Wheeler On HVAC/R: The Chicken Little Effect - Or, Don't Worry, It's Not Their Money
I always enjoy reading Jim Olsztynski's editorial column, and his June 2004 piece titled, “Serfdom Vs. the High Road” (page 76) offered readers some sage advice: Don't worry about large home builders buying direct.
Like Jim, I've been there too as a younger, less-experienced reporter (you see this on the local and national news all the time), predicting the imminent fall of the sky for our industry. Let's see, there were the franchises that were supposed to take over the HVACR contracting business and buy their parts direct; then the public utilities that were buying up contractors who were going to buy direct; then the huge chains that were buying up all your competitors who would cut prices and drive you out of business; then the builder-supply chains that were going to take away all your business; and then … and then…
Oh sure, you can always write a story about some local company that is poorly managed and crying about what the new competition is doing to them. After all, we need interesting stories to report, and who wants to be the last to recognize a major industry trend? So, we tend to be a bit quick on the draw - initially. But, after a few years, we see things differently - thus Jim's column and his sage advice.
Look at history. The franchises are mostly gone. The utilities are backing out of the business, and few ever really bought direct, because they found that providing local supply costs them as much or more than buying from you. Yes, you serve a valuable and irreplaceable niche in the industry - appreciate that.
Why don't the fads succeed? After all, they are great ideas, aren't they? Yes, they are, but greed is too often the driving force behind these great schemes, and selling stock in a new company is usually the first indication that something is wrong. Have you ever talked to anyone who was planning to take his or her company “public?” I have. What I've heard is, “We can make a lot of money if we take the company public,” not, “We can really get this idea off the ground if we have more public funding.”
Anyone's company can make more money when it is privately held, because you don't have to pay part of your earnings (dividends) to thousands of investors. However, the hot stock market of the '90s brought in millions of small investors, and companies had too much money, which they spent foolishly buying up competitors, entering new businesses, and paying the top brass unbelievable salaries. You already know the stories. And that's what happened - and is still happening - to the great ideas. Somebody makes a lot of money and leaves the business with small investors holding the bag. Yep, it was someone else's money.
So, you may not agree with my views, and maybe you're one of those (like a brother-in-law of mine) who thinks that the government needs to invest all our Social Security money into the stock market (can you imagine what Enron would have done with that?). However, recognize that the sky isn't really falling and most of your new competition fears are already doomed to failure, because the money that is invested in such schemes belongs to someone else.
Just keep your business current. Invest in new tools and products. You see, no company or idea has to be better than what you are doing. Just don't allow yourself to fall behind and become uncompetitive.