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ColumnsDave Yates: Contractor’s Corner

Dave Yates: Trial by fire

The climb to success doesn’t include an elevator or escalator; there are only stairs to climb.

By Dave Yates
Climb to success

DNY59/iStock / Getty Images Plus via Getty Images

January 27, 2021

I always hated the business side of being in business. After a hard day’s work, we would retire to our home office to do billing, write checks and fill in the books. Truth be told, Lois did the bookkeeping for the most part. No computers in 1979, so those tasks were done by hand. 

Today, of course, there are several very good bookkeeping computer programs, but for the small PHVAC shops, many still find themselves working after work just to keep up. 

After several years on my own, we had grown to having several employees and now I had one foot in the field — doing what I loved — and the other foot in management of employees and estimating. Lois and I still worked evenings, and often weekends too, doing the billing, paying bills, bookkeeping, and, now, keeping up with required government forms for payroll taxes, etc. 

We had pagers back then, which were a new way for the answering service to keep us in touch with customers. Get paged — find a telephone! Eventually, I purchased a bag-phone, which was essentially a CB (citizens band) radio with touchtone phone keys on the back of the microphone. The CB signal transmitted to a tower that connected you to a phone line, and you “dialed” the number using the touchtone keys. 

Pretty cool technology, but there was a hitch: It was a party-line, and if you were on the air for too long, others sharing the line could cut in to let you know to get off the air! In bad weather with low cloud-cover, coal hauling truck CB chatter from the coal mining region around Pottsville, Pennsylvania (95 miles away), stepped all over our signal, rendering it darn near impossible to get a word in edgewise.

With just a few employees, it was easy to track their productivity regarding billable versus non-billable hours and callbacks. We also knew which employees were adept at promoting sales of new HVAC equipment or plumbing products — without gouging our customers. 

My prior employer had been a hard seller for new everything, rather than judging if repairs were warranted instead of just being a parts changer or flat out lying to customers that they needed new PHVAC products because the old widget was worn out or dangerous to their health and safety. The final straw was him selling one customer a new oil boiler because the valve at the oil tank had a broken shaft, cutting off oil to the boiler. I moved on. 

 

Too good to be true?

The day Herb Behler and Scott Behler approached me about buying their third-generation plumbing and heating firm, I jumped at the opportunity for several reasons: A 21-year employee full-time bookkeeper who took care of billing, insurances, paying creditors and all of the tasks I considered to be drudgery would be my partner; and I would be freed up to do some service/repair/installation work as well as estimating. 

My almost fatal mistake was simply turning all that over to my partner while I was thoroughly enjoying being free from the business-side shackles. Three years into this partnership arrangement, a trusted employee let me know our credit at several supply houses had been revoked and we were only able to purchase products if my partner, the bookkeeper, would write a check. An unexpected punch to the gut! 

It became a dire necessity for me to take off my blinders and start digging into just what the heck was going on in the business side of our business. What I began to discover was a horror show. We were on the verge of bankruptcy! Meanwhile, my partner and the secretary became aware their mismanagement shenanigans were being uncovered and decided to try a desperate move. 

On the day before Christmas, they asked me to stop by the office, where they presented me with two letters. The first letter was a demand to buy me out; and the second letter contained resignations for both them and several of the employees with the intent of striking off on their own. Merry Christmas!

Our partnership agreement provided two weeks’ time for either partner to decide if they would agree to being bought out or turn the tables by reversing that move. In essence, the end result was now up to me. During that time, we secretly removed the books at night and took them to my father’s accounting firm’s office where we copied everything, and returned them to the F. W. Behler office. All perfectly legal since I was still a partner. 

My father, a certified public accountant, did forensic accounting to reveal the horrendous job my partner had been doing, while we did our own bit of forensic analysis on each employee’s productivity, non-billable hours, callback ratio and sales referrals for estimates. What we uncovered was quite revealing: My partner was taking all the dead wood with him for striking off on his own. We knew he would be headed for bankruptcy while I would retain a powerhouse of outstanding employees. 

The day of reckoning arrived and because they had foolishly tendered their resignations two weeks earlier, I was in a position to fire them all. A locksmith was to arrive within 15-minutes to change the locks and combination to our safe. My partner attempted to take outgoing bills with him and the company truck he had been using, but suffice it to say he was escorted off the property. 

 

Record keeping is a must

If you’re not tracking each employee's work record, you can learn from my mistakes and start keeping those records, which should include:

  • Billable vs. non-billable hours;
  • Callbacks;
  • Late for work;
  • Sales or referrals for estimates to be provided;
  • Customer compliments/complaints;
  • Sick leave;
  • Attitude;
  • Team worker or loner; and
  • Written warnings you have given them that need to include their signature.

Develop an employee manual (not an employment contract) that spells out what is expected of each employee, benefits, on-call requirements, etc., and have them date and sign it plus have a witness signature. Meet one-on-one with employees to coach their performance and never ever reprimand an employee in front of other employees. Essentially, do unto others, as you would want others to do unto you. 

As I would discover on that day of reckoning, my partner and secretary (their bond was strong) had hedged their bet by stealing all planned and scheduled work we had planned. But the real trial by fire came when I discovered a desk drawer stuffed with serious customer complaints — all the result of defective work the dead wood gang had performed. So, we weren’t without work those first few weeks, we had plenty to do by contacting each and every one of those customers and correcting the work.

I had to, for the most part, put down my tools that day, suck it up, and learn the business side of running the business. We undid all the damage my (now) ex-partner and secretary had done, restored our reputation and prospered. Then, 32 years later, I sold the business to that trusted employee and his family, and retired. They stepped into a well-run business and, in spite of the COVID-19 disruptions, they are doing very well.   

If you would like some help regarding running your business, or you’re thinking of pursuing the American Dream of starting your own PHVAC business, I highly recommend “It’s Go Time,” by Ben Stark and Chris Hunter with David E. Rothacker. Solid gold content I wish I’d had on that day of reckoning. It took me years to learn, often the hard way, what’s in this book. It’s available here: www.gotimesuccessgroup.com/product/its-go-time.

KEYWORDS: business administration contractors plumbers and pipefitters

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Dave yates

Dave Yates began his career in the PHCP-PVF trades in 1972 with F. W. Behler, a third-generation plumbing/ HVAC firm he purchased in 1985. Besides running F.W. Behler, writing articles for industry trade publications and speaking at events, Yates also is an experienced teacher in the hydronics industry, serving as an adjunct professor and on the Technical Advisory Board for the Thaddeus Stevens College of Technology. He can be reached at dyates@consultyates.com.

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      • John Siegenthaler: Hydronics Workshop
      • Kenny Chapman: The Blue Collar Coach
      • Matt Michel: Service Plumbing Pros
      • Scott Secor: Heating Perceptions
  • ENGINEERS
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    • PME COLUMNS
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      • James Dipping: Engineer Viewpoints
      • John Seigenthaler: Renewable Heating Design
      • Lowell Manalo: Plumbing Essentials
      • Misty Guard: Guard on Compliance
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