Did you know that 86 percent of all companies in the US have 25 employees or less? That’s right. According to the U.S. government, 86 out of every 100 companies are owned and run by individuals just like you and me. These companies are the basic fabric of the nation, so surely there must be classes taught all across the land on how to run successful small companies. Wrong! For the most part, when it comes to learning how to run a bakery, a small store, or in our case a trade company, there is nowhere to go.

Let’s review another interesting statistic: 90 percent of all the businesses that start up this year will fail the very first year. Worst yet, only one company out of a thousand will ever see its 20th birthday. Why? According to Uncle Sam they fail because of poor paperwork. They know what to do to provide the product or service, but very few understand the business side of their business.

Now I can hear the words of dear old dad ringing in my head: “Son, if you want to be successful simply find a need and fill it.” Sounds logical. We know the need is there, so how has it been filled? The word “franchise” comes to mind. Many years ago a few sharp individuals created the franchise industry to teach people how to run small businesses of all kinds using a “system”. Uncle Sam says that 97 percent of all franchises make it through their first year of business, and 95 percent make it through their first five years. That’s a bit rosier than the “normal” business startup. So what’s the difference between the two? In a word it’s systems. Franchises have done their homework, found out what works and taken the time to document the process so it can be replicated. With a 95 percent success rate in the first five years, there must be something positive about putting systems in place.

Many years ago when my youngest daughter was in high school the annual fund raising season was upon us. Usually the youth were asked to sell candy, magazines, doughnuts and other overpriced stuff. This year was different! The youth were asked to pre-sell pancake breakfasts at McDonalds, good for one specific Saturday morning. Now the catch - the parents were asked to go to McDonalds that Saturday morning to cook the pancakes.

As that special Saturday approached I became a bit more anxious about cooking. The day arrived and there I was with four other parents thinking of 27 ways I could mess up the process of cooking pancakes. The manager soon arrived, introduced himself, and announced that in a short 10 minutes we would all be able to produce perfect pancakes….every time. I chuckled silently, but was ready to learn. First the manager showed us an empty stainless steel container which had a mark on it about four inches from the top. Next, he proceeded to open a cardboard box filled with individual packets of pancake mix. He then instructed us to open one packet and empty the contents into the stainless steel container. Once emptied, we were to add water to the mark I described earlier. The container was then placed in a mixer and allowed to “mix” for a specific period of time. The batter was ready.

Now it was time to cook. We were taken to a flat surface stove with twelve dots on it. Each dot was numbered and arrayed in rows and columns that covered the surface evenly. We were then shown a special pancake dipper. It held the exact amount of batter for one pancake. We were told to dip the batter and pour it on the dots, in order, beginning with dot number one. The process was to continue until all 12 dots were covered with one dipper of batter. Once covered, we were instructed to press “Timer Number One” above the stove. When the timer went off we were to begin flipping the pancakes, but NOT randomly. We were to flip them in order, beginning with spot number one. When all twelve were flipped we were told to press “Timer Number Two”. When that timer went off it was time to remove the perfect pancakes, again in order, beginning with spot number one.

It worked, the system really worked! Within a very short period of time I was making perfect pancakes by following a predetermined, proven, system.

What were the benefits of the system?

• A consistent quality product was presented to the customer no matter where, or by whom, the pancakes were made.
• Any employee with a minimum of education and/or ability could do the job…..at a lower pay scale (more profit) to the company.
• If a problem did occur all the supervisor or employee had to do was review the system to see what went wrong. When the error was discovered, the necessary correction would be made and the process of producing high quality pancakes would be back on track.
• With systems in place the overall quality and profitability were assured.

What kind of person purchases a franchise like this? It is typically a doctor, lawyer or successful business person. Do they run the business on a day-to-day basis? Absolutely not! They hire management people and send them to McDonalds University to learn the “systems”. This is an amazing place with classrooms, dorms and labs just like any other college campus. I still remember walking past the “Milk Shake Lab” followed by the “Hamburger lab”. Each class was filled with students learning new systems to put into place when they got back to town. The business classes taught managers how to track costs and how to adjust pricing if, and/or when, the profit margins began to fall. It was amazing to see real people being taught how to run real companies to generate real profits.

When the graduates return home they hire employees who are taught the system for their specific area of responsibility. What is the bottom line? The owner makes a consistent, significant profit without getting involved in the daily operation of the company.

Developing systems within your company will produce the same kind of consistent results. How did McDonalds develop their systems? The answer is one system at a time, the same way you will. Pick an area. A good place to begin might be when the phone rings. Begin to document, on paper, what should be happening. Who should answer the phone? What do you want them saying to the customer? Script their opening statement (so it will be consistent) and create the detailed questions for your customer service representative to ask. Once the questions are asked, what information needs to be put into the company’s customer base? Again, whose responsibility is it to enter the data and what is the expected timeframe for data entry?

