To say the least, things look pretty volatile on the federal front. Volatile? How about crazy? Dysfunctional? In any event, it doesn’t seem prudent to be optimistic that we’ll have much in the way of coherent federal energy policy that supports the most cost effective resource–efficiency. Tax credits? Don’t hold your breath!
The good news is the bigger activity on the efficiency program front has generally been–and will remain–at the state and utility level.
But dear contractor readers, I caution you against building your business around the programs anyway. I expect we’ll see more contractors who’ve built their businesses around program incentives struggling or even closing up shop this year. This isn’t a bold prediction. It happens all the time.
While contractors often like the efficiency program incentives, they just as often have complaints about these same programs. And the contractors are frequently quite justified in some of their frustration. Programs often do a lot of silly things that thwart their own goals and undermine contractors’ ability to deliver. So stipulated.
But contractors, you need to ask yourselves some questions as you search for the root causes of your woes.
Do efficiency programs generate all of your leads for you? Are those leads satisfactory? And will they be there next week or next year?
Do the programs sell your projects for you? Do they sell at a price then ensures you’ll be able to earn adequate margins to stay in business?
Do programs provide liability protection for you when you play by their rules?
Do programs pay attention to the financial state of your business ensuring you are profitable today and that you’ll have a good exit strategy down the road?
If you’re not answering “Yes” to all of the above, and you’re not certain you’ll be able to keep answering “Yes” in the future, are you really sure you want the programs to run your business for you?
NO! And even if you want them to run your business, they won’t. YOU have to do that. That means you are responsible for generating leads, selling projects of a scope, and at a price, that makes for you and your customers. You are responsible for developing your business systems and processes, training your folks, and operating efficiently and profitably. You are responsible for understanding the accounting and ensuring the financial health of your business. And you are responsible for deciding whether or not to participate in a program with both its benefits and its costs.
If you’re looking for a program to save your contracting business, you’re probably looking in the wrong direction.
Don’t get me wrong. I actually like well-designed and well-run efficiency programs.1 The benefits extend well beyond the cost-effectiveness equations in individual homes and include the ability to avoid infrastructure costs like new generation and distribution. And often, programs and their incentives and other benefits make sense for your business. If you’re a residential contractor, though, I encourage you, to figure out your own business and how to run it outside of the program2. THEN, if the program makes sense for you, great, play their game and eat their cheese. But be very careful forcing your business into dangerous positions just so you participate in a program that doesn’t fit. And remember that it really is your decision and your responsibility.
If a program in your area is shutting down, the same advice applies.
It’s your business. Own it!
1I’d like even better something simpler, like raising the price of energy, or a revenue-neutral fee/dividend. But I’m under no illusions that our politicians have the wisdom nor the courage to go that route any time soon.
2Do you design or run programs? Talk about “market transformation”? Well, then you ought to be thinking about how to drive success outside of the program, and after the program, before the program even begins! And don’t do silly things.