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  1. #1
    Join Date
    Jun 2001
    Location
    Michigan
    Posts
    12,077
    Does any of the business owners here ever think of things beyond HVAC/R. Possibly another kind of business. Something maybe less demanding, less risky? In my opinion, this business is becoming very risky. The retailing of our trade is becoming prevalant. More and more idiots are starting to run business's and low balling, to be bankrupt down the road, because they have zero idea what it takes. In the meanwhile you hurt due to it. Customers not paying your bills. Increased liability from the over zealous sue happy society, high insurance. Corporate America and their lack of respect for what we provide them and in turn them asking for even more price concessions or they threaten to use A$$ Crack HVAC.

    I use to balk at these fix it artists like airtime 500 and the like. They and others have done some studies suggesting on average the mechanical contractor is only seeing anywhere between 2% to 10% profit margin in any given year. Thats a little too little for reinvestment.

    I see this from my small little world. If I was a ten million dollar major mechanical contractor, and diversified amongst all the disciplines my veiw may be much different. But myself, I have a small little gig, it was bigger, but it was not easier or more money. It was trading dollars. And it felt like all I was doing was being a ***** to someone who was willing to give me a job and I took their price. I had to make the payroll somehow. Although more profitable now, I still see all the same problems. I don't have a lack of business, I simply have a business that given all variables is simply a job. By the time it all balances out, given the amount of earnest effort put in, I am only ahead by so much as compared to working for someone else. I do not want to go that route. I'd like to find something else that I could try, hobby with while doing this and find something that may be more of what I am looking for financially. Which is always a never ending way of reducing risk while making more. Opposite of the popular mantra of the more risk the more cash.

  2. #2
    Join Date
    Dec 2002
    Posts
    9,871

    Good thoughts

    Profit margins do seem to be down among mechanical contractors. Probably the best way to make money and stay independent is to stay small. A few here seem to do well with this concept: James 3528 and Dice are probably the best 2 examples.

  3. #3
    Join Date
    Sep 2002
    Location
    The Alamo
    Posts
    3,025
    I too have learned the hard way, trying to grow too quick. I just returned to the smallest of the small size contractor, me and a helper. I try and think of work like a doctor. He see's one patient at a time, has an assistant and collects for work done. I stopped worrying about the lost revenue from not having more trucks on the road. More trucks equal more headache, risk, liability and money.

    A common thread to all sucsessful business's is that there must be employees and management. The labor market is tight all around. Todays labor pool is less educated and motivated than that of even 10 years ago. Eveyone wants to be paid like a movie star and never break a sweat.

    Customer satisfaction, expectations, and product quality are low due to the demand from customers to pay the least amount of money up front. Shareholders demand that products sell at a profit so to remain competitive many expenses are cut out. For example, fast food companies know that no matter how bad the food or service is there will be enough people who will come back because they have become accustomed to the "bad" product.






    Read, read, read!

  4. #4
    Join Date
    Sep 2002
    Location
    Hampton Roads, Virginia
    Posts
    1,593
    Sarge used the Doctor example, to take that further, try to become a specialist in ONE area of the trade, its easier in the commercial market to narrow yourself down to one area. By becoming the specialist in one part of the trade you can charge a better rate for your services. Examples could include: Geothermal systems, steam heating systems, chillers, radiant systems, the list goes on.
    "Profit is not the legitimate purpose of business. The legitimate purpose of business is to provide a product or service that people need and do it so well that it's profitable."

    James Rouse

  5. #5
    Join Date
    Jun 2001
    Location
    Michigan
    Posts
    12,077
    I could not agree more with specializing. But take care to pick your poison. I see geo thermal, I see alternative sources as emerging and taking a foot hold. I don't see our industry staying put in the days of old. I see many economy corrections as to what our future holds for us. It will be up to each individual in the industry to choose very wisely what they delve into.

  6. #6
    Join Date
    May 2001
    Location
    Bennington, Vermont U.S.A.
    Posts
    13,864
    I was thinking of either getting into the restuarant or the video rental business. I want something less risky.

