Episode 61: From Horizon Services to Service Champions: How the Best Grow Past $100MM

The home service industry is a really great state currently, and M&A continues to be a hot topic. As owners gear up to get their businesses in order and prime their operation for multiples, many are looking for what it takes to get their team to the next level. Even if selling the business isn’t on your immediate horizon, taking the steps to get to that next major profitability benchmark is always going to be a worthwhile endeavor. That’s why we had to have Frank Dimarco, COO of Service Champions Plumbing, Heating & AC in Southern California as a guest on To The Point. Frank has been involved with multiple sales and acquisitions, as well as helped grow several companies to the next level over his long and storied career in the industry.

A Rising Star in the Trades

Frank grew up in the trades, recalling being as young as 7 years old and in his father’s sheet metal shop using a tape measure and sweeping. It wasn’t long before he was going out on service calls and installations, and before he knew it, Frank was fully immersed in the HVAC world.

In his mid-20s, Frank ventured outside of the family business and went into management, running service departments. He was brought onboard to run a commercial company in Denver at the age of 26. It wasn’t long before other industry suitors came calling, and began a rapid succession of helping challenged business and being involved with multiple mergers and acquisitions. Frank eventually bought a business back in his hometown of Cleveland, OH, and after running it for about a year sold it to some of his partners. By this point, Frank was a bit disenchanted with the industry. He was only 30, but wasn’t sure if he wanted to stay.

Of course, demand for Frank’s talents continued to rise, and he was convinced to join a GM fast-track class for a company and went on to run another company. Frank helped grow this venture from 15 to 24 million in two years. From there, Frank did a small stint at Goodman on the manufacturing side, but quickly learned the pace wasn’t a good fit for him. During this time, he received the opportunity to help Mark Aitken and Dave Geiger run a Pennsylvania location for Horizon Services. This was a pivotal moment for Frank, and in 2008 took the role of VP of Operations and Sales. Alongside Frank, Horizon Services grew from 28 million to over 100 million in 5 years without any acquisitions, one of the more incredible stories of growth in the industry.

Frank’s hunger for growth wasn’t satiated still, and he began to look for more opportunities to grow businesses. He found a company in Denver that Mark and Dave helped him acquire, and ran that from 12 to 20 million in just over a year. By this time, Frank had been in contact with Leland Smith, who helped him acquire a business in Los Angeles, which they then partnered to grow. This business was Service Champions, which Frank remains involved with to this day.

Advice from a Seasoned Vet

With all of this experience growing companies and getting them to the next level, Frank has quite a bit of wisdom he’s happy to share with owners who want to figure out how to get to their first million, make the jump from 10 to 20 million, or even set their sights on a much higher number.

Winning characteristics of a successful business

According to Frank, it all starts with your people. Having a management team that is the right fit for growth is essential. It can be hard to make those tough decisions, especially with long-standing members of your team, but growth stagnates, a successful business will do what must be done in order to succeed. You’ll also want to make sure to have at least a double-digit profit margin. This means figuring out your pricing and labor to help drive the business, and backing up the service with value your customers will appreciate. This will help you have the cash to grow your business, and forecast months into the future to set yourself up for success. Lastly, you have to treat people right. From your employees and customers to your entire community, the way you interact with those around you is going to be a major factor in how quickly you ascend.

Winning characteristics of a successful owner

Frank is quick to use Leland Smith as an example of an industry titan to emulate, but he has learned from many others along the way what it takes to be a successful business owner. Starting a company from scratch and spending decades in the industry might make you an expert, but you can’t let it get to your head. Frank suggests checking your ego when you walk through the door each and every morning. Your name might be on the business, but you have to have a humble mindset to be the best you can be. Frank points out that Leland is always looking for ways to improve himself and his business. Believing that you and your company don’t need “fixing” because you’re already successful is a sure way to never make it to the next step on the ladder.

Premium pricing; premium service

Frank points out that Service Champions is unapologetic for being a premium-priced brand in the market and having high expectations. As mentioned before, you have to price your services with growth in mind. However, that doesn’t mean simply raising the prices. You can’t be afraid of charging the customer a premium price, but be damn sure you are delivering a premium service and product. Otherwise you’re ripping them off, and they’ll pick you apart online. As your prices rise, so should the quality. Remember, the bar for service is often pretty low, and being the cheapest on the block is never the path to growth. Have a mindset of world class service, deliver what you say you’re going to deliver, have great people, and your customers will easily justify a premium price for your services.

Backing Up Your Promises

To further elaborate on what it means to deliver “world class services”, Frank is quick to point out that you have to back up those 100% satisfaction guarantees, on-time guarantees, and anything else you promise your customers. You have multiple levels in your company that have the opportunity to make the customer happy, and each one has to deliver the best products and services that are out there. Get it out of your mind that you’re going to argue with the customer about pricing, or who is right and wrong in a situation. If the customer isn’t 100% satisfied, and you’ve promised that, you have to figure out how to remedy that situation. It’s going to be difficult, and many times you may feel that they are entirely mistaken, but you have to “wow” your customers no matter what. Fix it right, fix it fast, and be sure to deliver exactly what you say you’re going to deliver.

Take Care of Your People and Your Customers

Frank’s parting words are “stick to what’s true to you”. This is a difficult industry, but if you do the right things, the benefits abound. If you take care of your people and your customers, you’ll always win over time. If you have any questions for Frank, he’s happy to help. If you have any questions for Frank, let us know and we’ll be happy to connect you to him!