Terry Tanker met with Greg Mericle, president of Hurlburt Heating & Plumbing in Durand, Wisc., a 2017 Tops in Trucks Fleet Design Contest winner. The two discussed branding, buying an HVACR contracting firm, flat rate pricing and more.
We originally hired a design firm. They presented several concepts, but we didn’t like any of them. Then we enlisted the graphics team at Service Nation Alliance. After a few weeks of collaboration, we decided on the design that won your contest.
We have 18 vehicles. We’ve moved to the new euro style vans by Ram, which have more space, not only for tools and equipment, but also for our marketing.
We started with some absolutely horrendous concepts, but we stuck with it until the design was everything we wanted. Our customers and employees — and people who don’t even know us — love it! The old adage, ‘the tougher the road the sweeter the victory,’ is true.
Yes, it’s actually the first stage of a larger re-branding effort. The mobility of the vans give us the ability to quickly get in front of the public, whether they’re customers or prospects.
I came from the auto repair industry where I was a technician. I loved the business, but insurance companies run the industry, which is frustrating. So, I was looking for an industry and a business similar, with regard to the skilled labor because I believe I speak that language well. When I looked at the HVACR industry, I knew I wanted to be part of it.
She looked at me like I was an alien (laughs). But she’s an accountant, so who better to help with the business evaluations?
We knew what kind of lifestyle we had and didn’t want to go backwards, so it was a numbers game. The revenue and cash flow had to be good. I wanted a residential firm, since I was used to dealing with consumers. We ended up with a firm that was 70 percent commercial and 30 percent residential.
When we closed the deal in December 2014, there were 17 employees — five of whom were former owners of the company. Also, every employee except one had one or more family member working here.
We specialize in design/build work. Whether it’s an office building, warehouse or restaurant, we do all of the design work for the HVACR and plumbing systems.
We’re now 50 percent commercial and 50 percent residential, which has really helped our growth. When we bought the company, it was just over $3.8 million; we’re on target to do about $6.5 million this year. We’ve also grown from 17 to 30 employees.
It was a time and material company when we bought it, and we changed to a flat rate system. It helped our financial picture significantly. Flat rate was a foreign concept, both to our employees and customers. The first thing we had to do was change our culture and way of thinking.
We were under-charging so badly, we didn’t realize how much money we were actually losing on service. From a replacement viewpoint, we couldn’t make good recommendations and give our customers options since we didn’t know what the repair was going to cost until two weeks after we’d performed the work.
It was actually before we bought the company. I’d read a lot about it and decided it was the right business strategy. So, when I was looking for an acquisition target, I was shopping exclusively for a time and material company that I could switch to flat rate. I knew it would benefit us almost instantly.
It was difficult. We literally shut the shop down on a Monday morning and took the staff off site. We had a large presentation with samples and analogies in other industries. One of the former owners was an advocate and he really helped convince everyone this was the only move to make if we wanted to grow and get everyone a larger paycheck.
We’re members of the Service Nation Alliance. It’s been a great experience for everyone and we’ve learned a lot as an organization. Our technicians have really responded to Joe Cunningham. He has a great, down-to-earth style and they connect with him. We also take advantage of all the training offered by manufacturers.
Yes, I’m trying to do a better job with our inventory management. When we bought the business, inventory was three times the industry average. We’ve made some improvements but we can do a much better job.
Currently our stock items/inventory is tracked in Quickbooks. Our stock shelves are all bar coded for easy ordering and inventory. Our vendors’ part numbers are all cross-referenced to our part numbers so when we scan a barcode on our shelve, an order is placed for the correct item.
I’m hands on and like to be in the middle of things — literally. Soon after I started, I set up my office in the middle of our bullpen so I could immerse myself in the operation. I noticed immediately the phones didn’t ring like I thought they should, and knew we’d need to do more marketing to change that.
Literally everything. Marketing wasn’t a priority before we bought the company — there wasn’t even a website. I never looked at these things as negatives, though. Instead, I viewed them as opportunities. The company was doing okay before I arrived, and I knew it could be great if we addressed some of the untapped potential.
We needed to transform our culture to become an excellent service company. The phone rang one afternoon. It was a prospective client requesting service, he was placed on hold and one of our folks looked at me and said, ‘We’ve never done work for this person before, should we go?’ Yes we should go; it’s a new customer! (laughs)
Terry and Gene discuss family businesses, bucket lists, preparing for business every day and upcoming industry trends, challenges and opportunities.
Words of advice for the small business owner.
John Akhoian discusses learning the trade as a teenager, managing a team and learning from audiobooks, as well as mentors.
Terry Tanker sat down with Mark Hyde, of Hydes Air Conditioning, Heating and Electrical. They discussed operating a family business, the pending refrigerant change, and more.
Renew your HVACR Business subscription and meet our new Editor-in-Chief, Tom Peric.
