Contractor Fraud Cases on the Rise – Here’s what to Look For

In the construction business, fraud has taken center stage in recent years. According to a recent report published by the Association of Certified Fraud Examiners, financial loss from a typical construction fraud cases averages $245,000, far higher than other industries. Fraud in construction can cost far more, not only to the customer but the construction contractor managing the project. This is often due to faulty workmanship, job abandonment, and unnecessary billing for items or work not completed.

Construction contractors and business owners who operate appropriately and in-line with state and federal regulations make up the bulk of the market. However, the good actors in construction contracting can take steps to reduce fraud, improving the success of their business and the residential and commercial customers they serve. It starts with being licensed and bonded per the requirements of your state, followed by an awareness of how fraud takes place on the job. Here’s what to look for when it comes to construction fraud.

Understanding Common Fraud Types

Every construction contractor should take time to recognize the common fraud types in the business. Although not all-inclusive, construction fraud categories include:

  • False Billing – Nearly 35% of fraudulent activity in construction companies large and small correlate to billing schemes. Payments to made-up vendors or suppliers, overpayment for items or materials, and the use of job-related funds for personal items all fall under fraudulent billing.
  • Theft – Because of the location of many construction projects, theft runs rampant in the industry. Everything from lumber and concrete to piping, wires, and cables can be easily taken from a job site, and it is nearly impossible to track down after the fact.
  • Abuse of Equipment – In some cases of construction fraud, equipment is misused both on and off the job.
  • Bid-rigging and Corruption – Larger construction contractor projects are susceptible to bid-rigging and other types of corruption. Nearly 47% of fraud cases involving large dollar amounts involve these issues, including problems with bribery, kickbacks, and quid pro quo arrangements.

Once you are aware of the common types of fraud, preventing it and protecting your place in the construction contractor industry requires specific strategies.

Placing Internal Controls

First, establishing controls to reduce the potential for fraud among subcontractors, vendors, and suppliers within the business is critical to your success as a contractor. The most straightforward step to take in creating strong internal controls is a separation of responsibilities. For instance, having one person overseeing suppliers and another approving payments is a reliable internal control. Similarly, continuously comparing the estimates of projects with the actual costs helps uncover fraud if it is happening. Checking invoices for correct line-item expenses and charges, reconciling billing statements, and reviewing financial documents of the business on a regular basis all help prevent fraud from taking place.

Placing internal controls also comes down to recognizing warning signs of bad actors in the business, but this is easier said than done. This is because many construction fraudsters work sufficiently for one year or more before committing a fraudulent act, and they often have no prior criminal history or employment warning signs that would make one suspicious. The best thing to do is be diligent about keeping an eye on what’s happening on each and every job and every subcontractor, vendor, and supplier who comes in contact with a project.

 

Protecting Your Reputation

Construction fraud has a negative impact on the industry as a whole, as customers feel less confident that the work they need completed will get done without a hitch. As a construction contractor, you can focus on maintaining a strong reputation for your business to ensure fraud does not tarnish your name. Understanding your requirements for licensing, securing the right surety bond for your jobs, and completing due diligence on the work with whom you work closely all benefit your position in the industry.

About The Author

Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.

FREE Flat Rate Pricing

Black Belt Contracting

America’s Newest Social Networking Website with free Flat Rate Pricing.

With the help of our development team, I created a website for contractors to network, share ideas, and get advice from the industry’s top consulting people. The url is BlackBeltContracting.com

If you were to convert Facebook® into a social networking site for contractors and add an online flat rate pricing system, you would basically have BlackBeltContracting.com

What Can You Do at BlackBeltContracting.com?

  • Setup a Company Page
  • Invite Employees and Control Their Privileges
  • Send Friends Requests to Colleagues
  • Invite People to Join
  • Network with Contractors and Some of the Industry’s Top Consultants
  • Ask and Answer Questions
  • Attach Pictures and Share Documents
  • Use Service and Install Labor Rate Calculators
  • Build Flat Rate Pricing Books That Techs Can Use in the Field
  • Earn Participation Points and Receive Belt Rank Promotions

I would like to request a favor from you. Since this website is so new, I need a little help getting it going. I really need contractors to sign up and post questions and comments. No one wants to use the website until someone else uses it. It’s the “chicken or the egg first” concept. Basic membership is 100% free.

Please help me out by joining Black Belt Contracting, click here. As a thank you for your assistance, I set up a coupon for MrHVAC.com worth $25.00 off any purchase. Use coupon code BlackBelt2017 at checkout. This coupon expires on January 31, 2018.

Top 3 Must-Attend HVAC Events in 2018

Conferences are an integral part of being a successful HVAC contractor, no matter how big or small your business. During conferences and other industry events, HVAC contractors have the opportunity to meet with like-minded industry professional to discuss what’s new in the market, how to successfully operate a business as an HVAC contractor, and best practices for performing each job to the best of your ability. In 2018, there is no shortage of HVAC conferences and events to attend. Here are the top three worth your consideration.

