As many contractors know, making the decision to open another location is no small undertaking. In addition to finding the right people to staff the new location, a lot of research is required to make sure the new area can support another HVAC business.
Travis Smith started working at Sky Heating in Portland, Oregon, when he was just a little boy. His father founded the company in 1979, and he worked there most of his life. He eventually purchased the business in 2010.
About a year ago, Smith began debating whether to expand his service territory and buy an existing company located about 100 miles from Portland.
He found conditions to be favorable and ultimately decided to take the leap and open a second office. And, he’s glad he did, because the new location is already starting to turn a profit.
“Overall, it’s been a good move,” he said. “It’s helped us plan for future expansion as we continue to learn what we need to do on a daily basis to successfully operate out of multiple locations.”
There are numerous challenges that need to be addressed when deciding whether to open another location, including recruiting, quality control, consistent training, inventory control, and company communication, said Mike Giordano, president of United Air Temp in Lorton, Virginia. “One of the biggest challenges, though, is finding good people. I believe one of the main reasons people don’t consider HVAC as a line of work is because there’s relatively little opportunity for advancement unless they go to another company that has a vacant position or they decide to open their own business.”
It’s for this reason that United Air Temp evolved to become a multi-branch distributed company. The company now operates 25 branches in five states.
“We believe in providing a career path for people entering this profession, and if our people have the opportunity for growth, our whole company will grow,” said Giordano. “Our company incorporates a distributed growth model at its core — we combine the entrepreneurial desire most people have coming into this field with the support of a large company to help with the tasks most don’t want to do.”
United Air Temp hires from within, so all managers start as new hires and work as technicians while attending sales training. Giordano was hired in 1993, right after graduating from college. He progressed through the program just like everyone else. “Most technicians like our distributed model because they end up working more and driving less, which quickly leads them to be better at their jobs. As they continue to progress, they can move through all aspects of
our business and eventually open their own offices. They have the support of a large company and a lot of autonomy as well as the rewards of running their own businesses.”
When deciding whether to expand to another area, Giordano looks for areas of high growth that are readily accessible to existing offices. “That way, we can closely monitor and adjust our system as we move forward. We also initially offer easier-to-install products in a new location before adding additional products.”
The regulatory environment is one of the bigger challenges associated with expanding into different states, as every state has different permitting requirements, said Giordano. “We prefer to fully understand the regulatory environment before we add new services such as geothermal. Making sure we’re in full regulatory compliance is a primary concern of ours.”
But, the benefits of being a multi-branch distributed company far outweigh any drawbacks, said Giordano, with the opportunity for individual growth being the primary factor. “But, before even attempting a multi-state expansion, you have to have really strong distributed systems, a well-developed career path, and coworkers whom you trust. And, trust only comes with time. That’s why our growth is limited by our ability to grow leaders. Because of our model, we literally have more opportunities than people ready to fill those opportunities.”
Louis Bruno, owner and founder of Bruno Air in Bonita Springs, Florida, has a similar problem, as he’s always looking for trusted individuals who can continue the company’s expansion into new areas. “It takes special people who know our organization inside and out to be able to go into a new zone and start an office. These people need to be able to go out there on their own and basically be an entrepreneur within our entrepreneurial organization. That’s the bottleneck for us.”
Embracing this challenge, Bruno Air has experienced incredible growth since opening its doors three years ago. Bruno started the company in December 2012 in Naples, Florida, after being in the industry for about seven years. The first year, he set a business goal of $400,000 in revenue and ended up with almost $2.5 million in sales. The second year, he set a goal of $6 million in sales and ended up earning more than $10 million. “In 2015, I rewrote the goal for $15 million, and, today, we’re tracking about $23 million to $25 million. It’s been explosive growth and an insanely bumpy road, but that’s where the fun is.”
Bruno chose southwest Florida as his first zone and opened offices in Bonita Springs, Naples, and Fort Myers. Earlier this year, he opened a second zone in Orlando and a third zone in Tampa. “Both zones are off to hot starts, and I’m excited for the potential. Southwest Florida only has 1.1 million people in the tri-county area that we serve, and, between Tampa and Orlando, there are 6.5 million people. I’m pumped to see what the future brings.”
The company is successful, said Bruno, because it specializes in removing customers’ obstacles. “Everyone is autonomous for being able to make a decision that removes an obstacle for a customer, because our goal is to make everyone feel better about doing business with Bruno Air. We combined that goal with investing in our people, training, products, and technology, and we ended up with a proven process that is scalable and repeatable, and that has helped us grow exponentially.”
