Don’t get left out in the cold!
Winter is a time of problems, but those problems can also bring opportunities for heating and ventilating contractors. Mike Jenkins offers some helpful winter advice for smaller HVACR businesses.
The Chancellor of the Exchequer's autumn statement in the last week of November included an encouraging report that the independent forecast from the Office of Budget Responsibility showed no likelihood of a double-dip recession. That’s good news.
The Meteorological Office, meanwhile, having officially abandoned long-term weather forecasting after making such a hash of it in 2009, is nonetheless making cautious noises suggesting that with Winter having made such a resounding start before Christmas, there are likely to be freezing temperatures in the opening months of 2011. Warning that it may be on the cold side in January and February seems, if anything, excessively cautious. It usually is, but for heating and ventilating contractors, that too may be classed as good news.
The early part of 2011 seems likely to characterised by freezes — pay freezes, pipes freezing, ice on the roads because of council budgets being slashed and there being not enough salt for the roads or enough diesel for the lorries that spread it. Heating and ventilating contractors need to be ready for more work arising from cold weather and for the overhead costs that cold weather brings.
There will be more emergency work, as old people’s boilers stop working, perhaps because they have not been able to afford maintenance or a replacement. For those doing basic plumbing work, there will be at least the annual quota of freezing pipes. Every heating contractor will be called to failed central-heating pumps and faulty thermostats. And as temperatures dive and more snow falls, there will be more problems getting around and the likelihood of having to budget more to keep contractors’ vehicles operational.
The fable of the cobbler’s children applies. When you have too much work, you don’t have time to pay attention to the condition of the van. And yet, your reputation for fast response, efficient meeting of customer’s requirements and being able to come up with vital spares quickly, depends on the condition of the van. Yes, we know you knew that already because, maybe, you have made that mistake before.
Before the worst happens, get your bank on your side. If you are doing well enough, save for a snowy day. And, of course, check the van’s antifreeze.
Spend a few evenings on new spreadsheets and cash-flow forecasts, and keep the bank informed of how the H&V business is looking overall. If you are a member of the HVCA, you will be receiving information in two electronic newsletters, HVCA e-news and einsidetrack, that can help you convince your bank manager you are up-to-speed with market trends and know how much potential business will be out there as we emerge from recession. Remember that although the bank will claim to know your business intimately, they probably don’t.
Tell the bank why you get more business in cold weather. Tell them that you have to have the latest diagnostic tools for fault-finding in the latest high-technology boilers. Explain that vehicle maintenance is vital to sustaining your professional reputation and how there might be sudden short-term needs for money to pay garage bills or for hiring a van. Let them know you are working all the hours you can to create a reserve to cover the cost of emergencies but that there is always a chance that, when an emergency happens, that reserve might not be enough.
Tell your business manager that you could do with the bank’s assurance of emergency help if a sudden emergency happens. Tell them that things are looking good for even more work and, therefore, greater earnings. Show a spreadsheet for your expected cash flow as your earnings increase but also as you encounter greater Winter costs. Show what you might need in the way of overdraft help to keep the business ticking over.
In addition to these thoughts for small businesses, there is also plenty of good advice for businesses of all sizes in the series of ‘Better business guides’ available free-of-charge to HVCA members. You might also find it helpful to visit hvcabusinessplus.co.uk to see the full scope of the ways in which the HVCA’s group of companies can provide assistance and advice to your business.
Mike Jenkins is group co-ordinator of HVCA Business Plus and business development manager of Welplan.
