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Owned and Operated continues its new LEGENDS series, focusing on the stories of the home service industry’s most successful entrepreneurs. John Wilson and Jack Carr are joined by special guest Chad Peterman, President and CEO of Peterman Brothers–a $120M home service empire with over 700 employees and eight locations. Follow along as Chad discusses how a centralized operation opened the door for expansion, the realities of recruiting and marketing for a large organization, and the power of podcasting and branding to help find the right hiring fits for your business culture.
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Chad Peterman: On LinkedIn | @ChadMPeterman on Twitter
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Owned and Operated LEGENDS Chad Peterman Transcript
Chad Peterman: We added three locations in a year. It was not fun. You have 10 locations. Hi, I'm Chad Peterman, president of Peterman Brothers.
Chad Peterman: It's just three people. That's the only infrastructure that's at a 9 million. All these businesses are built on operational excellence. If all you're focused on is these fan dangled things, you lose sight of the operational piece. And that's the piece that makes these businesses successful.
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John Wilson: Welcome back to Owned and Operated. Today, we've got a special guest on. We have Chad Peterman from Peterman Brothers.
John Wilson: Welcome, Chad, to the show.
Chad Peterman: Yeah, I appreciate you guys having me excited to to chat and hopefully give give the listeners some nuggets that they can take away and keep improving their business.
John Wilson: Yeah, I'm sure we're gonna, I'm sure we're gonna get some good ones out of this. Can you walk us a, Like plumbing HVAC roofing now, but can you walk us through just like where Penan brothers is at so we can level set?
Chad Peterman: Yeah, absolutely. Company was started by my dad in 86. He was an HVAC technician. My brother and I joined the business. I joined in two. 11, 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.
Chad Peterman: 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 or headquartered in Indianapolis but have nine other locations across the Midwest.
Chad Peterman: So we're in, we go up into Michigan Ohio, and then Just this year, Kentucky. Yeah,
Jack Carr: That's incredible. Don't come any farther south though. [Laughs]
Chad Peterman: We learned that when you cross the Ohio river, that the energy standards change and there's a few nuanced things. But Louisville has been doing really well for us.
Chad Peterman: So we've got a good leader down there and a really good team. So it's been been fun to watch.
John Wilson: I haven't even thought about that nuance. Like my first thought, which is probably just like the most basic of thoughts is licensure.
Chad Peterman: Licensing is interesting for sure. So we have we actually created I think it was this year or late last year a licensing program where we incentivize employees to go get their license.
Chad Peterman: So we've had guys here that. 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 pay them a monthly stipend to hold it for the company. We really work to create redundancy in our licensing.
Chad Peterman: So we don't want just two Ohio plumbing licenses. We want three or four or whatever it may be.
John Wilson: I totally agree with that approach. We've done the same thing. I think that's a hard little mental hurdle. For like folks beginning to, cause you're like, Oh, you're literally paying someone. I'm imagining the quote.
John Wilson: You're paying someone to eventually compete with you. And I'm like, yeah, I guess but like you also need it. Yeah. It helps to have that to operate for sure. You said four states. It was Kentucky, Ohio, Indiana, and 10 states. Total locations. Yep. You got it. One of the things that's been fascinating to me may probably because I'm in the, we're in the journey ourself, like we're getting ready to do our, la we had five locations, but it was all just in northeastern Ohio, and then we merged into one.
John Wilson: 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'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?
Chad Peterman: Yeah. This will be about as unsexy of a story as possible. I have a lot of, there's a lot of we just went for it. We had our first. First 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.
Chad Peterman: So we literally just opened up in Lafayette, hired a team up there. And just went for it. It was very messy at the beginning just trying to figure out like, Oh they're up there and we're here. And how do we do things? And so on and so forth, at the time, I think just to give people kind of an idea, I think at the time, I want to say 2018 call, we were probably 10, 15 million.
Chad Peterman: In total revenue at that time. So that was the size. Now, if looking back, would I have done that at that point? Probably not, but it's worked out right. And it gave us a blueprint to how to do the others. The others have mostly came through acquisition outside of Louisville, Kentucky, which we just greenfielded.
