Never Too Late to Embrace Change
Advance Mechanical Is a 30-Year-Old Business with an Established Name and Sterling Reputation; Still Its Owners Randy & Vickie Riddle, Along with Their Daughter Rachel Davis and Other Key Employees, Have Shepherded the Company to Three of Its Best Consecutive Years Thanks to Their Commitment to Evolve, Improve & Grow.
by Bob Houchin
Since the 1930s a member of Randy Riddle’s family has owned a contracting company in the now rapidly growing, yet still comfortably small, city of Greenville, North Carolina. His grandmother, Alma Letchworth, ran a sheet-metal and roofing shop during the Great Depression. Randy’s father, Troy Riddle, and uncle, Marvin Riddle, opened Riddle Brothers shortly after returning from World War II. Randy became a third-generation contractor when he launched Advance Mechanical in 1986.
“We’ve always had a good name in the community,” Randy said proudly. “People trust us because we bend over backwards for them. We have customers who were putting in their third system. It’s because we care and we want them to be with us forever.”
“We want your kids to know to call us when they grow up,” Vickie added. “They wouldn’t think to call anyone else.”
Randy operates Advance Mechanical along with Vickie, his wife of 36 years, and their daughter, Rachel Davis. Talk with any of the three, and you quickly gain the sense that this is a family business in every sense. Work for the family, and you become a member—just as long as you work hard, work smart, and are dependable. Then, you’re a shoo-in.
“I was raised in this business,” Rachel said in reminiscing. “I worked in the office as a little girl. On Saturdays, my sister and I would alternate who got to ride-along with dad on service calls.”
“It’s funny, all that time, and I didn’t learn how to use a thermostat until I went to college and got my own apartment!” Rachel said while bursting into laughter.
“That’s right!” Vickie interjected, muffling her own laughter. “You weren’t the one paying for the utilities!”
“I swore I wouldn’t work in the family business,” Rachel gathered herself and continued. “I didn’t for a while. While I was in-between jobs, they asked me to help for a bit. I agreed to give them six months. That was in January 2013. I don’t ever want to do anything else.”
The last two-plus years have been very good for Advance Mechanical and the Riddle family. Both in 2015 and 2016, sales grew at an incredibly strong profit margin. Rachel commented the company is tracking to grow 10 percent in 2017 at another healthy bottom line.
Given the company’s current state, it’s difficult to believe, only six months before Rachel rejoined, its future looked bleak and uncertain. Randy and Vickie had grown gravely concerned that a business they’d spent a lifetime building was in trouble.
The Rise of Advance Mechanical
Randy’s story of growing up mimics that of his daughter’s. He was raised the child of a contractor, working in his father and uncle’s business at only 10 years of age. “No child labor laws back then,” Randy said and chuckled. “I’d sweep the floors and do whatever I had to do. I’d ride my bicycle there after school to work. In the summer, I was always there.”
Also, like Rachel, Randy felt ready to leave the family business and the trade by the time he turned 18. A passion for motorcycles drove him into several local shops, where he transferred his accumulated technical talents into a new trade. A lack of money pushed him back to dad and uncle for a time, until he took a job at the local college, East Carolina University, as an HVAC man. Three and a half years later, Randy couldn’t contain a growing entrepreneurial spirit. You can’t fight DNA.
Rather than rejoin Riddle Brothers, patiently waiting his time to inherit or buy the company, Randy struck out on his own. “When your father and uncle are the primaries. It felt like there was no room. I had cousins in it, too. I didn’t see a future I wanted for myself. I wanted something of my own,” he said. “This is my hometown. It’s not a big town. I had plenty of contacts and people willing to give me work.”
No hard feelings existed between a son and a nephew and his father and uncle. “They understood. In fact, I subcontracted work for them at times when they couldn’t get all theirs done,” Randy added. “Thankfully, it was never an issue.”
Advance Mechanical remained a one-man band until a friend of his father’s past away; the gentleman owned a heating and air business, and one of his friends was an electrical contractor. Randy and the electrician began chatting, and a handshake later, the two became business partners, essentially taking over the deceased contractor’s business. “He had work. There were customers looking for help. We made a quick business deal.”