Home Performance Coalition Conference and Tradeshow 2018

April 23-26, 2018 – Philadelphia, Pennsylvania

The Home Performance Coalition Conference and Tradeshow is an industry must each year. In 2018, HPC has put together a highly educational agenda full of workshops, seminars, continuing education opportunities and networking events throughout the four-day conference. The focus on this year’s conference is on home performance and weatherization, as well as residential energy efficiency for HVAC and other industry professionals. Some of the workshops and keynote sessions include the business toolbox, which gives valuable information on running and building an HVAC business from the financial aspect to marketing and employee management. There are also sessions surrounding diversification of business opportunities, policy shifts, smart home trends, and innovations and collaborations among industry leaders. HVAC professionals can gather more information about registration, accommodations, and educational sessions by visiting the HPC website.

Plumbing-Heating-Cooling Contractors Association Connect 2018

October 10-12, 2018 – Albuquerque, New Mexico

Each year, the Plumbing-Heating-Cooling Contractors Association holds its annual Connect Conference and Tradeshow. This event is intended to provide a large-scale networking and education opportunity to HVAC contractors and similar industry professionals. Throughout the three-day conference and tradeshow, HVAC contractors can gather information about new products and trends in the market, as well as participate in workshops and educational sessions that offer detailed information on best practices, business management, and opportunities in today’s residential and commercial market. Registration information as well as a list of speakers, workshops, and continuing education opportunities can be found on the PHCCA website.

Heating, Air-conditioning & Refrigeration Distributors International (HARDI) Annual Conference

December 1-4, 2018, Austin, Texas

Each year, HARDI comes together with several high-level sponsors to present its annual conference to HVAC professionals. While the organization itself is focused on HVAC distribution partners, the annual conference is meant to provide networking and educational opportunities to HVAC professionals from all aspects of the business. During last year’s conference, HARDI offered three distinct tracks for attendees: discover, intended to optimize supplier and distributor relationships, deploy, meant to offer insight and best practices for internal operations for HVAC professionals and businesses, and deliver, focused on identifying and delivering to the needs of HVACR customers. Registration information, educational sessions, and this year’s conference theme can be found on the HARDI website.

In addition to these three large, national conferences, many associations put on smaller local events for HVAC contractors and industry professionals. Be sure to check with your community associations and industry leaders for up to date event information in your area.

Author:

Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.

Eric Weisbrot

How Better Employee Management Increases Profits

Ever struggle with employee management?

If we’re honest, challenges with employees are something that most business owners have faced, regardless of their size. After all, employee productivity is directly tied to your business’ profits, while generally your employees just don’t have the same level of vested interest in your company. This then, is where the discrepancies lie, and why so many owners and employees fail to see eye to eye.

Having good employee management systems in place is your secret to ensuring that your workplace runs smoothly and efficiently. Of course, this starts by having clear objectives and goals outlined for your team to follow, and milestones for them to meet, and also involves striving to create a workplace environment that allows them to excel, thrive, advance, and achieve a work-life balance. Having the right software and tools in place, such as payroll processing software, time tracking solutions, and project collaboration tools, can help you in your quest to keep things running smoothly as well.

We all know that motivated and productive employees can have an impact on your bottom line, but what exactly does it look like and how does it boost your profits? Read on to see some of the exciting benefits of excellent employee management!

Lower Turnover Rates

Let’s face it; losing a valued employee can leave a big gap in your company. It can be costly too. Not only will you have costs associated with advertising the vacancy and finding a new employee, but you’ll also have to take into consideration time spent reviewing resumes, conducting interviews, and performing reference checks, as well as lost hours if the employee quits on short notice. Once you do find someone, you’ll have training costs to onboard the new hire. Better employee management can help you to reduce your turnover rate, helping to keep your costs down, and revenues up!

Better Customer Service

Excellent employee management can also help you to ensure that you find and hire the right people for the job. When you hire the right employee and give them access to the right training, and offer a decent incentive, you can drastically increase employee satisfaction, which in turn will lead to happier, more satisfied customers as well. A well-trained and positive representative can help to provide your customers with excellent customer service. A win-win for everyone involved!

Streamlined Efficiency

When your employees have all been trained properly and know how to do their job well, they’ll be able to perform their duties with ease and confidence. In a business where time is money, this certainly counts! Don’t overlook the importance of providing proper training, and a rewards-based incentive program, where performance is tied to rewards.

A Good Reputation

Finally, good employee management can increase employee satisfaction, resulting in employees who are happier to stay for longer. Companies with a high staff turnover generally get poor reviews on job-review websites like Glassdoor, which could influence a future potential employee’s decision to submit their resume to your company. Work to keep your staff happy and they’ll be more likely to stay for longer. Plus, having longtime staff can help to boost your appeal to customers and further cement your reputation as a committed, reliable, and reputable company. After all, if your employees don’t want to stick around, what does that say about your company as a whole?