Chad Peterman: We started from scratch. I would tell you moving forward, that will be our model. So we already have two more locations picked out. How do we pick locations? So typically what I look for is a. We're in the Midwest. Here in the Midwest, you got Chicago, which is massive, not going there, but you're looking for kind of what I call tier two markets like, Dayton, Ohio, Louisville, Kentucky, Lexington Evansville all of those cities.
Chad Peterman: And the main reason we do that is, one, we want to make sure that 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.
Chad Peterman: But it's like, how can I build a, call it 15,
Chad Peterman: Sub 20. That's what I want. Cause then I can still support it. And I don't have to put a bunch of infrastructure, like service managers and field supervisors. Like you don't need a whole lot of that. You need some depending on the size, but that's what we look.
Chad Peterman: 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.
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 once you've gone through a couple of 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?
Chad Peterman: Yeah. Don't get me wrong. Like you see all these PE groups out here and they're acquiring these companies and stuff like that. When you're using your own personal. Or, a loan from the bank, like you can't go out and buy a 30 million company especially if you're only a, 10 or 20, but it's very difficult, when they buy a 30 million company that already has everything set up.
Chad Peterman: It's literally Oh, we just invest in the company. You keep doing your thing. When you're buying sub 5 million companies, 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, it can be a challenge.
Chad Peterman: Now we still have people that stayed with our acquisitions and they saw the value and working for a bigger company. And we're super happy to have those people, but there are quite a bit that just ah, this is not for me. I don't really want to do this. And to your point, yeah. It's a big culture thing that if I start from scratch, I don't have to untrain any bad habits, any we did it this way.
Chad Peterman: And this was when Bill was in charge. We did it, 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? Cause you don't have any calls coming in. You got to go generate them. Your marketing costs are higher.
Chad Peterman: It's a little bit more difficult, but. The ease on the back end is so much better. Typically when we start a new location, we bring that branch manager and they work out of our Indy office for three months. There is no location. They're just learning all of the ins and outs. Then when they go and do it on their own they already have all of our process and procedure and this is how things are going to run.
Chad Peterman: And, you just go. So 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.
Jack Carr: When you're doing this, are you greenfielding in all three trades at once as well? Are you starting off with HVAC and then you hit certain benchmarks and you open up the secondary?
John Wilson: That was my second question. Cause that seems, especially I'll add with like with the scale, cause I think that's an important thing to note. I'm trying to imagine, cause we're 26. And we have all three trades and I still feel really small. And in those three we're not like, we're not deep yet into those trades.
Chad Peterman: 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 HVAC tech install group, sales guy. Go. I think that's how we'll do it moving forward. So our blueprint, when we go in, it's find a branch manager, first and foremost.
Chad Peterman: Like I always tell people like 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 want to go to a certain degree. So you find the leader, you hire one technician in each of the trades.
Chad Peterman: You hire an HVAC 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.
Chad Peterman: That is primarily due to just the complexity of excavation. It's a little bit more. But service lines, HVAC install, we launched 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 constant.
Chad Peterman: So what we've been able to do is generate a lot of business for HVAC side. Now that it's hot. You don't have to worry as much about that, but it's nice to have all three trades that can toss leads from one to the other.
John Wilson: Yeah I had excavation was one of my question marks is I was thinking about this for both the complexity, but also a capex requirement.
John Wilson: Cause with plumbing HVAC 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 team structure.
Chad Peterman: Yeah. So we only have, we have excavation at six of the 10 locations and all of those are central Indiana.
Chad Peterman: So our excavation, I think we run six or seven crews and they run, they'll, they touch all six of those locations. Now when we, like our location in South Bend or even Louisville, like we probably will have a crew in that location. Particular area. They'll report back into our centralized kind of structure because my brother oversees all of that.
Chad Peterman: 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 centralized to a certain degree.
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, pick this tier two market. It makes sense.
John Wilson: But like the reason that you're able to do this is levels deep, right? Like the reason that, yeah, like your market pen is what it is. And like the education and onboarding piece seems like the big nut to crack. Cause I'm trying to imagine dropping a new location into Nashville. Jack, I'm coming.
John Wilson: And yeah, Chad and I are working on together. It's going to be fun. We're going to take on Chris. Let's do it.
