Fall from Grace

I grew up working on refrigerators. I repaired my first Sub-Zero refrigerator in 1966 when I was just sixteen. Of all the brands I worked on, I was enamored most by Sub-Zero’s design. It was the embodiment of style and function, high quality and innovation, a quintessential kitchen appliance in a category of its own. I’ve watched the company grow through the years to a market leader. When I started my own refrigeration service business in 1974, the Sub-Zero company was a source of inspiration. But not any more.

Since January 2012, Sub-Zero has been putting the squeeze on the thousands of small independent service companies in the U.S. by restricting the availability of replacement parts and raising the cost of those parts by as much as 300%. It has also, as of January 2014, eliminated all trade discounts after 50 years of open support to the service industry. This has driven the cost of repairs to consumers well above normal. More recently, the company has stopped providing technical resource manuals, an essential aid for proper diagnosis of Sub-Zero products.  The entire refrigeration service industry is in an uproar.

Shipping fees, which most shipping companies normally evaluate by weight, are now based by Sub Zero on the value of the merchandise, driving up costs even more and magnifying the hardship to service organizations across the country. For example, a control board, even though it weighs a few ounces, cost more than $20 to ship from a Sub Zero distributer less than a hundred miles away. That’s about three times as much as UPS charges. It’s as if SZ has a vendetta against anyone competing with its factory service centers.  I believe that, long term, these actions will affect Sub-Zero negatively. Some of the company’s biggest advocates, such as myself, have been the owners of small independent service centers that supported SZ and promoted its products. But now everything about the company philosophy seems to have changed.

Recently, after SZ cut-off independents’ access to its service manuals, I called the engineering department for technical advice. I was instructed to carry out some diagnostic procedures, which I did and, in conclusion, was given the wrong advice. I was perplexed, and wondered if  the SZ company lost its rudder. I subsequently resolved the problem on that job, but without help from Sub-Zero.

The SZ Freezer company was established in 1945 by Westy F. Bakke in Madison, Wisconsin. Operating out of his basement, Westy Bakke built the first free-standing freezer. By the mid-fifties he had developed the first built-in refrigerator, which altered the future of kitchen design by fitting flush with surrounding cabinetry and offering a plethora of door-panel options. This spurred a swelling industry for kitchen designers. Sub-Zero was also the first company to employ dual-refrigeration technology, which allocated separate cooling systems for each refrigerated compartment. This has become standard on most high-end brands.

Under Westy Bakke’s leadership the company prospered for more than half a century. He was a pioneer, a man of great vision with only one purpose in mind–to build the world’s finest refrigerator.

I’ve never been officially associated with Sub-Zero, but on one occasion prior to 1993, which is as far back as my records go, the company’s engineering department called me to fix a problem that their own authorized service people couldn’t resolve. I solved the problem by creating a special tool to make the repair, saving SZ the cost of replacing the customer’s refrigerator. I sent them a bill and was paid promptly. I was so proud to be connected to SZ that I made a photocopy of the check and hung it on the wall of my office. I’m concerned now that the Sub-Zero Freezer company, under its current leadership, will lose its market dominance because its policy towards fair trade has been altered. I’ve seen many companies come and go during my career, including Revco, Crosley, Gibson, Philco, Norge, Kelvinator, and more. They’ve all folded or faded away.

If Sub-Zero wants to be around for the next 50 years, it should rethink its strategy towards independents, the backbone of the service industry, and the standards of fairness. Other high-end refrigerator manufacturers, especially European manufacturers, are looking to expand into the U.S. Market and are waiting and willing to attract disgruntled service organizations and frustrated customers. One such company, Liebherr of Germany, invited me in the middle of winter, February, 2014, to a training seminar in a warm climate. I was picked up at the airport in a town car, brought to a fine hotel, and fed like royalty. The company’s database and all technology were shared with me and I was educated on all its products.

Every company has to determine its direction, but a sudden, all-out drive for profit, against free trade tradition, usually dilutes a company’s image, or damages its reputation, or both. Restricting trade and choking independent service organizations is a sign of weakness, and in my opinion will only diminish the company’s position and send it on a backwards journey.

An example of how an appetite for excessive profit can sometimes lead to loss is that I have refrained from selling any Sub-Zero products this year and don’t intend to promote the SZ name any longer. Instead I have steered my customers towards other product lines with similar engineering excellence.  On June 4th of this year I delivered my first built-in GE Monogram refrigerator. It was exactly the same size as a Sub-Zero, with stainless steel doors, and was $3000.00 less than a SZ replacement. The customer was elated. Speaking for myself, I find it difficult to support or promote a company that has its hands around my throat. Companies of great stature are built on sound principles, fairness being one of them.  Free trade is the better principal and the best path to higher profits.

Size Matters

Size does matter, especially when you’re going green. They say “good things come in small packages.” Today, everything seems to be shrinking in size, including our service vehicles. I was somewhat awestruck when Ford started marketing its Transit, a small van to accommodate the needs of big city parking restrictions and improved gas milage. I see a lot of them in the Big Apple. They do offer a large cargo area in a small box with a shortened wheelbase. But a New Jersey based company, Fridgefix Refrigeration Service, says, “wait a minute, is that our only choice?”  Fridgefix’s primary clientele resides in Manhattan where parking is not just a major concern, it’s a fight to the death, a real challenge, on a good day.

