Episode 120: Legendary Advice for Running a Profitable Business in the Trades

Live from the 2022 ACCA conference in St. Louis, we bring on Lee and Michael Rosenberg of Rosenberg Indoor Comfort to To The Point!

Lee is Chairman and Michael is President of their successful HVAC company out in San Antonio, TX, and the father and son duo have been doing things right for many years. In fact, they were recently awarded the 2021 ACCA Residential Contractor of the Year! Of course, it’s not about the accolades and awards. It’s about having a sustainable, profitable business with a great reputation. That’s exactly what they are here to help you implement in your own business.

The Rosenberg Story

Lee Rosenberg graduated from the University of Texas in Austin as an electrical engineer. After college, he went to work for a large corporation in New York, working in research and development for telecommunications. In fact, Lee helped develop coaxial cable for television, and patented it for the company! After a few years, he went into the manufacturing side of things and moved to Wisconsin to run a manufacturing facility. 5 years later, he built another facility in upstate New York, but by this time he was getting fed up with the corporate environment.

Lee made the decision to move back to his native city of San Antonio, and was thinking about his next career move. His friend was in the heating and air conditioning business, and knew someone who needed someone for sales and engineering. Lee would join this relatively small company in 1974, and started to learn residential and new construction HVAC. By 1985, Lee had helped grow the company to about 9 million in revenue.

At an ACCA conference, Lee was exposed to the fact that this company wasn’t actually that profitable. He was making good money, so this was a bit surprising to him. He quit the company shortly after, and started his own company in 1986 with his wife, Betsy. The company, Metro-Tech Service Company, ran successfully for 16 years before they sold to Blue Dot as one of the founding companies. Of course, starting in the late 80’s was difficult due to a tough Texas economy. After joining an ACCA group with some successful contractors, the family made the company very profitable. As many will remember, Blue Dot went public, and things turned ugly. The corporate world had once again disappointed Lee.

Rosenberg Indoor Comfort is Born

Lee would leave Blue Dot and become the co-founder of Service Nation, where he served as chairman for 10 years. A few years after leaving, Blue Dot reached out wanting to give the business back–actually paying Lee to take it. So, the Rosenberg family took the company back, now with a laser focus on the top and bottom line. Rosenberg Indoor Comfort has been very profitable for many, many years after being officially founded in 2003. In fact, last year they grew about 30%!

Today, Rosenberg Indoor Comfort is at 46 employees and still looking to grow, with Michael as President of the company. They focus on residential service, replacement, and planned maintenance, with a healthy mix of light commercial to balance for seasonality. Looking ahead, the family business wants to grow profitably, organically, and at a pace that suits them well.

Important Takeaways to Running a Profitable Business

The key for the Rosenberg family isn’t so much the size of the business, but the profitability. It’s about the bottom line. There are plenty of $50mm+ companies out there barely turning a profit. Over the years, Lee and Michael have learned plenty of lessons about what is important to understand in order to make your business successful, sustainable, and most importantly, profitable.

Delegating

One of the key things that Michael specifically has learned is that hiring the right people and delegating work is key. Once they had the right people, he was open to delegating more. This allowed him to work more on the business, instead of being stuck with the usual day-to-day processes. He especially likes working on the marketing side of the company. After delegating enough of his workload, he was able to find resources such as RYNO Strategic Solutions to handle different things like SEO and PPC. He credits a lot of the growth of the brand and the company to being able to focus on the marketing more. It was only possible after he had the right people in place to delegate to!

Brand, Reputation, and Reviews

The Rosenberg family is committed to running their business with honesty, integrity, and professionalism. They understand that these attributes are recognized by their customers and community. Your company’s reputation and brand are essential to its success, and that isn’t lost on Lee or Michael. In fact, they hear it all the time from their customers that the reason they choose Rosenberg Indoor Comfort was because of their reviews or their brand. Their neighbors trust them, the reviews are glowing, and so the leads come in.

Another reason these things are crucial is because it helps with recruitment, too! They’ve had applicants tell them that they want a new career with the company not because of their current pay or job necessarily, but because of the ethics and culture that Rosenberg has versus their current situation.

Know Your Numbers

Lee is certified as a professional engineer, and he understands the importance of having your numbers down pat. According to Lee, for your company this means having numbers that are accurate, timely, and departmentalized. Rosenberg Indoor Comfort has budget before each year. They also budget every single month, tracking against their yearly expectations. In addition, they track trends and data by department. The top line is always a focus, but the real key is the bottom line.

You simply have to understand the financial side of the business, and that includes budgeting. Lee learned how profitable this industry can be–but only if you run your business like a business. There are lots of successful technicians who make the jump to owning their own company, and some think it’s easy. The tools you need to run an HVAC business successfully are a completely different tool belt. If you don’t understand how to budget and price correctly, you’ll be losing money and preventing your own growth.

Recruitment and Staffing

It’s still a common theme: recruitment is a struggle for many HVAC businesses. How does Rosenberg Indoor Comfort ensure they’re properly staffed with the right people to keep up with volume? They have their own internal build-a-tech program! They’ve also developed relationships with 4 of the trade schools in San Antonio, and serve on the boards. After bringing on fresh candidates, they have the recruits start as parts runners. After demonstrating that they are reliable and a good culture fit, they promote into the build-a-tech program. This includes riding around with senior techs and learning the Rosenberg Indoor Comfort way. After determining what they are good at and what they enjoy doing, if they’ve proven they’re ready the new techs get a truck and are sent out to take care of the customers.

Lee estimates that about 75% of their field people today came from their build-a-tech program. Another part of this program that has been highly beneficial is the lab that their Vice President, Tom, built. In addition to being used for training, it’s also something they can show during recruitment to potential technicians. Technicians love training!

Focus On Your People

Rosenberg Indoor Comfort won the 2021 Top Places to Work in San Antonio award, and not for the first time. This is a neutral company that comes in and asks your employees questions about their jobs and the company they work for. Michael and Lee don’t see these responses, and it’s not an award you can just pay for. After being put against similar companies in San Antonio, their company came out on top. That says a lot about the culture they’ve built!

The family spends a lot of time implementing the type of culture that promotes growth into the business. That includes devoting energy towards communication. There are many regular meetings held to cover metrics and discuss important issues, and everyone is able to know exactly where they’re at and where they’re headed.

Always Be Learning

After well over 100 episodes of To The Point, it’s clear that successful service companies are ones that are always learning. Lee and Michael embody this, and it’s quite fitting to have filmed this live podcast at an ACCA conference. Whether you’re a season vet or just starting out your first trades company, there’s plenty here to pick up and implement in your own business.

Michael and Lee encourage you to understand the financials of your business, and surround yourself with good people. That means not just having the right people in your business, but rubbing shoulders with successful people. Meet with them, ask questions, get involved in a best practices group and ACCA. And most importantly, don’t just write things down. Do it. As our host Chris Yano loves to say, “Ambition without action is useless”.

Want to connect with Lee or Michael? They’d love to help! You can email them at [email protected] or [email protected].