Jack Carr: You’re not competing against me. It's like cool.
John Wilson: The academy, like the onboarding and the continuing ed and like the Peterman way seems like the method.
Chad Peterman: Yeah, so all of our people for onboarding come to Indy.
Chad Peterman: So if they start, we onboard every other Monday. And they all come into Indy for, and 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.
Chad Peterman: It's called direct field support, which rides with not rides, but virtually rides with a technician for about their 1st. 30, 30 days, 30, maybe 60 days, but is there coaching them through all of this stuff? Because, even before when we had onboarding, you onboard a technician for a week and expect them to remember everything that you just told them.
Chad Peterman: It's 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, in the past. Yeah, we just send a guy send Bill with. Jimmy and Jimmy teach him, teach Bill everything, and let me know when he's ready, it's Oh boy, this is a recipe for disaster.
Chad Peterman: And so that's been really good. But yeah, to your point, it's easy. Like when we first did it, we, in 21, we added three locations and. A year and it was not fun. There was a lot of just what are we doing? How do we manage all of this? Whereas now we have a director of operations.
Chad Peterman: 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 continue to grow. But yeah, having the adding a second location introduces complexity for sure. We do it now because that's our model, right?
Chad Peterman: It's like, how do we build I always equate it to like, when you look at all these like tire 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.
Chad Peterman: You could build a massive company here, 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 yeah, it comes at a cost because you give up your focus on other things and things like that.
John Wilson: 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?
Chad Peterman: So Indianapolis is probably 40, 50%, I'd say maybe closer to 50 percent of total business.
John Wilson: I feel like that makes, Cause it makes sense as far as like the infrastructure has to sit somewhere.
Chad Peterman: So all of our call center is centralized. A lot of our stuff is, all of our back office, obviously really at a branch, so like a branch that does call it, yeah I'll use my, the Bloomington branch.
Chad Peterman: They're about, they're probably eight 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, it's just three people.
John Wilson: I have questions on that. So most of the questions, and maybe this is so Jack and I were talking about this right, like right before you came on.
John Wilson: And cause I was like walking through I told him that I was like, yeah, so he's got, it'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, in my mind, I feel like you add, and maybe it's just, this is the launch versus this is what it looks like, but I was like how would a brand manager tie into that?
John Wilson: Brand manager being like, they are accountable for the leads being driven every day. And then are they onsite or offsite? And then like recruitment obviously seems like a real challenge. And it almost seems like you throw a recruiter at that problem for the first year. Cause it's leads and it's people.
John Wilson: Like it leads to sales and fulfillment. And so how are you thinking about solving those challenges?
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, that takes a higher priority. But they're recruiting for all of them. Essentially our recruiters are getting.
Chad Peterman: Vetting candidates, and then they're setting them up for that manager in that particular location. On the lead side, all of that is, obviously funneled through our marketing team. And we have 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.
Chad Peterman: And then our digital team. Primarily because traditional media, once it's 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.
Chad Peterman: I will tell you that 1 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 essentially got 30 different companies that our marketing team is trying to fill capacity for.
John Wilson: Yeah.
Chad Peterman: That has been the strain on us. 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.
Chad Peterman: But I would say that is one of the, definitely one of the struggles is every branch and every service line needs something different. At all hours of the day.
John Wilson: That's a challenge for us now, same thing. We have five service lines cause drains is broken out separate and 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.
John Wilson: Of okay 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 at like septic which is a completely, and maybe we just shouldn't have that, but it's a completely different funnel and like a completely different customer acquisition than like HVAC.
Jack Carr: 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?
Chad Peterman: Yeah, I think 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.
Chad Peterman: 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 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.
Chad Peterman: Now there's an insurance component there that you'd have to figure out to a certain degree. But to me, 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 we're growing.
Chad Peterman: And I'm like, yeah, and I'm feeding you all this work which is great. Cause he, 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, fix whatever broke. So if we're there, why not do that? Yeah there's a bunch of different things that I look at.
Chad Peterman: It's not on our website. Immediate radar by 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 may be outside of the Three primary trades that people think about.
John Wilson: We added that in 2020. Now, granted, we were like too small for it, I would say. And when we added it, but it is good. Like it's good. Like average tickets in the five 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.
