How Do HVAC Companies Fail?

Most businesses fail, including HVAC companies. It’s the rare business that makes it past the three-year mark that is the exception. Of course, that doesn’t mean you’re doomed to fail if you have a new HVAC company. Instead, the fact that you’re reading this and trying to predict why you might fail and how to prevent it is a very good sign indeed. There are some predictable ways that HVAC companies fail, and you can avoid sharing their fate. Here’s how.

how do HVAC companies fail?

1. Charging too Little

The Solution: Know your numbers.

Most companies that fail very early will do so because their costs quickly balloon out of control, and their gross sales just can’t keep up. Calculate what each kind of job actually nets you in profit. If its too low or (as is common) you’re actually taking a loss, then you should increase your pricing. If your pricing is too high for the market, you’ll start to see your jobs get turned down. Then you can wonder how other HVAC businesses are affording to offer so little. But this is unlikely. Most starting HVAC companies underestimate their value.

2. Spending too Much

The Solution: Look for lower-cost options.

Your overhead can quickly get out of control as a new company, especially if you’re used to making purchasing decisions at a company with a lot more resources. In the early days and years, keep your business as lean as possible. The costliest things include:

  • Hiring people: Outsource their jobs wherever you can. Choose virtual receptionists, outside accounting firms, and part-time or contract technicians where you can.
  • Purchasing equipment and tools: Only buy equipment you know you will need for your most lucrative jobs. If you won’t use the equipment much, then rent it. Buying used can also help.
  • Your vehicle: Get as inexpensive a vehicle as possible while still ensuring it will be reliable to drive. Its tempting to get a brand-new truck, but the costs can really constrain your business.

3. Cash Flow Issues

The Solution: Be prepared with options.

Customers won’t pay immediately after you complete a job. And you will still need to afford what you need for the next job and the next. Your monthly costs will start rolling in well before you get the bulk of your early jobs paid. The last thing you want to do is start maxing out your personal credit card to make this work, so you need to have cash flow solutions ready to go. Consider:

  • Invoice factoring
  • Lines of credit
  • Bank loans

You need to apply and be approved for these solutions before you have serious cash flow issues. So start now.

4. Not Knowing Their Own Skills

The Solution: Get feedback and then outsource.

Most HVAC technicians start their own businesses because they know they have mastered the technical skills required for HVAC work. But, there is so much more to running an HVAC business than the technical skill. Few people can develop skills in all areas of business. So pay attention to what you might need help with, from marketing and accounting to resolving customer conflict, and outsource it to people who are great at it.

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