How to Successfully Grow an HVAC Dealership Part 2

Strategy equals discipline and discipline equals success. If the goal is to one day retire and sell your company, you’d better have a robust business strategy in place. If your goal is to transfer the business to family as your legacy, do them a favor and have a clearly defined and well-documented business strategy. If you plan to milk a dying cow, don’t worry about developing a strategy because it’s already defined.

A business strategy is essentially a long-term business plan that acts as a 3-5-year roadmap for your business operations, business investments, organizational structure, sales and marketing strategy and tactics, brand positioning, and financial projections and metrics. A strategy is the execution plan to achieve the long-term vision and the short and long-term business goals of your HVAC dealership.

Kodak is unfortunately most well-known not for film, but for failing to define and execute a clear business strategy in a quickly changing technological and competitive environment. While the shift to digital photography was clear to Kodak, rather than seizing the opportunity to dominate this modern technology, Kodak focused instead on protecting their heritage film business. A decision that cost them dearly. Kodak’s goal may have been to sustain their leadership in film and photography, but their strategy, if they had one, neglected to define how they would achieve that goal over time. The rest is history…Kodak lost consumer share to the likes of Sony, Nikon, Cannon, and Olympus, and ultimately to smart phones, most notably Apple. Kodak held on to their commercial business a bit longer, but eventually succumbed to digital movie cameras such as Arri Alexa and Red.

On the contrary, from the release of the first iPod, Apple had a well-defined strategy to create a digital ecosystem that consumers would never want to leave. Photographs, movies, music, messaging, editing, streaming, personal computing, smart home control, and countless integrated apps. All technologies that cut deeply into siloed businesses like Kodak, Blackberry, and manufacturers of camcorders, navigational devices, personal computers, CDs, and DVDs.

Apple continues to brilliantly execute its strategy with an ongoing cadence of iPhone, iPad, iMac and MacBook iterations, Apple Music, Apple TV, HomePods, AirTags, AirPods, and Apple Watches. Their strategy is well entrenched, but they continue to look into the future to ensure it is sustainable with innovations like Apple Vision Pro and a host of ever-evolving subscription services.

10% and No Plan?

Let’s put these two examples into HVAC terms using real life examples. The HVAC dealership whose “strategy” was simply to grow 10% each year with no specific plan could be called “Kodak HVAC.” When asked how they would achieve the 10% annual growth, they suggested it would happen by relying on the experience of their technicians and positive word-of-mouth referrals. In reality, Kodak HVAC’s books showed declining sales and a compound annual growth rate of 5% over the prior three years vs. their stated goal of 10%.

Looking deeper, the limiting factor to Kodak HVAC’s growth was a changing technological and competitive environment. A regional consolidator had been acquiring competing dealerships, aligning them with a single manufacturing partner and focusing their sales on smaller, quieter, and more energy-efficiency systems with side discharge and inverter technology.