Questions to Ask BEFORE Adding Services

by Rob Falke

I recently enjoyed a conversation with a longtime successful contractor from California who told me he was considering adding duct cleaning to his company’s services. I found it interesting that he described the proposed venture as “a temptation he had resisted for decades.” So, considering his quandary, what new services have you been tempted to add to your company recently?

The sweetest natural tendency in life is to grow. Take a look at nature — one kernel of wheat is planted and hundreds are created, if the seed is planted at the right time and under the right conditions. If the season and conditions are wrong, the seed may rot and die producing nothing.

So, before taking a leap of faith by adding a new service to your business, it may be wise to consider a few valuable questions.

Do You Have the Time?

In larger companies a portion of retained earnings may be invested in new talent and equipment necessary to launch a fresh venture. Capital is set aside to float the division. The marketing people pull a campaign together, purchasing secures new equipment and inventory, training ramps up and goes to work on the idea, the finance group sets up books, salespeople bring in the contracts, the first jobs are completed and then a period of time is granted to see if a reasonable return can be earned.

But most HVAC contracting companies don’t work quite like that. Much of the effort required to launch the new service comes out of the hide of the owner. If that’s you, how much of your personal time can you commit to the new opportunity? In simpler terms, how much extra time did you have last month?

And considering your current daily schedule, do you have two to four hours a day to invest and still maintain your current level of production in the core business? Most of us don’t. Even if you hire the labor to perform the new service, who’s going to market it, sell it, and manage it day-to-day?

Honestly evaluate the time it takes to launch the new venture before you cast off.

But Others Are Successful, Aren’t They?

Typically your vendors can offer lists of HVAC companies that have become successful with an add-on business and those contractors most likely will share reports on how they did it and how helpful the vendors were. I suggest you also take time to find a contractor or two who failed in the venture you are considering.

The Yellow Pages from a few years ago are a valuable tool. Make a few calls to contractors who advertised the new service you are considering, but no longer are listed in that section of the current Yellow Pages. Ask some candid questions. Sift through their comments to identify a few critical points that can help you make the best decision.

There may be good reasons why other contractors failed to be successful, but you can learn from each of them. Just because they failed surely doesn’t mean you will. But you can use their valuable experience to consider your decision better, and perhaps their failure may assure your success. One other benefit of local market research is that you may find them anxious to sell their used equipment for pennies on the dollar. Used blower doors are a dime a dozen.

Get on some of the industry on-line chat rooms and throw out some inquiries. Gather information from the current stars that are in today’s spotlight, but invite personal phone calls from those that have failed also. Allow others to contribute their lessons learned from their failure, to you. All of us fail; there is no shame in failure, although it may take a few years to realize that fact.

Are the conditions right?

Many of us consider adding new services because a few of our customers request it. A few requests don’t constitute conditions that assure prosperity.

How are the local economic conditions? Is there a wide spread need for the service? How much competition is out there? Is the idea a flash in the pan? Or perhaps has the trend matured and will soon be on its way out. Will the current income expectations continue or are prices falling? How easily can your competitors enter this new niche in the industry? Does the market really exist or do the vendors just hope it will?

Real wealth and long term income seldom require a quick decision to be made or the opportunity will be lost. If the product or service requires an incentive to you or your customers in order to catapult sales, consider incentives a warning that the opportunity may be:

• Too early or too late in the market
• A failing product
• Another government program.

What Will It Take from Your Existing Business?

Over the years, I’ve known many contractors, myself being one of them, who ventured into building science testing, for example, and ended up losing out on a fortune in HVAC sales as a result.

Face it, new knowledge and the promise of high margins is enticing. Many others may have found success, but here’s the key question: Is your core HVAC business healthy enough for you to spend your time and effort chasing a new venture?

Each company is different, but over the years I have found this one question to be the one that tips the scales for or against adding a new division to a company.

Compatibility

One test that many have found helpful is to select an additional service that is completely compatible with your existing HVAC contracting business. One qualifier may be is this new service something that you can offer with nearly every equipment change out? One acid test is if it can’t be offered at least 75% of the time, you may do well to pass on the idea.

Does It have to be ‘All or Nothing?’

Lastly, just because someone is offering you an opportunity today, doesn’t mean you have to jump on it right now. Perhaps you can subcontract the service to someone else and try it out. Other duct cleaners would love additional work, and may be willing to pay you a fee for your referral. Energy Raters are anxious to connect with HVAC contractors and provide valuable building science testing services. The possibilities are endless.

Remember – no matter what services you investigate, recognize there is no need to rush. The most important thing is to do your homework, and carefully evaluate the impact on your company.