Kieth Hilligoss added plumbing to his HVAC business in November 2013 for one main reason: year-round work. “We’re in a market where we have a little bit of winter,” says the president and owner of Air Solutions Heating, Cooling, & Plumbing in Sand Springs, OK.
“A lot of times in September and March, it really slows down and we wanted to be able to always have something for our guys to do,” Hilligoss says. “O¬ ering plumbing has opened up doors for our air conditioning guys. We knew by adding plumbing it would be an easy switch for customers, because they know us, they like us, and they trust us.”
Air Solutions, which employs 37 people year round, has been in business 18 years, also offers customers home performance options, although Hilligoss estimates that HVAC still accounts for 80 percent of his company’s business.
Residential customers, who make up 80 percent of total volume, can sign up for club memberships that feature spring and fall routine maintenance. “We can ¬ flush and clean the hot water tank, clean the air conditioner, and tune up the furnace,” he says. “ the advantage to our customers is they don’t have to take o work multiple times for different companies. they have one company that they’ve known and worked with for years that can take care of their problems at once.”
According to Hilligoss, not all of the company’s new services have hit a homerun. “We have entered some businesses that maybe we haven’t wholeheartedly adopted and put into full-time practice and departmentalized within our company,” he admits. “One example would be standby home generator sales. We dabbled in that. Even in home performance, we find that when we’re slow, we use it to the fullest extent, and then when we’re busy, we tend to back off.”
Three years ago, an ice storm threw the company right in the middle of home generator sales and installation. “Our customers were calling nonstop,” he recalls. “We jumped in with little training and learned to properly install them. We got into that and were going strong. A lot of the air conditioning supply houses were distributing those for us.”
Then air conditioning supply houses lost interest and pulled away their support. “Now it is not an everyday option that we give out,” he says.
Plumbing Proves Popular
Gerald McClelland, president, Service Heating & Plumbing in Waterford, MI, incorporated plumbing into his HVAC business when the company opened 32 years ago. With eight employees, the company focuses only on commercial and industrial accounts, such as large municipalities and schools. “We stick to what we know best,” he says. “Plumbing is something we do for our customers. We don’t actively seek new construction or anything of that nature.”
Mike Polchak, president of Team Electric, Heating and Cooling in Manalapan, NJ, recently added another corporation, Team Plumbing, to the mix. The company started out in electric in 1995, because of family members involved in the profession, added HVAC in 2000, and incorporated plumbing in 2012. He estimates the mix now averages HVAC 35 percent, electric 45 to 50 percent, and plumbing 20 to 25 percent.
“I find HVAC to be a natural fit and a nice complement for our business and our valued customers,” he says. “Our business model in electrical always left a favorable impression on our customers. Often they would ask about a heating/cooling problem they were having and if I could recommend somebody. I would recommend somebody, only to have a follow-up phone call from our customers complaining that the HVAC company we recommended did not provide the same caliber of service that we provide.”
Rather than jeopardize his reputation with existing customers, Polchak decided to fold HVAC into his product offerings. “We are customer focused,” he says. “Oftentimes people ask us what makes us different or why are we better. I answer that we do what we say we’re going to do, we understand the systems and procedures, and we understand how to run an honest and profitable company that is safe. That’s our mindset. By doing quality work and the right thing, we believe the money will follow.”
He adds that his company once tried duct cleaning, but dropped it because “we didn’t see it as a valuable asset to our business.”
Advice to Consider
The top brass at companies with multiple business lines offer several tips for HVAC companies considering expansion:
Hire highly qualified people. When Polchak started looking for a licensed plumber, he went through three until he found one with the right mind set and skill set. “Some of the plumbers we tried were more interested in volume than quality,” he says. “Before I put my reputation on the line, I made absolutely sure the trade areas would represent my core values as a business owner. We weren’t going to compromise quality for the sake of getting the department up and running. We made sure we were doing right by the customer. We were very selective.”
Cross train employees. Because plumbing is relatively new addition, Hilligoss is still in the process cross training his HVAC staff on plumbing techniques. “Our goal is to have technicians who can do any call that comes into the company. We’re hoping by next summer to have a one-call, one-guy type of shop.”
Nathan LeMay, owner, A Plus HVAC, Inc., in Westfield, MA, encourages ongoing training to keep technicians up-to-date on new advances and the ins and outs of rapidly changing equipment. His advice: “Schedule training during your off times. You don’t want to be doing it when it’s hot.”
Hold the licenses. Speaking from experience, Hilligoss suggests that company owners should consider holding all of the required licenses for completing work. “It’s not a good idea to borrow or lease a license from another person,” he says. “If you want to become a plumbing contractor, you need to study, understand that code, and get that license before you go into it. By owning the license, you’re in ultimate control. You’re not under someone else who could at any point in time walk out the door or decide he doesn’t like the company. ¬ en, everything you have spent on marketing and employees could be gone. Some states don’t have licensing requirements. Ours does.”
Understand pricing and financials. “Heating, air conditioning, and plumbing are very similar trades, but they are different in the way you go to the market and the way you price to the market,” Hilligoss insists. “Typically, in plumbing your rate runs very similar to heating and air conditioning, but your material costs are a lot less.
“You need to departmentalize so you can nd out if you’re making money in the di erent departments,” he continues. “I see a lot of guys who have no idea whether they’re making any money, because they lump everything into one bucket and look at the bottom and say, ‘¬ ings are great.’ ¬ ey need to break everything they do down to determine if that is a viable, pro fitable portion of their company.”
Keep a customer focus. McClelland’s recipe for customer satisfaction is simple: “Put in the hours to keep your customers happy,” he says. “Cradle them like little babies. When you take care of customers, that’s how you make your money.”