< Previous20 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYwant to download the articles, save them to a file, and go back to them once you are ready to take a serious look at this part of the HVAC contracting business. I hope you decide to read on and find that it’s a commitment worth making.PBC requires you to be open to the possibility there may be a better way. For example, many of us have done things the same way for many years. We live by the rule, “If it ain’t broke, don’t fix it,” right? WRONG.There’s much truth to the saying, “if your mind is not growing, it’s probably shrinking.” So, keep an open mind to the new ideas presented here, and to the possibility that some of the old ways were never right in the first place.Many of us grew up in this industry with rules of thumb that have been passed on from tech to tech, father to son, to grandson. Remember the tele-phone game you played as a child, where you sat in a circle and whispered a phrase into the next per-son’s ear, and it would be repeated over and over until the last person spouted out words that didn’t even resemble the original sentence? We’ve been playing the telephone game in our industry for more than 50 years now. Perhaps some original rules of thumb were fairly close - others not. Until recently, we didn’t have an easy way to check. Many of these rules, like “a six-inch duct can handle 100-120 CFM,” don’t work today. Perhaps when that rule of thumb was created, it was based on short straight runs of sheet metal with nearly perfect transitions. Do those conditions resemble the kind of HVAC systems installed over the last 30 years? I think you know the answer to that one.An important step is being open to the possibil-ity that not only are your installations not perfect, they may be a lot more messed up than you think. As we interviewed Performance-Based Contrac-In the third installment of this ongoing series we will explore the first five of 10 distinct steps to help you on your path to embrac-ing High-Performance HVAC – should you choose to accept this mission.It’s important to understand that anyone can become Performance-Based – it’s not an exclu-sive club designed to keep people out. As the say-ing goes, the “rising tide raises all ships.” The more contractors doing this, the better it is for everyone, including your company, our industry, and most importantly, your customers!Let’s take a look at each of the steps on the path to High-Performance Contracting™:STEP 1 – EXPLORE THE COMMITMENT AND KEEP AN OPEN MINDThe primary barrier to entering this realm of contracting is the level of your commitment. The more committed you are, the greater your chances of succeeding. Attending one class and learning a little bit about air diagnostics or balancing does not constitute the level of commitment neces-sary to succeed. It’s a start, but you must follow through. This means getting the right training, tools, and instruments for your entire team to efficiently and profes-sionally move up to the next level.The foundation of Performance-Based Contracting (PBC) is measurement. If you don’t measure, you’re just guessing. If you think you can learn some buzzwords and skip over the foundation of High-Perfor-mance HVAC – which is testing – you’ll waste precious time and money. If this is your intent, this series may not be for you, at least at this time. You may Five Steps To Becoming A Performance-Based ContractorBy Dominick Guarino, PublisherMANAGEMENT The ABCs of High-Performance HVAC Contracting: PART 3SEPTEMBER 2018 21HVACTODAY.COMyour future? If your net, pretax profit is less than 10%, there’s room for im-provement. If it’s less than 5%, you’re basically in a holding pattern. If it’s less than 2% (the industry average – yuck), you’re definitely going in the wrong direction.So how do you pull out of the cur-rent rut? Decide today to be a differ-ent kind of contractor. There are lots of opportunities to grow in different directions. You could start doing duct cleaning, launch a solar division, or dive into home performance and insu-lation. But will that really change the complexion of your business? Unless you can get the profits you need and deserve for your whole busi-ness, these other things can often be huge distractions, draining your ener-gy and resources.There’s nothing wrong with organi-cally growing your business with add-on services if your main business is strong and profitable. Unfortunate-ly, these add-on services often mask real problems and hide the bleeding in your business.PBC is not an add-on business. Al-though you could add on new services, like