Award-winning service contractors offer tips on how to retain top employees and run a more profitable business
Jim Kleiser, franchisee owner of Mr. Electric in Vancouver, Wash., started his own business with a service truck in his garage. In less than 18 months, it has grown to an eight-van, $1.2 million operation.
“We are very blessed to have grown from a cold startup to where we are today,” says Kleiser, who previously worked as a marine electrician in the Navy shipyards and as an industrial electrician for various contractors in the Portland, Ore., area. “I'm excited to have my own business, and I would do it all over again in a heartbeat.”
Many service electricians can install a ceiling fan with their eyes closed, but venturing out on their own to run their own business is a whole different ball game. While many electricians are skilled tradespeople, they often don't know how to run a profitable business, explains Kleiser, whose company does 80% residential and 20% commercial work. Successful electrical service companies often operate on three key principles — developing and executing a business plan, offering superior customer service, and focusing on training/retaining their employees.
Plan for success
To be successful, service contractors need to have enough money to develop their business, have a strong customer base, hire and keep well-qualified employees, and pursue an active market, says Glenn Gallas, franchisee owner of Mr. Electric in Hot Springs, Ark. “So many operators hope for something good to happen, but that's not the way the world works,” says Gallas, who counsels other small business owners. “Successful people plan.”
When launching a service contracting business, it's important not to cast your net too wide and go after too broad of a focus, says Gallas, who explains that the electrical profession has gotten to the point where some contractors do service on the side. As a result, they're not able to take quality care of their customers.
“If you're trying to be an electrical service company, then that's what you need to be,” he says. “Electrical contracting has two sides of the coin — one is new construction; the other is service. You have to focus on one or the other to get the growth you need.”
Shawn LaPlante, general manager of Mister Sparky, Portland, Maine, agrees.
“You cannot be the best at something if you are pulled in too many different directions,” says LaPlante, who started his company as a one-man band, and is now on track to earn $640,000 in 2007, with 70% of the revenue coming from residential service work and 30% from commercial service work.
Keith Pinkerton, franchisee owner of Mr. Electric in Huntsville, Ala., also attributes his success to focusing on growing a niche market. By specializing in electrical service and repair on residential and small commercial, sales for his company have increased 50% annually over the past four years to $2 million a year.
Treat your employees like family
Electrical service companies not only need to focus on service and execute a business plan, but they also need to take care of their employees to boost retention. The eight electricians who work for Mr. Electric in Hot Springs, Ark., are more than just employees — they're part of the family. Gallas' No. 1 priority is to have an employee-driven company.
“Many companies aren't willing to be truly customer-focused and employee-driven,” says Gallas. “I want to exceed their expectations and always make sure they are happy and fulfilled.”
His company trains electricians not only on electrical competencies, but also on life skills. For example, his firm has offered seminars on finance, leadership, and spirituality for his three journeymen, two apprentices, two lighting specialists, and one master electrician.
“We develop our employees in a personal sense because if we make them a better person, we make them a better employee,” says Gallas, whose revenues increased from $354,000 four years ago to a projected $650,000 this year.
When hiring electricians to do service work, business owners need to find employees who are willing to work a fast-paced job that doesn't go from 9 to 5, says Eric Breslin, a field manager for the Vancouver, Wash., franchise and winner of Mr. Electric's “Service Professional of the Year” award.
“We have a rule that we don't let one guy stay out while the other guys go home,” says Breslin, who manages eight electricians and works 50 to 60 hours a week. “It's easy to forget about the other guys, but you need to be able to help each other out.”
When electrical service companies find well-qualified and experienced electricians, they need to do their best to retain them. Gallas says the first five employees he hired eight years ago are still working for him. The secret to retaining these employees is showing them loyalty, treating them right, encouraging continuing education and personal growth, and not sacrificing employees' financial well-being for the profitability of the business.
“If you help employees to be successful, you will be successful,” says Gallas, who spent 14 years as a training and operations professional for the military's special forces. “That's what creates the loyalty that will make them work when it's hot outside. They'll work when they're tired or go the extra mile for their customer — even when they don't feel like it.”
Make customer service a priority
To generate profits and operate a successful company, business owners must not only hire and retain qualified employees, but they must also focus on customer satisfaction. Service electricians must be on time, dress professionally, and have a good attitude, says Gallas, who admits he frequently hears clients comment that they are surprised that the electrician showed up on time — or at all.
