Based on the strong following to the Feedback section, contractors do at least read what other contractors have to say. And, more than a few then take the time to pass along their respective opinions regarding another contractor’s thoughts posted in Feedback. It’s self-perpetuating.

TAKING NOTES

Moore, who has more than 20 years of operations, business development, and financial experience in the HVACR industry, wanted to pass along his business principles “that I believe can help a contracting business become more profitable and easier to manage.” After reading his 14 points, I have to agree with his assessment.

Here are Moore’s business principles for profitable contracting.

1. Companies do not compete against each other; management competes. Why do I say this? Management controls the resources; management hires and fires; management develops and implements strategy and policy.

2. All companies are broken. The process of improvement should never end.

3. When it comes to customer service, do what you say you are going to do and do it when you say you are going to do it. Since your subcontractors and suppliers are partners in the success of your business, insist that they operate in the same manner.

4. Understand the law of supply and demand. When there is more work than there are people, it’s time to raise your price.

5. Have a strong understanding of the company’s operational functions as well as the company’s finances. The reality is, you can’t make an operational decision without affecting the company’s financial condition, and you can’t make a financial decision without affecting the company’s operations.

6. Education, education, and more education. While technicians and installers need to continue their education in order to keep pace with changes in technology and building codes, management needs to continue its education in order to better understand and implement methods to increase profitability, cash flow, and revenue. Also, management needs to better understand methods as to how to keep money working.

7. Don’t be afraid to get help. The most successful companies in the world rely on consultants to help them become more efficient, lower overhead expense, increase revenue and profit-ability, take advantage of technology, and help steer the business into new market opportunities.

8. Focus on profits per person, not sales per person. Over the last decade, contractors have been obsessed with benchmarking their company’s performance against others based on sales per person. Unfortunately, most of these companies were so focused on sales they forgot to make a profit.

9. Know the difference between accounting and finance. Accounting is scorekeeping — it looks only at past performance. Finance gives management the ability to use the accounting information to identify what is ailing the company in order to make the necessary changes for improvement, as well as to view potential future performance.

10. Do not make customers part of your training program. When you send someone who is inexperienced to meet with your customers, you are telling your customers that you don’t care enough about their business to send someone who is qualified to service their needs or is in a decision-making capacity.

11. Management is about coordination, not delegation. Managers need to focus on providing the tools and resources needed for those working under their direction.

12. Develop and implement a business plan. Make sure your plan is realistic and flexible, and write it in a manner in which you would describe your business and strategy to a third party. The plan should at least include organizational strategy, marketing, finance, and strategic direction. Make sure your plan addresses the weaknesses, opportunities, threats, and strengths of your business and your competitors. If your company has multiple offices, each office should create its own business plan since one size does not fit all.

13. In regards to the business life cycle, remember that we are in a mature industry. In order to grow profits and revenue, determine what your company does better than your competitors and you will have something more to sell than just price.

14. Be proactive, not reactive. Companies need to acquire the tools and personnel necessary to better control their destiny, and not be controlled by it.

If you would like to comment on Moore’s points, feel free to e-mail The News’ Feedback section at LettersToTheNews@bnp.com.

Skaer is editor-in-chief. He can be reached at 248-244-6446; 248-362-0317 (fax); markskaer@achrnews.com (e-mail).

Publication date: 09/16/2002