independent third-party testing and balancing, the premise of Perfor-mance-Based Contracting is to change how you’re doing the things you al-ready do. It is a way to transform your core business both technically and profitably.STEP 3 – START YOUR EDUCATIONIf you’re still reading this, you’ve made a decision to examine PBC a little closer – congratulations! Get started right away by becoming more educated on the air side of HVAC. If you’re read-ing this, chances are you already have a good understanding of the equipment tors across the country, we found this was one of the toughest things to come to grips with. “We thought we did high quality work,” a Kentucky High Performance contractor confessed. “Our family business goes back 30+ years, and we always felt our systems worked. The first time we measured the perfor-mance of one of our systems, our jaws dropped. That was one of the tough-est moments in our company’s histo-ry,” he recalls. Remember: If You Don’t Measure, You’re Just Guessing!STEP 2 – DECIDE IF YOU NEED TO CHANGEThe only person who knows wheth-er High Performance is right for you is you!Examine your current business – are you happy with how it’s going? Are you moving forward, or are you in a rut? Are you making money, or are you just keeping up with the bills hoping that someday things will be different?Be honest with yourself. Whether you’re a two-man shop, or a $5-million business, are you making enough money to finance the company’s growth and put money in the bank for Catch up on all the installments of this series:Part 1: What is High-Performance HVAC and Why Do It? ncilink.com/ABCs-1Part 2: Is It the Right Fit for Your Company? ncilink.com/ABCs-222 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYMANAGEMENTing codes, especially combustion air and venting rules. There are three key issues when it comes to combustion appliances – safety, comfort, and en-ergy use. High-Performance HVAC addresses all three.Over two decades ago NCI recog-nized the need for reality-based car-bon monoxide safety and combustion training. Today the organization is the world’s largest combustion efficiency and safety training and certification body with well over 15,000 certified CO/Combustion Analysts. NCI’s Jim Davis, one of the top au-thorities on carbon monoxide and combustion, wrote a National CO and Combustion Diagnostics proto-col which remains the most compre-hensive step-by-step protocol avail-able today. This certification class was designed with High Performance in mind, so it includes much more than just the technical education.tion that can help. It takes you from the very basics through advanced stat-ic pressure and airflow diagnostics, to how to improve and optimize duct sys-tem performance.NCI keeps the concepts simple and backs them up with easy-to-fol-low forms, reports, and procedures. While some colleges offer air balanc-ing courses, you’ll find they are typi-cally directed at engineers. As such, they provide little guidance in terms of field diagnostics, system renova-tion, and residential balancing. NCI’s class teaches the basic principles of PBC and weaves in the business, sales, and marketing approaches into the training.Another key component of PBC is the combustion side of heating equip-ment. This is yet another area riddled with myths, legends, and rules-of-thumb. Some of these false assump-tions have become part of our build-and refrigerant side. If not, seek good training in these areas as well. True performance includes all as-pects of the HVAC system and its in-teractions with the building. Prop-er design, sizing, installation, airflow, and combustion adjustment, refriger-ant charging, and so forth, are all crit-ical factors in system performance. This series is not meant to cover what goes on inside the equipment (with the exception of combustion testing), although equipment selection and siz-ing are critical.RECOMMENDED TRAININGStart with a simple class that pro-vides the basics of airflow and stat-ic pressure testing. This provides the necessary foundation for better un-derstanding duct system diagnostics and necessary improvements. NCI (National Comfort Institute), provides a class titled, Duct System Optimiza-SEPTEMBER 2018 23HVACTODAY.COMwith a shiny new instrument and fum-bling around in front of them trying to figure out how to turn it on, let alone use it properly. Talk about perfor-mance anxiety!Start with your own home or shop. Once you’ve received the training and purchased the right tools, then measure your home’s HVAC system perfor-mance. Next test a family member’s system, or bet-ter