Hope is Not a Plan

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Last Friday started for me in much the same way many mornings for me start. I had my coffee in-hand, and I was making the rounds in my normal morning news and information crawl. Most days, I find there’s nothing really earth-shattering going on. This manufacturer released this new product. This person now works for this company. This regulation passed, or was extended, or was booted altogether. It’s all part of keeping informed about what’s going on around you.

On this particular Friday, I was greeted with a wave of news and celebration on the extension of the Federal geothermal tax credit. 

As someone who was there in 2008 when the tax credits first came into existence, I can understand the excitement. However, the last three years have dramatically changed my viewpoint on it. What I’m about to say is probably going to cause quite a bit of consternation, and maybe a little questioning of my mental acuity. Don’t worry, I won’t get mad.

The tax credits were one of the worst things to ever happen (again) to the industry. 

There’s many different sides you could argue on this point. Some would say that it enabled the industry to survive the economic downturn. There’s also the argument that it has created more awareness of the technology. Some would argue that it attracted outside industry investment. To me, it made us all forget why the technology was great to begin with. Trust me, I’m as guilty as any one of putting the tax credits as the priority in messaging and marketing at the time. 

However, no matter how you want to argue it, the fact still remains that the industry (at least on residential) took a 40-45% hit when the credits expired at the end of 2016. I’m not going to air out any (more) dirty laundry here, but that number is what it is. 

All that being said, the credits are now back until the end of 2021. I don’t doubt that it will help stem the bleeding to a certain degree, but I highly doubt the market will come back to the levels before they expired the first time. 

So, the question now becomes, what happens at the end of 2021?

Hopefully, companies were already enacting a post-credit strategic plan. Something that will help them move forward and either regain lost ground, or grow in other directions towards the future. If you are working a plan, don’t change anything! The temptation is probably very strong to go back to old messaging, or operational patterns that you were using at the height of the tax credit. Going backwards will not only hamper the work you’re doing, but it could put you right back in the same spot you were before. 

For companies who were hoping for the renewal, or were struggling to figure out what to do next, now is the time to get a solid plan put together. There’s four years worth of space to work with here. While not a lot of time, it’s still plenty to work a plan that keeps your business growing beyond the end of the renewed tax credits. Trust me when I say this as I was a part of a company that went from $50M to $100M in 5 years without the tax credits. Four years is plenty of time to work a solid strategic plan.

Whether you have a plan already, or are just getting started on one, it has to be multi-dimensional across your business. The best strategic plans bring your entire organization together towards one goal with a unified vision. They touch everything from operations, products, sales, administration, facilities, marketing and so on. The company I referenced above was completely different in the end because it had to be. That’s not to say you have to give up your core values or beliefs, but it’s the growth and adaptation that makes everything else possible. 

The HVAC industry has changed quite a bit over the last 18 years I’ve been a part of it. There’s been dramatic changes in technology, customer preferences, outside competitive forces, and swings in energy costs. Honestly, this is nothing unusual in any market out there. The difference between success and failure is how you adapt and change with all of the forces pressing against your business. It takes a lot of hard decisions, and sometimes direction you did’t really count on taking. 

For my geothermal colleagues and friends, the time to act is now. If you have a plan, keep going. If you don’t have a plan, start today. 

If you need help getting a plan together, or would like some outside perspective on what you’re already working on, Salyer and Associates is here to help. 

The clock is ticking…