Untrained and unsupervised staff can have catastrophic results on your company. But employees who are able to exercise their strengths on a daily basis are 8 percent more productive and six times more likely to be engaged. Work to improve your employee management practices, and employee engagement and satisfaction will follow.

How do you work to motivate your team?

5 Tips for HVAC Construction Contractors on Getting Bonded

Anyone who performs contracting work that involves installation, maintenance, or repair of heating, ventilation, and air conditioning systems (HVAC) is required to hold certain certifications and licensing. In order to receive the proper licensing to operate legally, new contractors and technicians must first be bonded. An HVAC construction contractor bond is a critical part of the process, as it provides a type of insurance to customers. Essentially, the bond company provides a guarantee on the work being done by the contractor, and initially, covers any claim against the contractor should the work not be performed per the original agreement. Contractors are not off the hook when claims arise; they are required to then repay the bond agency for any claims it covered for them.

While bonds for HVAC workers and technicians are important, they can be as costly as they are confusing at first. Here are five proved tips for securing a bond as an HVAC construction contractor that makes the process both easy and affordable.

Understand Surety Bond Pricing

One the simplest things you can do to ensure you’re receiving the most cost-efficient bond as an HVAC contractor is to take a moment to understand how bond pricing works in the first place. The cost of a surety bond is represented as a percentage of the bond amount required for a specific job. Depending on the strength of your personal credit and business financial records, the bond price will range from 1 to 10%, with higher prices for contractors with less than ideal financial history. Also, contractors with previous claims history against surety bonds from work performed in the past may pay higher prices for a new bond. Fortunately, there are steps to take to reduce HVAC construction bond prices for future work.

Check Your Credit

Surety bonds are based heavily on a contractor’s personal credit history. This means that any financial mishaps of the past have the potential to work against the pricing of a surety bond. Negative marks like missed or late payments, a bankruptcy or foreclosure, or tax liens or court judgments bring down a credit report and score fairly quickly. Bad credit doesn’t mean you cannot get a surety bond as an HVAC contractor, but it does increase the chance that you’ll pay more for it.

You can reduce the price of your contractor bond by regularly checking your credit and working to improve or eliminate negative marks. Credit reports from each of the three credit reporting agencies can be accessed once per year at no cost. These reports provide a detailed view of your payment history, credit utilization, and overall financial track record. Any errors listed on your credit report can be disputed either online or in writing, which will ultimately improve your score. Being diligent about paying what you owe or clearing up accounts in collections also works to boost your score. Use these tools to improve your contractor bond pricing for future jobs.

Have Records of Business Financials

Alongside your personal credit, bond agencies also may request to see business financial records. This adds another layer of detail about your ability to manage your obligations, and provides a detailed list of accounts receivable (who owes you). With up-to-date business records, bond agencies have a clearer picture of the strength of your business. Most contractors are able to secure a new bond that is affordably priced when this information is provided in addition to personal credit history.

Work with a Strong Bond Agency

Getting the best bond as an HVAC contractor also requires working with a surety bond agency that understands the job requirements and financial obligations that go hand in hand. A bond company with a strong financial rating and a history of working with contractors in your field is a smart place to start. Additionally, agencies that work with several different surety companies is beneficial in ensuring you receive the amount and pricing for the bond that meets your job requirements.

Avoid Claims When Possible

Although a surety bond for HVAC contractors is meant to provide some peace of mind for the customer or owner of the job, claims against the bond can be costly. Not only do contractors have an obligation to repay any amount paid out by the surety bond should a claim be made, but they are also in danger of having more expensive bonds for future work. If your bond company offers claims assistance, work with them when a claim arises. In any case of a potential claim, make a good faith effort to settle the claim before it becomes official with your bond company.

Taking steps to understand HVAC contractor bond pricing and how personal and business financial history play a significant role in securing cost-effective bond pricing for new jobs. Similarly, working with a financially sound bond agency and avoiding claims when possible helps ensure your access to an affordable bond as an HVAC contractor.

