Keeping a close eye on your key performance indicators (KPIs) will help you maintain and grow your HVAC business. Knowing where you stand and how to improve in these metrics can make the difference between barely maintaining the current size of your company and exploding/growing at a significant rate. This valuable information gives you the ability to emphasize your business’ strengths as well as minimize your weaknesses.
HVAC KPIs to Watch
In the HVAC industry, a few key metrics give you a great sense of where your business stands. The three biggest metrics to focus on are gross vs. net revenue, employee production, and operating costs. These three metrics combined paint a clear picture of the internal health of your business and can help determine the work you need to do in the future.
Gross vs. Net Revenue
Dialing in on exactly how much you need to charge for services and the items you provide on the job will keep your business profitable. Business owners often make the mistake of only looking at their gross revenue to gauge where their business stands. This leaves out a key factor; gross revenue does not take into account what it cost you to provide a service or product. Using the net revenue as well the gross revenue paints a more complete picture. You will want to use these numbers to dial in exactly how much you should charge to get the desired profit for the work you do.
Need help finding these metrics? Today, business owners can use products like the HVAC software Smart Service to track both the cost of a product along with the rate you charge to the customer. Smart Service gives you profit percentages so you can instantly tell how much you make from your jobs. In Smart Service, you can also gather all of this information into a single report, giving you an instant reading of where your business stands.
Employee Production
An employee’s production is also extremely important to the performance of your business. Employees represent the life blood of a business, so you need to equip them with everything they need to go through their day as efficiently and smoothly as possible.Â
You can measure much of an employee’s production from the time they spend on jobs. Specifically, you need to stay on top of an employee’s unaccounted time, production time, and their travel time. You will want to explore options to minimize unaccounted and travel time to maximize a tech’s day.
Unaccounted time is any time where the tech is on the clock, getting paid, without working on anything specific to a customer or job. Although it may be impossible to completely eliminate this, you will want to avoid unaccounted time whenever possible, as it costs your business money while not bringing any in.
Production time varies from job to job, but many jobs fit into a routine. You should have a pretty good idea about how long these should take. Making sure your employees remain on task and working throughout their day will lead to positive results.
You should attempt to minimize travel time as well. You want your techs spending their time working, not driving to job sites. Again, Smart Service offers a solution by optimized daily or weekly schedules to minimize drive time. Utilizing this allows your techs to work at peak efficiency.
Operating Costs
Do not forget about the other costs you encounter when running your business, things like truck maintenance, office supplies, and any other costs not directly related to the products and services you offer. These often go unaccounted for, throwing everything off. Don't let this be the downfall of your growth strategy.
Conclusion
Altogether, these three key metrics give you great insight into your business. Knowing the ins and outs of your business will keep you on track to where you want to go.
