You wouldn’t drive a car with a flat tire or an empty tank, but you might be running a flat-tire-empty-tank HVAC company. Or, worse yet, you may not even know it…
Just because your company’s key performance indicators (KPIs) are less obvious than those of your car doesn’t mean they’re any less important. In corporate mumbo-jumbo, KPIs are measurable values applied to business objectives.
Since we’re not a bunch of people sitting in a boardroom wearing suits, let’s boil it down to the bottom-line: Tracking your KPIs will help you understand how well your business is performing.
BEWARE: QUANTITY DOESN’T EQUAL QUALITY.
KPIs are only useful when you identify the ones that are important to your business—and only measure those. As a business owner in today’s world, you’re bombarded with hundreds of apps and software, all promising the same thing: “We’ll help you capture important metrics to help your business succeed!”
Oh, they’ll ’help’ you capture ‘important’ metrics alright…all 1 million of them.
The problem is that they don’t own an HVAC company, and they don’t know which ones are actually important. Plus, they can promise all the “automation” they want, but someone has to input that data. And, if you’re like most HVAC companies, you’re probably going to have a hard time finding someone who’s willing and/or able to navigate that fancy software—willingness and ability are, quite literally, above their pay-grade.
WHY SHOULD YOU TRACK YOUR KPIs?
The simple answer is that you can’t reach 20% profits without tracking your KPIs –that’s why it’s one of the 5 Critical Components of Success.
KEY BENEFITS OF TRACKING YOUR KPIs
- Awareness—The first step of taking any action is having the awareness that action needs to be taken.
- Guidance—Past, present or future, monitoring your KPIs will let you know how far you’ve come, if you’re on track, how to predict future opportunities and challenges, and determine realistic expectations.
- Motivation—When you’re tracking your KPI’s, you can determine rewards for good performance and incentives for improved performance.
- Accountability—Studies and experience have shown that productivity increases when employees know that they’re being monitored. “What gets measured, gets done.”
- Consistency—Tracking your KPIs will promote company-wide stability and consistency, even when the weather is up and down.
- Goal-setting—When you track your KPIs, you can determine approximate monthly averages. Once you have these numbers, you can use them to set goals for the future and know precisely what to expect each month.
- Prevention—Instead of waking up 6 months later thinking, “Oh crap! We’re screwed!,” you’ll be able to make adjustments in real-time to prevent drama and scrambling.
- Focus—If any business initiative doesn’t either directly or indirectly benefit—or worse, threatens—your KPIs, you should strongly consider ditching it. This eliminates the “should we or should we not” debate so that you don’t get dragged into a million different areas while your productivity and profits suffer.
- 20% profits—If you’re tracking your performance and following the rest of EverRest’s program, you’re virtually guaranteed success and 20% profits.
WHAT HAPPENS WHEN YOU DON’T TRACK YOUR KPIs?
Uncertainty. The occasional hunch is great, but it won’t ensure success the way that data-driven facts will. If uncertainty is bad for the economy, you can take it to the bank that it’s not good for your business, either.
Snowball effect. What was once a minor, correctable issue worsens exponentially. What’s even worse is that it could have been prevented by addressing it in real-time.
Aimlessness. You don’t know where you’re going, and you don’t know where you’ve been. How can you even begin to set goals? And if you “set goals,” how do you know if you’re achieving them?
Stagnation. Or worse, decline. It’s interesting how, at Hans Air, we thought we were having a great month one summer. Then, we looked back at that month from the previous year, and we were $98,000 behind. Without past and present tracking, we would have falsely assumed that we were crushing it!
Assumptions. Assumptions aren’t necessary when you can draw conclusions from facts. You know what they say about assumptions…
Inaccuracy. For instance, you might assume that your sales and profits were low because you didn’t get your techs in enough homes. So, you get your callers on the phone to get them into more homes. Let’s say that, in reality, your techs were in enough homes—the actual problem was that they were rushing through service calls without performing lead-generation tasks. Consequently, they weren’t generating leads. If you’d been tracking your KPIs, you would know that they were, in fact, in enough homes. In this instance, putting your techs in more homes is actually the worst thing you could do to “fix” the situation—you’d actually be encouraging them to blow through their inspections even faster.
Low (or lowered) profits. You can’t reach high profits without measuring and tracking the success of your business initiatives.
HOW OFTEN SHOULD YOU TRACK YOUR KPIs?
You can know where your business stands in less than 2 minutes per day with these spreadsheets. And reviewing those spreadsheets daily will be the most vital 2 minutes of your day, every day.
Hans Luquire’s Pro-tip: Hans’ dispatcher, Becky, is responsible for inputting the numbers into the spreadsheet, printing them, and putting them on Hans’ desk by 9:00 am every morning. If they’re on his desk by 9:00 am every day, she gets an extra $100 that week. That’s an extra $400 per month if she follows through.
You can bet that Becky follows through! If she’s out of the office for whatever reason, she makes sure that someone gets those spreadsheets on Hans’ desk. Hans knows that he’ll have them on his desk every day, and he hasn’t had to spend any effort making sure he gets them, reminding Becky to do it, or remembering to look at them. It’s a win-win for everyone!