Lone Star HVAC

The Situation

Mike Rodriguez built Lone Star HVAC from the ground up over 12 years. By 2023, they were doing $8.2M in revenue across service calls, equipment replacements, and new construction work. On paper, things looked good.

In reality? Mike was trapped.

The Problems:

• Working 70+ hours/week, constantly firefighting
• No idea which jobs or techs were profitable
• Month-end financials came 22+ days after close—too late to act
• Bidding based on gut feeling, not margin data
• AR ballooning (68-day average aging)
• Cash flow felt like a roller coaster
• Growth stalled—hitting the same ceiling quarter after quarter

Mike knew the numbers were messy, but he didn’t realize how much it was costing him until we dug in.

The Diagnosis

We started with a 2-day financial deep dive. What we found:

1. Chart of Accounts Chaos 147 accounts with overlapping names. Direct costs mixed with overhead. No way to see true job profitability or service line contribution margin.

2. Job Costing Theater Materials mostly got coded correctly. Labor? Hit or miss. Subcontractors and equipment rental? Rarely. Job profitability reports were fiction.

3. No Financial Rhythm Books closed whenever the bookkeeper got around to it (usually 3+ weeks). Leadership had no weekly pulse on cash, AR, or margin.

4. Blind Spot Pricing Service calls were wildly profitable. Replacements broke even. New construction lost money. Mike had no idea.

5. Admin Overload Office manager drowning in AR follow-up because there was no system. Everything reactive, nothing proactive.

The Plan

We built a custom financial operating system over 18 months:

Phase 1: Foundation (Months 1-3)

• Rebuilt Chart of Accounts: 52 clean accounts organized around decision-making. Direct costs separated by service line. Overhead bucketed into admin, sales, and operations.
• Job Costing Overhaul: Configured job types (service, replacement, new construction) and service items. Trained admin team on consistent coding practices.
• 5-Day Close Process: Implemented weekly reconciliation rhythm. Month-end close locked within 5 business days.

Phase 2: Visibility (Months 4-9)

• Custom Scoreboards: Built weekly dashboards showing:
  • Contribution margin by service line
  • Profitability by tech
  • AR aging with action items
  • Cash forecast (4-week rolling)
• Weekly Leadership Rhythm: Installed Tuesday morning meetings (60 min) to review metrics, surface problems, and assign action items.
• AR/AP Management: Created aging reports with automated follow-up triggers.

Phase 3: Optimization (Months 10-18)

• Pricing Model Refinement: Used clean job costing data to rebuild pricing for replacements and new construction. Killed unprofitable work.
• Capacity Planning: Helped Mike see tech utilization and forecast hiring needs 90 days out.
• Cash Flow Forecasting: Monthly rolling forecasts tied to job pipeline and payment terms.

The Results

Financial Impact:

• Revenue: $8.2M → $11.4M (+$3.2M, +39%)
• Gross Margin: +37% improvement across all service lines
• AR Aging: 68 days → 31 days average
• Month-End Close: 22+ days → 5 days consistently
• Owner Time: 70+ hours/week → 45 hours/week

Operational Gains:

• Killed new construction (money-losing). Doubled down on service and replacements (high-margin).
• Identified top 3 techs driving 60% of profit. Built training program to replicate their performance.
• Implemented weekly AR follow-up cadence. Reduced bad debt by 80%.
• Hired strategically based on capacity data, not panic.

Strategic Clarity: Mike now makes decisions from data, not gut feeling. He knows his numbers weekly, not quarterly. And he’s built a system that runs without him micromanaging every invoice.

---

What Mike Says

“Before KPS, I was guessing on every bid. I’d win jobs and wonder why we didn’t make money. I’d lose jobs and wonder if I was pricing too high. I had no idea.

Now I know my numbers cold. I know what margin I need to hit. I know which service lines print money and which ones don’t. We grew 40% and I actually have time to think strategically instead of firefighting.

The best part? The system doesn’t rely on me. My team runs the weekly rhythm. The books close on time. I get the reports I need to steer the ship.”

---

Key Takeaways

This transformation wasn’t about working harder. It was about building systems that create visibility.

What made the difference:

1. Clean Chart of Accounts → See where money actually goes
2. Accurate Job Costing → Price with confidence, kill losers
3. Weekly Scoreboards → Catch problems while they’re small
4. Leadership Rhythm → Turn data into action
5. 5-Day Close → Stay nimble, not reactive

If you’re stuck at a revenue ceiling with messy books and no visibility, you’re not alone. This is exactly what we do.

📞 Book a free financial deep dive: Contact Us