yet, one of your em-ployees’ systems.Don’t wait too long af-ter any training to begin testing – get out there and test within a week follow-ing your training. Borrow the tools if you must, but start right away. The dan-ger of putting this on a shelf for a month, or two, or six, is most people can-not retain information that long with-out putting it into practice. Don’t waste your hard-earned mon-ey and more importantly your pre-cious time, unless you’re willing to get out there and start testing. In the next installment of The ABCs of High-Performance we’ll look at five additional steps needed to get your business on the High-Performance track.cut corners when it comes to instru-ments. It’s better to invest in a few key high-quality instruments than throw-ing money at a bunch of cheap imita-tions. These will likely end up collect-ing dust on a shelf somewhere because you don’t trust your readings.In a future installment of this series we’ll look at each of the tools needed to get started, and what tools you’ll want to add as you grow into a full-fledged Performance-Based Contractor.STEP 5 – PRACTICE, PRACTICE, PRACTICEAny professional athlete, actor, or entertainer will tell you what makes them great is how much they practice before they hit the field or get in the spotlight. The same goes with Perfor-mance-Based diagnostics – especially on a sales call.There’s nothing more embarrassing than showing up at a customer’s home STEP 4 – GET THE RIGHT TOOLSYou must have the right tools to help diagnose performance issues and then test-out the system once you’ve installed and/or fixed it. This is not the place to cut corners. The right tools can make all the differ-ence in your accuracy, speed, and professionalism in front of the customer. Every now and then a contractor asks us if he can make his own flow hood out of card-board or sheet metal. My advice is absolutely not!This is critical. The right in-struments do time consuming calculations that make thorough testing feasible. They also are the difference between being per-ceived as a professional and look-ing like some nutty experimenter. Besides, if you ever had to defend your home-made instruments to an engineer, homeowner, or even a jury, what would you use for a calibration certificate – one or two-ply “comfort” paper?Don’t give in to the temptation to Dominick Guarino is pub-lisher of High-Performance HVAC Today magazine and CEO of National Comfort Institute, Inc. He can be reached at domg@ncihvac.com24 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYDad started his plumbing and HVAC company in 1964. It prospered through the growth years of the late 1960s and early 1970s. With five boys at home, he decided we needed to stay busy. So he bought us each a calf to care for. That led to a growing farm business as well! In October 1974, my father was injured in a farming accident that cost him all the fingers on his right hand, as well as the tips of his first two fingers and thumb on his left hand. I was 10-years-old at the time.That is how I came into the plumbing and HVAC business. My father had no technicians ‘on-call’. He ran the after-hours calls. After recover-ing from his accident, those af-ter hours or weekend calls in-volved him taking me out with him, so I could be his ‘hands.’ He stood over my shoulders and told me what to do to fix whatever we were working on. I was getting invaluable training, but at the time I just wanted to stay in bed or watch TV shows like Gil-ligan’s Island like the rest of the kids my age. ENTERING THE FAMILY BUSINESSWhen we weren’t fixing things, I was writing for him. I wrote out all job quotes, invoices, and led-ger cards. I resented it most of the time.Fast forward to the 1980s. I was in college, liv-ing in the big city, and loving my freedom. In the spring of my junior year, my mother called, crying. Dad hadn’t been able to cash a pay-check for months. She begged me to come home and run the business before they had to declare bankruptcy.I came home to work in the business for a According to Forbes magazine, 44% of the 400 richest Americans made their wealth working in family businesses. Some of the largest and strongest cor-porations in the world — Ford, Samsung, Nord-strom, Toyota, Walmart, and thousands of other very recognizable companies — started out as family businesses long before they went public. Some say family-owned and operated businesses are the backbone of the world’s economy.Those of us who are a part of a family business also know they can be the biggest cause of fric-tion, fighting, and discord! This article is meant to have