Show Notes & Action Guide
Nick True – HVAC Technician and HVAC Business Owners,
Getting your Money Under Control.
Show Notes & Action Guide
Nick is the real deal when it comes to money:
Nick starts his work life working for his Dad, who was a general contractor.
At age eleven, he started working for his Dad, cleaning and picking up job sites for minimum wage.
From his father’s lead by example style, Nick learned that earning money gave him the freedom to buy things he wanted without relying on his parents.
He learned how to budget and save up for bigger things, such as a new mountain bike.
Money challenges for HVAC technicians:
New HVAC technicians just getting started – Many new techs move over from lower-wage hourly jobs such as food service or retail. When starting in HVAC, old spending and budget habits may work just fine. Money challenges can start fairly soon since wage growth can happen much faster than they are used to. As a result, spending also increases, creating the potential for spending more than is being made.
Journeymen HVAC technicians can have money issues, too – Some journeymen HVAC techs can reach six figures, especially if they have invested in specialized training such as building automation controls, boilers, or process chillers. Wage vs. spending issues can hit the most experienced technicians how don’t know their real numbers.
Money challenges for HVAC HVAC business owners:
HVAC business owners can have issues as well – Many journeymen HVAC technicians move on to start their own businesses. One of the biggest issues that Nick sees is business owners mixing business and personal expenses. No knowing the real cash flow of the business can sneak up on HVAC business owners quickly. In addition to putting in long hours as a business owner, financial stress can also cause interpersonal problems with spouses and children.
What do I want my life to look like in three years?
When Nick takes on a new client, he has a series of thought-provoking questions he asks. Although he will tailor his questions to each client, here are some of his follow-ups to the opening question “What do I want my life to look like in three years?“ :
How many hours a week do I want to Working?
What are my work hours, as do I want to be working weekends, nights, etc.?
How many hours a week am I spending with my family?
What kind of trips Am I taking?
Do I want to own my own house?
What kind of hobbies or activities do I have?
OK, then what?
Once the new tech or HVAC business owner gets what he/she wants in better focus, it comes down to math.
The next steps include connecting dollar amounts on each lifestyle item, followed by factoring in taxes and longer-term things like retirement and kids’ education.
Nick says once the life you want is known and the cost to support that life is known, he can quickly tell technicians or HVAC business owners, “That’s a 10k a month lifestyle,” for example.
What about taking on debt?
When it comes to the HVAC business owner, Nick shared a place for debit in the HVAC business model provided the prior work described earlier is done. Business owners who use debt to backfill overspending habits generally do not end well.
Paying yourself through your HVAC business.
When it comes to the HVAC business, which tends to be cyclical based on weather extremes, smart cash management is needed.
Nick suggests paying yourself a fixed amount each month based on a realistic annualized budget.
For example, if your business’s average before-tax net profit (annualized) is 10k a month, you could safely pay yourself 5k a month, leaving the remainder (5k) in your business. If your HVAC business has slower than normal few months, you will have enough cash in the business to guarantee your monthly personal income. Conversely, if you happen to have a better than expected few months, you can always bonus yourself; however, it is recommended to keep a minimum amount of working capital in the business.
Accounting systems, what’s the best for HVAC businesses?
There are many systems available out there. It’s best to do your own research to find the best one for your business. Nick recommends, no matter what type of accounting software you used, make sure to look at your business on a cash basis rather than accrual. Looking at actual cash in and cash out from your business allows you to get a clearer picture of your business and compare it with your budget.
Getting the reports you need can also be a challenge, so don’t be afraid to export data into XL when you need to zero in on the data you need.
Nick mentioned that he loves QuickBooks; however, like most accounting systems, it only reports on a reactive basis as it has happened in the past.
What does a service like your offer vs. what’s on YouTube for free?
Nick says the main value add is asking lots of questions.
In my opinion, a good coach who is helping you through something is not going to tell you what to do. My role is to provides some strategies.
I’m never going to tell them to sell that car, or you need to consider moving or downsizing your home, etc.
What I always tell people when it comes to budgeting and reducing spending is that you’re doing something wrong if it feels not fun.
The process I lead my clients through is not meant to beat you over the head; it’s not meant to tell you you can have fun; it’s not meant to tell you that you can’t enjoy all the hard work and the fruits of your labor.
What’s the difference between a financial coach vs. a financial advisor?
Nick says it’s really important to think about the name.
So if we use the word advisor in the world of finance, we’re probably talking about someone who manages or does retirement planning like someone who manages investments, and that’s not what I do.
Most advisors and this is not a knock on them, get paid by the companies that offer financial products and investments they sell to their clients.
And so if what you need help with is retirement planning, and long term Long, long term sort of investment planning, and you should be looking for an advisor, a wealth manager, the key term you want to look for there is the word fiduciary.
What I do would be what falls under money coaching. Unlike an adviser, I can’t legally, and I won’t give you investment advice.
I will not tell you what to invest your money in. What I do is hyper-focused on the day-to-day.
So if you’re struggling with cash flow, if you’re struggling with just digging yourself out of the paycheck to paycheck, that’s what someone like I do.