Some contractors want to focus on only HVAC. That can be enough to build a successful business. Dave Miller used to be one of those contractors.
Superior Services was strictly HVAC from its inception in 1999 to around 2017, when Miller took the first step in expanding Superior’s offerings.
“It just snowballed after that,” he said.
To hear Miller talk about the array of current offerings and the semi-planned way that Superior’s expansion has picked up momentum over just a few years, “snowballed” is the right word indeed.
Ducts, Electrical, and Water (Two Kinds)
Contractors will often add services by acquiring an existing company or by starting a new division organically. Superior is unusual because it has gone both of those routes at least once, plus a couple of others.
STEPPING STONES: Superior Services uses its duct cleaning and air sealing team as a starting point for HVAC personnel. From there, they can move on to maintenance, service, and installation. (Courtesy of Superior Services)
The first step involved buying a company that performed duct cleaning and air sealing. By adding a dedicated team in-house for those tasks, Miller boosted sales and profitability, and it went hand in hand with the existing heating and air work.
Bluffton is near the beach in South Carolina, and about a year later, Miller decided to add water remediation and restoration, this time building from within. After that, Miller wound up adding electrical around the same time through an approach best described as accidentally hybrid.
“What spurred it is that I was looking at a company that did plumbing and electrical, and that was going to be our way to get the ball rolling in that direction, but the deal fell through at the end,” he said. “But we already had so much stuff in motion, we figured we’ll just keep going and do it from scratch.”
So they did. If turning on a dime to open two divisions internally instead of through a purchase sounds risky, Miller would agree. He freely acknowledged — and not for the only time — that if he had to do it again, he would have been a little more prepared for adding those divisions.
Wrong Step, Right Path
Back in the HVAC department, the company worked in 60 or 70 homes a day. Occasionally, a technician working in an attic would step through a ceiling or maybe accidentally damage a drain line.
It wasn’t often, but often enough that Miller took a good look at the expense of hiring someone to do the necessary sheet rock and painting. He decided to bring a few guys in-house to do the work.
In a classic lemons-to-lemonade maneuver, Miller reported that Superior went from a potentially upset customer to, “Wow, you guys did a really great job. I need these other rooms painted …”
Superior would, of course, have to eat the cost of the repair-related work, “but then we were able to make some money on painting the rest of the house or doing whatever else they want done.”
That touches on what Miller describes as a “mantra” of sorts behind all this growth: The company spends money to get into a house, and it shouldn’t miss the opportunity to expand what they can do for the customer once they’re in.
Over the last six months or so, Miller has started to see the benefits. His team might go out for a heating air call, and more often will come back with heating, air, plumbing, and electrical work.
“Nobody likes having strangers in the house,” Miller emphasized. “So if they’re happy with a company, they’re more apt to use them for these other services.”
Miller agreed that while that may be true, it also adds pressure to ensure that the first contact goes well regardless of which discipline takes that first call.
And … I.T.?
After water remediation, carpet cleaning isn’t much of a leap. But I.T. services? How did that happen?
The seed was planted in the early 2000s. Miller was trying to be the first one in his market (and maybe beyond) with digital printed forms in the field.
“There was a hack to Nextel which nobody really knew about, which was that their two-way radio was basically a data plan.”
Add some software, plug a cell phone into the “big, bulky, and slow” laptop, and the result was a hotspot prototype and field connectivity for the same plan that covered the two-way radios.
But the need for printers, occasional troubleshooting, and the assorted moving parts made for too many headaches for Miller to handle himself.
The son of an employee happened to work in I.T. Miller brought him in-house to run I.T. for the company. After a while, the occasional job for a customer presented itself. The outside work has not been heavy, but it subsidizes the support the department brings to the company.
On the horizon, Miller expects this area to get a reboot when Superior launches more of a smart home and home automation presence.
Putting It Together
Each department has its own team. They will “cross-pollinate if we’re slow, or if another set of skills is needed, like electricians may go back and forth to the heating side pretty easily,” he said.
On the other hand, Miller said “the plumbers are their own breed, so they stay in their lane. They don’t like to move, and nobody likes to move into theirs.”
Superior now uses its breadth to strengthen the HVAC side. Technicians start in the duct cleaning and air sealing area. Miller has them work there, “then they’ll slowly move up into replacements and into maintenance, and then from there, if they want, into service.”
He said this stepping stone process has worked well.
Not that it’s gone perfectly across all these additions.
“I should have rolled out a lot more paperwork. I should have gotten all my pricing together ahead of time, and I should have gotten all of my truck stock lists together ahead of time. I should have had all the paperwork in place. So now we're in situations where we don't have the right truck stock because we weren't ready for and now we're in the summer, and I don't have the time to start delegating.”
“We went after the sales first,” Miller said, “which I agree is the thing to do, because sales fixes things. But we just weren't as prepped as I would have been if I would have thought it out.”