you think about these issues and deal with them BEFORE they become a problem.SOME HISTORYI am a third-generation plumbing and HVAC contractor in Cambridge MN. My grandfather, Otto, was the first plumber in our town. He plumbed most of the homes and buildings in Cambridge when indoor plumbing first came to our community. My father, Bob, was (like me) the youngest in his family. Grandpa actually died when my father was two-years-old, so there was a 30-year break in the business lineage. Working in a Family Business: Success through CommunicationBy Tom JohnsonMANAGEMENTYou must be aware of your shortcomings and be OK with having someone – like a family member/partner – point them out to youSEPTEMBER 2018 25HVACTODAY.COMAs a result, the stress between my brother, father, and me was awful. Fi-nally, Mark and I got enough courage to move everything out of his build-ing and forced a sale offer, which Dad eventually accepted with the com-ment: “I guess this is what you think the value of my life’s work is!” From my perspective, we were giv-ing him a lot for a company that we saved and built value back into. But we didn’t talk about that and this lack of communication caused a huge rift that took years to get past.My brother Mark and I made a sim-ple 50-50 ownership agreement. We didn’t want to waste money on a law-yer. There wasn’t much to decide. He was a good plumber and I was good at service and sales. We made a good team. Mark ran the jobs in the field and I ran the office and sales. THINGS CHANGEFor more than 20 years that worked. Then, as Mark aged, he decided he didn’t want to ‘turn wrenches and shovel dirt’ anymore. He wanted to have a ‘cushy’ office job too. He had no training, no experience, and a typical construction worker’s vocabulary. This marked the beginning of the end. For more than 20 years we made many assumptions and communicat-ed poorly. Now we needed to talk to figure out these changes and had no idea how to go about it. Since we had a 50-50 ownership, we had no means to break a tie. We both dug in our heels. We worked at the same company and did not talk to each other for 10 months. The busi-ness suffered severely. Most of our em-ployees left. We were moments away from having to declare bankruptcy.Fortunately, I can report we final-ly did come to an agreement. Mark retired four years ago. Today we are much better at being brothers than we were at being business partners!ASSUMPTIONS DO NOT EQUAL COMMUNICATIONSI learned a lot of lessons from this experience. Most importantly is to never go into business with any-one whom you cannot communicate openly and honestly with. This might seem simple, but it is not! This is not about who you can be friends with. It’s about who you can trust. Who you can share your hopes and dreams with. It’s about who you can hear ‘no’ from without pouting. You must be aware of your short-$160/week salary. We were COD ev-erywhere, had no employees, and were more than $50,000 in debt. Clawing away, I climbed the com-pany up and out of that hole. I called my older brother, Mark, who was a plumber at a shop 40 miles away to come and join me. He did. We worked 60 to 70 hours per week. Slowly we built the business back up. WHOSE COMPANY IS THIS?That is when the first family is-sue reared its ugly head. Dad owned the business and the building it was housed in. He was now happy. The bills were paid, disaster avoided, and all was well. He had no desire to talk with us about buying him out. He avoided any such discussions like the plague. 26 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYsues, and help each other. The point is: No one is an island! You need others to help guide and steer you into good decisions. If you try to do it alone, you will almost always fail!COMMUNICATE, COMMUNICATE, COMMUNICATE!I learned I had to face reality head on, no matter how ugly. Having been liter-ally moments from bankruptcy twice in my life, I can say with complete cer-tainty things don’t get better until you first acknowledge the problems. This is also where trusted advisors help. In my case, by conversing with a trusted advisor, I found a private in-vestor (who happened to be a very sat-isfied customer) who gave me an oper-ating loan with no collateral. Without that advisor, my life would have taken a completely different trajectory and my family business would have failed instead of thrived.I cannot stress this enough — com-munication is the key. If you plan to be in business with anyone, especial-ly a family member, communication is always the single most important ele-ment. If you are already in