← Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast
#235 He built a $100M HVAC business, here’s how
00:55:47
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- [00:00]
Chad Peterman
We added three locations in a year. It was not fun.
- [00:04]
John Wilson
You have 10 locations.
- [00:06]
Chad Peterman
Hi, I'm Chad Peterman, president of Peterman brothers. It's just three people. That's the only infrastructure that's at a $9 million branch. All these businesses are built on operational excellence. If all you're focused on is these fandangled things, you lose sight of the operational piece and that's the piece that makes these businesses success.
- [00:33]
John Wilson
Welcome back to Owned and Operated. I am your host John Wilson and my day job is running a 30 million dollar home service company. But for fun, I run a podcast that teaches other people how to build their home service companies. Today we're bringing back one of my favorite interviews of all time. And this was with Chad Peterman. Chad gives us an absolute masterclass on how to think about market expansion, location management and and the craziness of scaling from 20 to 100 million in four years. This was an incredible interview and I've re listened to it several times. It is just packed with a bunch of great stuff. Make sure you like and subscribe so you can see more stuff that comes out like this and enjoy today's episode. Welcome back to Owned and Operated. Today we've got a special guest on. We have Chad Peterman from Peterman Brothers. Welcome Chad to the show.
- [01:23]
Chad Peterman
Yeah, appreciate you guys have me excited to, to chat and hopefully give give the listener some nuggets that they can take away and keep improving their business.
- [01:33]
John Wilson
Yeah, I'm sure we're going to, sure we're going to get some good ones out of this. Can you walk us like plumbing H Vac roofing now but can you walk us through just like where Penan Brothers is at so we can level set. We've been working with we supplytrades.com for the past 10 years but most importantly for the past six months as our primary vendor for H Vac Supplies. And that's going to be generic as well as some oem. They have been a huge partner for us in our H Vac for restocking trucks, for getting packouts done on time and getting quick deliveries when we need it. Their free Pro membership is going to give better pricing. It's free shipping for orders over $99 and you get access to a team of world class experts that know plumbing, hydronics and H Vac like the back of their hands. Like these guys are incredible. As a savings to our audience, they offered 20% off your first order if you use the code owned20o w ned20 so click the link below. Or go to wesupplytrades.com owned and operated to find out a little bit more.
- [02:38]
Chad Peterman
Yeah, absolutely. So company was started by my dad in 86. He was an H vac technician. My brother and I joined the business. I joined in 2011. My brother, a few years after, started to build the company. At the beginning, we did a lot of commercial, multifamily work. Today, we don't do any. It's all residential repair, service, replacement. We've added plumbing along the way. We've added electrical along the way. Roofing is a separate thing from this company. So really just the three primary services. Today we'll do probably. This year, we'll probably do 110, 120 million. We're headquartered in Indianapolis, but have nine other locations kind of across the Midwest. We go up into Michigan, Ohio, and then just this year, Kentucky.
- [03:33]
John Wilson
Yeah, that's incredible. Yeah.
- [03:34]
Jack
Don't come any farther south, though.
- [03:37]
Chad Peterman
We learned that when you cross the Ohio river that the energy standards change. And there's. There's a few nuanced things, but Louisville's been. Been doing really well for us. We've got a good leader down there and a really good team. So it's been. Been fun to watch.
- [03:53]
John Wilson
I haven't even thought about that nuance. Like, my first. My first thought, which is probably just like the most basic of thoughts, is licensure.
- [04:03]
Chad Peterman
Licensing is interesting, for sure. So we have. We actually created, I think it was this year or late last year, kind of a licensing program where we incentivize employees to go get their license. So we've had guys here that, you know, have lived in Indiana their whole life. But then we'll go up and take the Michigan licensing exam, and we'll compensate them to take the license. And then if we use their license, we. We pay them a monthly stipend to hold it for the company. So we really work to create redundancy in our licensing. So we don't want just two Ohio plumbing licenses. We want three or four or whatever it may be.
- [04:41]
John Wilson
I totally agree with that approach. We've done the same thing. I think that's a hard mental hurdle for, like, folks beginning to. Because you're like, oh, you're literally paying someone. I'm imagining the quote. You're paying someone to eventually compete with you. And I'm like, yeah, I guess, sort of. But, like, you also need it.
- [04:56]
Chad Peterman
Yeah, it helps to have that to offer. Operate, for sure.
- [05:00]
John Wilson
You said four states. It was Kentucky, Ohio and Indiana and 10 total locations.
- [05:05]
Chad Peterman
Yep, you got it.
- [05:06]
John Wilson
One of the things that's been fascinating to me, probably because I'm in the. We're in the journey ourself. Like, we're getting ready to do our. Like, we had five locations, but it was all just in northeastern Ohio. And then we merged into one. A lot of the journey now has been like, okay, we're. We think we're almost ready to branch out into our next location. So I. I'd love to dive into that a little bit with you and talk about when did the business decide to move to multi location? How did that first one or two look and how did you pick locations?