The company is headquartered in a 20,000-square-foot office in Bonita Springs, which houses the company’s infrastructure and call center. A general manager assigned to each zone is in charge of creating customer demand while technicians are outfitted with tablets, software, printers, and scanners to ensure customers have the best possible experience. With all the overhead located in the company’s headquarters, the cost to open a branch office is minimal, said Bruno. “The investment is in our people. We invest heavily in our teams and their training, and we really build and drive momentum in those zones.”
Creating a strong marketing program is another reason the company is successful, said Bruno. “We have our own individualized, customized marketing team; program; and style, as we don’t subcontract anything to anyone. We know what our image is and what our brand represents, and we’re really strong in portraying it. Given that most of the homes around the Gulf of Mexico are of similar construction and condition, we also know who our target customer is, and we’re able to take these proven marketing techniques and reproduce them in other zones.”
For contractors thinking of opening another location, Bruno advises them to first figure out how best to make things work. “Everyone has a proven process, and if you don’t know what it is, ask the best performers on your team: ‘What do you do that your customers really like? What value do you add to their lives? Why do they use you?’ Reverse engineer it from there and put it down on paper. Then, make it happen by training, coaching, leading, managing, and holding people accountable. You’ll
never feel like you’re ready to expand — you just have to take a leap of faith and trust that you have the right people in place and use your proven process to guide you.”
BURSTING AT THE SEAMS
Bell Brothers Plumbing, Heating, and Air was founded in 1990 by brothers Jerry and Kenny Bell in the back of their family’s Elk Grove, California, pizza parlor. The brothers eventually moved down the road into their own space, and this served as the company’s primary location until 2012, when Jerry and Kenny began looking for a new office location. They ended up choosing a space about 30 minutes away in Mather, California, and, just this year, they opened a third location in Manteca, California.
Opening the second location was necessary because the company had outgrown its original location. There were no more phone lines available in the call center, and the company had to rent another space down the street just to manage the warehouse. By the summer of 2012, the company could no longer handle the calls with the existing number of spaces available for phone lines and staff.
The expansion to the Mather facility was a long process, as the space was a fixer-upper, and the only part that was move-in ready was the warehouse and a small wing of offices. “During the renovation, we decided to manage our field staff in teams of north and south,” said Lauren Edvalson, marketing director, Bell Bros. “We moved half of our warehouse to Mather, and the other half stayed in Elk Grove. Our call center stayed put while we constructed a new space for it in Mather, which took about seven months to be completed. We then moved the finance, marketing, and human resources departments to Mather.”
There were a few bumps in the road when expanding to the second office, including the installation of the phone system. “We tried to move our call center and phone lines over to the Mather location a little over a year ago, and the process was kind of a nightmare,” said Edvalson. “We lost a lot of the functionality we had in Elk Grove due to phone line and vendor issues. We’re still working through some of that, but we had phone lines down on busy days, and an auto dialer that was causing issues. I’m not sure any of that could have been prevented, but we might have benefited from hiring a consultant or by asking more questions before we switched vendors.”
Even with these challenges, the brothers are happy they decided to expand. “From an efficiency standpoint, we’ve been able to control our fuel and inventory costs by having the three locations,” said Edvalson. “We staff warehouse teams to manage supplies, and technicians are broken up into teams based on where they live. They are assigned to meetings and parts pickups at the location closest to their homes. The end result is we have happier technicians because they have less drive time and happier customers because we’re able to get to them faster.”
Edvalson noted that Jerry and Kenny did a lot of research before making the decision to open up a second location, including tapping the resources of the Nexstar Network. “They helped us figure out what worked and what mistakes to avoid. In our case, we really had to expand, but we did our homework before, and I think that’s key for anyone thinking about expansion.”
As for Smith, he’s still working through some of the challenges that come with opening a second location. “Keeping everybody on the same page will probably always be our biggest concern. We want both branches to work together, yet operate somewhat separately. That’s necessary, because each location has its own design criteria because they are in two different climates. In addition, our second, smaller location does business in two states and works with multiple utilities while our larger branch primarily does business in one state, with one main utility district. This means there are different licensing requirements between the two offices, and it can be difficult to keep up with the differences.”
Smith is pleased with the growth he’s seeing and is delighted that the new office allows him to provide services, such as load calculations, financing, and high-efficiency equipment, that were previously unavailable. “We saw this location as a strategic area where we could offer people new options and raise the bar for the industry. Even though it took longer than expected for the second location to become profitable, we feel we’ve succeeded, and we’re happy to fill a need for these customers.”
Publication date: 12/7/2015