Boiler service contract

[REDSAW]

there was a previous thread last year on this from those who have walked the walk.
some who had done it and those who tried.
i think you needed somewhere like 1000-1500 customers to make any money!!
do a search.

 

[michaeljcliff76]

yeah a 1000 customers is a nice round number to start. I got 1000 leaflets printed and started posting on tuesday didnt realise how much graft is involved in posting leaflets. i wont mind getting takeaway leaflets through the door anymore. think i only managed 100 or so if that

there was a previous thread last year on this from those who have walked the walk.
some who had done it and those who tried.
i think you needed somewhere like 1000-1500 customers to make any money!!
do a search.

 

[REDSAW]

yeah a 1000 customers is a nice round number to start. I got 1000 leaflets printed and started posting on tuesday didnt realise how much graft is involved in posting leaflets. i wont mind getting takeaway leaflets through the door anymore. think i only managed 100 or so if that

should get all of 3 replies from them then!.. just another 30,000 and 4 pairs of trainers or so left to go

 

[michaeljcliff76]

not to mention my knee joints

should get all of 3 replies from them then!.. just another 30,000 and 4 pairs of trainers or so left to go

 

[Ray Stafford]

.if everybody had ray staffords drive and enthusiasm to futher there lives and jobs we would still be opening cans of beans with a rock

I'm sat here wondering how the beans would have got in the can!

Seriously Michael, all joking aside - if you ask for opinions, you are going to get them. As I said in an earlier post, I admire your ambition, but there is a difference between ambition and a realistic, workable business plan.

For what its worth, I have spent 27 years helping build a business, one slow step at a time. Maybe we lack ambition, but we don't owe the bank anything, and I sleep soundly every night. Over that time I have watched some businesses with ambitious ideas grow and succeed, but have seen a lot more go bust when the business plan wasn't as great as the ambition.

To leave you on a positive note - have you thought about getting together with a few other engineers and forming a co-op? That would get you over both the holiday/illness issue, and give the customers some peace of mind that they wouldn't be left in the lurch.

 

[michaeljcliff76]

Ha ha the beans got in the can because the monkeys in the canning plant put them in there they just didnt invent the bleeding can opener. Ray im sorry if i was a bit snippy but i didnt ask for an opinion i asked for an answer to a question. The reason i asked is if i wanted to offer a service contract (all the clauses exclusions and not taking on ideal isars aside) is it as easy as getting the customer to sign a direct debit mandate and putting an X in the box next to the contract cover they want. Because having sub contracted for BG Eon Npower Scottish Power doing servicing and breakdowns there seems to be a lot of people who are willing to sign up for these things. I can offer the same service (not right now) as these without the massive overheads , i mean who sits there in british gas and thinks £3500 is a reasonable price for a new boiler and a few new rads and trvs. You cant shoot me down for having ambition but im not goin to do these things right now ,i know i still have a way to go. And microsoft was started in a garage as was apple:yes:

I'm sat here wondering how the beans would have got in the can!

Seriously Michael, all joking aside - if you ask for opinions, you are going to get them. As I said in an earlier post, I admire your ambition, but there is a difference between ambition and a realistic, workable business plan.

For what its worth, I have spent 27 years helping build a business, one slow step at a time. Maybe we lack ambition, but we don't owe the bank anything, and I sleep soundly every night. Over that time I have watched some businesses with ambitious ideas grow and succeed, but have seen a lot more go bust when the business plan wasn't as great as the ambition.

To leave you on a positive note - have you thought about getting together with a few other engineers and forming a co-op? That would get you over both the holiday/illness issue, and give the customers some peace of mind that they wouldn't be left in the lurch.

 

[REDSAW]

its called reputation returns dividends

 

[on31ll]

right gonna say my part and take it as you want.

i know a man that paid alot of money to research this and got his contract wrote up and got a fair few people to sign up.
he tried hard to make it work but he told me that is wasnt easy and there was no way to do it without the big pot of money that the likes of BG has. so he stopped doing it. he looks after the clients he has on the scheme but isnt taking anymore on. after he stopped he bought a new van and kept his old one and hired an engineer that didnt want to be self employed to work for him. he makes sure his work is of a high standard and that engineer makes him more money than he would make on his contract. even when he got the money from the contracts he couldnt spend it. it had to stay in a pot to be spent on future breakdowns. he is now looking to get a 3rd engineer on his team. and sees himself continuing to grow. so surely this is the way to get to the size of BG or homeserve and not on the contract side.