Smaller and more efficient service vehicles can add to your profits if you are willing to “step outside the box.”  As we enter this new economic phase, which seems to be limping along like a snail in a hurry, we can turn our attention to streamlining our businesses, improving the environment and bumping up our bottom line.

With the average price of gas at $4.00 a gallon, fuel economy is a primary purchase decision for most of us, not just because fuel prices are too high, but because the “knot” of tough economic times makes every dollar count.  And we must also not lose sight of the concern about global warming and what we can do individually to contribute to its demise.

Smaller service vehicles not only save fuel, they weigh less and cost less to maintain, e.g., a set of tires can last 50-60 thousand miles instead of 30-40 thousand for a larger vehicle.  They are easier to park and cost less to manufacture because they use less material, and that’s good for the environment. And since they have a lower retail value, insurance is likely to be reduced.

Today, our choices are limited. Extended-range electric vehicles, hybrids and clean diesel are becoming more mainstream, and natural gas (NGV) with its clean combustion, abundant supplies and home fueling potential is also a great option. But these technologies are not readily available in most major markets, so don’t wait for them to present themselves to you. Now is the time to think ahead and act before the next economic cycle begins.

Fridgefix has purchased a new Scion IQ, a micro four-seater, (see fig. 1) and converted it into a roomy service vehicle by removing the passenger and rear seats, (see fig. 2) providing ample room for equipment and parts to satisfy the majority of service-related needs. It has the capacity to hold three fractional horse-power compressors, two evaporator coils, a refrigerant recovery system, a large toolbox for sealed system repairs, three large containers for parts, and an array of tool bags, as well as a portable hand truck with still room for more (see fig. 3). One small drawback is its small gas tank which has a range of approximately 250 miles necessitating more frequent stops at the filling station.

With the vehicle weighing in at a mere 2100 lbs. and averaging 37 MPG in the city,

the owners, Ernesto and Christina Rueda,  are saving over $500 per month on fuel costs from what they previously had paid with their Chevy van.  And there are additional perks: parking spaces are easier to find and parking fees have all but disappeared. If you’ve ever worked in a big city you know that getting to the job is half the battle. Time spent on finding a place to park eats up a good part of the day. And saving time, like saving money, increases the profitability of your company.

In conclusion, a smaller vehicle is a good investment. It’s politically correct, it makes sense and it’s the wave of the future. The ROI (return on investment) can be enormous, not just for us individually, but for the entire service industry.

Handling Complaints

If there’s one ingredient in the recipe for small business success, that stands above all else, it has to be survival. Without the survival instinct you’re just spinning your wheels, aimless, like a boat without a rudder. But if you’re in business for the long haul, then your first requirement should be to ensure your survival rate by paying attention to what’s going on around you.

With that being said, let’s look at ways to ensure your survival. High on the list of survival techniques is learning how to handle customer complaints the moment they crop up. Each complaint not resolved quickly puts your survival in jeopardy. In today’s business environment you must learn to appreciate and cherish your customers. They are your future. They may only need you occasionally, but you need them more; you need them for a lifetime. Ask anyone in the service business today, someone who’s been around for a decade or two or longer, what’s the most important aspect of staying in business?, and they will almost always say “customer loyalty or holding onto your customers.” Here is where opportunity thrives and is the subject of our discussion. You don’t need a high IQ to learn how to turn a complaint into an opportunity to establish loyalty.

In my 48 years in the service business, I’ve never seen the competition to hold onto customers so fierce. The internet, along with social media, reviews and blogs, provide an almost instant evaluation of your customer’s experience with you to the public. In some cases, before you have the chance to pull out of the driveway someone’s posting a review. That’s why handling complaints promptly is so crucial.

Customers expect satisfactory service. They not only expect it, they deserve it. A service company that doesn’t meet that requirement stands a good chance of a limited life-expectancy. Why? Because unsatisfactory service stands out more than satisfactory service.  It’s much easier for a consumer to remember a service company that trips-up in the customer satisfaction department, than it is for them to remember a job-well-done. While customers may likely forget the great job you did last week, they most certainly will not forget a troubled job or a rude technician or having to wait weeks for parts. Complaints thrive in mis-management. It only takes one small mishap or misunderstanding to set a customer off on a path of resentment, which will almost always result in a complaint, which can land you on the “Do Not Call” list. Don’t let this happen to you. Respond to complaints hastily, before they heat up. Don’t let them ferment, don’t ignore them. In some cases, service organizations take so long to respond to a complaint that the customer forgets what they were complaining about, leaving the situation in limbo. Leaving them in a frustrated and dissatisfied state seeking relief elsewhere.

Here is what you can do to ensure a long and prosperous run:

HANDLING COMPLAINTS

First, let’s identify what a complaint is.  A complaint is an expression of pain, such as the psychological pain of inconvenience, of dissatisfaction,  or resentment. In simple terms, complaints are expressions of expectations that have not been met. But a complaint can be an opportunity in disguise, as long as you attend to it ASAP.