business, please review a few of these thoughts and have discussions with your busi-ness partners about them. I think you may find those discussions very en-lightening. managers disagree. Questions like, who carries the tie-breaker vote? Can I force a sale of stock? What if we come to an impasse? What if one of us dies? There are many more such questions that a good business attorney will help you sort through. You must review this document reg-ularly, at least every two years. More often is better. Why? Because things and situations change. As you age and mature, so should this document and the business.Another tough lesson for me was the importance of having competent out-side council. All too often we are just too close to a situation to address it ra-tionally and reasonably. I recommend having several trust-ed people in your life who you can bounce ideas off. Some of these may be paid positions, including a CPA or your lawyer (both of which you must have). Some owners set up a Board of Directors that meet regularly to advise them. Others use business coaches. Some simply have business peers with whom they share ideas, talk about is-comings and be OK with having someone point them out to you. Some key elements you need to discuss regularly include: n Vision. All owners must be aligned on vision. n Clearly defined Roles and Re-sponsibilities. n The plan for Accountability. This is something that most business own-ers fail to address. Who are you direct-ly accountable to? n Growth strategy. This seems easy, but it can be very difficult, especially if visions are not in alignment. All own-ers must know and understand what the financials are for your individual business. If one or more of the owners does not understand this, alignment cannot happen. n Goals. Again, this sounds basic, but it’s critical all owners understand each other’s goals for the business. Without such understanding, conflict nearly al-ways begins. n Control structure. Each owner must be aware of and in agreement with the management structure. One micromanager can really disrupt this. Being aware of your own strengths and weaknesses really helps. n Exit plan. This can be huge. Going into business with someone without communicating how to retire is simply irresponsible. If you plan to bring children or spouses into the business, first make sure they really want to. Don’t proj-ect your desires onto them. Open and honest communication is key.WRITTEN LEGAL AGREEMENTS ARE A MUSTNext, you must write an agreement as to what happens if owners and MANAGEMENTTom Johnson is a HVAC and plumbing contractor in Cambridge, MN. He is also a trainer for NCI in the Carbon Monoxide and Combustion safety course. As a contractor, Tom has received many awards, including Contractor of the Year from both NCI and PHCC. He can be reached at: tom@tmjohnsonbros.comNo one is an island! You need others to help guide and steer you into good decisions.SEPTEMBER 2018 27HVACTODAY.COMPHOTO OF THE MONTH“The air filter works great!” — Dawn Mroczek, GVs Heating, Glenview, IL Well it looks good, anyway, right? What could possibly be wrong about this?Dawn Mroczek from GV’s Heating and Cooling is the September 2018 winner of our Photo-of-the-Month contest, as voted on by the subscribers to the High- Performance HVAC Today magazine and visitors to the website. She will receive a $50 gift card.You can too – submissions are always welcome. If you’d like to submit a photo for consideration in our Photo-of-the-Month contest, go to ncilink.com/POMSubmit and fill out the information as requested. If you don’t submit, you cannot win!THE OCTOBER CONTEST OPENS ON SEPTEMBER 10, 2018. If you’d like to be in the running for our next contest, you have plenty of time to submit your photos in any of our three categories: The Good , The Bad , WTH (What the heck).28 SEPTEMBER 2018HIGH PERFORMANCE HVAC TODAYdata for when you test-out, and truly differentiate you from competitors. In addition, ComfortMaxx Air now has a new feature called “Lightening Mode” which allows your techs to perform test-ing much faster. If you are a Learning Excellence Member, you get ComfortMaxx Pulse™, which includes everything in Air but enables you to take the pulse of your custom-ers’ systems by adding tempera-ture and deliv-ered BTU measurements. It’s designed to get a quick 15 to 20-minute initial di-agnostic on a system’s performance. Its focus is to create lead generation through service, or a quick test during a sales call.If you are interested in having the ulti-mate in total HVAC System Performance testing software, the ComfortMaxx Verify™ is for