John Wilson: Like literally none. It's like 45 to 50 percent cash flow, which is just absolutely ridiculous. But yeah we've been running that for a few years and inspired by Roto Rooter. So we were, Roto Rooters got exactly that. They have all these plumbers and then they added the restoration thing.
John Wilson: And we kept losing like drain cleaning, which I don't know that I personally, and maybe it's just cause 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. Cause I think the location that we competed against added it.
John Wilson: So we added it to compete and it's been good, but it is 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 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.
John Wilson: Cause the app is..
Chad Peterman: So big. Yeah, it's it's definitely interesting. I think that the interesting point on it is, 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, it's more complicated than that, but I guess that's how I start looking at it as okay, you've built this base, like what else do they need done on their home?
Chad Peterman: You can probably offer it.
John Wilson: That was what Chris roughly said the inspiration was for appliance was…
John Wilson: 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.
Chad Peterman: Yeah and he uses that I've talked to him about it is, while they're not, that department is not it's not like the golden goose by any means, but It's a way of lead gen where other people aren't looking because it's not like there's a big massive appliance repair companies sitting around the corner.
Chad Peterman: 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 duck cleaning and how do we utilize duck 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. So I think there's a lot of interesting things in the, as as HVAC replacement leads continue to get more and more expensive, I don't think they're going down anytime soon.
Chad Peterman: It's the, to me, the question is where do I go get cheaper leads that no one else is.
John Wilson: Yeah, the duck cleaning thing. I never really understood why more people don't do exactly that because you can go I think that's a good use case for an acquisition where like you can go buy a two to 3 million duck cleaning company or a jack.
John Wilson: And I were talking about this chimney sweeps because it's not as easy of a correlation, but Chimneys and HVAC, chimneys and water heaters opens up a conversation for tankless or high efficiency or something like that. And that is something that, the leads probably cost 10 or something on LSA.
Chad Peterman: If there's even a provider.
John Wilson: Yeah, it's so we had that conversation. Because Jack lost one of his install. Oh yeah. He's Googling it. Jack lost one of his installers to a chimney sweet company that was launching an HVAC department. And we're like, bro, why are we not going the other way on this?
Chad Peterman: In Greenwood, there's no LSA going on.
Chad Peterman: And the Chimney Sweep game.
John Wilson: Yeah, like literally probably 3 leads to sweep a chimney, right? And then you go and Hey should we talk about your filter? Or even just turn it into a membership? Cause you can almost do anything and turn it into a membership. But the obvious complexity that you have here is you have 10 locations.
Chad Peterman: …Bit more difficult.
John Wilson: Yeah, it's a lot more difficult. I don't even know. Like, how would you imagine rolling that?
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Chad Peterman: So the difficult part, it's not really difficult, we do it today, but when you have one call center, you've gotta, they've gotta be aware of if you just launch it in one. Location. Yeah. They've got to be aware of that. Now, I would probably just launch it in Indy because I could be close to it and, it'd be super there.
Chad Peterman: Whereas if you go launch it in Ohio 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 particular, 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 you could gauge demand and figure out where you're going to put the next one based on, what you're bringing in organically.
Jack Carr: Chad: question for you. So we've talked a little bit about you, you growing into multiple locations and all this. Do you like when we're talking to Mello, he has this. 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?
Chad Peterman: Yeah for me it's really building what I think to be a somewhat unique model in that it's a singular brand, multi locations. And not just, oh, we got two, but 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.
Chad Peterman: To me, that's and it's similar to what Tommy's doing, right? He's building for the most part, building one single singular brand, a one. Garage doors, whereas that's my goal is to how can we build this? Because to my knowledge, like horizon has multi location, but now, it's like they've got other brands and that's an operation to see sometime.
Chad Peterman: 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. Can't remember the name of it. And I've never met him, but I'd like to, but but yeah, that's my goal of Hey, how can we build this one singular brand kind of across the Midwest at this point?
John Wilson: What do you think a minimum viable branch is?
Chad Peterman: We bought out 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. We don't have a branch. Our smallest branch is probably outside of Louisville.
Chad Peterman: Cause 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 a ton of people and do 7 million. My goal or what I would think, I don't think you want another, 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.
