Justin Deese (00:00)

Warning, new tariffs could crush your business. What you need to know and what to do about it.

Tariffs are about to shake up the home service industry. If you own a home service business, you need to know these new costs can affect you. But are all tariffs bad?

Today we're going to break it down with simple pros versus con list.

So you know exactly what's coming and how to stay ahead. In this video, we're going to dive into how tariffs impact your costs, suppliers and

The unexpected benefits tariffs could bring

your business. And yes, there are some. Actionable steps to protect your business from price hikes.

Let me start off with what are tariffs and why do they matter? The simple answer is tariffs or taxes on imported goods. And when tariffs are increased, so do the cost for many materials that we use in our industry.

that could be impacted by tariffs are, well, almost any materials and supplies that we use in our industry on a daily basis.

So HAC units, water heaters, gosh, garage door, garage door, openers, really most things, copper metal fittings.

fasteners, even hardware like screws, bolts, brackets. All of those things could be affected by the tariffs that are coming down the pipeline. Here's another thing. Refrigerants for most HVAC systems are actually manufactured overseas. Another thing is specialty tools and equipment. Things like meters and gauges and diagnostic equipment and even replacement parts for power tools may come from tariff affected areas.

Let's talk about who tariffs could affect. Well, the simple answer is everyone. Suppliers, distributors, manufacturers, and ultimately you as a business owner. And let's not forget the customer. So again, the real answer is everyone.

as we go down the list today, I'm going to break these down into pros and cons list. I'll start with the con and move to the pros since I like to end it on a high note.

I'll start with the cons list and move to the pro since I like to end on a positive note. And I'm guessing you're probably thinking to yourself, is there any actual positives? The answer is yes, there are.

So in general, here are some pros and cons for just tariffs. So one of the cons is that for service businesses like ours, this can mean higher cost and if not managed correctly in a timely manner could lead to lower profit margins. And let's be honest, nobody got into this business to make less money.

Pro is that tariffs are designed to protect American manufacturers.

Tariffs can make it more profitable for American companies to manufacture materials and products domestically. It can create a lot of positive impacts like more jobs and reduced reliance on imports over time.

By relying more on domestic

can reduce the risk of supply chain disruption caused by global instability or foreign policy changes.

The bottom

is the more items that are manufactured in

American jobs.

Let's talk about how tariffs can impact your business.

It can impact your business in many ways, but here are a few that you should keep top of mind

The first and probably the most obvious is by increasing your material and equipment cost in your price book. Like I said in the beginning of the video, each of these items will break down into a pros and cons list.

So obviously with increased pricing, a con of that would be an HVAC unit, a water heater, wiring, steel products, garage door, garage door opener, fill in the blank. They all could jump up as high as 10 to 25 % in price literally overnight. We can all admit that's not really a good thing if we're not handling it correctly. Now a pro to that is domestic suppliers could

start thinking more about expanding, reducing a long-term reliance on imports. This can lead to a boost in domestic innovation and investment, which then can lead to stabilize long-term pricing and stronger supplier relationships. And I get it. That's kind of a long-term pro and you might be thinking that's all great, but I need something to help me now.

Don't worry. There's some things coming up.

One of the other things that a tariff can affect a supply chain disruptions and delays. Obviously a con with that would be tariffs can create uncertainty and that can lead to shortages and delays in shipping. lot of our parts in service or a lot of our parts and materials that we get again, they come from overseas. So if that start getting, if that starts getting delayed, that can start this whole backup process.

But a pro to that is you can get ahead by securing contracts with reliable suppliers, but you got to do it now. Once they're out, that's a really difficult time to really secure a relationship.

start sourcing alternative suppliers and ordering in bulk where it's possible. Now I get depending on the size of your business, you're limited on how much you can stock up, but the more you can stock up at the lower price,

Another big one is as you're looking for suppliers and manufacturers, look for people that are, manufactured in the U S now, the truth is they may have a, they may end up having a shortage as well in a delay in getting out, but hopefully that's because people are pushing towards us based. And obviously they're not used to that volume that could reduce that, but I'm guessing that would be a very, be a very short term thing.

Another big problem with the tariffs to your business could be your profit margins could shrink. And notice I said, could. Now, obviously a con to that is If you don't adjust pricing, these costs can eat into your profits and they can do it fast. Let's be honest. The businesses that didn't adjust pricing during the COVID struggle.

They had a hard time staying profitable and ultimately a lot of them went out of business.

A pro on this is to be thinking about smart pricing strategies that can help you maintain strong margins.

Sometimes higher price indicates higher value.