On the good side, “it’s starting to move really fast.” Miller has kept the local dealership in business the last few months with vehicle purchases. The occasional $10,000 call that turns into a $100,000 job involving most or even all of the company’s divisions has become more occasional, which makes it a little easier to handle chaotic days and working out of a warehouse space Superior has outgrown.
“If we’re able to keep morale up, then that brings other people,” he said. “We’ve seen that a lot — people saying, ‘Hey, I talked to Phil, and he said to come see you. I talked to him and this seems like something I want to do.’”
In a skilled labor shortage, expansion can make for a stealthy recruiting tool, too.
Don’t Sleep On Solar
For those companies not willing or able to consider adding multiple divisions, Justin Roberts has a suggestion: Get into solar.
Roberts is territory manager with Benoist Brothers Supply Co., an HVAC distributor that expanded its own business and started partnering with solar manufacturers in recent years.
Last year, Roberts said, Benoist worked with roughly 10 HVAC contractors on about 15 solar projects. Roberts would walk them through their first job, create assorted checklists and cheat sheets, and show them why solar was easier than they thought and a logical extension of their current operation.
Roberts is also walking the walk, having made his own house a solar project.
“I had several guys come up to my house. We did this to show how it worked and explain it, because once you get your theory down, every job’s pretty much the same. The design factor or the craftsmanship side of it changes, but as far as your key features and the function of the products, it is all relatively similar.”
Of course, Benoist also offers classroom training as part of the educational process.
The idea of adding solar work has become more attractive on at least a couple of fronts over the last few years.
The 26% federal tax credit for residential solar projects does not hurt. In addition, individual states may add their own incentives. The Illinois SHINE program was a significant help, Roberts said, until it ran out of funds later last year.
LOOKING UP: A 26% federal tax cut has made the idea of adding solar work more attractive to homeowners. (Courtesy of Elanathewise via Getty)
The projections and controls have also come a long way. The industry’s software gives contractors and potential customers very specific data on how much power they can expect to generate, average days of sunlight, etc.
“And from what we’ve seen,” Roberts recounted, “it’s been really close, as far as everyone’s production versus their estimated production. You can really drill down and say, ‘That 14.5 kW DC solar array will make 22,500 kilowatts a year.”
Like other areas of HVAC, the monitoring has also made strides. Solar manufacturers provide the app and platform, and then contractors and customers can check in on performance or just wait for any alerts, even if maintenance is light.
“You don’t have to clean [the panels] every six months or every year, anything like that,” Roberts explained. “They pretty much take care of themselves.”
COVID has been another contributing factor. When a lot of business ground to a halt, Roberts said the solar side still “had plenty of stock, with lots of stuff going on.
“All these guys I talked to were twiddling their thumbs, and I’d be doing three solar projects that month. That really piqued their interest.”
Roberts noted that in that regard and more ordinary times, solar work can serve as quality shoulder season work.
Integration and Aesthetics
Contractors considering solar often expect the electrical side to be very intensive. Roberts shows them in the field that the electrical component is often pretty straightforward, approaching “plug and play” in its way.
What contractors do have to be ready for is that craftsmanship aspect. Not surprisingly, when the work is taking place on the roof of someone’s house, the customer is likely to be pretty particular about everything looking neat and tidy when completed. People do not want to sacrifice their curb appeal to help the planet.
They also want to help their utility budget, and residential solar is in a better position than ever to get beyond feel-good environmental expense and into solid money-saving proposition. Part of that is due to tax credits and other incentives, Roberts said, but he pointed out that the general cost of solar equipment has come down 70% in the last decade.
Good solar contractors will work with customers and do the research up front to make sure the project will generate as close to 100% of a residence’s energy needs as possible, keeping in mind any local regulations or restrictions on generation.
Electrical firms could certainly perform solar installations, but the equipment that winds up consuming that energy is what makes solar such a natural fit for contractors willing to make the move.
“Of the 15 projects, I’d say at least 60% of the energy consumption was related to the heating, cooling, and plumbing equipment in the house,” said Roberts.
That opportunity for an integrated project team and expertise is appealing for homeowners. For contractors, it makes more even more sense when supplemental or complementary HVAC systems or upgrades are a common part of the equation.
Roberts said the concept “kind of clicks” with contractors when they see how much good an HVAC contractor can do by adding their HVAC expertise alongside knowing the solar side, whether it involves heat pumps or insulating water heaters more efficiently or other ways to lighten the energy load.
In Roberts’ opinion, HVAC contractors have a unique opportunity to get into people’s homes, maybe two or three times a year. He has made information packets that his contractors can simply leave for people to look over.
“[Contractors] never realize how many people were interested in it until I brought it up. A lot of times, homeowners just don’t know who to talk to about it.”
For folks in Benoist Brothers’ area, Roberts is a good place to start. As a guy who likes to restore cars in the evening, using welding and lights and other tools, his utility bill (gas and electric combined) used to average $260 to $375 a month.
Now, Roberts’ home will make two to three times more energy than it needs in the summer months, and with net metering he builds up a credit that he uses that fall.
“Our solar array has been in for about a year,” he said, “and last time I checked, it had saved us about $1,400.”