10 Tips for Minimizing Workplace Negativity

Workplace conflicts can be one of the greatest causes of employee stress. Nothing affects employee morale like consistent workplace negativity. It saps the positive energy of the organization and diverts the attention of the staff from work and performance. Employee’s stress and many other conflicts such as bullying claims and workers’ compensation can be prevented if managers act quickly to resolve the issues between co-workers and maintain a healthy work environment. Nowadays, negativity is an increasing problem in the workplace environment. Human Resource is one of the key departments of every organization and is one of the primary solutions to dealing with workplace negativity.  In such cases, the duties of HR must be performed vigilantly for the benefit of the organization as a whole. Negativity can arise when individuals are unclear about their respective areas of responsibility so that one person believes that another is trying to take away his authority and responsibility. HR must inform all employees about the harmful and detrimental impacts of negativity within the organization. In some situations, workplace negativity may arise when two workgroups are pursuing incompatible objectives. HR must promote good communication among the employees. If the staff has healthy professional relationship among each other, then employees can communicate with each other about any negative situations that are happening in their life. On a personal level, conflict can arise when one individual thinks that he can tell another person what to do, but the other person refuses to follow his instructions or recognize his authority due to jealousy or any other reason. Conflict may occur due to the nature of the work involved so that for one person or group to ‘succeed’, another group has to ‘fail’. Organizational Development (OD) can also play an effective role to minimizing negativity and conflicts in the work environment. The most appropriate measures of dealing with workplace negativity will vary according to the circumstances. Conflicts can be resolved primarily by paying close attention to the needs of the co-workers, maintaining organizational hierarchy, organizational development, taking disciplinary action, emphasizing the interests and rewards, managing conflicts of interest and ethical conflict resolution, good communication, establishing certain job roles, maintaining disciplined attention and effective team management.

  1. Diagnose workplace negativity and pay attention to employees’ concerns

Negativity is often the result of a loss of confidence, control or community as stated by Gary S. Topchik, the author of Managing Workplace Negativity. Knowing what people are negative about is the first step to diagnosing workplace negativity. Whilst trying to resolve the conflicts and minimizing workplace negativity, do not bring the issues that the individuals do not want to talk about. Resolving workplace conflicts and minimizing workplace negativity can lead to a positive professional culture and healthier professional relationships.

  1. Maintaining an organizational hierarchy at all levels and providing opportunities to employees to make decisions

Most of the negativity related to delegation of work can be prevented if an organizational hierarchy is maintained within the organization at all levels. This can be done by maintaining a matrix organizational structure for some of the activities of the organization. So that if employees turn negative, they can be counseled by the relevant individuals irrespective of taking up to the Head of the staff. Obviously, conflicts can arise i.e. the project manager might want to skip some tests to make up time; however, the quality control department won’t want accept that. Both will then put the employee under some pressure. However, the matrix structure should allow the employee to ask the two managers to discuss the problem, as it is certain that they are both involved in the conflict. Employees may also get jealous of each other professionally or personally and may react offensively against each other. The management must keep these situations in check and shall work to minimize workplace negativity in among the different departments of the organization.

  1. Organizational Development (OD) and training employees to work as a team

Organization development is the planned and systematic approach to enabling sustained organization performance through the involvement of its people. The Australian Human Resources Institute has described the benefits of Organizational Development. They include putting the minds of employees to work, enhancing the quality and speed of decisions, making conflict constructive rather than destructive and training the employees to work as a team. This can be done by team-building, career development, training and HR courses, innovation, talent management, change management, organizational assessments and coaching and leadership development. In this way, employees tend to work as a team and believe they are part of a larger group working towards a common goal. The management should work to develop workplace policies and procedures that organize the work efficiently and minimize workplace negativity within the organization.

  1. Taking disciplinary action in order to criticize negativity

Every organization requires its employees to meet certain performance standards and behave appropriately at the workplace. Disciplinary or corrective action is the way to communicate to the employee to improve his conduct and performance. Disciplinary action may be taken when other ways to minimizing negativity e.g. counseling, performance appraisal etc. have not been successful. However, for the serious cases of misconduct, the management may choose to advance straight to the disciplinary action.

Before deciding upon which disciplinary action to take, management has to keep in mind the very purpose of the discipline. The goal of this disciplinary action is to guide the employee towards a better performance or an appropriate conduct. The process has to be constructive and should not be meant for punishing the employee.

  1. Emphasizing the incentives and rewards for good and positive behavior

It is important while training employees to emphasize on the incentives and rewards. The following steps can be taken to promote positivity and undermining negativity in the workplace among two different department or parties:

  1. Comprehensive and convincing explanations can be offered as to why the concessions sought by the other party cannot be accepted.
  2. Expressing willingness to review the matter or concessions pursued by the other party in the future.
  • While attempting to finalize the main contract, providing an ancillary contract consisting additional advantages in the future for both parties
  1. During the final phases, subtly stating the consequences, must the negotiation fail and emphasizing the advantages to both parties leading them to a win-win.
  2. Conduct meetings with your staff and listen to their complaints on a regular basis

When employees are faced with an ethical conflict, they need to know what to do. If there is a threat to their compliance with the fundamental principles of the ethical code, how should they ensure their compliance and deal with the threat? Conduct meetings with your staff on a regular basis to discuss any issues that they might be facing and get feedback from them regularly. Encourage all of your employees to speak up and voice their concerns, even if they are negative. Regularly listen to the complaints of your employees in order to find out if there are valid reasons for their negativity.  Choose a human resource person in the human resource department or a company manager that employees can also come to when they have concerns about any workplace issues or conflicts, and introduce that individual to your employees at a staff meeting. Make certain that you assure all your employees that their concerns will be heard on a regular basis, as this will help in promoting positivity in the workplace by solving the problems of every employee.

