MUSKEGON, MI — On the shores of Lake Michigan lies Muskegon, a city of 40,000 people that is attempting to grow by shifting its economic base from industry to tourism. If turning Muskegon into a tourist spot is a challenge, then so too is the task lying ahead for Don and Jennifer Bowen, co-owners of Bowen Refrigeration, Heating and Cooling. They want to expand their business in order to ensure success and secure a bigger piece of the local commercial-residential hvacr market. They also want to continue to make their business a happy and secure environment for the employees.
Those reasons led them to enter The News’ first-ever “Do You Want to Grow Your Business?” contest. The company’s solid base, its plan for growth, and its desire to improve earned it the contest’s prize: six months of free consultation with Ruth King, president of American Contractors Exchange, a network for successful independent plumbing and hvac contractors.
King, who was hired by The News to set up a business/marketing plan for Bowen, met with the Bowens and their staff in early May to discuss their business plan and get comments from the employees. Her goal: to get a feel for Don and Jennifer’s vision and begin to set up a strategy to help them realize their goals.
The first stop was an early morning meeting with service technicians, where King quizzed the staff about what they liked and disliked about the business. Bob Wiegers, service manager, said that larger service contractors in the Muskegon area had one advantage over Bowen.
“The larger companies have more technical expertise and [have access] to programs like microprocessor control training.”
Service tech Shane Sutton said he’d like to work on larger accounts, too, and added, “I’m looking for what it takes to get to a comfortable retirement. I’d like to see our company start a retirement plan.”
King asked the techs about selling service agreements and how that might impact the business.
Wiegers noted, “It would be better if we had customers who wanted service agreements.”
Steve Dietz, who worked for Bowen, left for another contractor, and came back with some service agreement experience, suggested that Bowen should look into getting more commercial and industrial service agreements. He said selling to residential customers is tough.
“They don’t want to pay for a service agreement until something breaks.”
Don Bowen said he would like to make it simple and affordable for customers to purchase service agreements. He acknowledged one advantage of a service agreement program. “The contracts will keep the techs busy during the slow times.”
After the service techs headed out for their morning calls, it was time for the installers to come in and talk about the company. William Smith, installation manager, had a lot of good, positive things to say about Bowen. In fact, he even questioned the need for King’s consultation, although he was certainly polite about it.
“I’m glad [Ruth] is here but I’m not sure why,” he said. “We are going good and things are getting better.”
Lester Miller brought up the point about matching the proper materials to the job and how it is sometimes frustrating that he can’t get everything he needs at once. Smith had an answer for that: “I don’t ever see the problem solved completely because you have one person selling the job and another installing it.”
King suggested hooking up a utility trailer to carry the extra materials, or adding a runner or shop person to bring out the needed parts. Bowen replied that it was possible to add a young person, but said, “Kids would like more money than we can pay.”
Smith said he would like to see more new commercial customers or an increase in big commercial replacement jobs, rather than just changeouts.
The installers agreed with the service techs about one topic: better communication between dispatch and the customers is needed. The workers felt that customers were not being kept apprised of the scheduled service or installation calls; sometimes they weren’t home or weren’t ready. And often their routes would crisscross each other’s, an inefficient use of travel time.
Bowen said he would continue to address this concern at the company’s weekly Thursday morning staff meetings. He also planned to get feedback from dispatch, too.
King also interviewed salesperson Larry Bush to get his perspective. Bush, who has worked at Bowen for six months after being employed by a larger commercial contractor in the area, said the company needed better computer programs, especially of the scheduling/dispatch variety.
Bush, who has a master’s degree in theology and is the minister of a small local parish, acknowledged that he sometimes gets a little too anxious and doesn’t take the time to fill out the proper paperwork, which can frustrate the installers. But he stays busy, calling on at least four to five leads per day in a wide geographic area. And he schedules Saturday morning calls, too.
He added that he likes the product he sells and the boss he works for. “Rheem is a good outfit and they treat their people real well. And Don is a positive breath of fresh air. You can tell that people like to work with him.”
The office staff of Marilee Beck and Rose Matteson handles the dispatch, invoicing, and banking duties, besides answering all incoming calls. They also set up the job folders for the installers and techs. Matteson would like to see the techs become a little more aggressive at collecting money, especially since some of Bowen’s customers go through a lot just to get the money for basic necessities.
Matteson spends a lot of time finding money sources for customers, including financing packages through local utilities Con-sumers Energy and Michigan Consolidated Gas, along with American General.
Matteson addressed a concern about communications between dispatch and the service techs, saying that they don’t always call to tell her where they are or where they are going.
King suggested giving each tech one service call at a time instead of several in the morning. That way, the techs would have to call in after completing the job before heading to their next call.
Don and Jennifer worked on a mailer program involving kitchen magnets, offering customers a discount on service/maintenance calls. Jennifer produced a letter that was sent out to customers of a former hvac contractor who had gone out of business, offering a discounted rate for clean and inspects.
The campaign has yielded some results, but customers of the former contractor lost out on their service contracts and are reluctant to sign up for new ones. For that reason, King suggested shifting attention away from them and to other prospective customers.
She also recommended using a postcard as a mailer because of its cost and effectiveness, and suggested using the word “planned” or “scheduled” maintenance in place of “preventive” maintenance.
In discussions with Don and Jennifer, King learned that they didn’t keep accurate records of their inventories, preferring to “guesstimate” rather than to be exact. King noted that an underestimated inventory can come back to haunt them at year’s end — when this oversight can wipe out a big chunk of their after-tax profits. One of her recommendations was to take an accurate inventory and switch from their current accounting software to another type, KRS.
Bowen said his charge-out rate for service calls is $60 an hour, which is about average for the Muskegon area. He added that the rate was not the lowest nor was it the highest in town.
Based on that figure and the pay rate of Bowen’s top technician, King was able to put together a formula for setting a price on the company’s service agreements. A summary of her advice to Don and Jennifer after the initial meeting will appear in next week’s issue.
In the months to come, The News will report on the progress the company is making under King’s guidance.
NEXT WEEK: Find out in detail what Ruth King recommended to the Bowens after their initial consultation.
As winner of The News’ first-ever “Do You Want to Grow Your Business?” contest, the Muskegon, MI, contracting company is receiving six months of free consultation.
Providing the expert guidance is consultant Ruth King, president of American Contractors Exchange.
After swapping a few e-mails with owner Don Bowen, King recently came in from Atlanta, GA, to meet Bowen face-to-face at his place of business. News business management editor John Hall was right there, too, recording and taking notes as to what King had to offer to Bowen and his hvacr team. In this issue, Hall reports on what happened during the course of this first consultation visit.
Over the next six months, The News will provide periodic reports on the company’s progress. This is not meant to put pressure on Bowen and his employees. Instead, we believe News contractor-subscribers can identify with Bowen’s company and its business challenges. We believe readers can learn and (hopefully) grow with Bowen.
Where: Muskegon, MI
Owners: Don and Jennifer Bowen
Market: 40% service; 40% replacement; 20% new construction
Business Mix: 65% residential; 25% commercial; 10% industrial
Sales: $1.4 million in 2000
Quote from Don Bowen: “I am a young, aggressive businessman with goals, and I love doing what I am doing. I also have great employees. We want to be known as the best contractor. [Our goal is to] gain customer’s trust.”
Strengths: Strong refrigeration service department
Challenges: Local economy
Publication dates: 05/14/2001