In the HVAC industry, success is challenging, and failure can be swift. Many skilled technicians venture into business ownership only to discover the path is far harder than anticipated. To understand why HVAC companies fail and how to avoid common pitfalls, we gathered insights from several industry experts who shared their experience-driven wisdom.
1. Financial Mismanagement and Cash Flow Issues
One of the most frequently mentioned reasons for HVAC business failure is financial mismanagement. According to Matthew Kuehlhorn, cash flow is critical: “Same as any other—cash flow. Could be high overhead, low margins, or lack of accountability.”
Chet Rogers elaborates further, explaining how crucial it is to maintain a positive cash flow:
“Lack of positive cash flow driven by too much debt or too many expenses or low revenue to offset cost. Then there are some that get shiny new object syndrome and bounce to the next thing. Then there are some that get burnt out and don’t realize the magnitude of effort, responsibility, and additional stress it takes. Then a few fail because of not paying taxes.”
Financial knowledge isn’t just beneficial—it’s essential. Claudio Vilas emphasizes the necessity of financial literacy:
“9 out of 10 businesses fold before their 10th year, and the main reason is that they run out of money because they can’t see the red flags that will lead them to their demise. A business needs to be profitable AND cash flow positive. For that, you need to have your eyes on the financials.”
2. Poor Systems and Execution
Many HVAC companies start strong but falter due to poor systems and execution. Industry expert Ryan Bowman stresses this problem:
“In my experience, it’s lack of clarity/structure and failure to execute. The industry is LOADED with tools, resources, programs, software, INFLUENCERS—and everyone subscribes, listens, buys in… and then what? Without full adoption, actual USE, and EXECUTION, you’ve got nothing.”
Sam Wakefield succinctly identifies a core issue:
“Lack of systems.”
Dalton Hadley adds that prioritization and fiscal discipline often fall by the wayside:
“People get fancy too quick. It’s easy to blow through money and not hold reserves. People slowly inflate their lifestyles and don’t even realize it. Then there’s the side of not prioritizing the tasks in the business that actually generate the most revenue and profit.”
3. Ego, Leadership, and Company Culture
The role of ego, leadership, and culture is often overlooked but critical. Robert Currie provides a thoughtful explanation:
“There is an arrogance to success. When one becomes the ‘Big Boy’ of the area, they soon forget where they came from. Their technicians are usually better trained, better groomed, uniformed, with wrapped vehicles, etc. That breeds a confidence that if not watched carefully, will lead to arrogance, then to pride, then to the fall. But I also think there is cheering when the Big Ones stumble from the smaller companies. It’s like an MLB pitcher in a rehab assignment in the minors—everyone is gunning to hit a homer off of the star.”
Jennifer Clements points out another aspect of leadership issues:
“Most AC companies fail because they chase the ‘secret sauce’ that so-called gurus sell, believing that success is something they can buy if they just attend enough events or spend enough money. They never take the time to implement what they’ve already learned. Another major issue is the inability to hire for the skills they lack. Many owners think their job is simply to collect a check, but true ownership means actively improving the business and measuring progress daily.”
4. Misguided Priorities and Distractions
HVAC companies frequently fail by chasing trends instead of focusing on foundational business practices. Jason Noel warns against getting distracted:
“Lack of direction, lack of action on that direction, lack of processes, following too many shiny objects. Asking for advice on Facebook pages, attending motivational seminars, someone appearing to have the magic pill, etc. At the end of the day, the magic pill is doing the work—it’s just doing the work on the right things with the right plan.”
Practical Steps to Thrive in the HVAC Industry
To overcome these common challenges, HVAC business owners should:
- Develop robust financial literacy and maintain vigilant oversight of cash flow and profitability.
- Implement clear, actionable systems and hold everyone accountable for execution.
- Foster a humble, adaptable, and growth-oriented leadership culture that avoids ego traps.
- Prioritize essential tasks that generate revenue and profit over trends or distractions.
By carefully addressing these areas, HVAC companies can create sustainable success, avoid common pitfalls, and thrive rather than just survive in a competitive marketplace.
The HVAC industry presents growth opportunities, but rapid expansion without efficient integration can lead companies into serious financial trouble. The recent bankruptcy filing by Air Pros is a significant example, illustrating how unchecked acquisition strategies can lead to financial distress.
Air Pros: From Rapid Growth to Bankruptcy
Air Pros, formally known as AFH Air Pros, LLC, quickly became a significant player in HVAC, plumbing, and electrical services in the southern and western United States. Starting in 2017, founder Anthony Perera built Air Pros from a two-person operation in Fort Lauderdale, Florida, into a regional giant with over 700 employees and 600 service vehicles across eight states.
This rapid growth came primarily through acquisitions. Air Pros strategically purchased several notable regional HVAC businesses, including Blue Star Heating & Air and Louis Bruno LLC in 2019, Climate Solutions in 2020, and Dallas Plumbing in 2022. These acquisitions significantly expanded Air Pros’ geographic footprint and service capabilities.
However, with rapid growth came substantial integration problems. The company’s decentralized business model—maintaining acquired companies’ local branding while centralizing marketing, finance, procurement, and call centers—introduced complexity and inefficiency. Despite initial success, this model created operational headaches, increased costs, and strained resources.