Chad Peterman: They, we started the beginning of February. They're doing call it between two and 300, 000 a month, which will end up at three, three and a half million. So to me, that's where I would be shooting for. So like first 12 months, like three and a half million is okay, that's good. That would be what I would say.
Chad Peterman: I don't know that you'd want to just have a location that's just consistently doing $2 million. Might even have the, might even have it.
John Wilson: You have a podcast, which Yep. Is great. And I like it a lot. And when I think about the topics that you talk about, it's a lot of the like leadership. And culture and 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.
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 of people live. So I did one this morning, I was up at 3 30 a. m. this morning to drive to lovely Fort Wayne, which is two hours from my house. And we do them because we do them at 6 a. m.
Chad Peterman: 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. When it first started. So if you go back and listen to some of the stuff from eight, I don't know when the first time I ever had a guest on.
Chad Peterman: 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 we'll just put it on a podcast. And so it started as not, I wouldn't say it started as a podcast.
Chad Peterman: It just started as. Here's the easiest way to distribute this information. And it's evolved into where now we're able to have guests on there and, provide value that way. Which is a lot of fun. But yeah, that's how it started was just getting information out to the team.
Chad Peterman: It's even more beneficial now when I don't get to see. Everybody 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.
John Wilson: I've had the same, I haven't executed on it, obviously. We do have a podcast, but we're not yet.
John Wilson: I haven't used it. I haven't used it in that way. What has been interesting though, and you likely get 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.
John Wilson: And they bring up questions and they bring up, Hey, I heard this. And it's Oh, okay. This is interesting.
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 would be like at this company.
Chad Peterman: And yeah, I've had the 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, type of 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 a lady that works she just started, she's only been here a month and She works in dispatch and or sales coordinating.
Chad Peterman: And she came up to me and she's Hey, I really started, I started listening to your podcast in the morning when I come in, when I drive into work and I really like it. And so it's cool to see people who, come into the organization and they find that as a resource. And, a lot of people say it's to a certain degree, it's especially the ones that have been here for a while, it's Being able to still connect with me being that they don't work side by side, like we used to.
Chad Peterman: And so that's been fun too to be able to, in some way 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, it's, Published it's out there. People can consume it. It is, I think, nice to serves, or at least I think it does.
Chad Peterman: I don't have any facts on this, it serves as that cultural beacon of the company, especially when you've got layers and layers of management, it's I don't totally agree with my manager or someone said something to me and I didn't like it today, but knowing that, from the top, this is how we feel.
Chad Peterman: This is how we expect people to lead. This is how we deal with things. 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. Our issues that we have at the company.
Chad Peterman: So it's Hey, we didn't handle this situation. 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 it's 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.
John Wilson: Something I didn't cover that I wish I would have.
John Wilson: So I'm going to, I'm going to bring us back. Lafayette was the second location. I think 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.
John Wilson: So we've talked with Iko, we've talked with Tommy, we've talked with yourself, we've talked with Chris, we've talked with Logan and Cincinnati and Dayton and 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 out, a location an hour away, before we merge them all, was that one became a parasite on the bigger one.
John Wilson: 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. To give you a little bit of context,
Chad Peterman: so Indy is obviously right in the middle of Indiana. So four of our locations are within an hour of Indy.
Chad Peterman: 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. 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.
Chad Peterman: 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.
Chad Peterman: Ohio is, that'll be a separate model, but what we have now is Fort Wayne is about. It's two hours from Indy. I know because I drove it this morning there and back. But 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.
Chad Peterman: So it's 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 building these things and it's all just install like service wise, they stay in their local locales. They do their own thing. thing, whatever. We may have a little bit of Hey, we're shorthand of the tech.
Chad Peterman: 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 six locations. They all come to Indy. In the morning to get all their stuff and head on out.
Chad Peterman: Yeah. So that's why I think an hour, I think there's a piece that it feels manageable, especially when it's your first one, or, you haven't done it before. I would tell you that has been the biggest benefit is we may have a bang up day in Lafayette and not in Muncie. We're still winning because we can go put in more work than they technically have manpower.
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 cause we're trying to figure out okay, a step or two ahead of us.
