< Previous20 JULY 2023HIGH-PERFORMANCE HVAC TODAY COVER STORY ingredient that must be common be- tween teacher and student is the abili- ty to understand that the mission is to service the needs of others in the most economical way possible. “The method for doing that is nev- er the same for any two people. And by the way, the generation gap is real, and something that worked 10 years ago may not work today. So the transi- tion from the existing to the next gen- eration of leadership is a moving tar- get. You have to adapt and be open to new ideas. Isn’t that what any leader should do?” Brown adds that some training does have to come from the outside. Bas- nett agrees and says he has used lead- ership training offered by BDR. He also says that you must be available to coach, guide, and encourage those team members you want to consider for future leadership roles. Greg Vickers, on the other hand, has not developed or used formalized leadership training yet. He does rec- ommend books for candidates to read, our whiteboard at every meeting. We stress that not only are we in the ser- vice industry and serving others is a privilege, but this is the only way to be- come the best leaders possible. Again putting others before self.” TRAINING TOMORROW’S LEADERS When training the next generation of leaders for your business, Meginley writes that current company leaders need to foster active learning, which he defines as providing education that doesn’t only depend on passive listen- ing. He says, “Active learning experi- ences help learners arrive at the con- clusion themselves.” For Jim Brown, this is how his fa- ther taught him and how he taught his son. “My father taught me the basics of running a successful HVAC business and allowed me to learn the rest in- dependently. My successor is my son, and I used the same approach with him. From my perspective, the he focused on putting the needs and desires of others ahead of his own. In an article, he wrote for this publi- cation, How Servant Leadership Made My Company Better, Ball said that servant leadership is not about hoping to become a better lead- er whose reward is meeting all their fi- nancial needs. “A true servant would never perform their acts of service with the end moti- vation of leading others,” Ball says. For Rob Basnett, this approach is, by nature, who he is. “I’ve never real- ly looked at myself as a leader. I treat people like we are all equal teammates. My inclination is to give our employ- ees the option to be part of something and contribute their thoughts and ideas. This approach invigorates them and me, especially when their ideas get implemented.” According to Greg Vickers, GV’s en- tire approach to High-Performance HVAC contracting is through servant leadership. “Servant Leadership is on top of JULY 2023 21HVACTODAY.COM COVER STORY learning process for me.” Greg Vickers adds that the smart thing to do is to identify future leaders as early as the hiring process and nur- ture them with experience. “Then lead by example. Watch to see who drinks the Kool-aid. If they have leadership potential, send them to leadership training. Ask them who they admire as a leader and research that person or persons and how they got to where they are.” “Don’t forget to ask questions,” Rob Basnett concludes. “Find out their in- terests and desires. See if they are pas- sionate about them. There must be some passion. Then help them set per- sonal goals. You now have the basis for planning for your business’ next generation of leaders.” to become a state trooper), then I had only two choices: to continue in my ca- pacity or try to find another candidate and start over. “Luckily, in my case, my son re- turned to the business and committed his energy to help us grow. The rest, as they say, is history.” Then the transition from parent to child has to take place, which can be very tricky. In Brown’s case, that tran- sition is now complete. “My son runs the company’s affairs, and I am the bookkeeper and CFO. He often asks for my opinion, and I am happy to provide it. “But two people cannot steer one vehicle, and I had to learn to let go. I had to back away and let my son solve his own problems. That was a great Ted Talks, and other Internet-based resources. “We have been working on this for a year and are still in the infant stage. But we have seen solid growth from the employees we groom as to- morrow’s leaders.” IT DOESN’T HAPPEN QUICKLY Creating the next generation of lead- ers for your company takes time. A lot of it. That is why many consultants and family business gurus strongly urge business owners to begin looking for their replacements sooner rather than later. Jim Brown says that developing fu- ture leaders is a two-part transaction: an offer and an acceptance. “If my son didn’t accept my offer (at first, he didn’t and left the company 22 JULY 2023HIGH-PERFORMANCE HVAC TODAYour new special offer that includes a seat at the 2024 Summit in Asheville. If you have questions, call your Cus- tomer Care Representative at 800- 633-7058. Sizzling Hot Summer Onsite Deals! National Comfort Institute (NCI) has a special summer offer now! You can save thousands of dollars if you hold onsite training before August 15th. 