The Philosophy Needed to 10x an HVAC Business

Is it possible to 10x a business in the span of about 10 years? Is it possible to 14x in that same period?

While some HVAC business owners may have just pulled a muscle in their neck vigorously shaking their head “no,” the answer is actually yes, it is possible.

Meet Chris Hoffmann, president and CEO at Hoffmann Brothers. Before taking over the family business and elevating it to extraordinary new heights, he served as an Officer in the United States Marine Corps until 2014 when he went to work for a national financial institution supporting corporate banking clients.

When Hoffmann took over the HVAC business in 2016, it was doing around $10 million in revenue a year, already considered successful by most metrics. But, this year, they are expected to eclipse $100 million in revenue — $141 million, to be exact.

So what’s the secret recipe? For Hoffmann, it in part boils down to strong leaders and rewarding employees whenever possible.

Put even more simply, it’s all about the win-win-win.

A Quick History

In 1988, the business was started by his father, who was employed as an engineer at Anheuser Busch in St. Louis at the time. While working closely with an air conditioning contractor on a project, he caught the entrepreneurial bug and decided to go into the HVAC business for himself.

He was splitting his time between attending trade school and making calls in a service van, causing many to think he had lost his mind for ditching an engineering career.

Fast forward to 2016, and Hoffmann and his brother, Joe, the youngest of the four kids, took stake in the company with the intention of taking it over. Going into business with family can sometimes be contentious, but Hoffmann said they have been blessed in this regard.

In this type of scenario, where new blood is coming in and taking over, often the founder will still try to take the keys with him to the grave, insisting on approving every $10,000 purchase. But here, the opposite happened. Their father was quick to relinquish ownership and gave them the authority, trust, and confidence needed to operate with autonomy.

Since then, they green-fielded in 2020, or moved into a new territory without acquiring an existing business, in Nashville, and also founded the Hoffmann Brother’s University, a 40,000-square-foot tech school.

So how is this type of growth even possible?

How to Think about Growth

In short, there are three aspects Hoffmann said they consider when thinking about growth: the base business, strategic initiatives, and acquisition.

Base business, or the existing trades in the existing markets, is listed first for a reason. To get to that $100 million metric, Hoffmann said the focus shouldn’t be on numbers two and three.

“(The base businesses) have to stay strong, they have to stay healthy,” he said. “We need to have that relentless frontline obsession.”

In their first five years of owning Hoffmann Brothers, they went from $10 million in revenue to $50 million by focusing on their core business in their core market and ensuring it was operating with excellence.

“Too often I see folks lose focus early in their journey — they haven’t mastered what they’re doing in their existing market, and they’re talking about buying a business that’s 200 miles away or opening a new location,” Hoffmann said, again emphasizing not to chase the shiny things before getting a solid footing.

Only once the first piece of the puzzle is secured in place should a business worry about the other two.

Win-Win-Win Philosophy

When they took over in 2016, it could have been easy to start demanding change to fit their new vision for the company, but they knew that wouldn’t sit well with the existing team, who liked what they were doing and how they were doing it.

If the team wasn’t happy, the company wouldn’t be happy, and therefore it would be impossible to have happy customers. It’s these three stakeholders — the company, the customers, and the employees — that all need to be satisfied in order for there to be success. If one is out of balance, the other two will suffer.

To accomplish this, the Hoffmann Brothers put a big focus on the employees.

Good talent is hard to come by and if there’s strong competition elsewhere in the market, they can be tough to keep. So as the company grew, Hoffmann made it a priority to continuously make the lives of their employees better.

After seeing their first round of 30% organic growth, they started paying 100% of health insurance premiums for team members and their families, equating to about $18,000 per head, and it didn’t matter if they were in a call center, warehouse, or doing service calls.

When it came to PTO, the old policy dictated it wasn’t available until an employee’s one-year anniversary because, in the past, they had been burned by people leaving early. But they got rid of that and offered eligibility on day one as an incentive for new talent, a move Hoffmann said has worked out well.

“98% of people are good people; don’t change your policy for the 2% that are bad,” he said.

They then began to offer an 8% match on retirement benefits, up from 4% in 2019.

They also added two additional holidays, Black Friday and Christmas Eve, bringing the total up to nine. They added maternity and paternity leave and pulled up the 20-day PTO award to the five-year anniversary.

But one of the biggest moves they made to improve the lives of employees — one that may raise some eyebrows from contractors — was to eliminate offering 24-hour on-call service.

“Everyone talks about how they can’t find talent,” Hoffmann said. “Let me tell you about the reaction you get when (a potential hire) walks in and you say, ‘After 7 p.m. and on weekends, you’re home with your family and we’re not going to call and bother you.’ Talk about a value prop that goes beyond dollar-per-hour. (Working the on-call) is probably the biggest pain point for a lot of folks in the business.”

Hoffmann said you would think that getting rid of on-call would result in angry customers, and while there were a few, it wasn’t as bad as they initially thought. Most after-hours calls, Hoffmann noted, aren’t emergencies, and most are more easily solved in the morning when more resources are available. Now, he said, they view those contractors that offer 24/7 as the emergency room physician, while this company is the family care doctor.

These changes all go back to the “we all win together” philosophy, and with employees happy, that bleeds over to the customer, which means more money for the company, which makes CEOs happy, who then reward employees — a cycle everyone wants to be a part of.

Leadership

One of the most defining characteristics of a good leader is the ability to make a decision that will benefit the group and keep everyone moving in the right direction, even if that means a sacrifice has to be made, and even if that is at the expense of the leader themselves.

Hoffmann loves to tell people he’s fired himself four times since he took over.

When running a business, there is a certain intimidation factor to bring in people who are better than you, but Hoffman said that’s something that excites him.

“Every year that goes by, I’m leading a business that’s bigger and more complex than I’ve ever led and I’m in uncharted waters,” Hoffmann said.

Now there was talk about collaborating and integrating and huge investments, and Hoffmann said he recognized that he might not be the best to spearhead those efforts. Because of that, he found someone to replace him as president.

“Search out people that are better than you at those different pieces of your business,” he said. “When you get the right people, they pay for themselves a thousandfold.”

Would your team tell you if you weren’t the best at what you’re doing? Probably not, which is why a little self-reflection in this regard is important.

“Be open to that conversation and be open to that honest reflection around when you need to fire yourself, which, by the way, you should have the mindset of celebrating,” he said, because that means there’s going to be someone better at handling those tasks.

And when it comes to the smaller day-to-day decisions, managers also serve a crucial role in company success, so they need to be taught what it means to be a good leader.

Hoffmann estimates that 80% of a team member’s experience is going to be a function of their experience with their direct manager — the person coaching and holding them accountable. If that manager doesn’t know exactly how they should function within the business or how to have difficult conversations, how to coach, how to develop, then experiences with be inconsistent across the business for both employees and customers.

“Your frontline leaders are administering leadership in your business,” he said.

Hoffmann said they put managers through training so they know what’s expected, whether they’ve been there for a decade or just starting, to ensure those culture, quality, and reputation metrics are being met. Even if a business doesn’t have its own university or the means to send managers to a class, Hoffmann said start with something as simple as gathering and discussing an article on leadership. In fact, that’s how this process started for Hoffman in 2016. He said it’s better to have a bias for action than it is to be worried about getting things 100% right.

“It’s more important to recognize the impact those frontline leaders have than it is about getting the perfect solution in place,” he said.