The two remained partners before amicably splitting in the mid-90s. Randy and Vickie have managed the company independently—and successfully—for a little more than 20 years.
Leaves Residential Construction for Replacement & Service
Advance Mechanical did—and still does—a little bit of everything. Today, in addition to residential replacement and service, it also installs and services systems for commercial clients. However, for much of the company’s history, its primary source of revenue derived from residential new construction.
About 10 years ago, Randy decided residential construction had grown too fickle. The margins weren’t as good and the competition grew stiffer. He simply quit bidding it. “About a year or so later, the housing market started to slide. It busted a lot of people,” Randy explained. “I guess you could say we were lucky to get out when we did, but we still suffered. When you pull the plug on that much business instantaneously, you don’t immediately have the other business to fill that gap.”
The Riddles refocused their attention on residential service and sales—something they’d relatively ignored, outside of handling any jobs that came their way. They started selling maintenance agreements to both residential and commercial clients, and with time, the service divisions began to grow.
“We kept adding trucks and technicians,” Randy said. And for good reason, as Randy would further explain. “We didn’t stand on the sidewalk with our hands on our hips, look at the house, and quote a price. We actually measured the house, did a sketch, did a load calculation. We did replacement work the right way. People took notice. We’ve always taken pride in not being what I call a ‘hit-and-run’ contractor. We want to be the company you trust. The first company you think about and the first you call… always.”
Fighting Out of Financial Peril
Advance Mechanical experienced its ups and downs over the years, like many small businesses, Randy and Vickie said. Yet they always made money, even during the recession. That’s why the couple was surprised to find itself in financial peril in July 2013.
“We were about a quarter of a million dollars in debt,” Randy said audibly frustrated. “I had to let my general manager go. The business was going the wrong way. We were in such a hole, I had to cash in my investments to pay the bills.”
Vickie took over as general manager. While she didn’t have any prior experience in that capacity, “I knew how to balance a checkbook and work with a budget. It didn’t take me long to figure out that [our former general manager] was not being a good steward with our finances,” Vickie said stiffly.
“We had an idea things weren’t right, but I was a trusting person. I was doing the work; he was supposed to manage the financial end of things,” Randy said. “My CPA wanted to go after him. But at that moment, I said, we have to move forward. I can’t look backwards right now. If I do, we’re going to drown.”
Randy contacted each vendor he owed. All of them, but one, was willing to suspend additional service charges. “We had to be very specific about how we were going to pay them and when,” Randy said. “I said to them, ‘Look. I was raised here. This is my hometown. I’m not going anywhere. I want to be able to walk down the street, hold my head up, and look people in the eye. If you work with me, I’ll stick with you.’ We didn’t renege on anybody.”
Payment plans in place, Randy, Vickie, Rachel, the entire company—everybody worked hard to fight out of their deep hole. “Every morning on my way to work I would say a little prayer, telling the Lord how much money we needed [to pay the bills] that day. You know what? He always provided for us. We were blessed,” Vickie said steadfastly. “Within six months, we went from being in debt to being profitable again.”
The Riddles Find AirTime
The episode with a less than savory general manager left a mark on Randy. It made him reassess business and how he went about conducting it. He thought maybe it was time for a change. Maybe the business needed to evolve? As those thoughts raced through his mind, a series of emails continued to hit his inbox.
“I kept getting invitations to this Profit Day meeting. One day I noticed there was one in Raleigh, which is only about an hour and a half away. I told Rachel, ‘Let’s go check this thing out.’ She kept saying, ‘How are you going to explain this to mama?’” Randy said, and then laughed.
By the end of the presentation, Randy signed the paperwork to become a member of AirTime. Rachel was correct: Vickie was less than enthused—initially. As she would learn more about the program and the organization, anger led to understanding and approval.
“[AirTime] gave us renewed purpose,” she said. “We needed to do something different. We can’t be doing the same thing and expect better results.”