Here’s what Janelle Barlow, co-author of “A Complaint Is a Gift,” Berrett-Koehler Publishers, has to say, “Apologize for the inconvenience. Promise to do something about the problem immediately. Take responsibility. Ask for necessary information. Correct the mistake–promptly. Check customer satisfaction. Prevent future mistakes.”

Service providers all too often blame the consumer for mistakes they complain about and sometimes twist the situation around to imply that the customer is at fault. That’s not the recommended way to run a legitimate company. Consumers have a right and even an obligation to complain about sub-par service, disgruntled technicians or sloppy workmanship.

You can use these complaints to show the customer you care, that you run a reputable company, that they are important to you. Ignoring complaints is never good for business. It’s self serving, and over the long-run, it will come back to kick you in the bud. Remember what I said above about handling complaints, attend to it right away. It’s is never a good idea to procrastinate. If you want to survive in this competitive environment, if you want to celebrate your twentieth, thirtieth or fortieth year in business, it’s imperative to address complaints as soon as they surface to avoid building up animosity and frustration. Don’t give the customer a chance to get angry. Defuse the situation ASAP. No one wants to do business with an organization that serves itself.

Handling complaints and disgruntled customers is an art form. Whether due to sub-par service, defective parts, traffic delays, unsatisfied customers can become loyal customers when a caring and concerned owner steps in. Here is an opportunity to establish yourself as a respectful person or company. An opportunity to instill a sense of caring and trust and most importantly, reliability. Handling complaints quickly presents you with an opportunity to establish ongoing relationships and connect with customers by fixing a service or product breakdown. No one is going to criticize you if you put your customers first. It’s good business and a necessary ingredient for success.

Most often, attending to a customer complaint, no matter who’s at fault, can lead to more business for you in the long run, and under the right set of circumstances it may lead to a referral. Actually, it’s better if a customer speaks up and whines a bit, what better way is there to show off your communication skills and your ability to rectify the problem before they write a negative review or bad-mouth your company. I’m not suggesting you look forward to complaints, I’m suggesting that you respond to them the moment they crop up. Remember the adage: “If you snooze, you lose.”

Here’s an example of how I handled a recent complaint. I received a call from the other day from a loyal customer who claimed that his credit-card was charged for a repair that wasn’t completed. His refrigerator needed an evaporator coil but he had to leave for a meeting and said he would call to schedule an appointment for the install. We added some freon to his sealed-system to hold him off and told him to monitor it to see if it improved. We wrote out an invoice and collected his credit-card info and assured him we wouldn’t process the charges until the job was complete. We waited for his call. A month went by and we still hadn’t herd from him.

Somehow, unintentionally, his credit-card was processed and he called to complain. I asked him if his refrigerator was working properly and he acknowledge that it was. I told him that our diagnosis was correct, that his evaporator coil was leaking freon and it needed to be replaced, but he didn’t want to here that. He wanted a full refund because we said that we wouldn’t process the charges until the job was complete. I told him we were entitled to be paid for recharging his sealed-system, but he kept harping on the fact that we processed his credit-card before we did the work. So I put myself in his shoes and looked at it from his point-of-view and saw that we were indeed at fault, even though it was a mistake and even though he requested the repair. I was now in a situation where I had to make a decision to acquiesce or prepare for an argument. I chose the former and issued a complete refund to his credit-card account. I felt that it was more important to salvage the relationship by giving in and letting him win.

Speaking of giving in and letting him win reminds me of a philosophy I learned when I was struggling to build my business some thirty years ago. I came upon a book by Dale Carnegie titled “How To Win Friends and Influence People. Since it was first published in 1936, it has sold 15 million copies world-wide. I was so enamored by its content , that I enrolled in some Dale Carnegie courses, one of which was “Public Speaking.”

I’ve adhered to Dale Carnegie’s philosophy throughout my life and can attest to its viability and highly recommend it as a course of study to anyone wishing to develop a winning attitude when dealing with consumers. To this day, I still carry a wallet-size pamphlet called “The Golden Book.” that spells out his golden rules. I’ve been carrying it with me since 1983. In just four short pages small enough to squeeze into a corner of my wallet I have a complete philosophy on dealing with difficult circumstances and the difficult decisions we must make in our business. I highly recommend it.

Finally, let me re-iterate how important it is to deal with customer complaints right away and how dealing with them will ensure your chances of a long survival rate and a reputation of good-standing in the your community. In closing, of the 12 Golden Rules postulated by Dale Carnegie there’s one that I’ve used over and over again with tremendous results: “Try honestly to see things from the other person’s point of view.”

A Recipe for Success

The economic downturn of 2007-2008 is finally showing signs of receding. Before the momentum picks up, you might want to reflect on the lessons learned and begin to rethink risks and strategies for the next up-cycle. It’s time to diversify. Here are a few suggestions:

Additional Products

If your business is devoted to only You could add additional products to your service line For example, if you fix refrigerators you could branch out into dehumidifiers, ice machines, air conditioners and wine coolers. All these appliance operate on the same theory, i.e.; they all have compressors, condensers, and evaporators, and in most cases, use the same refrigerant.