 

[on31ll]

what is going to make you extra money ? £20 per month that sits in a holding pot ? or an extra engineer doing an extra install weekly ?

 

[Ray Stafford]

Ray im sorry if i was a bit snippy

No problem. I am a merchant, so skin as thick as a Rhino. Has to be to deal with you plumber types!

but i didnt ask for an opinion i asked for an answer to a question.

Fair point

is it as easy as getting the customer to sign a direct debit mandate and putting an X in the box next to the contract cover they want?

In my spare time, I am involved in the national governing body of a small sport. We looked at direct debit as a way for our (approx 10,000) members to pay their annual membership fee. As I recall, there was a big difference between standing order and direct debit. The standing order was fairly easy and any organisation could do it, but it has limitations - mostly in that if the rate changes you have to go back and get a new form completed.

Direct debit was more flexible, but the banks were very fussy about who could use it. The hoops that you had to jump through were way more than a small sport with just a handful of admin staff and limited financial resources could cope with. However, there are direct debit processing agencies (a bit like card-processing providers) that will do it for a fee. They get the admin headache, underwrite the direct debit guarantee etc, in return for a flat fee. I think it was about 50p to set up a new mandate, 30p to make a change, and 16p every time you drew down funds against any individual mandate.

So a customer on (say) a £48 annual fee*, payable on monthly DD would pay £4 per month. The first month you would get £3.34 (£4.00 - 50p set up - 16p drawdown fee) and future months you would get £3.84 so long as you didn't change it.

I think that the charges were quite sensitive to the volume of transactions, but since we had the 10,000 members already, I didn't ask about the charges for smaller numbers.

I hope that helps.

*Not suggesting that this is the right fee, just using it as an example because it makes the maths easy!

 

[Colin68]

There are a lot of guys with years and years of experience leaving comments for you here ... they are all here to help so take away from it what need and good luck! .. but don't make enemies in forums .. you never know when you will need some advice to get you outta the smelly stuff!

 

[petercj]

The answer to your question is that you need to draw up a business plan and run it past a solicitor specialising in commercial law.

BG are authorised and regulated by the Financial Services Authority, and so anyone unhappy with a complaint made about Homecare to BG can have their complaint looked at by the Financial Services Ombudsman.

If you draw a up a plan of how you see your business working, and how you see it being financed, then a commercial lawyer will be able to advise you on what you are letting yourself in for. A lot of solicitors claim to specialise in everything, don't bother with one of those, you need someone who is a legal expert in this area. So do a bit of research before getting involved. The advice is going to cost you a fair wedge, so make your plans as clear and concise as you can - the longer the paperwork takes to read, the more it will cost you.

You sound to be frustrated by any mention of complexity, but taking advice early on may save you a lot of money and grief later on.

From what you have posted above, it sounds as if you are hoping to do this on a shoe-string, but no matter how deft you might be at your trade, you are going to need some capital to prime the pump with.

Rather than offering something that sounds like an insurance based scheme, maybe you could offer a boiler/system 'check and service' that includes an agreement to attend to any later problems based at a fixed charged rate.

So to start the ball rolling, let's say you offer a boiler service and a system check for £100 (the amounts are just examples). You service the boiler, and you check the system for faults, part of the ingoing deal being that you will fix any faults found on the system at cost price (whatever that is). Once you are happy with the state of the system, you offer to cover any further repairs for a fixed fee of £50 up to a maximum of £500 - but no boiler replacements.

If the customer is not happy to pay for any work required to bring the system up to standard, then you just charge them for a boiler service.

BG get people on HomeCare contracts by offering introductory fees, and then they jack up the monthly charge year by year after the first year. They claim to "service the boiler", but only do a gas check and a scant visual check. Their contract has all sorts of get-outs that makes a farce of their slogan: "looking after your world".