“The way I looked at it, our profitability wasn’t where we wanted. We knew we were doing our service calls right. We were missing some pieces,” Rachel added.
“The bottom line is [AirTime] has helped us refocus and get direct. We didn’t have a direction. We were stuck in survival mode,” Randy explained. “This was a system. We didn’t need to reinvent a thing.”
Get Tough on Receivables
The next step for the family was attending Executive Perspective in Sarasota, Florida. It was an eye-opening experience. They knew much work needed to be done. Rachel led the way in implementing the new system and style of conducting business.
“We quit billing for residential almost immediately. You had to collect on-site. All of the guys got credit-card swipers on their phones and learned how to use it,” Rachel said. “We had been taking credit cards, but [the techs] had to call it in. It was easier for them to tell the customer we’d send them a bill. That had to stop.”
To the surprise of no one, Rachel met some initial resistance. “Techs would call and say, ‘Alright, I’m done. Where am I going next?’ I’d say, ‘Great. Did you collect?’ They’d say, ‘Oh, the customer said he’s going to mail a check.’ I’d say, ‘You better sit right there as he writes that check.’” Rachel explained the situation with a bit of a chuckle.
“We’d also turn them around [and make them go back,]” Randy added. “It took about a year to really get everyone on the same page. It was a culture change. Techs like to fix something. They don’t like to do paperwork.”
The response from Advance Mechanical’s customers proved to be greatly different. “They loved it. They were more than happy to [pay cash on demand]. They don’t have to write a check. It’s easier for them.”
The reason for going COD became painfully obvious the more Randy, Vickie, and Rachel discussed the need. Advance Mechanical was owed an overwhelming $380,000. “It was staggering. I started making phone calls to collect. I was hounding some people. I’d say, ‘I’m sorry you don’t have air when it’s 90 degrees, but if you pay your bill, we’ll send someone out.’ People were complaining to my dad. They were asking him, ‘Who is this Rachel girl anyway?’ He said, ‘That’s my daughter.’ They’d say, ‘Oh, okay. The check is in the mail,’” Rachel said and laughed.
“The sad thing was, some of these customers had service businesses. They knew how receivables hurt,” Randy stopped for a moment and then continued. “But it was funny. After explaining to them who Rachel was, they’d all say, ‘I need someone like that [collecting for me].’”
Radically Reshape Pricing
The next step in overhauling Advance Mechanical’s business initially garnered another unwelcomed response—from customers and technicians. Prices had to rise. The company adopted the $150-level StraightForward Pricing® guide initially. Rachel was too nervous to do any more. Today, the company uses the $225 guide.
“We raised the price of our club memberships, too,” Vickie shared. “We did get some kickbacks from customers. I’d talk to them. I’d say to them, ‘You’ve been a customer a long time. Do you trust us?’ They’d say, ‘Of course, we trust you.’ I’d say, ‘We haven’t raised our prices in 11 years. Everything costs more today. This is what we’re doing. If you want us to be here next year, we have to raise our prices.’ In some cases, for our commercial clients, their maintenance plan went up 30 percent. But they stuck with us.”
The Advance Mechanical technicians especially found the increased pricing and new pricing guide a bitter pill to swallow. “Oh yeah, they hated it,” Rachel validated. “They insisted people wouldn’t pay that high of a price. Poor Mark, that’s when he came in, May of 2014. We implemented the price book in July of 2014.”
Mark is Mark Porter, Advance Mechanical’s service manager. He came to the company via Ashley Furniture, where he acted as their delivery service manager. Mark doesn’t have a technical background, but, “Mark is incredibly organized and a great communicator,” Randy pointed out. “His predecessor was our lead service tech. I thought it would be a good idea to bring him in as service manager, and all it did was mess up a really good technician. I learned from that to never make that mistake again. I have techs do what they do. I need a manager who can manage people and processes. The technical stuff, that can be learned. In Mark, there’s no doubt I got the best man for the job.”