- [05:37]
Chad Peterman
Yeah, so this will be about as unsexy of a story as possible, I hope. A lot of. There's a lot of. We just went for it. We had our first kind of. Or our second location first outside of Indianapolis, in. We did that in May of 2018. And it was. I had a service manager at the time who wanted to run his own location. And we were like, we had an acquisition but ended up falling through. So we literally just opened up in Lafayette, hired a team up there, and just kind of went for it. It was very messy at the beginning, just trying to figure out, like, oh, well, they're up there and we're here and how do we do things and so on and so forth. You know, at the time, I think, just to give people kind of an idea, I think at the time, I want to say 2018, probably 10, 15 million in total revenue at that time. So that was kind of the size. Now, you know, if looking back, would I have done that at that point? Probably not, but it's worked out right. And it kind of gave us a blueprint to how to do the. Do the others. The others have mostly came through acquisition outside of Louisville, Kentucky, which we just greenfielded. We hired a team and started from scratch. I would tell you, moving forward, that will be our model. So we already have two more. More locations picked out. How do we pick locations? So typically what I look for is a, you know, we're in the Midwest. So, you know, here in the Midwest you got Chicago, which is massive, not going there. But you're looking for kind of what I call kind of tier two markets, like, you know, Dayton, Ohio, Louisville, Kentucky, Lexington, Evansville, all of those cities. And the main reason we do that is one, we want to make sure that the. The town or whatever can support a business. But we also look at it as we're not looking to build a $20 million company in Lafayette, Indiana. What happens is they get as they get so big, then you got to start adding infrastructure. And we support it all centrally, but it's like, how can I build a, you know, call it 15, like sub 20, like, that's kind of what I wanted because then I can still support it and I don't have to put a bunch of infrastructure like service managers and field supervis advisors. Like, you don't need a whole lot of that. You need some depending on the size, but that's what we kind of look. And so now the model is okay, find other cities, start, find a leader, put them in place, build a team, and then grow it from there.
- [08:20]
John Wilson
Yeah, I have so much to unpack here, like acquisitions versus Greenfield. I also think Greenfield sounds easier. And maybe that's just because, like, once you've gone through a couple culture turnarounds, you don't want to do them anymore. Because that's to me, what the acquisition Is that like, the reasoning that Greenfield's attractive?
- [08:37]
Chad Peterman
Yeah, I mean, you know, don't get me wrong, like, you see all these PE groups out here and they're acquiring these companies and stuff like that. Well, when you're using your own personal funds or, you know, a loan from the bank, like, you can't go out and buy a $30 million company. Like, especially if you're only, you know, 10 or 20, like, it's very difficult. You know, when they buy a $30 million company, well, it already has everything set up. It's literally like, oh, we just invested in the company. You keep doing your thing. Well, when you're buying sub 5 million dol like one their people worked at a small company for a reason. And then when you go and bring all your process and procedure and all of these things in, you know, it can be a challenge. Now we still have people that stayed with our acquisitions and they saw the value in working for a bigger company. And we're super happy to have those people. But there are quite a bit that just like, ah, this is not for me. I don't really want to do this. And to your point. Yeah, I mean, it's a big culture thing that if I start from scratch, I don't have to untrain any bad habits any. Well, we did it this way, and this is when Bill was in charge. We did it, you know, this, that, and the other. And it's just to me, when we started Louisville, like you talk about, like now, it's a little bit harder in the startup. Right. Because you don't have any calls coming in. You got to Go generate them. So, you know, your marketing costs are higher. It's a little bit more difficult, but the ease on the back end is so much better. You know, typically when we start a new location, we bring that branch manager and they work out of our indie office for like three months. There is no location. They're just learning all of the ins and outs. Well, then when they go and do it on their own, well, they already have all of our process and procedure, and this is how things are going to run. And, you know, you, you just go. So I. I think what will happen is it'll be maybe a little bit slower start, but then it'll ramp pretty quick because we've already got everything in place.
- [10:34]
Jack
When you're doing this, are you greenfielding in all three trades at once as well? Are you starting off with H Vac and then you hit certain benchmarks and you, you secondary.
- [10:43]
John Wilson
That was my second question because that seemed especially. I'll add with like, with the scale, because I think that's an important thing to note. I'm trying to imagine because we're 26 and we have all three trades, and I still feel really small in, in those three. Like, we're not, like, we're not deep yet into those trades.
- [11:04]
Chad Peterman
So, yeah, so we've done it a bunch of different ways. When we did Louisville, we launched all three trades at one time. So we went out, found an electrician, found a plumber, found an H Vac tech install crew, sales guy, go. I think that's how we'll do it moving forward. So kind of our blueprint, when we go in, it's find a branch manager first and foremost. Like I always tell people, like, well, when are you going to build your next location? I'm like, when I find the leader that can lead a location. And then we'll figure out where we want to go based on where they kind of want to go to a certain degree. So you find the leader, you hire one technician in each of the trades, you hire an H Vac install crew, and then you just go. I like that. The only thing that we don't. That we don't launch initially is excavation. So my brother heads up all of our excavation. That is one thing that is fairly centralized for us. It's starting to branch out as we launch it in other locations. That is primarily due to just the complexity of excavation. It's a little bit more difficult. But service lines, H Vac install, we launch them all at the same time. A lot of that is what we have found Is that electrical and plumbing, obviously we know are not super weather dependent. They're pretty kind of constant. So what we've been able to do is generate a lot of business for our H Vac side. Now that it's hot, we don't have to work. You don't have to worry as much about that. But it's nice to have all three trades that can kind of toss leads from, from one to the other.
- [12:35]
John Wilson
Yeah, I, I had. Excavation was one of my question marks as I was thinking about this for both the complexity but also like a capex requirement. Because with plumbing, H vac, electric, you just, you buy a truck and you hire somebody. But excavation, yeah, that can get pretty messy. So is it like one excavation crew is servicing all of them? Not crew, but like, like team structure.
- [12:58]
Chad Peterman
Yeah. So we only. We have excavation at six of the 10 locations and all of those are central Indiana. So our excavation, I think we run six or seven cre and they run, they'll. They touch all six of those locations. Now when we, you know, like our location in South Bend or even Louisville, like we probably will have a crew in that particular area. They'll report back into our centralized kind of structure. My brother oversees all of that. But yeah, we'll probably have a crew in those locations eventually. But yeah, it, it gets, it's difficult for sure. And just like my brother knows excavation better than most that I've met. And so it's one of those things where finding somebody who understands excavation is very difficult. So that's why we've remained kind of centralized to a certain degree.
