What a tough subject. There have been alot of articles written on this and varying stands. I will look at this from the owners position with a Service Company insite.
At the beginning of any call to a service company you need to qualify their capability, so asking some background questions-How long has your company been in business? Can you provide me with 3 references that are not close friends or relatives?, Can I stop in and visit your office?, How many service technicians are on staff?, Part 2 will cover how are your technicians compensated? What brands do you represent? How do you charge for a typical service call?.
Each of these questions has a specific purpose. First by establishing the amount of time they have been in business allows you to gage the viability of them being around next year and the year after. I have seen many technicians, very accomplished technically, open a business with a sign on a truck and a couple of accounts from their previous employer come and go within several years of beginning. Many times these businesses do not understand overhead/Profit and will perform these jobs/services at less than true cost. Eventually this leads to someone getting stuck with used parts, an incomplete service call-having put 50% down at times, and no back up for warranty.(Some guys joke about this being a Tail Light Warranty-You have coverage only until you can no longer see their tail lights) While funny this is the case alot of times.
A newly established business in this industry generally begins with accounts taken from their previous employer, along with family and friends. When getting references make sure to call them. This will allow you to ask questions of these contacts-How do you know them?, How long have they been servicing your HVACR equipment?, Have you had previous work with "the business owner" at other companies?, How are they on warranty calls?, How do you feel about their technical competency?. It is very important that you follow up on references-I have provided many for our firm and in 20 plus years here only know of 3 that have followed up. I know many who have contacted us later and in speaking with them directly have regretted not getting more information before having chosen the company that performed their work.
Establishing if they have an office is important-that leads to the legitimacy of the business. If you can physically go to their place of business-even if it is small and out of the way it lets you know they take pride in themselves and their operation. There are many companies that go into business working out of their garage or a storage area and progress no further. They may tell you it is to keep their costs down but in reality it is because they do not understand overhead-If you have a home office you need to pay yourself rent, If you have a storage area you need to incorporate the costs into overhead. Many of these owners will invoice 55, 65 even 85 dollars an hour and yet when you ask them how much they are making they will tell you the same amount. There is no concept of overhead, taxes, etc. Which unfortunately leads them down the wrong path.
I had a conversation one night with a fellow who's business was in this same position. During our discussion he told me he was backlogged several years with installations-he was very proud of this. I asked him what he was charging per hour-$45.00. In pursueing this farther I asked him how many hours a week he worked-60 to 70 on average. I asked if he billed 45 an hour when he went to perform his bids-no he did not/this accounted for an additional 30 hours time a week. I asked who did his books and where was his office-His wife and at home, Do you pay your wife-no, how many hours is she working for you-About 40 a week-she answered the phone at home during the day along with watching their children, Do you pay yourself rent:-no.
By the end of our conversation it was established that he was actually earning about minimum wage for all his efforts. I do not know what became of him but I do know when we ended our conversation his final statement was that his rates were going up Monday morning. Now we also discussed taxes, vacation(he did not take any), materials mark ups etc., all things he was not aware of/or had not considered.
Last for this Blog is how many technicians do you have? This allows you to establish the level of service they will be able to provide on the 95 plus or below 0 days. Everyone can get to you quickly in April or September-but that first 95 degree day or that first 0 degree day is when you establish who is really geared to service and who is not. There are alot of companies that believe in service agreements-I am a strong believer in them. On most times that the weather turns hot or cold-I rarely get calls from agreement investors I normally get swamped by people who have chosen to not have predictive prescribed maintenance. I limit my service agreements to be sure that all of them can be properly covered when and if they need emergency service. I have found that you are better served by a company with 5-10 technicians vs those with more. This is because to the staff you are a person not an account number. When companies get too large you lose the personal touch of the owner and in many cases it becomes about money not service.
See you tomorrow with Part 2.
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