Having gone through a number of recessions in my 47 year history as an appliance repair technician, I wasn’t worried that much because recessions are usually banner years for repair people. As a matter of fact, 2008 was the best year I ever had up to that point. But I decided to diversify anyway. So I expanded into the wine cooler business and the results were impressive. Here is a breakdown of my profits for wine cooler jobs:

2009, 37 calls ($10885), 2010, 25 calls ($8985), 2011, 42 calls ($14562), 2012, 49 calls ($22407. All this without spending a dime on advertising. I just added service for wine coolers to my website.

But before you branch out and consider expansion plans, do your due diligence. Spend some time on research, talk to other business owners or if you have employees ask for their input. In most cases you may need additional training or skills. Don’t rush in–tread slowly.

Additional Revenue

Sell services or accessories that complement your area of expertise, such as installing water filters for ice makers or overflow alarms for clothes washers and dishwashers. If you have a shop, you could offer drop-off service. If you’re a dealer you could take trade-ins, refurbish the old units and sell them on ebay or Craig’s List.

Training

Knowledge is power. How often have I encountered inexperienced repairmen that walked away from a potentially profitable job because they didn’t know what to do or lacked sufficient training or worse, condemn the appliance to the grave yard.

When I started out as an appliance technician in 1966, I was trained on-the-job. I knew nothing about appliances but I was mechanically inclined and understood how things worked. After three months of OJT with an experienced technician, I thought I was ready. But I wasn’t, and for a few of years I remember calling my boss everyday for assistance on a technical matter. It was frustrating to say the least. I approached my employer about attending trade school, but he discouraged me and said the only thing I would learn in school was how to rebuild a pump. He was wrong! In trade school, I learned the fundamentals of physics and basic electricity. I learned how to wire a house, read schematics, install central air, and service commercial and industrial refrigeration. Since then, I’ve added hundreds of thousands of dollars to my gross income from what I learned in school, so if anyone discourages you about additional training, run for the hills.

Adaption

Another area worth considering is adapting to market conditions. Being smart and hardworking are great qualities for a business owner and most of the business owners I know are both, but because most of them are busy, if not inundated in work, they often miss opportunities when it come to identifying and adapting to change.

I realize that there are plenty of business owners out there who detest change–some for good reason. However, there are also plenty of owners who I’m sure would embrace change if they knew it would enhance their business.

In closing, seek out other successful business owners and learn from them what makes them unique. Join a trade association. Stay abreast of what’s going on in the industry. Subscribe to industry newsletters. If you make it your business to seek improvement, you’ll tune in to that mind set and change won’t be so daunting.

What’s in a Name

What’s in a name? Your company name can mean the difference between success or failure. It’s the first point of contact between the service you’re offering and the mind of the consumer. Is your company name easy to remember or does it confuse and get lost in the day-to-day shuffle?  An inappropriate name can cost you in lost sales.   When we see a company’s name, we often equate it with an image, and depending on the image we see or project, we usually make a judgment about it. Some images are designed to stick, because they are equated with something we already know or remember, some distract. Image is everything and it’s important that the name of your company paints an image that is easy to remember and communicates the service you provide in a succinct way.

In their Bestseller “Positioning-The Battle for your Mind.” (McGraw Hill 1981), Al Ries and Jack Trout state: “The name is the hook that hangs the brand on the product ladder in the prospect’s mind. The single most important marketing decision you can make is what to name the product.”

In the mid-eighties I started an appliance repair franchise company named  Astre Appliance-Tech that I couldn’t get off the ground. It was a great concept, was affordable, and had tremendous potential for a national presence. But I couldn’t get past ten franchises for the life of me.  Part of the reason, I believe, was that the name I chose for the company sounded more like a school than an appliance repair firm.  I’m also convinced that if I had a name that was more conducive to the services I provided, I’d still be franchising today.

Here are some thoughts about naming your company.

How to Choose a Name:

There are many options to consider when coming up with an effective name for your company.  A good name is an insurance policy for long-term success. Descriptive names are better than generic names because they’re easier to protect from copycats and piggy-backers. Remember Frigidaire? Even though GM sold the company to White Sewing Machine in 1979, and was sold again to Electrolux in 1986, the name still stands today. That analogy reinforces the idea of how important a name is. Be original in your selection, avoid copying the competition.  Local names attract local customers.You wouldn’t want to use a name like “New Jersey Refrigeration” if you’re just covering one city or county in that state. Create a name that conveys an image of just who and what you are. Give facts that set your business apart from the competition. Illustrate what your business can do for them. Be conversational. Let people know in a slogan or tag line if you’ve been around for a long time or if you’re second or third generation. Take advantage of your strengths, your positive traits, things you have going for you.  Mention awards if you have any. Remember, you’re trying to create an image the customer won’t forget. When I created my first business in 1966 I called it Speedy Refrigeration Service which conveyed an image of service right away. And in a fast-paced world in which we live, “Speed” works.

The value of your name in advertising:

If you plan to advertise in print, such as telephone directories, the name of your company will determine the position of your listing. Everyone wants to be first, so you’ll see names that begin with “AA”  or “AAA.” These names will guarantee a top spot but that doesn’t necessarily mean they will convey an image other than call me first.  Internet advertising is quite different. There, aside from having a great name, you’ll also need a tag line that appeals to what the seeker is looking for. Your placement of internet ads depends upon factors such as SEO and how much you’re willing to pay for the top spot.