Create systems for every aspect of your business. Set up systems for ordering materials, the sales presentation process, the physical receipt of inventory, payment of invoices, the running of rewards and/or bonus systems, etc. As each system is created, training becomes very organized. Allow your employees to be part of the process by writing the initial “current” procedures themselves. Then management can tweak the system to be sure all systems are happening the way they want them to happen. Place the written systems/procedures into a three-ring notebook and review them often, at least on an annual basis. Once the systems are in place some amazing things will begin to happen. Like the owner of a McDonald’s franchise, you will begin to experience the following:

• The company will be consistent in the way it handles each and every customer
• Problems will be recognized immediately and will be corrected quickly by reviewing the system
• Things will run smoothly, allowing the owner to spend time working on the business, instead of in it.
• The company will earn a consistent profit
• The owner will be able to take more time off since the systems run the company – not the owner
• Training new employees is simple….follow the system
• When it comes time to retire, the company will be much easier to sell since the systems run the company, not the owner

It takes time to set up systems but the benefits of investing the time, energy and money will bear fruit year after year.

If you want to systematize your service department the goals are already set.

Eighteen national, regional and local lenders will participate in a new two-year pilot program that will offer qualified borrowers living in certain parts of the country low-cost loans to make energy-saving improvements to their homes. Backed by the Federal Housing Administration (FHA), these new PowerSaver loans will offer homeowners up to $25,000 to make energy-efficient improvements of their choice, including the installation of insulation, duct sealing, replacement doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.

"We believe the market is right for a low-cost financing option for families who want energy-saving technologies in their home," said U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan Secretary Donovan. "PowerSaver hits on all cylinders by helping credit-worthy homeowners finance these upgrades, cut their energy bills and boost the local job market in the process. While FHA and these lenders are jumpstarting this pilot, we hope its success will lead to a growing private sector interest in making these types of loans."

The remodeling industry cites surveys that point to a growing demand among homeowners interested in making their homes energy efficient. Initially, the PowerSaver pilot program is estimated to assist approximately 30,000 homeowners to finance energy-efficient upgrades though higher market demand may increase this impact. According to HUD projections, more than 3,000 jobs will be created through this pilot program and the impact may be larger if market demand for the loan program increases over time.

Participating lenders are largely selected based on their commitment to work in partnership with established home energy retrofit programs provided by states, cities, utilities and home performance contractors. These markets include, but are not limited to areas of the country participating in the Energy Department's Better Building Program. For a list of participating lenders click here.

PowerSaver loans will be backed by the FHA but require lenders to have significant "skin in the game." FHA mortgage insurance will cover up to 90 percent of the loan amount in the event of default. Lenders will retain the remaining risk on each loan, incentivizing responsible underwriting and lending standards.

PowerSaver has been carefully designed to meet a need in the marketplace for borrowers who have the ability and motivation to take on modest additional debt to realize the savings over time from home energy improvements. PowerSaver loans are only available to borrowers with good credit, manageable debt and at least some equity in their home (maximum 100 percent combined loan-to-value).

HUD developed PowerSaver as part of the Recovery Through Retrofit initiative launched in May 2009 by Vice President Biden's Middle Class Task Force to develop federal actions that would expand green job opportunities in the United States and boost energy savings by improving home energy efficiency. The announcement is part of an interagency effort including 11 departments and agencies and six White House offices.

For more information on how to work with the program and direct homeowners to a qualified lender, attend Efficiency First’s May 11th webinar: FHA PowerSaver Loan Program: What Your Company Needs to Know. Efficiency First (EF) webinars are provided as a benefit to EF members. Not a member? Click here to learn more about Efficiency First membership or contact coby@efficiencyfirst.org about complimentary registration for prospective members.

A website has become as integral a tool to the home performance trade as a blower door. In the residential energy efficiency industry, where misinformation runs as rampant as drafts in an old farmhouse, it’s important for homeowners to have a place where they can find good, reliable information from a trusted, local source. Your website is the perfect place for that.

The only problem is that, while 70 percent of people search for local businesses online, in the home performance category they’re usually searching for something other than “home performance”. The terms “weatherization,” “insulation,” “heating bills,” and “spray foam” all have a much higher hit rate than “home performance.” So while your business might provide the best services and your website might have the best information, there’s a good chance the people looking for your business aren’t finding it.

So the first challenge in web marketing is getting people to your website. The second challenge is getting people that visit your website to call you or fill out a contact form, so that you can take the next step and schedule an energy audit or a retrofit job. The first challenge is called SEO, or Search Engine Optimization, which is the craft of tweaking a website so that it ranks higher in Google and other search engines. The second challenge involves site design, navigation, and content. Maximizing both is essential to having a high performance website that will convert leads and drive your business.