- [13:46]
John Wilson
I was thinking about this as we talked about greenfielding versus acquisitions because like we were talking through it and the thing that we didn't. I think it's easy to look at the output and be like, oh, okay, so launch 10 locations. Okay. Yeah, here's the, you know, pick this tier two market makes sense. But like the reason that you're able to do this is levels deep. Right? Like the reason that. Yeah, like your, your markipen is what it is. And like the education and onboarding piece seems like the big nut to crack because I'm, I'm trying to imagine dropping a new location into Nashville. Jack, I'm coming. And yeah, Chad and I are working on together. It's gonna be fun. We're gonna take on Chris.
- [14:30]
Jack
Let' I was going say you're not competing against me. It's like cool Ray versus you.
- [14:34]
John Wilson
But yeah, but the, the, the academy, like the onboarding and the continuing ed and like the Peterman way seems like the method to get there. Are you still using a clunky phone system for your service? Business OpenPhone is the modern business phone platform powered by AI that helps you stay responsive, connected and never miss a call with with shared numbers. Call summaries 24.7aicsrs plus deep integrations with Slack, HubSpot and more. OpenPhone keeps your team aligned and your customers taken care of no matter what time. Start your 7 day free trial@openphone.com owned and get 20% off your first 6 months just for being a part of the owned and operated crew. Open Phone no missed calls, no missed customers.
- [15:23]
Chad Peterman
Yeah so all of our people for onboarding come to Indy. So if they start we onboard every other Monday and they all come into Indy for. They're usually here for. They're usually here for three days and then I think we can do some of the onboarding while they're at their location. But that's critical for us is they get all of the same training. We also have a department, it's called direct field support which rides with. Not rides, but virtually rides with a technician for about their first 30, 30 days. 30, maybe 60 days. But is there coaching them through all of this stuff? Because you know, even before when we had onboarding you onboard a technician for a week and expect them to remember everything that you just told them. It's like there's a whole lot to this. So that has been a really big win for us is having somebody there that's like curating the onboarding as they're actually running calls. You know in the past, yeah, we just send a guy, send, send Bill with Jimmy and Jimmy, teach him, teach Bill everything you know and let me know when he's ready. It's like oh boy, this is a recipe for disaster. And so that's been really good. But yeah, I mean to your point, I mean it's, it's easy. Like when we first did it, I mean we in 21, we added three locations in a year and it was not fun. Like there was a lot of just like what are we doing? How do we manage all of this? Whereas now we have a director of operations, she has three regional managers under her and then you have a branch manager there. So each regional manager has three to four locations and then they'll be able to take on more as we, as we continue to grow. But yeah, I mean having the. Adding a second location introduces complexity. For sure we do it now because that's our model. Right. It's like how do we build? Kind of. I always equate it to like, when you look at all these like, tires places, that's the model that we want to build. And it takes a little bit more infrastructure than just having one singular location. And sometimes we have to remind ourselves to refocus. Like, hey, Indianapolis is a big city. You could build a massive company here. Like, keep focusing on that. So we're always drawn back to that. It's easy to lose focus and just say, hey, I'll just drop another location. And they should be able to do 3 million this year. It's like, well, yeah, but you know, it comes at a cost because you give up your focus on other things and things like that.
- [17:50]
John Wilson
That makes sense. That was going to be one of my other questions was. So I was talking with Eco the other day, one location in Columbus and that that is like 60 ish total percent of their business. How, like, how big is Indianapolis in relation to the rest of your branches?
- [18:04]
Chad Peterman
So Indianapolis is probably 40, 50%. I'd say maybe closer to 50% of total business.
- [18:12]
John Wilson
I feel like that makes sense because it makes sense as far as like the infrastructure has to sit somewhere.
- [18:18]
Chad Peterman
Yeah. So all of our call center is centralized. A lot of our stuff is. I mean all of our back office obviously, really at a branch. So like a branch that does call it. Well, I'll use my. The Bloomington branch, they're about. They're probably 8 or 9 million in Bloomington and they've got a branch manager, a dispatcher, a warehouse coordinator, and that's it. That's the only infrastructure that's at a $9 million branch. It's just three people.
- [18:49]
John Wilson
I have questions on that. So most of the questions. And maybe this is like. So Jack and I were talking about this right, like right before you came on. And because I was like walking through, I told him that. I was like, yeah, so he's got, he's got the manager, the dispatcher. I didn't know about the warehouse guy, but that makes sense. And I was like thinking through the first 12 months of a new branch and I was like, I mean, in my mind I feel like you add and maybe it's this is the launch versus this is what it looks like. But I was like, how, how would a brand manager tie into that? Brand manager being like they are accountable for the leads being driven every day and then are they on site or off site? And then like recruitment obviously seems like a real challenge. It almost seems like you throw a recruiter at that problem for the first year because you know, it's, it's leads and it's people like, it's lead sales and fulfillment. And so how are you thinking about solving those problems, those challenges?
- [19:41]
Chad Peterman
Yeah, so with those two. So we have two recruiters in house. Obviously they know when we launch a new brand that's, yeah, that takes a higher priority. So. But they're recruiting for all of them. Essentially. Our recruiters are getting vetting candidates and then they're setting them up for that manager in that particular location. On the lead side, all of that is, you know, obviously funneled through our marketing team and we have a, I mean giant boards that are basically capacity boards. So they, and they're pulling live data from service titan and basically telling our customer service center where we need to go and then our digital team. Primarily because traditional media, once it's kind of placed, it's placed. But digital we can move on a day to day basis. So they're constantly shutting campaigns down if we're full in that particular area or raising them up or increasing spend so that we can go get leads. I will tell you that one of the stresses of having multiple locations with multiple trades. So you essentially have three separate businesses at one location. Right. They're all three different. So you've, you've essentially got 30 different companies that our marketing team is trying to fill capacity for. Yeah, that has been the strain on us. We're, we're potentially looking at bringing on some more help on the digital side so that we can again basically have one guy who takes five locations and you just watch the capacity boards and manipulate our campaigns so that we can drive leads there and then maybe the other guy takes the other five, whatever that looks like. But I would say that is one of the. Definitely one of the struggles is every branch and every service lock needs something different at all hours of the day.