That being said, of equal importance is how does your company name sound when it’s recited. Is it warm and friendly, professional, or is it hard to pronounce?  When a potential customer calls, the name of your business is the first thing he or she will hear. Do research. Check your competition. Scan the yellow-pages or internet for ideas. If you’re planning on being in business for a long time, exhaust yourself in your search for the perfect name.

Pricing your Services

If you own a small service business it’s vital to have a firm pricing strategy, one that takes into account all the costs associated with doing business, such as adequate gross and net profit and return on investment.

Pricing your service is both an art and a science. To benefit the most from both, you should be in a continuous state of review. I check my supplier statements on a monthly bases. If the price of a part goes up, I make the appropriate adjustment.

If you’ve been in business for a long time, then you probably have a working strategy for pricing your services, but if you’re a young business seeking long-term growth, you’ll want to thoroughly cement the concept of pricing your services.  You absolutely have to know the difference between over-pricing and under-pricing.

Let’s review over-pricing first, since it’s the most prevalent. Over-pricing is quickly reflected in loss of volume, slow growth, and irate customers.

Here is a list of pointers that can reveal over-pricing:

  1. Competitors prices are lower
  2. High gross profit
  3. Customers are complaining about prices
  4. Low volume of calls
  5. More customers are asking the  price of a service call, and then saying, “I’ll get back to you.

A more serious problem is that of under-pricing. A company that under-charges probably has a high cash flow and business seems to be good. But that won’t help pay the bills during a dry spell when the calls aren’t flowing in. If anything, you need to be consistent with your prices and consistent with all your customers. Don’t deliberately charge someone more because they have more.

Here are some things to watch for in under-pricing.

Low gross and no or low net profit

  1. Prices are much lower than the competition
  2. No complaints about prices
  3. No shortage of customers
  4. Labor and material costs have risen without prices being raised.

A good accountant should be able to determine whether a company is engaged in under-pricing. While it’s true that under-pricing makes it easier to sell your services, it doesn’t make surviving easier. You have to work harder to sell your service at competitive prices, but wouldn’t you rather be successful as opposed to bankrupt?

HOW TO PRICE YOUR SERVICE

When performing a service for a profit, the key question to ask is, “How do I price my services to be sure I’m making a fair profit?”

Here are three common elements that go into determining the selling price:

Cost of materials and supplies

Labor and operating expenses

Planned profit margin

GROUND RULES FOR PRICING SERVICES

Every job that you do should contribute to the financial position of your company. Unless you are sure it will increase your overall sales, don’t deliberately operate at a loss

  1. It’s imperative to have a good book keeping system that reflects all operating expenses and costs associated with your service
  2. You should know the difference between direct and indirect costs. Direct costs are associated with expenditures you incur when you perform a specific service for a customer. If you eliminate that specific service, you eliminate the costs that go with it. Indirect costs are quite different as they are constant. For example, you still have to pay the rent, utilities, phones, advertising, etc. Indirect costs are primarily there to keep the doors open.

Your mission is to find a bases of pricing that allows you to distribute and allocate indirect cost to each job. Of course the volume of calls is a major factor in this decision. After you know what it costs to produce a service call, you can use these costs to set your prices. This is called the “cost method.”

If you belong to a service group or a franchised dealer, there may be certain price schedules and customs that dictate your fees. In this case you may be limited to what you can do.

Finally, it may be that the quality of your service is the most important factor in shaping your prices. Many customers are willing to pay more for above average service. If your customers feel this way about your company, then you’re ahead of the competition.

UPGRADING YOUR PROFITS

One of the main goals of being in business is to upgrade your profits. Increasing your profits doesn’t always mean increasing your prices. Improving your operating efficiency can also increase profits. You can do this by cutting costs, buying in bulk, using third party manufactures, taking advantage of specials from your supplier or using more efficient service vehicles.

The level of costs, to a great extent, may be determined by local prices for labor and materials, but even so, you can often get a competitive edge by improving your operating efficiency.

Some small service firms improve their operating efficiency through adequate planning and scheduling of jobs. This is where science and art converge. Your revenue is a condition of your price strategy and your ability to build sales volume. Consider your market area. In what income category are your customers? Are they able to judge quality of service? Do they demand and appreciate superior service, promptness, personalized attention, friendliness and so on. You may be able to charge $150 for a service call in New York City or Beverly Hills, but you will have a hard time charging that amount in Tampa, Florida.

In a nut shell, keep on top of what’s coming in as revenue and what’s going out in expenses. You should know your average call volume. And if you make any adjustments, do so slowly, so you can evaluate if something works or not. Remember, every job should contribute to the overall profitability. Don’t be greedy, there’s plenty of work out there for everyone.

Innovation

One of the most recognized “secrets of success and longevity” in the service business, or any business for that matter, is innovation–innovation is the catalyst of growth, the fuel that propels progress. To be innovative you have to think ahead. You have to be willing to make changes–sometimes drastic. You have to be willing to think outside the box.

The world is full of innovators and America has produced more than any other nation on earth. Who can dispute the contributions from Thomas Edison; Henry Ford;  The Wright Brothers; Ray Kroc; and one of the brightest icons of our time, Steve Jobs. Countless others, including people like you, have contributed to the plethora of American inventiveness.

