Every human being is ignorant about what they know nothing about. Ignorance itself is not good or bad; it is a fact of life. Future medical doctors are ignorant before learning about the wonders of the human body and the ways to tend to its need. Future lawyers are ignorant about the laws of the land before learning the complexities of those laws.

Future plumbers and HVAC techs are ignorant about the trade and the intricacies of the trade in which they choose to support their lives. 

The problem is not ignorance; it is turning ignorance into stupidity.

Ignorance turned into foolishness regarding the proper medical procedures to prescribe to human conditions can lead to harm or even death.

Ignorance turned into stupidity regarding the proper application of the laws of the land can lead to financial catastrophe or the loss of freedom with stays at the gray bar hotel.

Ignorance turned into recklessness regarding the proper application of math and logic fundamentals as they apply to plumbing, heating and cooling systems can lead to hazardous conditions for the consumers who wish to avail themselves of the potential benefits of those systems.

Tainted water supplies lead to disease. Improperly tended heating systems can, at the least, lead to uncomfortable living conditions. At the worst, they can lead to deaths caused by carbon monoxide. And air-conditioning systems that do not function properly can cause anything from discomfort to death for those with breathing problems who need those systems to function properly and safely so they can breathe.

Plumbing and HVAC contractors who entered the business arena ignorant of the reasons for the existence of business and the proper way to run a contracting business are susceptible to making harmful decisions for the company, the people who staff it, the consumers who avail themselves of the business services and the industry as a whole.

That ultimately turns ignorance into stupidity as it pertains to the contracting business.

On the Right Path

Before writing this column, I received a very nice phone call from Howard, a retired plumbing contractor from Albany, N.Y. As a retired plumbing contractor myself, I understand Howard’s keeping up with the industry. It’s in our blood.

Howard expressed his belief that what I write should be heeded by all contractors. It’s the reason I write these columns and continue to consult with contractors. I’m always hoping to show them the proper way to conduct business and help them be successful by avoiding the foolishness emanating from ignorance.

Thanks for your call, Howard. It feels good to be appreciated.

Certain issues must be addressed to ensure that a contracting business is on the right path.

First, you must understand the reason your business exists. Your contracting business exists to recover your true business operational costs and earn the reward (profit) you deserve above these costs for delivering excellence to consumers.

Next, you must realize that to attain said profit, you must understand, properly calculate and prudently administer the true operational costs of running your business.

Then, it would be best if you kept in mind that your techs are the people who tend to the wants and needs of your clientele. It means you are responsible for properly training your techs to deliver excellent service. At the same time, they complete tasks in a fashion that can recover the costs and earn a reward for the risks the business is taking in delivering excellence.

Obviously, consumers deserve value for the dollars you charge them. You must also consider that you must stand behind your performance and that providing service to the public adds to the risks you take in business.

In addition to pleasing consumers, you must keep your technicians and administrative staff content to achieve your desired success.

Consider the Industry, too

Your responsibilities don’t end with your business entity solely. You are part of an industry. And, since all humans are ignorant of what they do not know, you would be wise to understand that many, if not most, of your competitors are possibly ignorant of the proper way to run a business.

When those competitors do not understand how to properly and professionally run a business, the industry as a whole gets a black eye regarding consumer perception.

If you are wondering about what I’m trying to say, let me clear it up. You only have three choices about your prices: you can sell your services at your true proportionate operational business cost, below the cost or above the cost.

Obviously, selling at your cost defeats the reason you are in business. Selling below your cost is the epitome of turning ignorance into stupidity. Selling above your true cost to perform any task is the only logical choice.

Running your business requires you to constantly make decisions. Sometimes, you will make good decisions; other times, you will make bad choices. The trick is to make your good decisions tower over your bad choices.

However, since you are part of an industry, you must consider your competitors’ effects on your business and the industry. 

You can’t legally, and morally shouldn’t, attempt to fix prices among competitors. However, you can discuss the proper way to run a business in a potentially successful manner for the value delivered to consumers, and the futures of your employees, creditors, industry, your business and yourself. 

After setting up your business to function in a manner that delivers excellence to consumers while allowing your business to profit and grow, you have another choice to make. 

You can be an industry leader and profess the need for businesses to be run intelligently, logically and financially prudent for the benefit of consumers, employees, creditors, the industry and yourself. 

Lead yourself and your competitors to persons who can show them the path that can lead to the light of success. However, beware of false preachers who profess to know the directions to the path of morally righteous profitability.

Or, you can be a follower and hope that your path doesn’t lead to broken dreams, excessive stress, mounting frustration and poor business results.

Whatever you do, do not ignore the need to turn ignorance into knowledge rather than allowing ignorance to turn your dreams into foolish futility. As the adage states, “Lead, follow or get out of the way.” l

Richard P. DiToma has been involved in the PHC industry since 1970. His Contractor Profit Advantage podcasts, Solutionars and programs show contractors how to improve their business results. DiToma has authored books on contracting business management as well as customized contractor price guides. Contact him at 845-639-5050, richardditoma@verizon.net or www.contractorprofitadvantage.com. For podcasts, check iTunes or other major distributors.