- [21:29]
John Wilson
Yeah, I mean that's a challenge for us. Now same thing. We have five service lines because drains is broken out separate and like there's a septic pumping from a legacy acquisition. And yeah, it's a lot, it's a lot of like mental switch which like there's a real, there's a real cost to that of like, okay, well I'm focusing on electric now and electric's good. I hit my minimum calls for the day or my three day call board. But now I, I happen to not glance it like, like septic, which is a completely. And maybe we just shouldn't have that. But like it's a completely different funnel and like a completely different like customer acquisition than, like, repairs?
- [22:09]
Jack
And so on that note, Chad, are you guys looking at potentially moving into any more verticals, or is that three and done and then roofing separate and there's no more separate, or are you guys planning on expansion out that way?
- [22:21]
Chad Peterman
Yeah, I mean, I think there's. There's definitely areas that I'm interested in because I think you can easily add it. Not easily, but I think that to me is where the acquisitions come in. You know, you acquire not to build your current service lines, but more so to add in ancillary services. One that I really like. And I know that one of the big groups, I don't think it's neighborly. What's the. What's the one that. One hour. So Authority Brands. I talked to a guy where water mitigation is a big one that I think could be its own business. Now, there's an insurance component there that you'd have to kind of figure out to a certain degree. But to me, I mean, our plumbers keep. I know this because one of my good buddies is. Has a water mitigation business that we send all of his leads. He's constantly like, we're growing, we're growing. And I'm like, yeah, and I'm feeding you all this work, which is great because he, you know, he's building his thing. But I'm also at the same time thinking our plumber identifies. They call it plumber before they call a water mitigation company, whatever broke. So if we're there, why not do that? So, yeah, there's. There's a bunch of different things that I look at. It's not on our immediate radar by any. Any stretch of the imagination. But I could see, once we really prove out this ability to add locations, I could see that being a thing where, hey, now to go get more growth, let's add something that maybe outside of the three primary trades that people.
- [23:47]
John Wilson
Think about, we added that in 2020. Now, granted, we were like, too small for it, I would say, when we added it, but it is good. Like, it's good average ticket, it's in the 5 to 6,000 range. Small business, like, it'll do a million and a half top for us. But because it's attached to the plumbing company, there is no overhead. I mean, like, literally none. It's like 45 to 50% cash flow, which is just absolutely ridiculous. But, yeah, we've. We've been running that for a few years. And inspired by Roto Rooter. So we were, you know, Roto Rooter's got exactly that. They have all these plumbers, and then they added the restoration thing and we kept losing, like drain cleaning, which I don't know that I personally. And maybe it's just because I'm a plumber, but I don't think I would like, oh, you don't have the cleanup section, so I don't want to clean my drain with you. But that's what was happening in 2020, because I think the location that we competed against added it. So we added it to compete and it. It's been good, but it is like. It's a different beast. Just like anything else, it's a different beast. And I think it would end up looking a lot like excavation, where you have like a centralized. Like this is what they do because you're managing insurance and you're negotiating and like the talent pool is totally different. But it is a big way to boost average ticket in a location because the average ticket's so big.
- [25:09]
Chad Peterman
Yeah, that's. It's. It's definitely interesting. I think the. The interesting point on it is, you know, once you get a customer base, I think we've got 30,000 members, like, at the end of the day, just pick something and shoot out a text message and I'm sure you can do. I mean, it's more complicated than that. But, yeah, I guess that's kind. How I start looking at it is like, okay, you've built this base. Like, what else do they need done on their home? You can probably offer it.
- [25:34]
John Wilson
That was what Chris roughly said the inspiration was for appliance was they. I think they had 10, 12,000 or 8,000 when they launched it. But yeah, they sent a message and it's an $8 million service line for them now.
- [25:46]
Chad Peterman
Yeah, well, and he uses that. I've talked to him about it is, you know, while they're not. That department is not like. It's not like the golden goose by any means, but it's. It's a way of lead gen where other people aren't looking because it's not like there's like a big, massive appliance repair companies sitting around the corner. So he's looked at that as lead gen. I think one interesting thing I was talking to Ken Goodrich about this a few weeks ago is duct cleaning. And how do we utilize duct cleaning to go get maybe cheaper leads and then be able to flip that to a new system or IAQ or whatever it may be be. So I think there's a lot of interesting things in the. As you know, as H Vac replacement leads continue to get more and more expensive, I don't think they're going down anytime soon. It's like the. To me that the question is, where do I go get cheaper leads that no one else is fishing in that pond.
- [26:47]
John Wilson
Yeah. The duck cleaning thing. I never really understood why more people don't do exactly that. Because you can go like, I think that's a good use case for an acquisition where like you can go buy a 2 to 3 million dollar duct cleaning company or. Jack and I were talking about this chimney sweeps because we. It's not as easy of a correlation, but like chimneys and H vac chimneys and water heaters opens up a conversation for tankless or high efficiency or something like that. And that is something that, you know, the leads probably cost like $10 or.
- [27:17]
Chad Peterman
Something on LSA, if there's even a provider.
- [27:19]
John Wilson
Right. Like, yeah, it's so, so we, we had that conversation because Jack lost one of his install. Oh yeah, he's googling it. Jack locked one of his installers to a chimney suite company that was launching an H vac department. And we're like, bro, why are we.
- [27:35]
Chad Peterman
Not going the other way on this in Greenwood? There's no LSA going on in the chimney suite game.
- [27:41]
John Wilson
Yeah. So like literally, probably three dollar leads to like sweep a chimney. Right. And then you go and like, hey, like, like, should we talk about your filter or even just turn it into a membership? Because you can almost do anything and turn it into a membership, but the, the obvious complexity that you have here is you have 10 locations.
- [27:58]
Chad Peterman
Yeah. Yeah. It makes it a little bit more difficult, for sure.
