What About Adding Home Performance to Your Business Plan?

Posted on:

January 19, 2018

If you have been ignoring the home performance market, you can use the ANSI/ACCA 12 QH Home Performance and Evaluation standard as an opportunity to increase your marketing footprint. Since you already have HVAC covered, your company’s future growth potential can be expanded by training some of your technicians to supervise home performance projects. We all know from our Manual J load calculations that homes are made up of integrated structural and mechanical systems. Since the HVAC system you already service is the heart of the home’s comfort system, comfort complaints get your technicians through the door. Once in, your company is uniquely positioned to dominate in the home environmental and energy efficiency upgrade market.

Why Now? Because the Housing Sector is Strong!

After dropping since 2005, the home ownership market appears to have stabilized. According to the U.S. Census Bureau Graph shown below, home ownership has been growing slightly higher since 2016 and is currently at about 64%. The number of homes has also increased between 2016 and 2017 from 124.59 million to 125.82 million, or by about 230,000 homes in the last year (according to ©Statista 2017). The National Association of Home Builders (NAHB) reported on December 18, 2017: “Builder confidence in the market for newly-built single-family homes increased five points to a level of 74 in December on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) after a downwardly revised November reading. This was the highest report since July 1999, over 18 years ago.”

Potential Market:

In 2015, the NAHB Home Innovations Research Lab reported that, 6% of homeowners had work done on, or replaced their HVAC system in 2015. If that number is adjusted for the number of homes in 2017 (125.82) it comes out to 7.6 million HVAC jobs done in 2017. Other home performance opportunities abound. Below is the NAHB percentage list for home improvements, with associated jobs that were done in 2015 adjusted for the 2017 housing stock:

4% Insulation = 5.0 million home performance jobs.
5% Doors = 6.3 million home performance jobs.
5% Windows = 6.3 million home performance jobs.
5% Roofing = 6.3 million home performance jobs.
6% HVAC = 7.6 million home performance jobs.
9% Plumbing Fixtures = 11.3 million home performance jobs.
9% Electrical/Home Electronics = 11.3 million home performance jobs.
10% Flooring = 12.6 million home performance jobs.
11% Appliances = 13.8 million home performance jobs.

TOTAL = 80.5 million homes with home performance upgrades in 2015; with an expected similar proportional number in 2018.

HVAC and plumbing firms are lumped together in Statistics of U.S. Businesses NAICS 23822- Plumbing and HVAC Contractors- by Employment Size of Enterprise: 2008: with a total number of 97,757 Firms; of which 57,351 have 4 or less employees; 18,883 have 5-9 employees; 11,633 have 10-19 employees; 8,703 have 20-99 employees; 1,036 have 500 or more employees.

Let’s take a leap of faith by using the NAHB 2015 numbers to represent the current job types by percentage, the 2008 (latest available) number of HVAC and plumbing contractors, and the 2017 numbers (3^rd quarter) for the number of homes, and guesstimate the potential business market in 2018. But first, let’s exclude the HVAC jobs from the total. The remaining home performance related jobs total is 72.9 (total of 80.5 minus the HVAC 6% or 7.6). If those jobs were equally divide by the 97,757 HVAC and plumbing contractors who are already in those homes, each contractor could have done 745 more jobs for their existing customers in 2017. To approximate your potential sales opportunity totals by home improvement type, take the total number of customers you have and multiply them by the NAHB percentages in the various upgrade categories. For example, 1,200 customers at 5% for roofing would mean 60 of your existing customers are likely to get updated roofing in the next year.

Make Lost Opportunities and Waisted Trips Pay Off

Do you send technicians out on calls and find out they are not related to an HVAC problem? Can your technicians identify home performance opportunities with some training? Wouldn’t your loyal customers be better served if their envelope could be improved, their ancient HVAC system downsized, and their utility bill lowered considerably? Would work that can be scheduled outside of peak heating and cooling seasons help your business grow? Could you use a few more entry-level installer positions to help you find and develop talent? If you answered “yes” to the questions above, you should consider expanding beyond the heating-and-cooling-only business model.

Take The First Step

Take the first step in becoming a home performance contractor by enrolling your technicians in a qTech online training class on Home Evaluations and Performance Improvement: www.acca.org/certification/qtech.

If you want to preview the material covered, hard back copies are available through the ACCA bookstore online at: www.acca.org/store/ or by phone order at: 888-290-2220; and the 12 QH-2018 is available for free downloading at: www.acca.org/standards/quality.

Author
Recent Posts

Don Prather

Don Prather is technical services manager with ACCA. Reach him at don.prather@acca.org or 703-824-8867.