Repairs can take days because they are frequently: "experiencing exceptional demand for their service", and they weren't even answering the "24 hour emergency helpline" for extended periods during April and May of this year.

Hardly surprising that they get so many complaints when their customers become disillusioned by the reality of what they actually provide, having made all sorts of reassuring promises to get people to pay their monthly installments.

Presumably, you like to sleep at night, and so you won't want to sale close to the wind by making glowing promises that you don't deliver on?

The cheapest boiler and system cover I've seen is by Help-Link, who say they provide a boiler service and full cover of the system for £15.99 per month - approx £192 a year.

For anyone starting out, I would think £15.99 would be the benchmark to work to.

To have any hope of getting this kind of scheme off the ground, you will need other engineers you can call on. Whether you go the "insurance" route, or the fixed price scheme, if you let people down, your name will stink in no time at all.

If I were in your shoes, I would put some ideas down on paper and have a conversation with a suitably experienced commercial solicitor, and find out whether there is a business model that you can afford to follow. It may be that such advice can guide you towards a feasible business plan.

 

[woodsy]

Agree with most of the posts on here and some very good sound advise. The only other problem that i can see is that bg etc pay £10 for something that costs you probably £70 -£100 which is why they can offer what they do.

 

[on31ll]

obviously it is being done. have a look at this i have stumbled accross for you.

Hassle free All In One maintenance plans

 

[RoryD]

What if .. lol

What if your first custard has an unvented cylinder leaking? Live in an area of Ideal Isar's and all the neighbours tell them of a muppett offering a great contract that'll repair these heaps for £140 a year? lol

Oh I'm just depressed now!!!

 

[so-solar]

WHAT IF.............. you had 500 customers paying you 200 pound a year and not 1 boiler had a fault? a lot of negative feedback, not a lot of positive feedback guys!

 

[Millsy 82]

For a contract plan to work you need enough decent engineers (Who are hard to find as companies who have decent engineers fight to keep them) to cover the work during the winter but then pay them for sitting around during the summer as we all know services dont only happen during the summer.

To compete with the big boys you need to offer a 24hr call out, Guaranteed visits within 24hrs of calls, Getting back to the jobs ASAP (People who pay for cover want there boiler fixing yesterday not tomorrow), Service every 12 months

You will also need to sort out great terms with suppliers for spares which would mean you would have to guarantee spending so much per year.

The way I look at it if you got 1000 houses straight away each paying £200 per year is £200000 per year out of that you will lose money straight away on services so if you normally charge £50 its down to £150000 to cover the services alone (worked out 8 services a day over a 48 week year) you would need a minimum of 2 engineers then a couple more for breakdowns so if you allow £26000 per engineer (Not including call outs and I wouldnt work for that but some people would) that drops down to £46000 Office staff during the day at £14000 down to £32000 (If you can find a good person but more than likely need 2 so down to £18000) then you have the parts to buy to repair the boilers pay for fuel gas safe insurances etc you might be lucky to make between £5000-£10000.

If you say you have a few companies around you that do this then the chances are you would struggle to get the work.
I would look for something that they dont offer Like fixed labour costs or no fix no fee (but only if you are really confident in your fault finding)

Most people who I speak to ask about cover for there boilers, I ask would you be willing to £2000 over 10 years when you could spend £700 (At our companies current prices) on services leaving £1300 left for breakdowns but if they have a boiler installed by us then they get a 7 year manufacturer warranty so £1300 for 3 years. The answer is always no

 

[Millsy 82]

WHAT IF.............. you had 500 customers paying you 200 pound a year and not 1 boiler had a fault? a lot of negative feedback, not a lot of positive feedback guys!

We would all be looking for new jobs.

Never gonna happen unless they are all in warranty.

 

[so-solar]

now that boiler manufacturers are offering 7 year warranty periods this is far more achievable, I bet there are thousands of customers paying BG and the other big dogs in the game a monthly payment and there boiler is still within the warranty period, but i very much doubt the engineers point this out and tell the customer to contact the manufacturers direct!