How HVAC Contractors Can Get a Plan in Place

It seems every time I’m interviewed or make a guest appearance on an industry podcast I’m asked the same question, “What is the biggest mistake you see contractors repeating?”

That question is lobbed back and forth among all the in-home contracting business consultants, maybe just as affirmation that we’re all seeing the same thing – and we clearly are. In all the constant ebb and flow of industry trends, one thing stays constant. The brick wall contractors continue to slam themselves against is lack of execution on goals. And to make that more granular, most don’t hit their goals because they don’t have any goals set in the first place.

According to IBISWorld’s data and research, there were almost 112,000 independent HVAC contractors in the US at the end of 2023, with over half making less than $1 million in total revenue. That number gets even uglier when you hear that the average profit margin surveyed among these sub-million-dollar contractors was 2.5% – 3.5%. Ouch. So, the question really is, “What’s truly separating the top 20% of contractors from the other 80%?” Or at least, what‘s keeping the majority fighting for their lives against razor-thin margins each year?

Simple Answer: Planning, resolving to make the necessary change, and then execution.

Oddly enough, for the mechanically-minded world we work in, this should be black and white. You will not reach the desired outcome without knowing, first of all, what you want to come out on the other end, and then following specific instructions to get there. However, you wouldn’t believe the amount of consultative meetings I have where the business owner can’t articulate their goals any deeper than, “I need more appointments,” or “…just better than last year,” with zero plan to get them there.

Yes, that’s why they’ve called me, but many don’t have any clue what they spent on marketing in 2023, what worked and what didn’t, areas or demographics that produce more than others, or even an idea of what they should be spending on marketing based off their revenue and goals. Again, because they haven’t set anything to shoot for, they’re going to hit mediocrity… hard. If you aren’t already thinking of this quote by Benjamin Franklin yet, you should be: “Failing to plan means you are planning to fail.” And that will always be true.

From clearly defining your goals to staying on top of your finances, a well-thought-out business plan shows a trackable path to growth and profitability. If you don’t have one in place and someone to keep you accountable to it you’ll likely keep sputtering, making the same mistakes over and over again.

Why Business Planning Matters

1. Clarity: A business plan helps you define your long-term vision and goals. Whether you aim to eventually expand your services, increase overall revenue, target new areas, etc., having a clear direction guides your decision-making and keeps you focused on what matters most to get there. There are many ways you can grow, so the more specific your goal setting is, the better you’ll be able to tailor a business plan to become successful.




2. Risk Management: Unfortunately, many contractors do much of their marketing on a whim. Some new company they met at a trade show promises them the world and underdelivers. Months and months go by before they realize the results aren’t there, but they’re thousands of dollars in the wind. A formalized business plan with set goals and expected investment can protect you from flying blind. By conducting thorough market research and financial analysis, you can identify potential risks and challenges before they arise. A well-defined business plan allows you to develop strategies for mitigating risks, making changes along the way, and pivoting before damage is done.




3. Resource Allocation: Effective business planning enables you to allocate your resources — whether it’s time, money, or manpower — more efficiently. By prioritizing tasks and investments based on your goals, you maximize your chances of success while minimizing waste. Whether you choose to undertake the work of implementing the plan yourself or trust much of it to an outside marketing vendor, developing a plan will show you beforehand how much of your resources will be required to get where you want to be with few surprises.

Tips for Creating a Successful Business Plan

1. Set GOALS, and make them the SMART kind: Ensure your goals are Specific, Measurable, Achievable, Relevant, and Time-bound. Break them down into actionable steps and milestones to track your progress along the way. (You can read more on setting SMART goals here.)





2. Review and Revise Regularly: There is no silver bullet or “Set it and Forget it!” solution to good marketing or business management, so make sure you and others you trust are committed to this plan and analyzing it often. Your business plan is a dynamic document that should evolve over time. Changing and tweaking it is not a bad thing, it’s necessary to meet an ever-evolving market. Remain fluid — regularly review your progress compared against your goals and make adjustments as needed.





3. Seek Feedback: Don’t hesitate to seek input from trusted advisors, mentors, or industry peers when creating your business plan. That’s what we are here for. Trusted insights and outside perspectives can help you identify blind spots and help you to refine your overall strategy.





4. And most importantly… Stay Committed: Creating a business plan is just the first step – executing it is what ultimately determines success or failure. Unfortunately, I’ve seen countless contractors get so close to achieving their dreams only to pull the plug too early instead of staying the course. The best-laid plans mean nothing if they’re never implemented and committed to. If you believe your goal is worthwhile and your plan to get there is solid, trust the process and stay disciplined.

By investing the time and effort into creating a holistic business plan on the front end, contractors can position themselves for long-term success and growth in competitive markets. There is so much more business available out there than low sales at a 2.5% margin, but only those who have a plan to take it will obtain it and hold onto it. Remember, a solid plan not only provides a roadmap for achieving your goals but also instills confidence in your homeowners and employees too. Set a vision with a clear path to get there, and others will readily jump on board to help you achieve your dreams.