Imagine a country where every HVAC contractor uses flat-rate pricing, and has a fantastic truck identity program. They all follow spot-on marketing programs, and they all use private labeling, to promote their individual contracting companies as “the brands.”
For the most part, that country is Fantasyland. But thanks to the work of Matt Michel and Service Roundtable, as the years go by, many more contractors are starting to do more of what it takes to truly compete, become more profitable, and prepare their businesses for succession down the road.
Matt Michel — the 2015 inductee into the Contracting Business Hall of Fame in the residential contracting category — has worked in the HVAC industry for his entire professional life, with experience in R&D, manufacturing, sales, and marketing.
Since 2002, Michel’s career has been dedicated to improving the success potential of HVAC, plumbing and electrical contractors, as co-founder and CEO of The Service Nation Alliance and Service Roundtable, the world’s largest private contractor business alliance, with members in all 50 states, most of Canada, and around the world.
Manufacturing, Marketing, Consulting
An interest in robotics, computer-aided-design and manufacturing prompted Michel to study industrial technology at Texas A&M University.
He then joined the Turbo Refrigerating Company, where he implemented a computer numerical control manufacturing process. While at Turbo, he also designed the first solid-state control system for thermal energy storage.
In reflecting on his pre-Service Roundtable days, Matt Michel doesn’t mind saying that he often found himself learning as he went along, figuring things out on his own. But each step along the way was a valuable learning experience that he would draw upon later.
Next came a stint with Lennox, where he instituted some beneficial improvements to the Lennox manufacturing process. This was followed by a series of promotions within the Lennox marketing department.
Following Lennox, Michel led the VAV terminal unit business for Titus. Over time, he helped oversee the reintroduction of the entire Titus air handling product line.
Next came the decision that would lead Matt Michel into the business of working directly with contractors, as the head of franchise development for The Dwyer Group’s Aire Serve chain.
In reflecting on his pre-Service Roundtable days, Michel doesn’t mind admitting that he often found himself learning as he went along, figuring things out on his own. Some would call that initiative; others, perhaps, just a keen knack for survival. But each step along the way was a valuable learning experience that he would draw upon later.
For example, his manufacturing and automation experience, showed him the importance of thinking in terms of systems. Later, a “systems” approach was instrumental in the design of the Service Roundtable and the Service Nation Alliance. He adds: “In addition, automation necessitates simplification. Things must be simplified before they can be automated. When the Service Roundtable was created, everything was simplified as much as possible prior to coding. So, even though I didn’t stay in manufacturing long, I applied my manufacturing training to each business venture I was involved in.”
He joined Decision Analyst in 1996, as an analyst of the high-tech and telecommunications industries, which brought him into frequent contact with HVAC clients. While with Decision Analyst, Michel developed the American Home Comfort Survey, an important barometer of consumer HVAC needs, preferences and buying habits.
The mission of The Service Roundtable remains the same: to help contractors improve their business and financial performance, leading to a profitable exit strategy; and, to help improve the fortunes of the small contractor, who is underserved and overwhelmed.
During all of his career stops, the idea for the Service Roundtable began to take shape. And then, it happened.
“One Saturday, I sat down with a group of investors, contractors, and consultants, at the offices of Callahan Roach, to brainstorm the industry and the future. I had come up with this idea, and was trying to shop it, and obtain financing.” The financing and support he sought from leading HVAC industry professionals came through, and in 2002, the Service Nation Alliance was born.
And today, the mission of its Service Roundtable division, based in Lewisville, Tx., remains the same: to help contractors improve their business and financial performance, leading to a profitable exit strategy; and, to help improve the fortunes of the small contractor, who is underserved and overwhelmed.
Praise for the Team
Matt Michel never forgets how much he owes to the Service Roundtable support team.
“I’ve been most fortunate in being able to hire above myself,” he says. “The team here is exceptional and talented, and they work hard. I’m blessed to work with these people. I can take off for awhile, as I did earlier this year, when I was gone for the better part of two months, and the company never misses a beat.”
Every event or contractor-support idea developed by The Service Roundtable team is based on an overarching concern for the contractor.
Every event or contractor-support idea developed by the Service Roundtable team is based on an overarching concern for the contractor. It shines through the organization’s employees, website, summit meetings, and in the Service Roundtable aisle at the Comfortech Show, where the Service Roundtable consistently registers the largest affinity group attendance figures.
The underlying purpose of the Service Nation Alliance is that, if we can get contractors operating with documented practices and procedures, all operating in similar way, sharing information and data, then we can create a marketplace where a contracting company can be attractive to an outsider, and continue to run without the contractor’s presence. —Matt Michel
Michel balks when asked to estimate how many business people the Service Roundtable has “rescued.”
“We don’t ‘rescue’ companies,” he clarifies. “I can’t do it for you. We provide resources, people, and advice. You have to do it for yourself. We provide some things that can help, but you’ve got to go back and do the actual work. I can’t take credit for anybody’s success; and if somebody doesn’t make it, that’s not my fault either.”
Yes, Matt Michel can be rather direct. But what business owner hasn’t found value in straight talk? For Michel, tough talk is based in the concern he has for every contractor that’s trying to make their business into more than just “a living.” Speaking the truth is one of his hallmarks.
“I think I’ve called out the elephant in the room when others have been hesitant to say something,” he admits. “And there are a few elephants I haven’t mentioned. I’ve talked about occupational licensing, which I believe serves little purpose, and the permitting process, which has little to offer to consumers, and does little to help contractors. There’s no enforcement, so licensing and permitting don’t matter.
“We also tend to accept stuff that comes down from Washington without much of a fight. And the people who are in a position to comment on it tend to say they can’t because they have to have a seat at the table. Then, what’s the point?”
Some time after Service Roundtable had been up and running, Michel instituted the “Roundtable Rewards Program,” which has become the HVAC industry’s largest contractor buying group. Next came the Retail Contractor Coalition, which is a branding program, and the Service Nation Alliance, a best practices group.
“The underlying purpose of the Service Nation Alliance is that, if we can get contractors operating with documented practices and procedures, all operating in similar way, sharing information and data, then we can create a marketplace where a contracting company can be attractive to an outsider, and continue to run without the contractor’s presence,” he explains.
“Most contracting business can’t be sold because they’re not worth anything when you take the owner out of it. Owners have glorified jobs. We try to create a situation where owners can put general managers in place, so they can be free to do what they want to, and later have the ability to sell the business.”
Michel is encouraged by the growing numbers of contractors who are ‘getting it.’
An example:“The market crash in 2008 was a really tough time for a lot of people. We advised them to run counter to the market, to run against the wind. It was not the time to pull back. Those who followed our advice came out of that time with 25% or 30% annual growth rates. That was gratifying. We were unwavering in our efforts and advice.”
If he were to choose one area in which contractors still need to listen to reason, it’s related to low pricing of services, lack of marketing plans, and failure to see value in their own brands.
The Service Roundtable is a big-time growth mode. As a corporation, its gross revenue has grown at a compound annual growth rate of 41% over more than a decade.
“We’re very close to being the largest contractor organization of any kind. We’ll be there within a year,” he predicts.
That’s all the better for contractors who need and want more of that straight-talk, and proven business-building advice.