As President Obama said in his 2011 State of the Union address:

“The first step in winning the future is encouraging American innovation.  None of us can predict with certainty what the next big industry will be or where the new jobs will come from.  Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution…”

What can we do as individuals to be more creative in our businesses? How can we be innovative? Before we can answer that, we must first define what innovation is;  it is the development of new ideas, techniques, and methods that provide solutions that add value to old ways of productivity.  In simple terms, it’s “Building a better mousetrap.” And it is rooted in intention because nothing ever gets developed, remade, or created without an intent to do so, and that requires a conscious choice. It heeds the axiom, “Find a need and fill it.”

Don’t think for one moment that you’re not capable of developing some new technique, some new method of repair that can revolutionize the service business.  But how? How can we be innovating in the appliance repair business? What can we do as individuals to create new products or new methods of service in a mundane field such as ours–Most of us are bogged down with everyday choirs and responsibilities and don’t have time to think about creative ways to change and grow our business.

Whenever I find myself pondering these questions I’m reminded of a quote from one of my all-time hero’s of business, Ray Kroc, founder of McDonalds, who said, “When you’re green you’re growing, when you’re ripe, you begin to rot.” Complacency is almost always a hinderance to progress. You have to be continually engaged in forward gear, because if you’re not, your competitors will be, and you’ll get left behind. By continually seeking better ways to grow and manage your business, you’ll be contributing to the overall modernization of the industry.

Let me give you an example, last week I was confronted with a problem in a high-rise apartment in New York City that required a dose of innovation. I was working on a built-in side-by-side refrigerator with dual compressors. The customer complained that the ice maker wasn’t working. The temperature in the freezer was 25ºF–not sufficient to produce ice. After a few preliminary checks I suspected trouble in the sealed system and I was right. It had a partial restriction, the heat exchanger needed replacing. Unfortunately the unit could not be removed from the cabinet it was built into because the contractor built the kitchen around it making it impossible to pull out.  My first thoughts were, do I want to get involved? How much time will it take? I didn’t want to leave the customer stranded, that’s not good for business. For lack of space I’ll refrain from the details, but I did find a way to clear that restriction without pulling the unit out. The point I’m trying to make is that I could have given up and let someone else deal with it, but I chose otherwise. I decided to innovate because I’m a firm believer that every problem has a solution. And I wanted to solve it. And you can do the same.

But this story is not about how I innovated, it’s about you and how you can break new ground. What works for me may not work for you, and vice versa. So ask yourself some simple questions. How can I make this job easier? How can I save time on this job? How can I reduce my workload and work smarter? Where is most of my time wasted? How do I develop new techniques?

Here is a list of some suggestions on how and where to innovate your business.

 

Record keeping

Time management

Communications

Employees

Service vehicles

Social Media

 

Record keeping

I developed a database program for my business some twenty years ago using commercially available software called Filemaker. Since then I’ve personally inputted every job I’ve done–some 25,000 records–and can recall the history of every customer at the click of a mouse. I can calculate my profits, my expenses, the number of jobs for any worker in any given period. I can tally my receipts and determine my sales tax and payroll within seconds. And most importantly, I can keep track of my inventory allowing me to take advantage of special buying opportunities from my local supplier. For example, if I know I’m going to use 150 condenser fan motors this year, I’ll buy them by the case, and take advantage of discounts. Most suppliers will discount bulk buying. If needed, I can print reports for any activity within any given period for a visual presentation to compare year-to-year progress.

Time management

Since time is money, this is an area where we all can improve. To save time I do my purchasing on the internet. Most supply houses have websites where you can order your parts when it’s most convenient for you. At the end of each day I determine what I need, restock my truck, and place my orders. No need to drive to the supply house, so I save precious resources, i.e., time and money, and parts are delivered to my door. In some cases I’ll call in my orders because sometimes the salesman at the counter is more knowledgable in a certain area and can find something much quicker. This is one area where you can save time.

Communications

This is where innovation shines. It’s the one area that I follow religiously and that offers the most bang for your buck, from computers to smartphones to voice mail and even service vehicles. Imagine… you’re driving down the road and your phone rings. It’s a customer needing to set up an appointment. You don’t want to pull over to take the call, that would cause a delay, so you push a button on your dash and through your smartphone your call is recorded, converted to text and sent to your email account. All this with both hands on the wheel.  No time wasted, no lost calls and you have a hard copy as a backup. As a bonus your smartphone is capable of storing your entire database of customers so you can look up records while in the field or connect to a video source like YouTube and watch a service procedure. Larger service organizations can keep track of each service vehicles location via GPS and dispatch calls on demand, saving time and money.

Employees

I’ve had my share of employees over the years, and I too became bogged down with paperwork, payroll taxes, unemployment taxes, etc. It takes a lot of manpower to comply with government regulations. I had to ask myself is it worth it? I decided that I wanted to scale my business down because I was spending to much time managing it and not enough time making money. I had nothing to loose and everything to gain–I went solo and never looked back. Rather than throw my technicians to the wolves, I assisted them in establishing their own business, and they in turn sub-contract for me when I can’t handle the workload; mostly in the summertime. And there’s always someone available to cover for me when vacation time comes around or I need a little R&R. Business has kept expanding. I was able to pick and choose my calls and the rest I gave away to my sub-contractors. I realize this method may not be practical for larger organization. As a former factory technician for Frigidaire, I saw a lot of waste and many areas that were in desperate need for improvement.

