More HVAC Profit Starts One Day at a Time

day

More profit for your HVAC business starts one day at a time. How to use a simple tool to start making more money day by day. Secure link to video here or YouTube below. Blank template you can use here: HVAC Profit One Day at a Time. Let me know if you have questions. 

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for growth and exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.

I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedInFacebookTwitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
 Josh Horn, CPA and Certified Valuation Analyst

Why Your HVAC Job Pricing Will Make or Break You

job

Can you answer these HVAC job pricing questions quickly?
-> Do you price jobs using a consistent method?
-> Do you know your direct labor and materials on every job? (Cost of Goods Sold).
-> Do you know your annual overhead? (Fixed costs you must cover every month).
-> Are you shooting at a target profit or cash flow on every job?

If not, you’re probably dying a death by a thousand cuts every hour/day/week/month/year. How can you fix this? Let’s take a simple example for an installation. How should you price this job?

If you don’t know your Cost of Goods Sold (direct labor and materials), overhead percentage, and net profit goal per job, please stop right here. You should be able to get the first two from your accounting system. If not, it’s broken and please contact me right away. The 10% profit goal was one I set, and I’ll explain why it’s reasonable in a moment.

Let’s say you used a “markup” method. This is common and why it’s often dangerous.

Using a 1.6X Cost of Goods Sold markup ($4,000 X 1.6) resulted in this HVAC business losing $679 of cash on this installation job. If they did this 10 times a week for 52 weeks, the installation portion of their business would burn through $353,000 of cash in a year. This is, unfortunately, what a lot of HVAC businesses that don’t survive do.

Let’s dust off those algebra skills and try another method. Please be patient. I’m going to make this very easy at the end – no algebra required.

Solving for “x”, we determined the price on this job should be $7,692 to hit our target 10% profit. Does this work? Let’s find out.

Pricing this job at $7,692 allowed this HVAC company to hit the 10% profit goal. More importantly, they hit positive cash flow of 7% which will allow them to reinvest cash back into the business and pay owner dividends. This is why 10% is a good profit target to start with on installs, especially if you’re way below it. You can always crank it up later as you get better at the method and continue to deliver outstanding service. This was a $633,000 increase in annual cash flow over the markup method! 

I said I was going to make this easy. Once you nail down the Cost of Goods Sold, Overhead, and Profit Target, it’s very simple. Do you see the percentage of Cost of Goods Sold? 52% can now be used for single factor pricing. You’ll want to model your exact numbers and target before implementing this.

$4,000 Cost of Goods Sold / 0.52 = $7,692

From here, as long as you can correctly calculate your direct labor and materials (Cost of Goods Sold) you expect on the installation, know your overhead rate, and have your target profit, you can use your single factor (in this case only, 0.52) to price installation jobs. You’ll want to monitor this to make sure it’s delivering the profit you want, particularly since the prices of everything go up. Let me know if you want help implementing this in your HVAC business. 

Please buy this book if you haven’t already. This isn’t an affiliate link and I receive no royalties. 

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for growth and exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.

I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedInFacebookTwitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
 Josh Horn, CPA and Certified Valuation Analyst

Why HVAC Service Agreements are a Goldmine

goldmine

Three reasons why HVAC service agreements are a goldmine and what steps to take today to start mining for gold in your HVAC business. Secure link to video here or YouTube below. 

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for owner exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.

I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedInFacebookTwitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
 Josh Horn, CPA and Certified Valuation Analyst

Three HVAC Business Levers to Pull First

levers

To put more cash into your HVAC business quickly, there are three levers you should pull first. What those three levers are and why they matter. Secure link to video here or YouTube below. 

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for owner exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.

I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedInFacebookTwitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
 Josh Horn, CPA and Certified Valuation Analyst

The Snow Must Go On

snow

I just dug out from the biggest snowstorm we’ve had here in a while. We’re stuck at home, and since I prefer to have an empty house for recording (oh, the irony!), you’ll be spared from a video this week. As they say, the show (or snow) must go on. What I really want to do is tell you what I’m working on, how it might help you, and get your feedback.

Digging into HVAC Businesses

My plan is to go deep into the HVAC industry with specific webinars and posts designed to help these owners:

  • Make more Money
  • Work fewer Hours
  • Sell their Business for a Higher Price
  • Buy other HVAC Businesses
  • Find Buyers for their HVAC Business
  • Have more Fun

…among other things. If this is interesting to you and your clients, great. If not, that’s okay and you can opt out at any time. I’m grateful you hung with me this long.

Why the HVAC Industry?

  • We’ll always need heating and cooling but…
  • New HVAC businesses may be popping up faster than demand so…
  • Only the strong will survive.
  • I can help owners position their HVAC business with…
  • Specific tactics that will increase…
  • Cash flow and business value.
  • There are opportunities for growth but…
  • Only for those who look beyond what they’re doing now.

I’ve done significant homework on the HVAC industry. Now, it’s time to teach HVAC owners who are interested what I know and offer them an opportunity to be significantly better.

I’m still researching various webinar platforms and haven’t made a final decision. If you’re using a platform you like, please let me know which one and why.

Thanks,
Josh

Sign up for this blog here if you want tools to increase the value of your business or want a refreshing view on business valuation from a recovering CPA. I’m Josh Horn, CPA, CVA of Horn Valuation. I value businesses for owner exits with a focus on HVAC and trade contractors. I also assist litigation and divorce attorneys as a business valuation consulting or testifying expert. My clients are business owners and attorneys. If you’d like more information, email me at [email protected], or call me at 217-649-8794.

I’m a licensed Certified Public Accountant (CPA) and credentialed in business valuation (CVA). I’ve been a tax and business consultant in a top 100 CPA firm and a controller in a large international company. I’ve also valued and advised small family-owned and multimillion-dollar companies. You can connect with me here on LinkedInFacebookTwitter, YouTube and Instagram.

“Once-in-a-lifetime events demand an expert.”
 Josh Horn, CPA and Certified Valuation Analyst