Among Mark’s first acts as service manager was to get the technicians involved with the StraightForward Pricing® guide. It greatly helped resolve the disconnect. “We got their input on how to group different things together. Those first six months [with the guide] we changed a bit around,” Mark said.
“Now, every time we order a new book, I give them an Excel spreadsheet with what the new prices will be. I tell them they have two weeks to think about how the guide will be structured. If they think something needs to be moved, they have until then to let me know. After that, it’s going to print,” Rachel added.
“By getting their input, it turned into a team exercise,” Mark shared. “It made the transition a bit easier.”
Accept Turnover as a Cost of Business
The transition wasn’t without its casualties. The service manager Randy mentioned earlier—the technician “he messed up.” The moment that expedited his exit from Advance Mechanical occurred when attending a Success Group International training with Randy and another technician while in St. Louis.
“He was just staring at the ceiling the whole time. I looked at his workbook, and nothing was written down. He said he had it all memorized. Bottom line, he didn’t buy-in. He later quit and is doing his own thing; he’s a ‘Chuck in the truck.’ Some say it was a bad investment in sending him to training, but I tend to look at it the other way—it probably cost me less money in the long run,” Randy said.
Losing a manager was unexpected, but the family recognized turnover was inevitable. Some techs would leave over taking payments; others would leave due to the new pricing. “Guys thought we were lining our pockets. We’d explain to them, out of a $200 job, we’re lucky to get $30,” Randy urged. “There are a lot of expenses to running a business. The guys would be shocked when we broke it down. Still, some couldn’t wrap their heads around it.”
“Those early days, much of our time was spent identifying who was going to buy-in and finding new techs. It took a huge chunk of time—but it’s necessary,” Rachel emphasized. “We have two techs who’ve stuck with us through the transition.”
The family has bent over backwards to reward those two technicians who’ve placed their loyalty with them, especially their lead technician Toby Hurd. “He’s probably the best technician in town,” Randy said firmly and resolutely. “He’s very technically inclined and he believes in what we’re doing. He can offer technical support, and he also is excellent at communicating with the customer and using his soft skills.”
“Both Toby Hurd and Roy Brown work so hard for us, especially those days when we were short staffed. They were willing to sacrifice and push themselves to get the company turned around. We remain grateful for their efforts,” Rachel stressed.
Randy, Vickie, and Rachel take care of those who take care of them. When the company got financially stable, they could provide them with the raises they deserved, as well. “Roy and Toby are such big parts of our team,” Randy added. “They’re huge parts of our success.”
Continue to Refine the Business
Going COD and implementing a new price guide were two of the largest and most complicated improvements to Advance Mechanical. They weren’t the only. Rachel spearheaded the adoption of newer uniforms, as well as Technician Seal of Safety™, and the company began regularly drug testing again.
The family tightened up their financials. “We really didn’t have a good grasp of them. We had software, but it was garbage in, garbage out,” Rachel admitted. “Now, we go over our financials every month. We have a budget. We understand our overhead better. As a result, we could work on reducing it. It went from 43 percent to between 34 and 37 per month.”
Regular Thursday-morning trainings became a new staple within the business. Mark captains them. Recently, their biggest push has been to use that meeting time to work on reducing callbacks. “They happen when guys are rushing,” Mark explained. “They have the [AirTime System Performance Report]. It has a checklist to follow. If you follow it, you will be good.”
The company also utilizes outside training. Randy has no qualms sending technicians to manufacturers or now Learning Alliance for added insight. “When we do send them out, we expect them to come back and share with everyone what they learned. We’ll do some role-playing,” Mark said.
“Training is something that we’ve learned to believe in. I have no problem sending people out to work on getting better,” Randy added. “We implemented training pay, which is a reduced rate, so we could afford to invest more in training.”
Utilize Formal & Grass-Roots Marketing
Another new concept for Advance Mechanical was marketing. Randy and Vickie had built the business on the backs of their good names and a job well done. Now was the time to invest in spreading that good name to the masses. “It’s funny, when we started advertising, people were asking, ‘Oh, Randy Riddle started a new company? I thought he was still with Riddle Brothers,’” Rachel said with a laugh.