  1. Promote good communication among the employees

Elton Mayo was the first management theorist to draw attention towards the social aspects of working and the effects of motivation on the performance of the individuals. Motivation and productivity is affected by the relationship between management and the coworkers. Management should sit down on an individual basis with employees who have negative feelings about their work and ask detailed questions to find out the reason or reasons they have negative feelings and suggest them other positive ways to view these negative issues.

Managers need to communicate with their coworkers. When there is no communication, conflicts are inevitable, and workers resent the focus of management on cutting costs and improving efficiency. Managers must play the role of “disturbance-handlers” in resolving the conflicts and disputes and reducing negativity among the work environment. Management must, therefore, develop and apply ‘people skills’ in order to motivate their coworkers. Managers should become more involved with their coworkers, and earn the respect of the coworkers so that they stop resenting the management. The result would be improved motivation amongst workers and higher productivity.

  1. Establishing certain job roles and responsibilities

Conflicts can arise due to role ambiguities among the employees. It is necessary to create certain and fixed job roles and responsibilities to resolve the conflicts among the group members. The simplest way is by giving praise to the employees and other measures etc. This is usually common in organizations where employees are ambitious and want to succeed in a short span of time. Such conflicts can be minimized if the job descriptions are set and even if another employee works on behalf of another, he must be credited for it. He should be recognized and such a clause must be included in a proper recognition system such as “employee of the year”.

  1. Maintain disciplined attention and maintain an open-door policy

The leader must get conflict and negativity out into the open and use this as a source of creativity. Constructive conflict among individuals leads eventually to collaboration and agreement. The leaders most likely to succeed are those who make followers aware of their responsibilities. Start an open-door policy and have a suggestion box made available. This will encourage your employees to communicate on a regular basis with you and make them feel that their concerns are being heard and acted upon.

  1. Effective team management

In an effective team, team members identify themselves with the team and feel a part of the team. Team spirit and team loyalty is strong.  Positive conflict occurs when there is disagreement, but the team members are willing to discuss their differences fully and reach a suitable agreement about what the solution should be. Some conflicts are inevitable in teams: the way that the conflicts are resolved is important.  In an ineffective team, the team members fail to resolve their differences properly. Disagreements are not discussed fully. They are often resolved by an ineffective compromise that ‘patches up’ the differences of opinion, and the compromise might not last for long.

These are the 10 ways in which management can effectively resolve workplace conflicts and eliminate negativity in the workplace environment. One of the tasks of management is to evaluate the performance of the workgroup for which they are responsible. Performance evaluation is linked to planning, coordination, and control. Measuring and evaluating team performance is also necessary when there is a system of team incentives and rewards. Conflict among the staff can adversely affect the quality of work and its effectiveness and may further deteriorate the workplace environment through increased negativity. However effective conflict resolution can bring radical changes, open communication, improved dialogue, improved customer service, encourage innovation and result in constructive levels of tension within the organization proving positive for the organization as a whole. Management must, therefore, maintain the organizational performance by reducing negativity and promoting workplace positivity.

Author Bio:     

Asma Niaz is an Academic writer at Zoe Talent Solutions who loves to write stellar content on various educational topics, programs, trainings and courses. Zoetalentsolutions is a premium teaching division, which offers highly professional hr courses to excel at your workplace.

 

How to Get more Business out of your Current HVAC Customers

As an HVAC industry pro, you know the importance of building a customer base. Tips and tricks and marketing tools abound, and you likely have a good idea what works and what doesn’t in your market. But what if there is an untapped market for your business, one that doesn’t require additional work making contacts and building a base? In other words, what can you do to increase profitability among the customers you already have? Many residential customers may go years without a specific complaint serious enough to warrant a service call. Here are some tips and tactics for you to consider that can help you get more business.

Before we get started, here’s one important caveat: let’s operate under the assumption that dishonest tactics might make money in the short term but are bad business in the long term. The tips you’ll find below do NOT include anything intentionally shady or deceptive. Now that we have that out of the way, let’s get started.

Tips for Getting More Business from your Current Customers

1. Offer a Service Agreement (Retainer Service)

If you don’t yet, consider setting up a service agreement (i.e., a subscription or retainer service). Some customers will pay monthly or yearly for the peace of mind of knowing that if something goes wrong, they will get priority service. This is also a good way to make money on regular AC unit service and maintenance. Customers are very likely to forget to schedule this manually, and it’s a hassle for your company to have to call customers to remind them to get this done. So if it’s built into your service contract or subscription service, not only will the units be better cared for, you’ll make regular money from these customers. It’s a win-win. The level of service you offer in this may need to scale with the size of your business. If you’re a one man show, you may not be able to promise 12- or 24-hour service in these contracts. But you can still monetize and make consistent your customers’ maintenance needs.

