More than 40 per cent of small businesses in Australia close within their first three years which might explain why a new book entitled “12 Profit Pillars for HVAC Contractor Success” has become a bestseller on Amazon.

Author of the book, Scott Ritchey, said when he first joined the HVAC industry, he soon discovered his employer was losing money despite taking in $2 million in revenue each year.

“The company just didn't understand that mark-up does not equal margin, and a HVAC business has varying overheads between its different departments,” he said.

“This lack of business knowledge showed up in their pricing methods, resulting in a two per cent loss in the company's financial performance.”

Ritchey said drastic changes were needed to ensure all jobs were competitively priced while still providing above average net profits.

He helped the company see which types of construction and service work jobs were the most profitable, instead of simply thinking all jobs were the same.

By focusing on the most profitable areas Ritchey said the company grew from $2 million per year to $6.5 million per year in a five year period.

This inspired Ritchey to help other contractors. To date, he has worked with 400 companies assisting them with financial principals that, he says, guarantee HVAC contracting success.

“I have seen too many HVAC businesses fail by not having the financial knowledge they need to succeed,” he said. “My book will give HVAC business owners the tools to thrive.”

According to figures from the Australian Bureau of Statistics (ABS) Australia has 2.1 million small businesses.

The biggest challenges faced by small business are financing difficulties, higher costs, volatile cash flow and vulnerability to local economic conditions.

Half of new one-person businesses and 30–40% of other small businesses fail within their first three years, and even existing small businesses face the high probability of going under within 10 years.

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