  7. #7
    Join Date
    Feb 2004
    Location
    Midwest
    Posts
    9,932
    Dow's post could have been easily written by me. Those are my thoughts exactly, and I think about them more each year, because each year more new concerns arise.

    disatisfaction with manufacturers
    deadbeat, tightwad, demanding customers
    utility companies trying to take over
    hacks
    distributors who sell to anyone
    online direct sales companies
    greedy business insurance companies
    " attorneys
    " home improvement corporations
    govt rules which only apply to legitimate operations

    I've been around long enough to remember when these burdens either didn't exist, or the effects were minimal.

    You really have to love this business to remain a part of it, and loving it gets harder all the time.

    Yes, it's often true in this business that if you expand, you die.

    But as far as getting clear out of it, for most of us, we'll keep complaining and doing it until we keel over

  8. #8
    Well, I do not own my HVAC-R business yet. But for extra money I do some welding (gates, cars, yard stuff) and buy and sell cars. It actually almost matches my net pay from my real job. Next year I'm partnering with a cousin to open up a 'carniceria', a store catering to Hispanics.

    My cuz also was an HVAC tech, but then he bought a car wash/barber shop and is doing very well. No on call, no pissed off customers, and mostly cash business.

  9. #9
    Join Date
    Jun 2003
    Location
    Texas
    Posts
    1,159

    There ya go Dowa..........

    ..........start cuttin hair.

    Or sellin used cars,

    Pick yur poison.

  10. #10
    Join Date
    Jan 2002
    Posts
    1,503

    You knew I'd reply...

    based on some recent threads I've started...


    I could go long here, but for now I'll just say it's not "if", but "when"...

  11. #11
    Join Date
    Sep 2001
    Location
    East Stroudsburg, PA
    Posts
    13,215
    I'm giving serious thought to branching out into pool filter service/install. I've got a bunch of customers with large pools that need them worked on, and the quality of service in the area is really poor.

    I've worked on a few over the past few years, but never anything real steady. Seems to be a real demand.

    Been reading some of their trade journals lately, and it seems to be a good place to make more money.

    Either that, or I'm moving West, buying a horse, adn becoming a cowboy.

  12. #12
    Join Date
    Aug 2002
    Location
    Orange County CA
    Posts
    1,084
    Originally posted by condenseddave
    I'm giving serious thought to branching out into pool filter service/install. I've got a bunch of customers with large pools that need them worked on, and the quality of service in the area is really poor.

    I've worked on a few over the past few years, but never anything real steady. Seems to be a real demand.

    Been reading some of their trade journals lately, and it seems to be a good place to make more money.

    Either that, or I'm moving West, buying a horse, adn becoming a cowboy.
    Dave, my mom has 40 acres and horses in Kingman AZ.

    She'd teach ya

  13. #13
    Join Date
    Apr 2003
    Location
    Iowa
    Posts
    2,652
    I have my future planned out. I've known what my goal was for years and I am getting closer. I co-owned a construction company with my dad for 8 years and worked on the side to learn electrical, plumbing, and concrete. My last major hurdle was HVAC. Now, my boss is going to retire, pretty much is now, and I am buying the 92 year old HVAC business. I learned while being owner of the construction company that I am an owner at heart, I have to have my hands on the reins. Not only am I going to buy the HVAC company but my father is handing the construction company over to me, he will still run the show on that end of things. Additionally, I am aquiring a landscping company now owned by a family friend, it will be run by my brother. The businesses will remain seperate though owned by one corperation. Only the future will tell if I branch out into electrical, plumbing, or concrete.

    I was worried about the scope of what I was attempting for a while though now I've seen it done by others in other cities, thankfully out of the area of our target market because they're kickin' butt.

    I figure, if I don't take a chance I can never achieve the level of success I am striving for. I have the drive, only time will tell.




    As far as things getting harder....you have to be flexible. As times change, you have to be willing to change as well. Failure to change means you fail. You can buy a toilet at Menards and plumbers still stay busy. If one day you can buy a furnace at Menards, as sad as that will be, the HVAC trade will survive.



    [Edited by i_got_ideas on 05-31-2004 at 12:34 AM]
    There are 3 ways to do anything in life; Good, Fast, Slow: You can pick any 2.

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