Patrick could feel his cell phone vibrating as he was carrying the new furnace down the stairs of his new install.  Patrick owned an HVAC installation and service business that was doing extremely well.  He felt like the phone call could wait as he couldn’t afford to drop his furnace down the stairs.  After he got to the bottom, he noticed the call was from his banker, Andy.  He called Andy and asked what he wanted.

Andy was a little frazzled, “Patrick, this is the second check that has bounced this month.  What’s going on?”

Patrick responded, “I don’t get it, Andy.  We’re doing great business.  Are you sure that you’ve counted our most recent deposits?”

“Look, Patrick.  I’ll cover for you; but you’ve got to come into the bank as soon as you can to clear this up.  You can’t keep bouncing checks.  It looks like you don’t know what you’re doing.  You say you’re doing great, and then we get bounced checks.”

“Got it.  I have to do this install, and I’ll come right in.”

It didn’t make sense.  Patrick had more new installations and service projects than he could handle.  It was normal for him to start his work day at 7:00 am; and finish around 8:00 pm.  How could he be bouncing checks?

Patrick met Andy in his private banker’s office and they were both looking at Andy’s computer screen.  Patrick saw the negative balance in his account; but he couldn’t understand how it got there.  There was no fraud or theft.  Patrick had simply failed to plan his finances to avoid the bounced checks.

Andy commented, “Patrick, it looks like you may need to get a loan or a line of credit to stop these checks from bouncing.”

Patrick responded, “I just don’t get it.  There is no way I should need a loan.  We are killing it!  We should have tons of extra cash.”

“I don’t know what to tell you.  You just bounced your second check; and it looks like there are two more checks pending that will have insufficient funds, unless you get a loan.”

“I guess I’ll get a loan.  How much should I borrow?”

“It’s not that simple.”

“What do you mean?”

“My boss says he doesn’t want to extend credit to you until he’s sure you’ll be able to pay the loan back.”

“I’m sure I can pay the loan back.  Didn’t you hear me?  We are killing it!”

“Patrick, you have continued to tell me that, but you’re also bouncing checks!”

“How can I get this loan that you say I need?”

Andy’s gaze lowered to his desk, “My boss says that you need to hire this business coach.  His name is Coach Russ.”

“What?  You think paying some ‘desk jocky’ will help my cash flow situation?”

“My boss says it’s the only way he’ll approve a short term loan to cover your account.”

“I guess I have no choice!  Give me his card, I’ll hire him… if that’s what I have to do.”

“Thanks, Patrick.  Who knows?  Maybe this coach will help you get out of the financial trouble you’re in.”

“Unless this coach needs a new HVAC system in his house, I doubt it.”

Patrick left the bank frazzled.  Not only did he have a full work schedule.  Now he had to make time for this Coach Russ.


Russ met Patrick in his make-shift office in his shop.

After the small talk, Russ asked, “What has created your financial stress that has forced you to hire me?”

Patrick responded, “I don’t know.  We’re doing great business, but I’m somehow running short of cash.”

Russ asked, “How well are you following your business plan?”

Patrick had heard this question before.  He heard from every business geek in the world, ‘where’s your business plan?’.  He knew how to make money; and writing a business plan had nothing to do with earning a profit in his business.

Patrick responded, “Look, I’m getting customers just fine without a plan.  Plus, I don’t have time to waste writing a business plan that I’ll never use.”

“I agree that you need to write a plan that you’ll use.  Can you tell me why you’re running out of cash even though you’re busy?”

“I don’t know.  It just doesn’t make sense.  Maybe we misplaced a check or deposit or something.”

“What gross margins and profits have you planned for your business?”

“We typically mark up our equipment and labor 20%.”

“What do you mean, TYPICALLY?”

“I give a few people breaks every now and then.”

“How much profit do you think your typical 20% markup will give you?”

“Is this a trick question?  It’ll give us 20% profit.”

“If you have 20% profit, then why are you bouncing checks at the bank?”

Patrick hesitated, “I don’t know.”

“I probably should explain the rules of how I coach my clients.  You’re not allowed to say ‘I don’t know’ or ‘I can’t’. Both of these statements imply that something is out of your control or knowledge.  Your homework for our session will be to find out why you are bouncing checks.  Deal?”

“But I have two more installations this week.  I need to get this done to pay the bills.  I don’t have time to do book keeping!”

“On a scale of 1 to 10, how important is it for you to stop bouncing checks?”

“It looks like I may have to invest some late hours doing accounting.  I’ll have the answers you seek next week.”

“Thanks, Patrick.  I think you’ll find your extra hours well worth the time.”


It was one week since the two had met.  With bags under Patrick’s eyes, Russ knew that Patrick had invested a lot of time over the week trying to get his homework done; while also completing the installation work he had promised to his customers.

Russ asked, “What did you find as you looked through your books?”

Patrick was almost ready to cry, “It doesn’t look good.  Not only have we lost money over the past six months; it looks like we may lose even more money this month.”

“What’s the cause of your losses?”

“It turns out, I didn’t estimate many of the small parts that it takes do do our installs.  It also turns out that we had a lot of other costs that I didn’t anticipate when I priced jobs for our customers.”

Russ didn’t want to antagonize an already deflated Patrick, but he had to ask, “How do you think a business plan can help you avoid these financial problems?”

“I get it.  Rub it in.  I would’ve seen all of this coming, if I just created a business plan, right?”

“Not necessarily, Patrick.  But a business planning process forces you to think about and visualize your business before you start DOING your business.”

Russ and Patrick spent the rest of their coaching session going over how to create a business plan.  In the process Patrick discovered several items that he had missed.  He discovered that he could hire more technicians to avoid working so hard himself.  He decided to schedule monthly reviews of finances to make sure he wouldn’t bounce checks and would have plenty of profit to reinvest in his business.  He understood that he would need at least a 50% markup to break even; and would need a 75% markup to grow his business.  Now that he could visualize his business, he could accurately price his services to his customers.


After creating a business plan, Patrick hired an additional technician to do his install work while he invested his time in keeping track of their financials and selling additional work.  The bank approved a substantial loan after discussing the plan with Patrick and Russ.  It turned out that Patrick needed to borrow twice as much as he originally thought in order to dig himself out of the hole he had created.  Since the business plan spelled out exactly how Patrick would increase his earnings to pay back the loan, the bank was happy to loan the money.

It took Patrick a year to pay back the loan.  After the year was up, his HVAC business was growing and making money.  It was amazing.  All Patrick had to do was put his plan down on paper and then execute the plan; and he would make money instead of lose money.  No more guessing.  Patrick set aside a week each year to create next year’s plan with Russ to make sure that he would never bounce a check again.


As a business coach, I help my business owner clients change their mindset in a way that allows them the freedom and profitability they have always hoped for, but never thought possible.  If you desire to create a successful business of your own; but are stuck in some way, please fill out the contact form below.  Maybe I can help.


 

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