The family hired a local marketing company to assist them in this new venture. They liked the idea of working with someone in their marketplace who understands their consumers. “We’ve redesigned our logo and redid our website,” Rachel shared. “Everybody thought we worked on cars because if you look at our old logo, some people thought it had a tire in it.”
Advance Mechanical drastically reduced its advertising spend on phone-book advertising, but has been aggressive elsewhere. They’ve released radio spots and are in the process of producing TV ads. They utilize Facebook ads, and the last two years, they’ve been major sponsors of the town’s athletic team, East Carolina University football. “It’s expensive, and we’ve gotten great recognition from it,” Rachel said.
Grass-roots marketing has been an important part of their mix. They’ve become active in two Chambers of Commerce and the local Rotary Club, and they frequently sponsor local events and festivals. The family will also pay full or part of the membership for any Advance Mechanical employee who would like to join a civic organization, so as long as they promote the company in some way.
Give Back to the Trades & the Community
Perhaps Advance Mechanical’s biggest contribution to the community has been Randy, Vickie, and Rachel’s dedication to promoting the trades. This quest began with their own interests in mind initially. They have struggled to find technicians capable of passing a drug test and without a criminal record. Several of their techs have been recruited from outside the area. Rather than wait for more to relocate to Greenville, Randy has gone to the people—the young people, that is. He’s begun teaching at a local high school.
“I’ll work one day during the spring semester. I’ll be there for three class periods. It’s called their flex period. Students can come into the shop. It’s not a formal class, but we’ve installed heat pumps and built ductwork,” Randy outlined. “I’m trying to stimulate interest—expose them to a career path they might not have considered. I also do it to look for interns. We’ll bring a young person in for the summer, give them some work, further expose them to the trade, and see if they like it.”
Advance Mechanical had two interns last summer. One recently graduated and has been hired as a helper in its install department. Rachel believes with the young man’s attitude, work ethic, and people skills, he has the promise to become a strong service technician one day.
“We had a couple of kids come in from the community college. As part of their last couple of months in their HVAC program, they’re required to volunteer with a local company. These are kids about ready to graduate, but for several of them, these work hours are their first exposure to working in the field in real time.”
Rather than accept the local community college HVAC program in its current state, Rachel mobilized and has been actively working to make it stronger. “I got together with Pitt Community College and Pitt County schools. I told them, ‘If you can give us good people, we’ll hire them.’”
Changes are transpiring. The HVAC lab at the community college has been updated, and a new department head put in place. “The college is working very hard to get students interested in the trades. We have a long way to go, but our long-term goal is to also push the county school system to add skilled trades back into the high schools. Let’s put kids that aren’t on a college path on a path that will still lead to a great living.”
Rachel went as far as helped organize an “educators retreat” at the community college. Local high-school guidance counselors and teachers were invited to learn about the trades and how they can positively impact students’ lives. Rachel said they had an incredible turnout. Hopefully more of these retreats will occur in the future.
Advance Mechanical needs more people. Over the last several years, the company has stabilized and accelerated. They’re debt-free and looking to grow. A residential plumbing division may happen soon and a residential electrical division within the next five years.
“People are calling us all the time looking for referrals. Why not take care of our own customers?” Rachel asked rhetorically. “There aren’t many companies in the area providing the level of service we provide. We think there’s a lot of opportunity.”
“It’s all about getting the right people in place,” Randy added. “I believe we have a lot of the right people. We’re just looking for more.”
Randy and Vickie have successfully stewarded Advance Mechanical for more than 30 years. It’s been an impressive run, and the company’s future appears brighter than ever with Rachel driving much of the recent improvements and eager to continue to implement and evolve. The family is living proof that even successfully established businesses can benefit from change. It’s never too late.
“You’ve heard the expression, ‘You can’t teach an old dog new tricks?’” Randy asked rhetorically with a bit of a smirk reflecting in his voice. “Well, it might not be easy, but we proved it can be done.”