John Wilson: Like we feel the strain of it and customers do too. 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. Cause my first thought was with pooling install is how are you pulling leadership? If each branch has a manager, then like, how does fulfillment get handled?
John Wilson: 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.
Chad Peterman: Yeah. So our leadership right now, and I'll preface this by saying a lot of it is who the person is. If you got a rockstar, okay.
Chad Peterman: 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 HVAC service, electrical, plumbing, jobs, they're responsible for the 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.
Chad Peterman: How we put in a system, what equipment, all of this stuff, all that direction comes out of Indy. And then the branch manager is just there to coordinate and support. The same as with sales. So we have a director of sales and then a sales manager. They manage all the sales people across the company for agency.
Chad Peterman: The only. Area that we have. And again, this kind of goes back to the thing I said, the outset, the only place that we have one service line manager for the whole company is an exhibition. And partly is because my brother runs that. So all of the stuff that's in Sewer and excavation business all come up to him and that works in that specific area, but it may not work.
Chad Peterman: We've talked about, do you have like a VP of HVAC? The tricky part is splitting ownership. So if I'm a branch manager 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 HVAC install a touch to where I'm not managing it, but I'm managing it, but do I have a one on one with this guy?
Chad Peterman: Do I not? What do I do is who's his manager? 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, 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.
Chad Peterman: It works now because, 6 of our 10 locations are within 2 hours of one another. So that makes it. A little bit more manageable. So it's definitely something we're thinking about quite a bit as well. It's like, how do you split those responsibilities and do different things like that?
John Wilson: The pain point that we notice is it's back to marketing.
John Wilson: It's like a switching power thing where 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 what's the leader good at.
John Wilson: 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.
John Wilson: And then we have another manager that's like amazing at mapping out fulfillment, but weaker on the service side. And it's 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 have the same issues instead of just Hey, let's focus.
John Wilson: 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, 40 crews. We can,
Chad Peterman: yeah, it's tricky. And I think to your point, it's just, people are good at different things. And you're asking when they're over a lot of different things, you're asking them to be a lot of different people all the time.
John Wilson: What's the big challenge you see ahead of a Peterman for the next 12 months? I
Chad Peterman: think for us it's really just ironing out. Yeah. Kind of the continued expansion and kind of getting into a rhythm with it. I think that's going to be critical.
John Wilson: 10s are breaking point for like franchises, like 10, then 20 are like, and this is franchise world.
John Wilson: Anyways, those are like the points. Cause you start needing, yeah, more.
Chad Peterman: Yeah, exactly. And I think that's really where we're at. I'd say one of the other ones is just the marketing aspect of it. And how do we do that effectively for 10 locations? Three lines a piece. And it's they all need something different.
Chad Peterman: So I think figuring out that is going to be critical. They all need, Hey, maybe we've got to go spend, 12 percent over in this market where we can spend six and 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.
Chad Peterman: I think that's a key. And then, I think it's just when you go into these other locations without a whole lot of brand equity, how do Attract technicians, attract customers. So I think that's really where we're focused in on is solving those problems.
Jack Carr: How do you view AI taking a role in your business in the next 12 months?
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. Yeah, I think it's something we're waiting into and figuring out, how to, how can we best use this?
Chad Peterman: I've been guilty before of trying to find, the next shiny object and be like, Oh, we're going to take over the world with this thing. And it's maybe we'll just wait and see as it happens. And it also changes so damn fast. A year ago, no one was talking about AI.
Chad Peterman: Whereas today it's Oh everybody uses chat GPT. It's okay let's figure out what that looks like. 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 Hey, how could we utilize this to better deliver service.
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 and most of the business.
Chad Peterman: I went there last year. It's, it is it works for them and they're very successful.
Chad Peterman: But yes, it is. You're like, you're doing, you're dispatching this many technicians with that over there. That that, and it's, yeah it's super antiquated, but they're like, it's our stuff. It's our baby. We built it.
John Wilson: I think it's a good lesson. Yeah. And exactly that. And another one would be, I was in Phoenix last spring.
John Wilson: I remember, like I've obviously heard of Parker and Sons, I don't even know how many times, and I saw their vans, I was like, are you serious ? These guys are industry makers. 'cause the vans are like, 2005, 2005 call. They want the wrap back .
