You started your HVAC contracting business to help people. What you didn’t expect was all of the things that you needed to know and track to keep your business viable. Things like what your 9 KPI’s were. You don’t even know what a KPI is. You know that what you don’t know can hurt you, so here is what you need to know.
KPI is an acronym for key performance indicator. It’s a numbers tool used to evaluate the health and success of a business. As an HVAC contractor there are some that are universal KPI’s. They involve knowing your financial numbers as well as knowing how they can be used to improve your business.
Sales vs costs
One of the first two KPI’s you need to know are how well your trucks are doing, meaning the sales per truck and the cost per HVAC truck. If the sales outweigh the costs, you’re doing well. If the costs start to outweigh the sales you will need to determine if it’s because of the age of the vehicle or because sales are down.
Profit and loss per HVAC truck
Next, look at your fleet. What is the profit and loss per truck? It means taking the first two above and looking at the fleet as a whole. Again, if the trucks are older they may be the problem. If not, it may be your techs, sales or other thing making your fleet responsible for losses instead of profits.
Look at your HVAC techs
What is the cost to keep each? What that entails is their salary, vacation and sick time, health insurance costs, payroll taxes, 401K costs or whatever else is included in their benefits package. This can help you figure out who is benefitting your business and who is not. It also will help you know one of the other KPI’s involving your tech, their break even. What this means is what is the point that the cost of the tech is even with the sales or jobs attributable to them.
The next few deal with your revenue
What is the revenue generated per department? Your break even sales per month (or revenue minus costs so the answer equals zero)? How many jobs do you need to sell per month to get to the break even? What about your GMP or gross profit margin?
All of these will tell you a few things
One, the number of jobs you need to sell and perform in order to get above break even and make a profit. Another is how well your techs are doing their jobs. If you have any that aren’t investigate why, provide more training or let them go. Put your KPI’s together and you will know where you need to improve or how you can expand your business goals.