2. Stay Social All Year

If the only time your customers think of you is when their HVAC is broken, you’re doing it wrong! Use technology to your advantage. These days it’s incredibly easy to build an email database and you can also build a following on social media. Whenever you leave a satisfied customer, make sure you’re reaching them electronically. And then email and post regularly! If you live in a region with a definite slow season, use this time to build up a list of short posts and tidbits that you could send to your customer list via email. These electronic touches remind customers about you and can also include calls to action about potentially needed services.

3. Check In with Them

Let me illustrate: I know there’s something off with my home plumbing. It doesn’t seem to affect anything else, so I’ve just been ignoring it and haven’t called my plumber. But if he called me to check in, I would certainly mention it, and he might make some money off me.

The point? When business is slow, pick up the phone and start calling your customers. Ask them how they are and how their system is doing. You might be surprised to hear, “Well, you know, it’s doing this thing…” There you go; you’re in business.

4. Always Be Available (via Virtual Receptionist)

Unless your company is large enough to have an office with multiple people answering phones, it’s likely that at some point a customer will get sent to voicemail. And if you’re a one-man operation you certainly can’t interrupt the customer you’re currently with to answer the phone. But if a customer is having a crisis and you’re unreachable, he or she may reach for the phone book and start calling down the list until they find someone that answers. When this happens, best case, you lost some business; worst case, you lost a customer!

Hiring a virtual receptionist fixes this completely. You can rest assured that your customers will reach a live human, and you can focus on what you do best rather than on answering the phone.

5. Diversify

Consider whether there are any add-on services you don’t currently offer, but with a little extra study or training you could. One popular area is air duct and dryer vent cleaning. Another option is offering an HVAC efficiency check-up, which allows you to identify ways to improve the customer’s home or business. And if you can offer to procure and install efficiency upgrades, that could become another revenue stream. The “free system inspection” is far from a new idea, but it can go a long way. You can find problems before they become crises, and most low- or average-information customers will be grateful to spend the money now to avoid the crisis later.

If you’ve yet to implement one or more of these 5 methods, consider making the change today.

 

Mr. HVAC wants to thank our guest contributor – JC Heating & Cooling.

JC Heating & Cooling, Inc is here to help with the heating and cooling systems in your home or office. Our combination of skills and services make us your best choice. All JC Heating & Cooling, Inc technicians are factory trained and certified, and we offer flat rate pricing that lets you know up front how much your HVAC installation will cost. We serve the North and South West Suburb areas and can provide same-day or next-day service in most cases. We also offer hvac emergency service and free estimates on heating & cooling equipment.

Understanding your Burdened Labor Costs (BLC)

Your People Your Profit

There are articles out there on a daily basis about how society has been pushing bachelor’s degrees; leaving the United States with a shortage of tradespeople. A report published by NAHB shows increasing labor shortages over the last 5 years. In those areas showing the greatest growth companies are struggling to find and hire good tradespeople. This causes employers to pay more to find and retain better workers, which in turn drives up costs and cuts into profits.

So how do you deal with this? Well we know that cloning is not an option, so the path becomes clear. We need to become extremely diligent in labor productivity and efficiency. This is not something that has had to be a priority in the past. So where do you begin?

Understanding your Burdened Labor Costs (BLC) is a must. Calculating the hourly cost and responsibility for each direct labor employee creates an intricate labor tool to allow for better labor allocation on jobs. You may be thinking that all of this sounds like a lot of work and why would you bother doing it? To understand the cost differences for direct labor employees as a comparison between them and your subcontractors in regards to hourly rates. Who costs you more per hour? In some cases you might be surprised. Then there is the question “Am I having my top craftsperson doing tasks because they are there; instead of a lesser paid individual and move the higher paid employee to a task that pays more?”

Let’s look at an example:

Employee A has a BLC of $110 an hour. Employee B has a BLC of $61. Employee A has the skillset to deliver more productivity per hour than Employee B. Employee B is a good steady worker and does installs well with some guidance. Do you have them chasing materials or cleaning up? You not only want them but you need them to be as efficient as they can be. In fact it may be worth your time to hire a $35 BLC employee to feed them materials or clean up giving you the ability to move them off the project as soon as possible; saving on job costs.

Let’s put all of that into dollars and cents. At $110 BLC per hour Employee A will cost the company $4400 for 40 hours. Employee B at $61 BLC will cost $2440. That’s $1960 a week difference; multiplied by 4 weeks that’s $7840. Let’s take that one step further, the difference between Employee A and a $35 BLC employee is $3000 a week and $12,000 per month. If that doesn’t seem like much look at how many employees you have. Take a look at your last 6 bid jobs and the costs – ask yourself was the profit margin where I wanted it to be? Could you have been more efficient with your labor costs?

Many of you will say that while you might be more efficient with labor it takes too much time. And how does this have anything to do with hiring and retaining employees? What about setting cost benchmarks for each employee based on their BLC and productivity. If you could increase the profitability of a job by 15 to 20% and share some of that profit as a bonus to direct labor employees? Starting to reward them for profitability instead of them just doing what you hired them to do.