Chad Peterman: Yeah, exactly. If you, I don't even think it's a wrap.
Chad Peterman: I think that's just almost like it's letters, it's decals
John Wilson: or something like that. 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. If you look at some of the largest players in the industry, they're not doing it,
Chad Peterman: but I think it comes back to, all these businesses are built on operational excellence.
Chad Peterman: It is, how do we operate? And what they found out is they know how to operate and you don't have to look the flashiest or anything. I think some of that stuff helps for sure, but if you're not, if all you're focused on is these fan dangled things, you lose sight of the operational piece.
Chad Peterman: And that's the piece that makes these businesses successful.
John Wilson: Like I think the cultural communication that you're driving, and 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.
John Wilson: It's innovative. It's also simple and it's the way you operate. But I think that's an advantage from the outside looking in. That's an advantage, probably I know, it's an advantage, but I think it's even more of an advantage than you think it is from my own seat. Cause I'm not doing it.
John Wilson: And I see how much of a disadvantage not doing it is.
Chad Peterman: Yeah. And I think that's key. If 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 Oh, we have a, our company has a bad rap.
Chad Peterman: In kind of the plumbing community, like with plumbers or whatever it may be because plumbers are like 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 go do whatever I want to do.
Chad Peterman: And so that's been the interesting point that we have to solve 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 wild west. And just do whatever you want, you care about inventory or not, following the safety handbook and driving scores and all of this stuff that we look at.
Chad Peterman: As Oh, this is a great thing. And we're organized and we have all of this stuff. But what I believe is that, most people, they always say, Oh, you're getting too corporate getting corporate is just getting organized to a certain degree. And, but it's making sure that organization feels natural to your team.
Chad Peterman: Especially when I'm not used to it.
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 five. It's coming. Yeah. And I know that we're just getting through the next one. And it's, and it happened and I didn't really, I didn't see it coming.
John Wilson: We went from a three tier org chart to a four, which shifted. Everything in the organization. And that, that was one of them. Cause now I'm like three, four layers removed from 90 percent of the organization. And that's where the, I think the communication that you're doing, is an alpha. Yeah. More process, more expectation on the people that report to me or report to those people.
John Wilson: 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 just like the, we don't see it as complicated. It's yeah, we like, yeah, we're midsize contracting company. Like we need to, have basic accountabilities, but it is a struggle.
Chad Peterman: One tip I'll give you. Because we learned this is that one of the, 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 worked is when we roll out a change, especially the one that trickles all the way down to the field is.
Chad Peterman: 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 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 name, a telephone, it breaks down all the way through.
Chad Peterman: So we just, we started just, we have a 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, we just rolled 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.
Chad Peterman: It's not the communication. It's that they didn't get the right communication.
John Wilson: When 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 Hey, how do we communicate this thing or this training or whatever, this like core value that we, need to dive into.
John Wilson: So this is just, me reminding myself that I have to actually do that. But yeah, that, that makes sense. Especially as you add more stuff, like one of our big transitions recently was we went on to next star. Like six months ago. That was a huge transition. And obviously a lot of changes like followed that, which like we did not roll out well and anyone listening to the show that currently works for me, I'm sorry, but I know we didn't roll out, that was my bad deal, but it is challenging.
John Wilson: And I can only imagine that it gets harder with. Cause it, 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 that was a challenge to communicate. This was great. I appreciate you coming on and I appreciate you being as transparent as you've been with us.
John Wilson: I think this has been an eye-opening conversation. I know for me.
Chad Peterman: Yeah, absolutely. Happy to help. And yeah, hopefully there's some value gained out of a lot of lessons learned. But but yeah, happy to be on here.
John Wilson: If anyone wants to connect with you, where can they find you?
Chad Peterman: Yeah. So LinkedIn is probably the best place.
Chad Peterman: I have along with With you been following your example on the on the Twitter X game, which you do a great job on there. But yeah, LinkedIn is probably the best place, or you can just shoot me an email. It's just Chad at Peterman HVAC. com.
John Wilson: Cool. Thanks for coming on. And everyone, thanks for tuning in to owned and operated.
John Wilson: If you like what you heard, make sure you check out owned and operated. 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.
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