“Because we focus on service, we're not tempted to put our customers in a position to have to wait to get their electrical needs taken care of,” Gallas says. “We can typically arrive in two hours or less and are committed to same-day service.”
Most of his customers are repeat or referral customers. The same is true for Mr. Electric of McLennan County in Waco, Texas, a firm whose customers represent more than 75% of its business. The company has 10 employees, earned more than $1 million in sales last year, has been in business for 13 years, and owns six vans and a bucket truck. To build its customer base, electricians go out of their way to serve clients in any way they can, says Mike Muhlman, franchisee owner.
Cornerstone Electrical Services and Mister Sparky in Salem, N.H., attributes its success to its three experienced technicians and their dedication to exceeding customer expectations.“Being in the service industry — and now the residential sector — has given myself and my team a deep appreciation for all aspects of electrical work,” says John Croteau, owner of Cornerstone Electrical Services and Mister Sparky, which has six commercial trucks and two service trucks. “Keeping the consumer educated and safe is our No. 1 concern and objective.”
Organizing regular training meetings has helped Adco Electric, a Mister Sparky franchise in Needham, Mass., to improve the technical skills, work ethic, and morale of its team members. The increased emphasis on training has translated into a higher level of customer service, says President Gary Ajamian.
So what's the key to success in the electrical service world? Business owners need to focus strictly on service work only, develop a solid business plan, take care of their employees, and put the customers' needs ahead of everything else. While it may seem like an impossible dream, many electricians have taken the plunge and grown their businesses from a single service van operation to a million dollar company. You can too!
Fischbach is a freelance writer based in Overland Park, Kan.
Sidebar: Ten Ways to Grow Your Electrical Service Business
- Set goals
Develop a good business plan, execute the plan, measure the outcome, and make necessary adjustments, says Keith Pinkerton of Mr. Electric, Huntsville, Ala.
- Have a vision
Successful service contractors need to have a team dedicated to following the vision that is set before them, says Shawn LaPlante of the Mister Sparky in Portland, Maine.
- Get out of the van
Electricians who start their own businesses often try to boost profits by taking service calls. The quicker owners can get out of their vans, however, the faster they can focus on growing their business and hiring the right people, says Jim Kleiser of Mr. Electric in Vancouver, Wash.
- Offer round-the-clock service
Employ customer service representatives who are available to respond immediately to customers' needs and offer an after-hours answering service with on-call electricians to handle emergencies like Adco Electric, a Mister Sparky franchise.
- Spread the word
Pull in new customers by advertising in the local newspaper and phone book. Create a marketing plan and promote your business through public events, seminars, shows, and exhibitions. Cornerstone Electrical Services, which owns a Mister Sparky franchise, considers finding the right target market for advertising as one of its biggest challenges. “We have been doing a lot of grass roots marketing, which has been very successful for us,” says Gayla Bartlett, marketing/sales representative.
- Educate the customers
Successful service contractors educate their customers on the importance of electrical safety. If they're not aware of safety issues and the risks associated with improper wiring, then their do-it-yourself work can be dangerous, says Glenn Gallas, owner of Mr. Electric in Hot Springs, Ark. “While they can save $50 by installing a light themselves, it will cost them a lot more in the long run if their home burns down,” he says. “Not only do we have to go into a house at an affordable price, but we also need to educate the customer on the electrical system and look out for safety, security, and comfort issues.”
- Branch out into new markets
In addition to taking on traditional electrical service projects, hire lighting designers and then take on some lighting projects. Mr. Electric of Hot Springs, Ark., earned $40,000 in a six-week period by doing holiday lighting. This year, it's on target to make $65,000 in this area. The business also specializes in landscape lighting, and has closed many a sale by lighting customers' homes for a week for a free demo.
- Reinvest in your business
Kleiser learned this lesson the hard way as a new business owner. Rather than tying himself to a new truck, he bought three used trucks. In the past two years, he has put down payments on six new vehicles. “I sacrificed customer service when the vehicles were down,” he says. “You can't bring in revenue if your truck is in the shop.”
- Find a mentor
Owners of electrical service companies should find others in the trade who are willing to share information with them. Life is too short to reinvent the wheel, LaPlante says. “If someone was willing to share information with me, I would soak it up,” he says.
- Get involved in the community
Electrical service companies that are actively involved in community service projects not only create good will in their cities, but they also pull in new clients. For example, Kleiser and his team of electricians donated their time and materials to rewire a home for a boy with cerebral palsy to make it more accessible. As a result, Mr. Electric honored the company with the “Service from the Heart” award.