Since you're going to have to increase your price now is a great time to ensure you are focusing on value to customers. This can be an opportunity to emphasize the value of your service rather than just about the price. The truth is with customers, it's always about the price until you make it about something else. And if you educate customers on why your services are superior, better warranties, quality of work, reliability, you can justify higher pricing without losing that business.

higher quality customers and less price resistance. Listen, tariffs will force businesses to stop competing on price alone and hyper-focus on value-based pricing. When done correctly, this attracts better customers who are less price sensitive and more loyal to you and your business.

This can also lead to a competitive advantage. If competitors don't adjust pricing properly,

they will absorb the costs and shrink their profits while you maintain a strong margin by making smart pricing adjustments early. can position your business as a leader while others are struggling.

Make sure that you're using option selling techniques. if you don't already have the good, better, best pricing implemented, then make sure you get that out. That's just going to ease customers and give them the option of looking at what it is they want. Tell your techs to stop selling and start educating customers. when your techs stop buying for your customers, your close rate and your average ticket will go up.

Another biggie is going to be competitive advantage for early movers. Now a con to that is competitors who stock up early may undercut you.

A pro to that is you can gain an edge by making proactive business moves before tariffs fully hit.

Renegotiating supplier terms, locking in pre-tariff pricing and communicating urgency to customers is a great way to navigate what's happening right now.

Let's talk about how to protect your business from tariff costs. We've said this a couple of times in the video. I'm going to say it again, because it's worth repeating.

Adjust pricing before it's too late. Don't absorb the cost. Pass them on strategically with value-based pricing. Think about it. For those of us in the South, we love Waffle House. It's just part of what we love.

And at Waffle House, if you go to Waffle House right now, there is a sign up and it says there is a surcharge for eggs. And it's like 50 cents. Well, if I go in, I now have the choice whether to buy the eggs or not buy the eggs. The truth is if I want to egg, I'll pay 50 cents more because I want the egg. Waffle House passed that along and customers aren't riding in the street. So don't feel like because your price went up, you're not able to pass that along to the customer because you 100.

percent are able and it's okay to pass that along to the customer. Another thing is to offer limited time pre-tariff deals to drive urgency to customers. This is a real thing. If they get out of hand and they go up even higher, if a customer acts today, the price is not going to go down. I mean, think about when COVID happened and all these price increase happened. Very few prices went down.

I'm guessing that with the tariff as things get increased, I'm not sure that they're ever going to go down to where they were before. Again, using COVID as the example, maybe they do, maybe they don't, but use that as an urgency to move boxes. If you're in the HAC industry right now, it's kind of a weird time anyways, because we're

in that shoulder season where it's not winter and it's not quite summer. So some places are, you know, between 60 and 75 degrees and there's not a lot of demand. This is a good way in order to create urgency to have the customer move the needle. And the truth is it's a win for the customer if they need it and they're going to need it in the next six months. It makes more sense to pull the trigger and make the decision now.

Focus on higher margin services. Sell premium services to offset material cost.

One of the things we talked about earlier was the giving customer options. When you're giving customer options, they tend to pick higher option items if they know what's out there and available for them. Most customers don't know, so it is the technician's responsibility to educate the customer on that. Another thing is to increase efficiency in operation.

minimize wasted material and optimize scheduling to avoid unnecessary cost.

Another thing is to educate customers proactively communicate why prices are increasing and offer finance options. Let's be honest. The customer already knows, but still communicate with them. What the what's happening and what needs to be done. And also finance option is a great way to spread out that cost. The number one strategy for staying profitable, despite. Tariffs.

I think it's to pre-sell services before costs increase. Offer lock-in pricing today.

Especially for big deals or big ticket items before the cost goes up, go ahead and lock it in. Promote maintenance plans and service agreements to create reoccurring revenue.

If you act now, you can beat the price hike and keep your business ahead of the curve.

Here's a few closing thoughts. Tariffs can be a challenge, but if you plan ahead, You can turn this into an opportunity instead of a crisis. Again, using COVID as the example, the people who got on it and made the shifts quickly are the ones who thrived during that. This is no different.

Now, what if tariffs go away tomorrow? Did I just waste time by going and looking at my business?

The answer is no. Everything I've talked about in this video are things you should be doing in your business on a regular basis. You should be watching your labor and your efficiency and your materials. All of those things should be happening on a regular basis.

I want to leave you with this quote. It's not the strongest or the most intelligent who survive, but those who can best manage change. That's from Charles Darwin. I hope this video was helpful and I'd love to hear about how tariffs are affecting your business and what you're doing to stay ahead of them or preparing forms to drop a comment below. If you're on YouTube,

Thanks a lot for checking this out and until next time, keep crushing it.