- [28:00]
John Wilson
Yeah, it's a lot more difficult. I don't even know, like, how would you imagine rolling that at Wilson? We've saved a stupid amount of money by having AI help out with our call center. And the best tool out there that's making that happen is Avoca. So look, you've probably heard the buzz about AI CSRs. They seem to be everywhere. But not all AI CSRs are created equal. And Evoca seems to rise to the top every time. They answer every call in the first ring, they sound just like a real person and they don't take breaks. But here's what makes Evoca really interesting. In the real world, if a caller's getting heated, like they're getting frustrated or annoyed, Evoka knows it, hears the tone, emotion, and hands the call to a real human. So you can still say, saved that call. And this has been huge for us here. At Wilson, there's no more churn or people yelling representative into the phone. And the backend is tight. It directly integrates into Service Titan at the gold tier level. That means it can handle reschedules, check, check arrival times and look up customer info. It even helps with capacity planning. It's basically a CSR with perfect memory. On top of all that, it consistently makes our team better. We get post call analytics, auto tagging and coaching tools so that no matter who's on ship shift, we deliver for our customers. If you're curious, go to Avoca AI. Avoca AI. Book a demo and tell them owned and operated Senshu.
- [29:19]
Chad Peterman
So the, the difficult part, well, it's not really difficult. We do it today. But like you know, you, when you have one call center, you've gotta, they've gotta be aware of if you just launch it in one location, they've gotta be aware of that. Now I would probably just launch it in Indy because I could be close to it and you know, it'd be super there. Whereas if you go launch it in Ohio, well, shoot, what are you going to do? And to me maybe it's just a thing where. Oh, unfortunately we don't offer that service in this at that particular location right now. We're looking forward to doing that. We'll give you a shout when we do. And it may be a good kind of marketing piece of like you could gauge demand and figure out where you're going to put the next one based on, on you know, what you're bringing in organically.
- [30:04]
Jack
Chad, question for you. So we've talked a little bit about you growing into multiple locations and all this. Do you like, when we're talking to Melo, he has this, you know, giant goal of being a billion dollar garage door industry. What is your goal with this? What's the end or at least the next goal post. What does that look like for you?
- [30:23]
Chad Peterman
Yeah, so you know, for me it's really building what I think to do be a somewhat unique model in that it's a singular brand, multi locate like and not just oh, we got two but like oh, we have 40 locations across the Midwest now. 40 is not next year. We've got a lot of work to do before we get to that level. But you know, to me that's kind of. And it's similar to what Tommy's doing, right? He's building for the most part building one Single Singular brand, A1 garage doors. Whereas that's kind of my goal is to how, how can we build this? Because to my knowledge, like, Horizon has multi location, but now, you know, it's like they've got other brands and that's an operation to see sometime. Dave's a great guy. I don't know that anybody's built this multi location. There's a guy down in Louisiana, I think, that's built something like that where he's got a bunch of locations. I can't remember the name of it, and I've never met him, but I'd like to.
- [31:26]
John Wilson
But.
- [31:27]
Chad Peterman
But yeah, that's kind of my goal of like, hey, how can we build this one singular brand kind of across the Midwest at this point?
- [31:34]
John Wilson
What do you think a minimum viable branch is?
- [31:36]
Chad Peterman
We bought our Muncie. We acquired a company as a $600,000 revenue company in Muncie, Indiana, and that was at the beginning of 2021. This year they'll do probably 12 to 15 million. So the scale I think you can get there. You know, we don't have a branch. Our smallest branch is probably outside of Louisville because it just started, but it's probably 7 million. And that's a pretty small branch. Like, they don't have a whole lot of. They don't have like a ton of people and do 7 million. So, you know, my goal or what I would think. I mean, I don't think you want another. I mean, it's going to be small to start, especially if you greenfield it. But to me, you should be able to kick out per month. They we started the beginning of February, they're doing and call it between two and three hundred thousand a month, which will end up at three, three and a half million. So to me, that's kind of where I would be shooting for. So like, first 12 months, like three and a half million is kind of like, okay, that's good. That would be what I would say. I don't know that you'd want to just have a location that's just consistently doing $2 million. Like, might even have it.
- [32:43]
John Wilson
You have a podcast, which is great, and I like it a lot. And. And when I think about the topics that you talk about, it's a lot of like leadership and culture and sort of explaining like your perspective was the original idea behind that, like getting. Distributing your message directly to your own team. Because that's what it feels like as a listener.
- [33:07]
Chad Peterman
Yeah. So any of the stuff that you hear me just talking and there's not a guest is actually me talking to a group. Group of people live. So I did one this morning. I was up at 3:30am this morning to drive to lovely Fort Wayne, which is two hours from my house. And we do them because we do them at 6am before we get started with the day. So I was up there this morning. We were talking about leadership blind spots. And so I travel around to all of them and I do these and then we record them and we put them on the podcast. Well, when it first started. So if you go back and listen to some of the stuff from like, 8. I don't know when the first time I ever had a guest on, but. But a lot of. Probably over half of the episodes were just me talking to our team. And then that's the way they're all. They all are out in their truck every day. So what's the easiest way to consume that content? We said. I said, well, we'll just put it on a podcast. And so it started as not. I wouldn't say it started as a podcast. It just started as, here's the easiest way to distribute this information. And it's kind of evolved into where now we're able to have guests on there and, you know, provide value that way, which is a lot of fun. But, yeah, that's kind of how it started, was just getting information out to the team. It's even more beneficial now when I don't get to see Everybody. You know, 2018, when I started it, we just had Lafayette, so I saw everybody every day, and there weren't nearly as many people as there are here today.
- [34:29]
John Wilson
I've had the same. I haven't executed on it. Obviously, we do have a podcast, but we're not. I haven't used it. I haven't used it in that way. What has been interesting, though, and you likely get this. This a lot, especially with, like, where you are. I get fascinated because we don't ever really link the company. We don't directly mention it very often, but the amount of people that listen when they're on their way for a job interview is fascinating. And they bring up questions and they bring up, hey, I heard. I heard this. And it's like, oh, okay, this is. This is interesting.
