Diversification is key to building business

The plumbing/pipefitting/HVAC industry is broad based. There are as many types of businesses as there are facets of the trade. They range from the one-man residential service shop to the large commercial industrial companies, employing hundreds of men, and every type and size in between. The shifting business climate and economic landscape we see today, and the uncertainty that comes with it, leads to the questions of how best to maximize a company's bottom line while minimizing risk, and how to best shore up the infrastructure of the company while simultaneously expanding into new areas or markets in an effort to broaden the company's footprint to keep the business vibrant and healthy.

To be sure, this is not an easy task even in the best of times, but the savvy contractor can do it. We are in the midst of a great economic decline and many businesses, some of many years, will fall by the wayside. Even so, opportunities abound for those who are willing to look for them. Competition, normally strident to begin with, becomes fiercer as the available work becomes scarcer. It takes vision and determination to succeed today, but it can be done.

Determination without a goal is like a car with no gas. The gas (goal) makes the car run. Having a clear goal or direction in mind is the first step. Obviously, staying in business is a clear goal, so is the decision to hire more people or to downsize. Expanding the client base is a good idea sometimes, but not always.

Diversifying, then, is another of those ideas or goals that can help you to build your business into the future. By diversification, I am not suggesting a large scale move from your tried-and-true business plan into the unknown of, say, going from working on strip malls to building oil refineries. Rather, for the sake of argument, let's say that your company does new construction. Your forte is light commercial with the occasional custom home. With new starts way down, you are searching for any likely work to fill the job board. Bath and kitchen remodeling with a little tenant improvement work will fill the bill nicely. If you go out and look for that work, you're diversifying.

Take the same company: new light commercial work with a side of occasional custom residential work. Now bath and kitchen remodeling is added. Let's add a service truck. With a little creative advertising, using the local “Penny Saver” type newspapers, and an internet Web site with a link from the online phone directory as well as some good old-fashioned canvassing, you can create a lot of business “out of thin air” without a lot of capital outlay. Remember that service work is almost always “cash and carry.” What a great way to get your cash flowing! People today are trying to keep their expenses down, fixing rather than replacing things that break. Plumbing/HVAC is one critical area that many people would rather hire a professional to do the work than do it themselves. This occurs from, in the first instance, not understanding how things work and, in the second instance, the general lack of mechanical ability that our “information economy” has bred in the population at large.

So now we've gone from light commercial and occasional custom homes, added bath and kitchen remodeling along with service work. Why not add drain cleaning equipment to your service truck? While it is true that good rodding equipment is expensive, the return is worth the investment. With the number of business failures high and climbing, good used equipment might be available at a more modest cost. One thing is for sure — stoppages happen, and more often than not, a stoppage call turns into additional service work, which can turn into a bath or kitchen remodel. By embracing diversification, you are creating a self-generating business.

You might think I'm making all this sound like it's the easiest thing in the world, but it's not. It takes hard work, and a lot of effort to get into, and to stay in, business today. More than that, though, it takes fortitude and determination. The rewards are worth the effort. It also takes courage to go into the plumbing/HVAC business, especially today, and it takes strength of will and character as well. There is ample evidence of that. Make the commitment to yourself that your business will not only survive, but thrive, despite the economic uncertainty of the times. The alternative is to hope that things will change, and that your business will still be there when, and if, the economy recovers. Remember, it's your business, your family's livelihood, your employees and their family's livelihoods that we are talking about here. No one is going to do it for you, so just do it.

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].