Service Vehicles

Smaller vehicles mean smaller gas bills, less parking fees, less maintenance. I use small micro cars for the day-to-day workload and when I need to pick up or deliver a large appliance, I use my cargo van. For a more comprehensive analysis on the advantages of small service vehicles see ‘Size Matters,’ Marcone World  magazine, September 2012 or visit www.subzerospecialists.com/Blog/TechniciansCorner.

Social Media

You wouldn’t think there was any way to innovate in the area of customer relations, but think again. Social Media is transforming the landscape. It has revolutionized our relationships with our customers, and all for the better. Now we have to worry about reviews, (and believe me customers are reading them) and using them to determine who they want to do business with. Of all the social media portals the most popular are Facebook, Twitter, YouTube, Linkedin, Pinterest, and new one’s are cropping up every day. It’s difficult to imagine not using these services in the future. I think it’s imperative for you to get on board now before it’s too late–because if you don’t your competition will. Other opportunities in social circles include referral services like Angie’s List, Yelp, Yext, etc. Today I rely exclusively on referrals from these services and very little on advertising. Print advertising is a dinosaur. Social media is the future.

To wrap things up, the next time you’re on a job and you have a couple of minutes to spare,  see if there’s a way to improve it or  a way to do it faster. Take the challenge to innovate. Learn something new and share your expertise with others. You can help transform the industry. Be a leader. We will all be better off.

3D Printing

Are you ready for the next industrial revolution? Do you want to double or maybe triple your profits?

3D printing is poised for a major entrance into the manufacturing and duplication of common everyday household parts, including appliance parts. 3D printers will become as ubiquitous as fax machines and cell phones. It’s the next big thing according to a 2009 “State of the Industry” report by Wohlers Associates, a consultancy group: “3D printing is now entering the field of rapid manufacturing and was identified as a “next level” technology by many experts.

Imagine stopping by your local parts supplier and having your parts printed out while you wait. A simple digital file stored in a database with the exact dimensions and configuration are all that is needed. It promises to reduce costs, eliminate shipping charges and long waiting periods for out of stock items.

3D printing, also called additive manufacturing, is a process of producing a three-dimensional solid object of virtually any shape from a digital model. Additive manufacturing itself is not new. This method involves building up an object layer-by-layer.  To perform a print, the machine reads the design from 3D printable file (STL file) and lays down successive layers of liquid, powder, paper or sheet material to build the model from a series of cross sections. These layers, which correspond to the virtual cross sections from the CAD model, are joined or automatically fused to create the final shape. The primary advantage of this technique is its ability to create almost any shape or geometric feature. In the industrial sector, 3D printers are often used to rapidly produce plastic prototype parts to accelerate the development of new product designs. The first working 3D printer was created in 1984 by Charles Hall from 3D Systems Corp. They became commercially available in 2010.

In the early phases of 3D printer development, printers were used extensively for development and research purposes by universities and commercial companies.  They generally used larger machines that used proprietary metals, casting media, (e.g. sand), plastics, paper or cartridges. Advances in RP technology (rapid prototyping) have introduced materials appropriate for final manufacturing, which has in turn, introduced the possibility of directly manufacturing finished components. A major advantage of 3D printing for rapid prototyping lies in the relatively inexpensive production of small numbers of parts. You print parts as you need them.

Michael Idelchick, Vice President of Advanced Technologies, at GE Global Research says, “The potential impact of additive manufacturing is huge. We’re not talking about the creation of thousands of new jobs; we’re talking about the creation of thousands of new businesses to the country that leads in this new wave of manufacturing.  It promises to transform industry much like Henry Ford’s Assembly Line transformed the modern manufacturing plant… perhaps even more so.” With additive manufacturing, you can design parts and products that were previously not possible.

Some companies have created services where consumers can customize objects using simplified web based customization software, and then order the resulting items as 3D printed unique objects from their local suppliers. In addition, it will be possible to replicate discontinued parts and create a clone and even modify and strengthen them.

At the forefront of 3D printer technology for small business is MakerBot Industries.. The MakerBot Replicator Mini compact 3D printer will be available this spring and will sell for a modest cost of $1375.00. Larger models are also available.

There are three ways to produce 3D objects: You can download a predesigned product from thingiverse.com;  you can scan an object from the real world, such as a crisper cover for a refrigerator or a knob for an oven; or you can design something yourself.

What is the cost factor? To determine the cost of printing an item, just weigh it.  A 1K spool of PLA (poly lactic acid), which is one of the materials used in additive manufacturing, costs $43.00. To replicate an ice maker leveling arm rudder, such as a Sub-Zero PN 7014671, would cost approximately $1.23. The factory cost for this part is $25.99 plus $13.00 shipping. That’s a savings of $37.76 for just one item.