As a subcontractor, how often are you asked by the General Contractor to step up or make exceptions? By knowing your BLC you can truly understand what that will cost you; allowing you to make the right call for your business. Do you step up or will the cost be too great? Right now you make a gut decision based on rough numbers and hope that you can make payroll at the end. You need to know, right down to the penny!

Let’s take a look at what Burdened Labor Costing is and why it is such a great management tool. Most of you are familiar with loaded labor (hourly wages + taxes + benefits). Burdened Labor Costing goes further and applies responsibility for indirect labor (those employees in support positions to your direct labor), a percentage of your overhead costs, and vehicle or equipment costs (if applicable). By assigning portions of overhead and indirect labor costs you create a true responsibility for the portion of revenue generation that you’ve hired this employee to provide. Now you can compare true cost responsibilities to revenue generation to develop profitability benchmarks based on performance instead of tasks.

Other reasons for having an accurate BLC rate is hiring and training, providing you with the ability to create what-if scenarios for cost evaluations. Developing onboarding and training budgets, and creating competitive wage packages with realistic revenue numbers. And the list continues on.

While all this seems like a good idea and certainly worth considering you may still be asking – why waste time to do all this? In my experience I have seen not only the creation of usable profitability benchmarks but increased profit numbers in excess of 24% above current levels. If that isn’t enough, think of accurate job costing or proposals. You can create targeted labor efficiencies with results that can be tracked on a daily basis.

By now you understand the need to develop BLC business metrics. The last piece of advice I can give you is don’t waste your time trying to create an excel spreadsheet or having your CPA do one. The time is better spent applying the results. There are several programs available such as the Apex eSuite Burdened Labor Costing SaaS www.apexesuite.com that give you the reports you need quickly and accurately. Remember to update your numbers on a regular basis to ensure up to date metrics.

About Kelcey Thompson

Kelcey Thompson is a burdened labor costing expert, along with business mentor and trainer with a focus on accounting and customer service. She is the creator of the Apex eSuite (www.apexesuite.com) Burdened Labor Costing SaaS and blogs regularly on management accounting at Applied Management Group (www.appliedmg.com). She has more than two decades of experience in the service industries, where she has held many strategic positions and responsibilities. She has been successful in a diverse set of projects, including economic impact studies, ROI analysis, operation reviews and development of management accounting programs for service oriented businesses. If you have any questions about creating and implementing your BLC numbers Thompson would be happy to help. Feel free to reach out to her at info@appliedmg.com .

 

 

How to Grow Your HVAC Business in a Very Challenging Market

Small-to-mid size HVAC business owners know that the best customers are those who keep coming back. After all, customer retention is what makes family owned businesses successful. However, keeping the status quo isn’t enough to keep customers coming back for more. Business owners and heating & air conditioning contractors need to perform way above minimum expectations and go the extra mile continuously. Let’s go over some ways to evolve your business in this very competitive market.

Look at the numbers first.

First off, assess your financial goals. Experts recommend HVAC owners to fill out a Dealer Needs Analysis. The Dealer Needs Analysis compares your HVAC business to similar businesses with double-digit profits. The outcomes of the analysis is the stepping stone needed to assess your strength and weakness’s, which opens new doors to either maintain a triumphant industry position or take your business to new heights.

Use downtime wisely.

When you’re busy servicing your customers, the growth of your business can be pushed to the side. Use your downtime wisely by getting involved in community eventsand looking for growth opportunities such as increased training for your staff, new product offerings, and additional locations.

Train well.

HVAC business owners really have to dedicateserious thought on how their technicians respond to customers. One bad experience could lose a potential long-term customer or business relationship. This is why a well-trained staff is paramount for every HVAC business.  Focus on training your heating & air conditioning contractors and you will be able to achieve great heights for your business growth.

Have good time management.

Time management can make or break your relationship with your clients. When you have good time and calendar management, you know where your company staff is, what they’re actually doing, and how well they interact with customers. As a result, you can provide your customers with a more accurate arrival time of your tech or service person.

Look neat, organized and sharp.

An HVAC customer service appointment shouldn’t be as formal as a board meeting, but there should still be consistency in place when it comes to presentation. Your heating & air conditioning contractors could be the best in the world at their job, but showing up disorganized, wearing old, dirty shirts, can create a negative impression among your customers. First impressions count.

Explain the job to your customers.

Encourage heating & air conditioning contractorsto share what they know in a customer-friendly manner. For instance, most customers probably don’t have any idea about certain HVAC terms like condenser coil and load calculation. Your technicians can spend a few minutes explaining how they work to their customers. Improved communication reinforces honesty and competency, which paves the way to better customer service.

Follow up.

When the job is completed, a follow up call to the customer shows that you care about the job performed and their satisfaction. Your customers will understand that your company is concerned about its services, which also provides more opportunities for customer outreach. You can consider including an advertising sale or a discount offer when you follow up.

