/ Trademarks are the properties of their respective owners. All rights reserved. The opinions and views expressed in this white paper are those of the author and not Ductless HVAC systems could come to represent up to 15% of the total industry revenues in the next 5 years. 4 15% Subject to credit approval. Loans for the GreenSky® consumer loan program are provided by Synovus Bank, Member FDIC, NMLS #408043, without regard to age, race, color, religion, national origin, gender, disability, or familial status. GreenSky Servicing, LLC services the loans on behalf of your lender, NMLS #1416362. www.nmlsconsumeraccess.org. GreenSky® is a registered trademark of GreenSky, LLC and is licensed to banks and other financial institutions for their use in connection with that consumer loan program. GreenSky Servicing, LLC is a financial technology company that manages the GreenSky® consumer loan program by providing origination and servicing support to banks and other financial institutions that make or hold program loans. GreenSky, LLC and GreenSky Servicing, LLC are not lenders. All credit decisions and loan terms are determined by program lenders.

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