As a small business owner, the potential for savings from 3D printing is enormous. This is a potential game-changer for our industry the results of which would be an improved bottom line, production of discontinued parts, and reduction of inventory.. I’m placing my order for a 3D printer now.

Kitchen Shock

KITCHEN SHOCK

Corrupt  service companies are cropping up in major US cities like weeds in a neglected garden. The seeds for this were sewn by the increase in expensive high-end appliances during the last housing boom. Widespread abuse has grown in the form of fraudulent and negligent repair practices.

Crafty and slippery marketing prowess is swindling desperate and economically strapped consumers and making it difficult for honest firms to compete. These unscrupulous and unethical repair companies purposely mis-diagnose, and replace parts as “faulty,” regardless of their condition,  then charge high fees, forcing consumers into a corner.

Similarly, in the late 1950s and the early 1960s, fraud and negligence in the television repair industry accelerated. Consumer and law enforcement agencies were inundated with complaints. The TV industry experienced tremendous growth during the 1950s, and TV sets were relatively expensive household purchases. For many, replacing a failed TV was not an option. Demand for TV repair services escalated. While today the price of TV sets has dropped considerably, the same cannot be said for  kitchen appliances, some of which can sell for ten thousand dollars. When they go wrong there are sharks ready to feed. Here are some examples of what can go wrong, followed by tips on how to arm against fraud

On a recent service call, I found work by one of the most deceptive and exploitative repair companies I’ve ever encountered in my 46 year career. This company charged over $4,500 for two separate visits to repair a broken ice maker in a Sub-Zero refrigerator. On the first visit the owner was charged over $2,000 for a new ice maker, which I discovered had never been installed. On the second visit, they charged $2,500 for an ice maker water valve which was brand new, but not the correct part. It was left dangling under the refrigerator.

This same company attempted to charge $2,500 on a call for another Sub-Zero refrigerator. The estimate listed four separate parts where only one was needed. Fortunately, the customer sensed foul play and called me for a second opinion. I made the repair for one-fifth the cost. To make matters worse, the guarantee stipulated the following: “Thirty day warranty on parts, ninety days on electrical  parts only. All parts listed on the estimate were electrical.” It goes on to state other erroneous facts and the terms:” Strictly Net Cash Only Upon Completion of Work. Checks Not Acceptable.” That’s a hefty amount of money for only 90 days of protection.

These are clear signs of deceit. Reputable companies want you as a customer and will go out of their way to serve you. They have longer warranties and will accept checks and credit cards because it makes good business sense. Don’t be fooled. Here are some precautions and signs.

First, verify if a company accepts credit-cards. Banks and other financial institutions perform background checks and keep records of complaints.  We live in a credit based society. Refusing to accept credit-cards is akin to eliminating approximately 70% of all business.  Any legitimate service company would, at the very least, accept checks if not credit-cards. A demand for cash only is a warning. Make sure that any such company has an honest record or find one that has. Companies that accept only cash are usually here today and gone tomorrow.

Another common practice to be wary of is an offer to waive the service charge if work is performed. This is a tactic to lure you in.  It seems as if you are saving money, but more often than not, companies raise the prices on parts to compensate for dropping the service charge.

Additionally, a company’s warranty can say a lot about its philosophy. Honorable companies usually provide longer warranty periods and are more interested in keeping you as a customer. They will go out of their way to keep in touch. This is a sign of responsible and good business practice. Long term relationships are always more profitable for businesses  than fly-by-night methods.

As for the service technicians themselves, they represent the company.   How well do they behave? Are they courteous? Well mannered?  Knowledgable? As an example, a consumer contacted me last week because he was dissatisfied when his refrigerator was serviced. He was afraid to call the technicians back, because they looked liked “thugs.” He was wise.  They had botched-up his refrigerator, charged him a small fortune and to make matters worse, left it inoperable.

This scenario is repeated everyday in every major city.  Some companies will go so far as to scrape off the serial number from your appliance so they can charge you the full price for parts that should otherwise be under warranty.

So how do you find a good service company? If you scan the yellow-pages directory, be careful and discriminating. Big ads usually mean higher operating expenses which are factored into the cost of repair. But small ads or no ads are no guarantee either. If undecided, try asking someone you trust for a recommendation, such as a building manager,  friend, relative,  or neighbor. Also, consumer protection agencies keep files of complaints from suspect companies; that can be a good place to start.

The internet, though not totally reliable, can provide a comprehensive list of reputable service companies. When doing a search online, the ads at the top and right side are paid advertising. About midway down the first page are the organic listings. But search engines provide priority of listings to the ads that gain most internet traffic. This can be a sticky point because companies can hire media experts to write up false reviews, thus enhancing a company’s position.

Wading through a plethora of websites offering repairs can be daunting. Homeowner-to-homeowner referral websites are helpful. One of the more respected is Angie’s List.  On this site, paid and registered subscribers provide reviews which are then graded from A to F.  Participating contractors are investigated with stringent tests. No contractor can pay to be on the list or report for his own company. Angie’s List employees must check every single report to prevent deception.

In a perfect world you’d have a black book filled with the names of reliable contractors who provide top-notch service at reasonable prices. Unfortunately, choice usually boils down to common sense and awareness. If you’re suspicious don’t dive in. Companies you can trust are out there.