SEO Basics:

The most important component of a vibrant, effective website is a little bit of SEO. While there are people that make a lot of money doing SEO consulting, and the intricacies can get pretty complex, it basically boils down to a handful of principles:

• Use Google’s Adwords Keyword Tool to find out what keywords people are searching for (you might be surprised to learn, for example, “weatherization” gets about 4X the amount of search traffic as “home performance”).
• Frequently update your content with a good variety of these keywords, and create readable and keyword-rich meta titles and descriptions for each of your pages.
• Sign up on local directories like Google Places and Yahoo! Local.
• Increase the number of links to your site (links are often called the “currency of the web,” because the more links you have to your site, the better your site will perform in search engines). You can do this last by connecting with friends and colleagues who have websites and offering to swap links.

Design, Usability & Conversion:

• Clear, well organized navigation and lots of internal site links that make it easy for your visitors to get to your content.
• A well-written “About” page that introduces your team and puts a face (or faces) to the company.
• A “Services” page that lists -- with keyword-rich content -- each of the individual services that your company offers. Insulation, air sealing, duct sealing, blower door testing, etc, etc.
• Landing pages: pages specifically geared toward a campaign, that aren’t accessible through standard navigation. A link from a local energy efficiency incentive program, for example, could be directed to a landing page with information about that program, highlighting the fact that you are a participating contractor. Use logos, and incorporate a contact form.
• Trust symbols: logos of your key certifications such as BPI (properly displayed of course) as well as local, state and national organizations that your company is a partner or member of, or organizations that you’re certified by. Think Efficiency First, Energy Star, etc. These give your business credibility in the eyes of visitors, and increase the chance that they’ll call you up instead of your competitor.

Just as a home performance retrofit pays dividends for years to come, so too does a “retrofitted” website. If you can get your site to the top of a Google search for, say “Energy Audit, Topeka” and maintain that position, that organic link will be a source of free, steady leads to your company for a long time.

Congratulations to Daniel Dempsey, owner of Mo. Home Energy Audits LLC who was the first person to correctly identify the problem in last month’s Stump the Chump game! Daniel (in photo to the right) was right on target when he sized up the older furnace as a natural draft furnace with a roll-out safety switch. The furnace had an internal air leak between the blower compartment and the burner compartment. When the blower came on it created a vacuum in the combustion area, causing flame roll-out that tripped the roll-out safety switch. After the roll-out switch re-set itself (it's a clixon type) the cycle repeated.

The answer of course was to seal the internal air leak. BPI reveals that behind the front mullion was a piece of sheet metal that separated the burner compartment from the blower compartment. A tiny 1/8 inch foam gasket was supposed to be where the sheet metal hit the mullion, but was not installed during the manufacturing process. Our hero applied 1/8 inch adhesive insulation tape to the back side of the mullion, and presto - problem solved!

Daniel likes the photo with his tomato plant, because it represents how even an apartment dweller can "go green". He tells us the plant keeps the sun from hitting his sliding glass doors in the summer and helps reduce his A/C bill. Plus, instead of wasting all that sun energy, Daniel converted it into tasty and free tomatoes. Go Daniel!

Mo. Home Energy Audits LLC is primarily aimed at the energy retrofit market for existing homes in the St. Louis and Jefferson County, Missouri area using the "whole house" approach. Daniel Dempsey couples his experience as a HVAC-R serviceman/installer with his home performance training and BPI credentials to offer homeowners a comprehensive energy audit of their home.

Below is this month’s puzzler, a test of your home performance know how. Figure out what is going wrong with this house, write it up along with your prescribed solution, and send it to us at lmcdowell@bpi.org. If you’re the first person to get the right answer, we’ll feature you, your company and your answer in the next issue of Performance Matters!

The Problem:

The clients were a pair of 60-something empty nesters living quietly in Keene, New Hampshire. By rights, they should have been cozy in their 1,150 square foot 1930s Cape with a warm air furnace. How hard could it be to keep that house performing properly? But all was not right. They’d suffered through a miserable winter in the wee months of 2009. The kitchen was always cold, the bedroom was too hot and worst of all, the air coming from the vents smelled awful. By March of 2009 they’d had enough. They called Our Hero, Paul Button of Energy Audits Unlimited.

Additional facts: The house contained a bare dirt floor basement. They had laid a single layer of gravel on this, with no plastic underneath.

Note: This stumper really has two problems - the smelly air and the cold kitchen/hot bedroom. Each problem has a solution separate and distinct from the other.

Think you know the answer to the problem? Send it to us at lmcdowell@bpi.org.

Serving the New England region, Energy Audits Unlimited (EAU) has performed over 1,000 residential and small commercial audits. As a BPI affiliate, EAU trained many auditors and is now expanding to begin training crews. We are proud of our relationship with BPI and will continue to raise the bar in home performance.