- [35:01]
Chad Peterman
Yeah, we get that all the time. A lot of our especially, like, higher level, when they go to research the company and they find the podcast. What's a better way to get a feel for what the culture be like at this company? And so, yeah, I've had same experience as you. Like, oh, yeah, I listened to your podcast episode. Now part of it may just be like trying to suck up in the interview, you know, Type thing, which is fine as long as you listen. I'm good with it. But yeah, a lot of them listen. And I even had a lady that works. She just started. She's only been here a month, and she works in dispatch. Dispatch and. Or sales coordinating. And she came up to me, she's like, hey, I really started. I started listening to your podcast in the morning when I. When I come in, when I drive into work. And I really like it. And so it's cool to see people who, you know, come into the organization, they find that as a resource. And, you know, a lot of people say it's kind of, to a certain degree, it's kind of. Especially the ones that have been here for a while. It's kind of their way of. Of being able to still connect with me, being that they don't work side by side like we used to. And so that's been fun too, to be able to, you know, in some way kind of talk to them still. And I think it's too, a good way. Like, when you have something that from a podcast standpoint, that's official, I guess, right? It's published, it's out there, people can consume it. It is, I think, nice too, to kind of serves, or at least I think it does. I don't have any facts on this, but. But, you know, it kind of serves as that cultural beacon of the company, especially when you got layers and layers of management. It's like, well, I don't totally agree with my manager or someone said something to me and I didn't like it today. But, like, knowing that, you know, from the top, this is how we feel, this is how we expect people to lead. This is how we, you know, deal with things. Like, I feel like it's been a good thing there. I will tell you that a lot of my content and a few of the people here know this. I guess everybody will now if they listen. But a lot of the topics that I talk about are issues that we have at the company. So it's like, hey, we didn't handle this situation right. And then I'll do a talk on here's how we should handle it and here's how we should lead. And here's some things that maybe some of you out there listening are forgetting about. And so, you know, it's kind of an indirect way to hopefully add a little bit of context into kind of the problem solving that we're doing and so on and so forth.
- [37:22]
John Wilson
Something I did didn't cover that I wish I would Have. So I'm gonna. I'm gonna bring us back. Lafayette was the second location. I think that that is fascinating. And I think that the fact that everyone chooses about an hour away for their second location is fascinating. We're actively shopping locations, right? We have three in mind. I've talked to more and more people that have gone multi location. So we've talked with Eco, we've talked with Tommy, we've talked with yourself, we've talked to. Talked with Chris, we talked with Logan in Cincinnati and Dayton, Columbus, and everyone picks an hour. I wonder if it's. Is it because it feels manageable? Because my first assumption was three hours. And it's almost like what I'm concerned about happening. And I guess you tell me if it did happen or what your thoughts are on it. But if you launch a location an hour away from another location, our lived experience from having an A location an hour away before we merge them all all was that that one became a parasite on the bigger one. And maybe that was just a total failure to execute on our part, which it probably was. But three hours away feels like it's so far it has to stand on its own two feet.
- [38:30]
Chad Peterman
To give you a little bit of context. So Indy is obviously right in the middle of Indiana. So four of our locations are within an hour of Indy. There's essentially. And where it helps us is we pool our install labor between those five locations. So if Lafayette only has, let's just say, for example, they have two install crews, but an Indy has 10. Well, if the guy in Lafayette or the guys in Lafayette sell four jobs for tomorrow, we send two. And they sold them before the 10 got sold in Indy. We'll send two crews from Indy to go do that work. So we can do it fast. So where it helps you is you can pool your install labor and you can move those resources around to go capture the work and get it done quick. So that's where it's really been helpful now. Like a. And what we're working on right now is a system Ohio is. That'll be kind of a separate model. But what we have now is Fort Wayne is about, well, two hours from Indy. I know because I drove it this morning there and back. But so. But it is only an hour from Muncie. So right now we can flex Fort Wayne down to Muncie. We can flex Muncie even up to Fort Wayne. So it's kind of like you're almost like building like these like, connectors type things. So Fort Wayne can now go up and help South Bend. So you're kind of building these things and it's all just install. Like service wise. They stay in their locales, they do their thing, whatever. We may have a little bit of like, hey, we're shorthanded to tech. Can someone run from Indy and go run calls in Bloomington today? We may do that occasionally, not often, but a lot of that. And same with excavation. So our excavation, they actually will go to Fort Wayne. So they'll cover, they'll cover six locations. They all come to Indy in the morning to get all their stuff and head on out.
- [40:24]
John Wilson
Yeah.
- [40:25]
Chad Peterman
So that's why I think an hour. I think there's a piece that it feels manageable. Especially when it's. When it's your first one or you know, you haven't done it before. I would tell you that that has been the biggest benefit. It is. We may have a bang up day in Lafayette and not in Muncie. Well, we're still winning because we can go put in more work than they technically have. Manpower.
- [40:46]
John Wilson
The next question, and this is something that we're currently struggling with. So I'm curious how you think about this. We got to the size we are with vertical specific leadership and vertical specific teams and a lot. We've been having a lot of conversations because we're trying to figure out like, okay, a step or two ahead of us. Us, like, we feel the strain of it and customers do too. Right. So like the feedback we'll get from customers is like, hey, it feels like I'm working with a different company between plumbing and electric. Because my, my first thought was with pooling install is how are you pooling leadership? If each branch has a manager, then like, how does fulfillment get handled? And the way we're thinking about it is there's like a service leader, a sales leader and a fulfillment leader, regardless of trade. And that would allow us to pool across locations, I think.