you. Verify enables you to conduct full system performance test-ing before and after completing HVAC System renovation work and balancing the system. This includes full room-by-room airflow and performance testing. Using Verify, you can provide your cus-tomer with a side-by-side comparison report showing that you delivered what you promised.As owners and leaders, it’s up to you to imple-ment Comfort-Maxx. If you need help, contact cus-tomer care at 800-633-7058. They can help you get signed up, set up, and started so you can take advantage of this amaz-ing benefit.For more information you can also download a PDF datasheet on Comfort-Maxx™ from http://ncilink.com/CMLit.DID YOU KNOW ...The fact is most members of organi-zations don’t know all the benefits their membership brings. Do you know what your NCI membership provides for you?The answer: plenty. Here is a quick rundown of what your $100/month membership fee provides for you: zLive Support, Lead Generation, and Software. This includes unlimited toll-free phone support, access to the High PerformanceTalk Discussion Forum, a Premium Listing in NCI’s web-based Find-a-Certified-Professional Lead Gener-ator, and ComfortMaxx Air™ software. zDownloadable Tools and Knowl-edge Libraries. This includes an extensive Download Library, i-NCI Mobile-Friend-ly Tools and Applications, an exclusive Member Newsletter, the largest library of Performance-Based Contracting articles, as well as a subscription to this magazine. zDiscounts and Rebates. Members receive Live and Online Training Dis-counts, access to the Member Rewards Training Incentive Partners Program (TIPP), NCI Training Bucks Program, and NCI Online Store discounts. And there is so much more, including discounts to the NCI High-Performance HVAC Summit annual meeting. Plus you can add options that even further en-hance the benefits of your membership. Do you want to really take advantage of these benefits? Then go to ncilink.com/Explore NCIMembership for more information. Or call 1-800-633-7058 today.SUMMIT 2019: SAVE THE DATE!The High-Performance HVAC Summit 2019 is coming. We are returning to Or-lando Florida the week of April 15 – 18, 2019 and it promises to be one of the best Summits yet. More information will be available shortly. So, mark your calen-dars today and get ready to rock down the Path to Performance.We look forward to seeing all of you in Orlando in April.NCI MEMBERS: ARE YOU USING COMFORTMAXX™?One very import-ant feature of your NCI membership is having FREE access to the ComfortMaxx™ testing software se-ries. All members have access to Com-fortMaxx Air™ -- an easy-to-use cloud-based testing tool that allows you to record and calculate System Airflow information based on static pressure measurements. All you do is collect four sys-tem pressures at the indicated locations. Lookup airflow on the appropriate fan chart for the equipment brand – or use our generic chart. Then pro-duce detailed PDF reports for yourself and for the custom-er. They can help you generate more leads, add credibility to your testing, provide baseline NCI MEMBER UPDATESEPTEMBER 2018 29HVACTODAY.COMAdvertiser IndexHIGH PERFORMANCEHVAC TODAY TMAD INDEXDwyer Instruments, Inc. | www.dwyer-inst.com .......................................................................2High Performance HVAC Today Magazine | HVACToday.com/subscribe ........................29Jackson Systems | www.jacksonsystems.com ...........................................................................5Lazco Corp. | www.lazcocorp.com.................................................................................................18The New Flat Rate | www.thenewflatrate.com .........................................................................19TSI, Inc. | www.TSI.com/comfort ...................................................................................................13To Subscribe to High-Performance HVAC Today:ONLINE: Visit HVACToday.com/subscribe for a FREE digital subscription.PRINT: 1 year/$72; single copy $7. Canada: 1 year/$92; single copy $9. Payable in advance with U.S. funds. Prepaid subscriptions may be sent to: High-Performance HVAC Today, PO Box 147, Avon Lake, OH 44012. Phone: 440-949-1850; toll free 800-633-7058; FAX 440-949-1851, or visit HVACToday.com/subscribe to order online.PublisherDominick GuarinoEditor-in-ChiefMike WeilArt DirectorConnie ConklinOnline Development DirectorBrian RosemanSales ManagerDave KenneyCirculation ManagerAndrea Begany- GarsedEditorial AssistantMarge SmithEmail us at contactus@hvactoday.com with your comments and questions.Next >