Starting an HVAC business can be a profitable step, or one that quickly falls flat. The number of HVAC businesses in the US grows by around 2% every year, and almost all of these are local or regional businesses. While the demand for HVAC services is high, so is the rate of early failure: 70% of new HVAC businesses fail in their first year of operation.
Family-owned HVAC businesses and sole proprietorships successful at beating these odds still face barriers to scaling up business and growing profitability through independent contractors and staff. Here are the data and insights you need to improve your HVAC business and lead in your market.
HVAC Industry Statistics to Improve Your Business
First, it’s essential to understand which sectors of the HVAC market you serve and need your contractors and technicians to serve. How big is the HVAC industry? These statistics reveal how many residential, commercial, and public sector clients are out there by percentage.
- 33% of the worldwide HVAC market is in the public sector, like healthcare, education, and government facilities.
- 28% of the HVAC industry is made up of single-family homes, while just over 6% are apartment buildings.
- Manufacturing, industrial, and office HVAC applications each make up about 10% of the industry.
Regardless of whether you do residential HVAC, commercial HVAC, or public sector HVAC, you must know that HVAC job openings are expected to grow 13% by 2028. This means that competition for the skilled talent and trade professionals you need is only going to get more intense. So, it’s important to structure your business in a way that sets up your employees, contractors, and customers for success.
Most Common HVAC Business Model Components
According to an article in Contracting Business Magazine, there are multiple components of a successful long-term HVAC business model:
- Maintenance Agreements and Tune Ups: These agreements between a client and an HVAC business allow a technician to develop trust with the client as the technician regularly performs excellent preventative maintenance that keeps the system running smoothly.
- Emergency Service: When a new or existing customer needs on-demand service due to a performance issue, this presents an opportunity for the business to go above and beyond solving the problem.
- Accessories: Thoughtfully recommending add-ons like air cleaners, humidifiers, smart thermostats, and more is one way your business can set itself apart from others who just do the bare minimum.
- Replacements: Selling a customer a replacement furnace, air conditioner, or heat pump when necessary is another way to grow their trust and confidence in your company’s honesty and integrity.
- Renewals and Referrals: All this adds up to renewals of maintenance contracts, as well as word-of-mouth referrals that bring in new business.
If one or more of the elements on this list is lacking, that might be the best place to start improving your HVAC business model. However, it’s also important to know that almost one-third of field service businesses like HVAC companies are not even achieving 80% customer satisfaction. While it’s great to expand your business model, it’s also important to make sure your current services are up to standards as well.
Improve HVAC Business Profit Margins with Acumatica
All these elements of a successful HVAC business model can be better-enabled with Acumatica, the fastest-growing HVAC software on the market. Acumatica enables HVAC businesses to keep track of service agreements and warranty information, making this information available on-demand to technicians in the field. Technicians can see a record of past service and which accessories have been offered in the past, to avoid repeating the same pitch when a client has already declined. Insight into available inventory will help them set customer expectations and upsell these products when the time is right. Lastly, integration with administration allows customers to be accurately and quickly billed from the work order. Customers can pay through an online secure portal where they can also give feedback.
Improving your HVAC business model doesn’t have to be complicated. Working with Circle City Software Solutions, you can deploy a field service software within 6 weeks that makes it easier for you to focus on the job well-done. Contact us today to schedule a demo and learn more about what we can do for you!