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Rick
Rick, HVAC Supervisor
Category: HVAC
Satisfied Customers: 13668
Experience:  40+ yrs. experience as a licensed oil & gas technician.
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Gentlemen: I am just the average Joe with a degree in Finance.

Customer Question

Gentlemen:

I am just the average Joe with a degree in Finance. I previously owned an insurance agency. For some odd reason I feel as though the HVAC business would be interesting to get into. I would run the office handle appointments advertising and all thats involved except the actual physical repair. What I planned on doing was not employing techs but having a subcontractor type relationship where there income would be based strictly off a % of the invoice.
I would enjoy any feedback on whether you feel that this could be a worthy venture.

Tanks to all!

Regards,
Forrest
Submitted: 1 year ago.
Category: HVAC
Expert:  Rick replied 1 year ago.

Rickheatdoc :

Welcome, my name is XXXXX XXXXX I will do my best to help you with your issue

A couple things come to mind:

First you may have trouble getting liability insurance if you only have sub-contractors. It's been my experience that insurance companies are reluctant to insure a company, in a business like this that requires licensed technicians, with no employees that are techs

Rickheatdoc :

You'll have trouble getting subs if you don't provide enough work for them. If you only plan on doing new installations your business model would be easier to put into practice. I don't see this working as a service business

Customer:

I see. I contacted 5 people for quotes and received one replied. $1,538 for 1 mil general liabilty

Rickheatdoc :

Also, install only contractors rely heavily on new construction and that is pretty limited these days.

Customer:

I would be looking to do repair also not just new install

Rickheatdoc :

Residential installs, replacements and repairs is what is carrying most companies lately. You'll need at least 1 service tech on staff if you plan to do this type of work

Rickheatdoc :

You may be aware of the IRS rules re: captive subs

Customer:

a little....could you fill me in

Customer:

I plan on doing residential repair and install

Rickheatdoc :

Any sub-contractor that works exclusively or primarily for you can and often is considered a captive sub-contractor which = employee in the eyes of the IRS

Customer:

was also considering gov contracting

Rickheatdoc :

and local State workers comp boards

Customer:

I see

Rickheatdoc :

My suggestion would be to find one good HVAC tech that you can work with (maybe offer a piece of the action) and classify him as an employee

Rickheatdoc :

This tech will likely have other contacts in the industry (other potential subs) that will be invaluable

Rickheatdoc :

And it's easier to wiggle around the tax and comp rules if you have at least 1 employee to start

Customer:

so hire one and the rest would be subs?

Rickheatdoc :

To start, eventually if you get big enough you'll probably have to put on more employees but that's something you can figure out as things progress

Rickheatdoc :

The IRS is getting very picky about calling an employee a sub

Customer:

Suld I cover that one tech with benefits or just pay him an allow him to get his own plan

Rickheatdoc :

Not to mention workers comp Boards

Rickheatdoc :

You'll have to work it out with who ever you hire. Somebody really good will probably want benefits. Also if you want to give yourself benefits you'll usually have to offer them to your employees as well

Customer:

what type of tech should I hire regarding experence in your eyes? and what would you recommend for pay?

Rickheatdoc :

You want a NATE certified tech as well as someone with a gas fitters license and depending on where you are an oil burner license would be a big plus . Someone with at least 10 years experience minimum. I can't make a recommendation regarding pay since I don't know where you are and what rates are in your area. Here in the suburban Boston area no body you would want to hire would accept anything less than $30/hour + bennies

Customer:

I am in southern new jersey

Rickheatdoc :

I'd also offer 5-10% profit sharing for the right guy

Customer:

ok

Rickheatdoc :

I'm not real familiar with south Jersey but I believe oil burners are not uncommon and I'd expect the pay rate to be similar particularly if you're near Philly

Customer:

I am 15 min from Phill

Customer:

Do you believe heavy internet advertising would generate the busines needed in the beginning?

Rickheatdoc :

There's no way to tell. Our experience with internet advertising is that you have to have a presence but it's no better than print or yellow pages used to be. Given your unfamiliarity with with the business I'd recommend you consider "partnering" with a good tradesman who knows the business but maybe doesn't have the business acumen to make a go of it. Maybe consider buying an established business.

Rickheatdoc :

This can be a rewarding business but it's also a tough one to break into even for somebody who knows the ropes.

Customer:

I see....I have a web designer and plan on doing some pay per click...especially in the begining

Rickheatdoc :

Pay per click is the best way to go. SEO, I've found is a scam

Customer:

what would you say the average is regarding appointments? I mean how many phone calls turn into appointments? I would think it be high

Rickheatdoc :

I don't know what you're asking, do you mean cold calling?

Rickheatdoc :

Or do you mean what 's the typical close rate on leads

Customer:

no i mean if someone calls your business it usually turns into an appintment correct

Rickheatdoc :

If it's service yes. If it's a new install or a replacement estimate 10% is average 20% is good

Customer:

so you feel as though SEO is a scam.....curious as to why

Rickheatdoc :

You get a lot of promises and can spend a lot of money but results as promised seldom materialize. You'll get better page position with PPC budgeting the same money

Customer:

I see

Rickheatdoc :

do you have any more questions?

Customer:

not at the moment...I felt this was a worthy investment so I signed up for ulimitted questions for the time being but I do need to leave for an appointment right now. I thank you for your cander and help

Rick, HVAC Supervisor
Category: HVAC
Satisfied Customers: 13668
Experience: 40+ yrs. experience as a licensed oil & gas technician.
Rick and 2 other HVAC Specialists are ready to help you
Customer: replied 1 year ago.

Rick, How do the service and repair companies handle parts? I mean do the trucks carrier what is usually needed for a days work. Also are most parts interchangeable from manufacturer to manufacturer? Or do they go off site to get the part they may need.


 


Regards,


 


Forrest


 

Expert:  Rick replied 1 year ago.
There are some generic parts that fit many models and manufacturers. These are stocked on the truck. But most parts are not interchangeable or common enough to warrant the carrying cost so they are picked up at the supply house as needed.

I'm logging off for the night. I'll answer any follow ups tomorrow morning
Customer: replied 1 year ago.

Curious as to what happens under those cases. Is the client charged for the time to get the part and return, or do you just schedule for the following day.


 


Have a great night, I will check for your response in the morning.


Forrest

Expert:  Rick replied 1 year ago.
Client is charged for the time it takes to get the parts. Any time spent on resolving the customer's problem is billed to the client

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