Simplify your customer feedback and billing process.

After a service call, customers may dread dealing with a pile of time consuming paperwork. After the job is completed, you should know that your customers will most likely just want to pay their bill and get on with their day.This is made easier with mobile technologies that allow online payments and simplify customer feedback acquisition.

Generate leads.

Upon completing a major heating or cooling service, you may consider sending other homeowners within your service area information about the particular HVAC services your business provides. It makes sense if a previous customer in your service area has provided positive customer feedback showing how satisfied they are with your team.

Get involved on social media.

Engage your audience on popular social media platforms like Facebook and YouTube. The keyword here is ‘engaging’. Interact with them by providing meaningful content. Be sure that all your social media profiles are not just user-focused, but should also be search engine friendly. Social media has been documented as a powerful tool in marketing HVAC businesses.

With every marketing tactic you implement to grow your HVAC business, having a clear goal and dynamic strategy will help you take your business to greater heights. That’s where successful HVAC business growth starts!

 

Author Bio(Automatic Air Conditioning, Heating & Plumbing)

Automatic  Air Conditioning, Heating & Plumbing is a highly reputed air conditioning, heating and plumbing company servicing Memphis and surrounding areas. They take pride of their strong commitment to excellent customer service, allowing them to deliver top-notch heating, cooling and plumbing solutions for residential and commercial customers. At Automatic Air Conditioning and Heating, they value your comfort more than anything else”. http://itsautomatic.com/

Key Time Management Tips to Help Improve Employee Productivity for More Sales

In business as in life, time is not just money – time is everything. Effective time management is the difference between a contract delivered on time or a lost client, a bill paid or missed, and the overall success or failure of a business.

Helping employees to manage their time effectively is a necessity for any business, but adoption of any new habits or guidelines always starts at the top. To help increase your employee productivity and drive sales, consider the following starting points:

1. Divide and conquer. Everyone has a role to play in the sales process. To some extent, customers like to deal with a familiar face – someone who manages their relationship with the company. However, not everyone can be good at every part of the sales process. Some employees are better at generating leads, some are closers, some execute, and some are great at offering additional add-ons after the fact. The key here as a manager is to find out where people excel and allow them to utilize their strengths.
People in HVAC Business Talking
2. Always incentivize success. It is important to align an employee’s interest with those of your company as closely as possible. This will provide employees strong motivation to use their time wisely in pursuit of their goals, which will also be your goals. Employees need to be rewarded for success in achieving objectives that have been very carefully selected by you as a manager.

For instance, your goals for an employee may not just be more sales; instead it might be a greater number of sales with high profit margins, which will help your company’s profitability. In the short-term, your goal for employees may be limited to getting more leads. You can always change the objective later to converting more of those leads to sales.

3. Avoid punishing failure. As helpful as positive reinforcement can be in the form of proper incentives, negative reinforcement has shown to be every bit as harmful to employee morale. First, employees can become embarrassed or even resentful of your company. Moreover, punishing mistakes almost inevitably distracts employees from putting their best effort into generating sales.

If mistakes are made – which they inevitably will be – it is best to help an employee understand what was done wrong and what corrections they can make for the future. However, try to let the employee figure out why what they did was wrong. This way they will come to better understand your company’s process and why things are done a certain way. They may even come up with ways to improve the company’s process or develop new best practices.

4. Train, train, train. To really boost productivity in sales or any other area of business, employees need to be given the tools they need to succeed. They need to be empowered with the ability to achieve. That can mean having the flexibility that they need to meet varying customer needs, or the ability to make each sales call count. General George Patton is credited with saying, “don’t tell people how to do things, tell them what to do and let them surprise you with their results.” Other historical figures from Winston Churchill to Franklin Roosevelt have quotes to the same effect – micromanaging is counter-productive. The best managers are those that help set goals for employees, give them access to superior tools and training, and step back to let the employee determine how best to achieve their objectives.

Helping employees to improve their productivity is almost a full-time job. Many large companies have entire divisions built around employee training and empowerment, developing best practices and exploring new ways to apply ever-increasing knowledge about employee and customer behavior. For smaller firms, even a few areas of improvement can go a long way.

To help the productivity of your employees, try exploring the points above; and be sure to keep an eye out for other areas that you come across as potential sources of improvement. Your company will change over time, and with it will change your staff, customer base, your goals and your needs for employee productivity. Setting your mind early on to developing not only ways to improve productivity, but ways of determining your short-, mid-, and long-term needs will put your business on the right track for long-term success.

About Our Guest Author – Una Lawlor
Una Lawlor is Content Marketing Manager at Advance Systems, a company that provides world-class enterprise HR software. Una has over 10 years’ sales and marketing experience in retail, media, finance and technology. A graduate of Trinity College Dublin with a degree in English & French, Una has extensive content writing experience and specialises in the field of people operations and HR management. You can find Una on Twitter (@lawloru) and Linkedin.