- [41:35]
Chad Peterman
Yeah. So our leadership right now and I, I'll preface this by saying a lot of it is who the person is. If you got a rock star, okay, they can handle a little bit more. But the way we work now is really the branch manager is responsible for the service lines. So they're responsible for H vac service, electrical, plumbing, drains. They're responsible for the service service. Our install manager is here in Indy and he basically, yeah, the installers, they don't come from South Bend down here, but all the direction comes out of Indy. How we put in a system, what equipment, all of this stuff, all that direction comes out of Indy. And then the branch manager's just there to kind of coordinate and support, the same as with sales. So we have a director of sales and then a sales manager. They manage all the salespeople across the company for agency. The only area that we have. And again, this kind of goes back to the thing I said at the outset. The only place that we have like one service line manager for the whole company is an excavation. And partly is because my brother runs that. So all of the stuff that's in a sewer and excavation business all come up to him. And that works in that specific area. But it may not work. We've talked about, you know, do you have like a. Like a VP of H Vac? The tricky part is kind of splitting ownership. So like if I'm a branch manager, like what do I have control over at that point in time? It seems like everybody's just telling me what to do. So there's a little bit of that. We run into that in H Vac install a touch too where like I'm not managing it, but I'm managing it. But do I have a one on one with this guy? Do I not? What do I do is who's his manager? What. What is all of that? So that's something that I don't know that there's a. There's a perfect solution. I think a lot of it has to do with kind of the, you know, just kind of leader that you have and what can they take on. I can see potentially some of that getting regionalized as we spread further. It works now because, you know, six of our 10 locations are within two hours of one another. So that makes it a little bit more manageable. So that it's definitely something we're thinking about quite a bit as well is like how do you split those responsibilities and do different things like that.
- [43:56]
John Wilson
If you've been listening to the show for a while, you know that we've been big fans of service scalers. One of the things that they just dropped that we are really excited about is a pay per lead program. So what they help you do is they help you directly gain access to leads and scale up your lead partner program. Go to service scalers.com and say we sent you. But the pain point that we notice is like it's back to marketing. It's like a switching power thing where like so we have a department heads which is by trade and then under them they each have a call by call and an install manager or sometimes several call by calls depending on the size of the team, it all, it feels like it's back to like, what's the leader good at? Right? So like we have one of our leaders is like amazing at like training and handling like the service system. So in our mind, like that person is just over plumbing, but like they probably should be over the call by calls, which is over the service techs because that's like the thing that they're the best at. And then we have another manager that's like amazing at mapping out fulfillment, but weaker on the service side. And it's like because we've siloed by trades, we're like ignoring people's strengths and we're like the way their brain is having to switch. They all, they all have the same issues. Instead of just like, hey, let's focus and be the best at managing call by call and like service system in the trades. And then, hey, over here, let's run the best install, you know, 40 crews we can.
- [45:18]
Chad Peterman
Yeah, it's tricky. And I think to your point, it's just people are good at different things, right? And you're asking when they're over a lot of different things. You're asking to be a lot of different people. Yeah, all the time.
- [45:30]
John Wilson
So, so what's the big challenge you see ahead of Peterman for the next 12 months?
- [45:34]
Chad Peterman
I think for us it's, it's really kind of just ironing out kind of the continued expansion and kind of getting into a rhythm with it. I think that's going to be critical.
- [45:42]
John Wilson
Well, 10's a breaking point for like franchises. Like 10, then 20 are like. And this is franchise world. Anyways, those are like the, the points. Because you start needing. Yeah, more.
- [45:54]
Chad Peterman
Yeah, exactly. And I think that's really where, where we're at. I'd say one of the other ones is just the marketing aspect of it. And how do we do effectively for 10 locations, three lines a piece, and it's like they all need something different. So I think figuring out that is going to be critical. They all need, you know, hey, maybe we got to go spend, you know, 12% over in this market where we can spend 6 in this one. And kind of figuring out what's that look like and how do we cut up the marketing budget to make sure that everybody gets what they need. I think that's a, that's a key. And then, you know, I think it's just, you know, when you go into these other locations without a whole lot of brand equity, how do you, you know, know, attract technicians, attract customers? So I think that's really where we're kind of focused in on is solving those problems.
- [46:41]
Jack
How do you view AI taking a role in your business in the next 12 months?
- [46:44]
Chad Peterman
It's something that's out there, right? We're all using it already, whether we like it or not. Probably a lot of the people that you talk to on the phone may not be an actual person. So. Yeah, I mean, I think it's something we're kind of wading into do and figuring out, you know, how do, how can we best use this? You know, I've been guilty before of trying to find, you know, the next shiny object and be like, oh, we're going to take over the world with this thing. And it's like, well, maybe we'll just kind of wait and see kind of as it happens. And it also changes so damn fast, right? I mean, yeah, a year ago, no one was talking about AI, whereas today it's like, oh, well, everybody uses chat GPT. It's like, okay, well, let's figure out what that looks like, you know. So I think. I don't know that we have a definite plan for it, but I think it's something that we're aware of and like, hey, how could we utilize this to, you know, better deliver service?
- [47:36]
John Wilson
I remember Four Seasons in Chicago. I think they're like a good lesson in like shiny object. I'm hearing this like third hand, but they're still running like 2008 and earlier technology in most of the business.
- [47:49]
Chad Peterman
Business. I went there last year. It's. It is. It works for them and they're very, very successful. But yes, it is. You're like, you're doing, you do. You're dispatching this many technicians with that over there, that, that thing. And it's. Yeah, it's. It's super, super antiquated. But they're like, it's our, it's our stuff. It's our baby. We built it.
- [48:13]
John Wilson
I think it's a good lesson. Yeah. And exactly that. That another one would be. I was in Phoenix last spring and I remember, like I've. I've obviously heard of Parker and Sons. I don't even know how many times. And I saw their vans and I was like, are you serious? These guys are industry makers because the vans are like, you know, 2005. 2005 call. They want the rap back.
- [48:39]
Chad Peterman
Yeah, exactly. If you. I don't even think it's a wrap. I think that's just like something like that.
- [48:44]
John Wilson
Yeah, yeah, I think it's. I think it's like a lot of the stuff that gets hailed as best practice or anything now, like, if you look at some of the largest players in the industry, they're not doing it.