A Look at the Numbers: Cash Flow Problems
Reviewing Air Pros’ cash flow forecast reveals early warnings. In the 13-week cash flow projection prepared in March 2025, multiple periods showed negative operating cash flows. For instance, in the second forecast period (ending March 28, 2025), Air Pros projected an operating cash deficit of $316,000, leading to a net cash flow shortfall of $551,000. This trend continued in subsequent forecasts, peaking with a net cash shortfall of $2.9 million in forecast period nine (ending May 16, 2025).
These cash flow deficits were largely due to consistent high disbursements across payroll, materials, marketing, insurance, and restructuring costs, which outpaced the incoming collections. Even significant forecasted collections couldn’t offset rising operational and restructuring costs.
Operational and Integration Challenges
Air Pros’ decentralized model complicated the effective integration of its acquisitions. Fragmented practices and inconsistent standards led to operational inefficiencies. The decentralized branding strategy, while attractive to local markets initially, resulted in duplicated costs and challenges in central oversight.
Additionally, the heavy debt load from aggressive expansion constrained liquidity. As cash flow tightened, operational flexibility diminished, leading to defaults on financial obligations. These defaults further reduced the company’s negotiating leverage and its ability to manage day-to-day operations effectively.
Leadership and Strategic Changes
In an effort to regain stability, Air Pros appointed restructuring veteran Lawrence Hirsh as sole independent manager in January 2024, replacing founder Anthony Perera. Despite leadership changes aimed at improved financial management, liquidity issues persisted.
By mid-2024, founder Anthony Perera had completely exited the company, highlighting the severity of internal disruptions. Hirsh’s leadership marked a shift toward crisis management and asset restructuring, steering Air Pros toward strategic asset sales rather than continuing its unsustainable operational path.
The Path to Chapter 11 Bankruptcy
In July 2023, Air Pros hired investment bank Jefferies LLC to explore a potential sale of the entire company. However, attempts to find an enterprise-wide buyer failed due to unresolved operational challenges and debt burdens.
Faced with limited options, Air Pros pursued a breakup sale strategy, seeking court-approved asset sales to maximize returns for creditors. To support ongoing operations during this process, Air Pros secured a $20 million Debtor-in-Possession (DIP) financing arrangement. This financing was crucial, providing $4 million immediately upon bankruptcy filing, an additional $6 million upon court approval, and rolled-up financing to maintain operations and vendor relationships during asset sales.
The Bankruptcy Budget: A Closer Examination
Analyzing the initial bankruptcy budget further highlights Air Pros’ financial predicament. For the forecasted 13-week period, total operating receipts were estimated at $31 million, against $29 million in operating disbursements, leaving a slim positive margin of $1.9 million. However, restructuring and non-operating expenses quickly eroded this margin.
Significant restructuring costs, such as professional fees, restructuring item expenses, and secured creditor distributions, added $10.6 million in disbursements. The final result was a projected net cash flow surplus primarily due to sale proceeds of $154 million. Without these asset sales, the company’s financial position would have been untenable.
Lessons from Air Pros: What HVAC Companies Can Learn
The case of Air Pros illustrates crucial lessons for HVAC businesses:
1. Integration Matters
Rapid acquisitions require equally rapid integration. Decentralized operations might offer local branding benefits, but centralized control over finance and operations is essential to sustain growth.
2. Manage Debt Responsibly
Aggressive growth through debt can lead to significant financial vulnerability. HVAC companies should balance growth ambitions with sustainable debt levels to avoid crippling liquidity issues.
3. Importance of Cash Flow Management
Companies must closely monitor and manage their cash flow. Forecasts should drive strategic decisions proactively, preventing spiraling deficits.
4. Leadership and Crisis Management
Bringing experienced restructuring professionals early during financial distress can provide clarity, helping businesses navigate turbulent periods effectively.
Beyond Air Pros: Common Pitfalls in the HVAC Industry
Air Pros is not alone in experiencing difficulties related to rapid growth and integration. Many HVAC businesses encounter similar issues, highlighting industry-wide challenges:
- Underestimating operational complexity: Companies often overlook the complexity involved in managing multiple acquisitions. Proper planning for post-acquisition integration is vital.
- Failing to streamline brand identity: While multiple local brands might seem advantageous, centralized branding can significantly reduce operational costs and enhance customer recognition.
- Ignoring financial fundamentals: Expansion must align with financial stability. Neglecting core financial metrics, such as liquidity and debt ratios, can precipitate crises.
Moving Forward: Best Practices for Sustainable HVAC Growth
To avoid the pitfalls encountered by Air Pros, HVAC companies should adopt these best practices:
- Centralize key functions: Finance, procurement, marketing, and customer support should be centralized to achieve efficiencies.
- Strategic planning: Create realistic and flexible growth strategies, carefully balancing expansion with available financial resources.
- Enhanced financial oversight: Implement rigorous financial oversight and controls to detect and correct cash flow problems early.
The Future for HVAC Businesses
The HVAC industry remains robust, offering ample growth opportunities for companies that manage their expansions wisely. Understanding cases like Air Pros allows business leaders to recognize risks early and adopt sustainable strategies for lasting success.
HVAC companies should take heed of Air Pros’ experience, ensuring that rapid growth is matched with disciplined integration and financial management. By doing so, businesses can avoid similar outcomes, thriving sustainably in a competitive market.