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There is no cost for a con- sultation and no obligation. You can earn NCI certification, re- certifications, plus NATE, BPI, and state CEUs (where applicable). Onsite training can minimize down- time and reduce expenses by bringing a trainer directly to your location. Get a leg-up over competitors using NCI training to take your company to the next level of High-Performance HVAC Contracting. It just takes a phone call or email to get started! Available dates are limit- ed, and Onsites are offered on a first- come-first-served basis. Don’t miss out on this game-changing training! NOTE: NCI Members can use NCI Bucks towards the cost of a class and/ or earn NCI Bucks towards future training! It’s not too soon to mark your cal- endars for the High-Performance HVAC Summit 2024. The event will be held at the Crowne Plaza Re- sort Asheville in Asheville, NC, from September 10-13, 2024. 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Be sure to check out NCI UPDATE It’s Time to Mark Your Calendars for Summit 2024 JULY 2023 23HVACTODAY.COMHVAC SMART MART 24 JULY 2023HIGH-PERFORMANCE HVAC TODAYAD INDEX HIGH-PERFORMANCE HVAC TODAY TM Publisher Dominick Guarino Editor-in-Chief Mike Weil Art Director Judy Marquardt Online Development Director Brian Roseman Circulation Manager Andrea Begany-Garsed To 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; or visit HVACToday.com/subscribe to order online. Go to ncilink.com/ContactMe with your comments and questions. Arzel Zoning Technology, Inc. | www.ArzelZoning.com ...................................................... 5 Baker Distributing Company | www.BakerDist.com ........................................................... 24 Duct Saddles | www.DuctSaddles.com ....................................................................................... 9 Evergreen Telemetry | www.EvergreenTelemetry.com ........................................................ 2 Goodman Manufacturing | www.GoodmanMfg.com ....................................................... 25 Lazco Corporation | www.Lazcocorp.com ............................................................................. 21 R.E. 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He can be reached at ncilink. com/ContactMe Four Tips to Keep Your Business on Track set up automatic transfers from your operating account to a separate account from which payroll withdrawals are made. 3. PRICE YOUR WORK PROFITABLY One of the biggest issues plaguing our indus- try for decades is not understanding the differ- ence between markup and margin. This subject is covered in many great articles and books. The bottom line is that markup is misleading, and it’s not a good way to achieve the profits you expect. Another common mistake is using the same margin when estimating labor versus materials cost. Your labor should be calculated at higher gross margins than materials. You can always buy more product to meet de- mand, but labor is your most precious asset, and it’s not very easy to get more of quickly. It re- quires an investment in hiring and training peo- ple. As a high-performance contractor who sells more labor-intensive system renovations, those jobs should be priced at 70% gross profit margins. 4. BUILD A STRONG MAINTENANCE AGREEMENT BASE Maintenance agreements are the life blood of a profitable HVAC business. They create recurring revenues, and the work can be done during your low-demand seasons. These agreements also provide leads year after year. When a customers’ equipment is ready for replacement, you will like- ly get that work. In addition, companies with thousands of maintenance agreements are worth many more multiples of net profit, and will sell for top dollar. If you are not already doing all of the above, I hope you start implementing these things within the next 30 days – it will mean a big difference for your company in 2023 and beyond! A ccording to the U.S. Department of En- ergy (DOE), 20% of HVAC contracting businesses fail every year, and only 30% of startups reportedly make it past the first year. There are several common business killers that are relatively easy to remedy. You could fix most of them within 30 days. Focus on the following four key areas and your odds of success will in- crease exponentially: 1. CREATE A BUSINESS PLAN, AND UPDATE IT REGULARLY Whether it’s your first or 20th year in busi- ness, a business plan is a must for so many rea- sons, including the ability to borrow money when needed. A business plan however, is more than projections on a spreadsheet. While numbers are important, your plan must be a map to where you want your business to go, as opposed to just “winging it.” One of the most important elements of a good plan is your strategy. In other words, what is your unique proposition in a sea of sameness among your competition? A high-performance approach is one such strategy. Figure yours out and let oth- er goals and priorities follow. 2. IMPLEMENT GOOD FINANCIAL AND BANKING PRACTICES One of the biggest mistakes I’ve seen contrac- tors make over the years is not setting up bank accounts for different functions. For example, it’s critical you set up a separate payroll account. Many companies fail because they don’t set aside payroll taxes, and when they’re due, they don’t have the money to pay them. Don’t fall into this trap – it’s a business killer! Even if your payroll provider automatically withdraws your weekly payroll, it’s important to By Dominick GuarinoNext >