- [48:57]
Chad Peterman
But I think it comes back to, you know, all these businesses are built on operational excellence. It is how do we operate? And what they found out is they know how to operate and, you know, you don't have to look the flashiest or anything. I mean, I think some of that stuff helps, for sure. But if you're not. If all you're focused on is these fandangled things, you lose sight of the operational piece, and that's the piece that makes these businesses successful.
- [49:22]
John Wilson
Like, I think the cultural communication that you're driving, that's a little bit outside of operational. That's just like raw leadership. But it gets good. It's really good. Yeah, I can imagine how good that would be inside the team, too, because I do feel like you get connected. It's innovative. It's also simple, and it's sort of the way you operate. But I think that. That that's an advantage from the outside looking in. That's an advantage, probably. Like, I know, you know it's an advantage, but I think it's even more of an advantage than you think it is. From my own seat, because I'm not doing it, and I see how much of a disadvantage not doing it is.
- [49:50]
Chad Peterman
Yeah. And I think that's. That's key. You know, if, you know, you said challenge, and that just made you remember something like challenges that we're looking at. I think it's just like getting used to being big. One of the things we hear right now is like, oh, we have a. You know, our company has a bad, bad, bad rap in kind of the plumbing community, like, with plumbers or whatever it may be, because. Because plumbers are like, well, I don't want to go there and be held accountable and follow process and procedure and do all of these things. I would rather just work for this guy over here. I can make about the same amount of money and not just kind of go do whatever I want to do. And so that's been kind of the interesting point that we have to solve for. For is how can we be a big company yet still be marketable to a. To an industry that for so long has just been kind of wild west and just do whatever you want, you know, who cares about inventory or not? You know, following the safety handbook and driving scores and all of this stuff that we look at as like, oh, this is A great thing. We're organized and we have all of this stuff. But what I believe is that, that you know, most people, you know, they always say, oh, you're getting too corporate. Getting corporate is just getting organized to a certain degree. And, but it's, it's making sure that that organization feels natural to your team. Especially when I used to. It.
- [51:15]
John Wilson
It seems to happen in layers. So I'm curious when you're going to tell me the next one is. But that seems to happen at 5. Yeah, well and I know that we're, we're just getting through sort of the next one and it's. And it happened and I didn't really, I didn't see it coming. We went from a three tier org chart to a four which shifted everything in the organization and, and that, that was one of them because Now I'm like three, four layers removed from 90% of the organization. And that's where the, I think the communication that you're doing like is in alpha. Yeah, yeah. More process, more expectation on the people that report to me or report to those people and then that just trickles down. And we've definitely seen some of the people who have been here since we were a million dollar shop really struggle more with, with just sort of like the. We don't see it as complicated. It's like yeah, we like yeah, you know, we're a midsize contractor company. Like we need to, you know, have basic accountabilities. But it is a struggle.
- [52:21]
Chad Peterman
Yeah, one, one tip I'll give you because we learned this is that one of the, I mean if you do a survey of your company, more than likely the one thing that comes back that, that sucks and needs to be improved is communication. What we started doing that's really, really worked is when we roll out a change, especially the one that trickles all the way down to the field is we. Our COO does it and he crafts the message and then we just have a meeting. Everyone's on zoom, everybody's there and he is the one who delivers the message. Because what we found was it. It isn't or what we think, what we believe it to be is that it isn't the. There's a lack of communication. It's just the communication breaks down when it has to track. It's like giant game of television phone. It breaks down all the way through. So we just do, we started just. I mean we have our regular service meetings and different stuff like that. But any big changes we, it comes from one mouth essentially and Everybody gets the same message because you can imagine, you know, we just roll out all these like different things and it's like this message, once it travels down and out to different branches and here, there and everywhere, it's going to be so convoluted that people are going to be like, the communication around here sucks. Well, it's not the communication, it's that they didn't get the right communication when.
- [53:43]
John Wilson
We originally and again we haven't done it yet, so we haven't executed on this idea you have. But when we thought of this internal podcast thing and like one of our use cases was exactly this of like, hey, how do we communicate this thing or this training or whatever, this like core value that we, you know, need to dive into. So this is just, you know, me reminding myself that I have to actually do that. But yeah, that, that makes sense. Like especially as you add more stuff. Like one of our big transitions recently was we went on to Nextar like six months ago. That was a huge transition. That's absolutely ridiculous. And obviously a lot of changes like followed that which like we did not roll out. Well.
- [54:27]
Chad Peterman
Yeah.
- [54:28]
John Wilson
And anyone listening to the show that currently works for me, I'm sorry but like I know, I know we didn't roll out. That was my bad, yo. But it, it is challenging and I can only imagine that it gets harder with multi location because it did for us and we were still in, we had five locations and they were all basically in Akron, Cleveland, which are like an hour away from each other. And it, that was a challenge to communicate. Well, this was great. I appreciate you coming on and I appreciate you being as transparent as you've been with us. I think this has been been an eye opening conversation. I know for me.
- [54:59]
Chad Peterman
Yeah, absolutely. Happy to help. And yeah, hopefully there's some, some value gained out of a lot of lessons learned but, but yeah, happy to be on here.
- [55:09]
John Wilson
If anyone wants to connect with you, where can they find you?
- [55:12]
Chad Peterman
Yeah, so LinkedIn's probably the best place I have along with, with you. Been following your example on the, on the Twitter or X Game which you do a great job on there. But yeah, LinkedIn's probably the best place. Or you can just shoot me an email now. It's just Chad Peterman. H vac.com cool.
- [55:30]
John Wilson
Well thanks for coming on and everyone, thanks for tuning in to Owned and Operated. If you like what you heard, make sure you check out Owned and operated dot com. Give us a five star review. Wherever it is that you listen to podcasts, it helps our moms know that we're popular somewhere on the Internet.
- [55:45]
Chad Peterman
Zing.