Catch A Fish Upstream
My spray foam conversation with successful energy-entrepreneur Steve Gilbert.
If you are a spray foam business owner, competition is inevitable. Other installers want the same business that you want. Thus, specializing and bringing value can be critical factors of your success in the marketplace— which can also be challenging. How do you diversify and add new product lines? When and how do you hire the right people? What factors determine your direction of growth? Steve Gilbert, of Gilbert Home Comfort (GHC), offered his 2 cents on these topics in a recent phone conversation.
[Learn more about Steve Gilbert & Gilbert Home Comfort here.]
Q: Your father founded GHC as a plumbing & heating company in the early 80’s. At what point did SPF come into the picture and why?
A: “We got into the (SPF) business because we had a contractor in our area that we were referring business to that wasn’t doing business to the level of our standards. We were getting alot of complaints from the consumer and decided to take control of the process out of necessity because we are an energy company.
The HVAC took off first. When I came on board, dad really didn’t do much marketing. So, I started a website to market the geothermal and started to see alot of success in that. We started doing 20 to 30 high-end, custom homes per year. So, we decided that we had enough volume of leads coming into our business, at times, to make a decision to go ahead and invest in spray foam. We went from a volume of $600,000 in sales per year to about $5 million, companywide.
Spray foam has been a nice part of that. It averages between $400,000-$500,000 per year, of the $5 million. That’s with one rig and two applicators in an area that has seasonal restrictions on the ability to spray year round. We are able to spray in the colder seasons by using certain equipment (commercial heaters) that help mitigate the issues of colder substrates and material. When a lot of companies can’t do that, we have been able to separate ourselves during the cold weather as a company that you can still hire to install foam. So, we do pick up some business in the winter months, based on the market.”
Q: What part of the spray foam martket do you focus on?
A: “We do everything from crawlspaces to attics to alot of new construction such as machine sheds for farmers. We could probably increase our growth to $600,000-$700,000 with one rig, but I think that would be really pushing it. Now, if we were to get into new markets, we could definitely justify getting a second rig or push that volume up to $700,000+. But, with where we are at in the rural area and the market that we serve, we are a solid $400–500k per year company.”
Q: What advice to you have for young spray foam companies that are looking to increase their service offering and better position themselves in the marketplace?
A: “Look to have a synergy of energy efficient products. Spray foam is a consumer-driven product. It’s not what ‘the establishment’ wants. By saying ‘the establishment,’ I’m talking about your local lumber yards, depots, or anyone else that touches the consumer frequently. They’re just looking to push a product with a lower price-point that can fly off the shelves. Spray foam is a product that has to be manufactured on-site with a high price. Similar to geothermal.
Spray Foam is a high-end product. For example, you really don’t want to marry this up to a guy who is treating his HVAC company like a commodity. It could be comparable to a Bentley or Cadillac dealership. They are already in touch with the same consumer that (a SPF contractor) wants to be in touch with. The consumer that wants the high end products and sees value in it as an investment tends to think the same way when it comes to spray foam. So, you really want to find a complimentary product that makes sense in your area. A lot of times you can tap into the group of financially savvy consumers who are passionate about energy efficiency by acquiring a reputable HVAC company or by building some sort of strategic partnership. It’s hard to start a HVAC company because it’s so technical and takes a lot of knowledge. So, I would recommend finding an HVAC company to partner with that values efficiency at a good price for their products.
Another idea that I have been kicking around is using SPF as more than just insulation. There’s obviously a roofing component to it. There’s also concrete leveling. So, it can be used for more than just insulation. Now, you have to look at those things market-by-market to determine whether or not any of those make sense. For example, driveway leveling may seem like like a no-brainer because it’s very low risk. With that said, it very meticulous and you have to be patient with the product.
Roofing is just a whole different animal because the risk greatly increases. But, again, you have to keep synergy in mind. There is no crossover, or synergy, between SPF roofing and concrete jacking/leveling. Now, a compelling argument can be made that roofing and insulation are symbiotic.”
Q: What are the key factors that guide your decision on whether or not you follow through with adding a new product or service?
A: “It’s taken us a lot to get to where we are and it’s been a herky-jerky trend of growth. Not a smooth incline. I mean, it’s taken a lot to get different department heads and managers (plumbing, electrical, hvac, and spray foam) that are competent. You will find that different crews have different specialties. For example, good HVAC guys probably aren’t good plumbers and vice-versa.
Our motto has been to ‘catch fish upstream.’
By that, we mean staying ahead of the competition. Demographics will greatly control your product and service offering. But, our current business is a result of the necessity to control a process that our competitors could not. We meet a demand others could not fulfill.
Mainly, it just boils down to scalability. Business owners that start off as purely spray foam insulation installers shouldn’t necessarily dabble with other things right away and try to be a jack-of-all-trades. You should focus on strategically creating and expanding your spray foam business and then the same with different divisions. I say strategic because you wouldn’t want to co-mingle the marketing efforts for those divisions. It could dilute your company down and people won’t know what you are good at.
If you are a person that works IN your business instead of ON your business, than you definitely want to stay with one thing and get really good at that one thing. If you work on your business, want to grow it, or scale it, then it makes sense to look at different divisions. The determining factor is your ROI (Return on Investment). Is it 3 years or 5 years? What I’ve learned from people that have been in the industry a lot longer than I have is that they won’t even look at a capital investment unless it has a ROI of 3 years or less. So, if you’re using capital for new equipment, launching a new market campaign, or anything else, you need to determine when you expect your money back. It’s just about prioritizing what you do and where you do it.”
Q: Once the decision has been made to add a new division to your company, where do you focus most of your attention?
A: “In my opinion, the labor force is going to dictate what you can and cannot do, even if the business move makes sense. You are competing for people (to hire) that are competent. So, at the end of the day, if you don’t have access to people than it isn’t a good investment. People come first.
On that note, if you have a good first set of people, a foundation, that are solid and well rewarded, then the next set of people are easier to come by. You will already have built-in trainers and you won’t have to be as hands-on to build new systems. If you have good systems and combine them with good people, you get good results. The hard part is finding the first set of people that will commit to you system. But once you establish that first set, the key is to always keep your eye out for good new help and then see if there is a way to bring them in and train them. Once you have that foundation, as the business grows and you grow into a second or third spray foam rig, now you have lead applicators that can train anyone you put underneath them.
It’s hard to keep good employees because they have lives going on outside of work, obviously. So, they have to see a future and they won’t see it by just going to a job. Now, I don’t promise them anything other than one thing: if they do a good job and help help grow the business, they will be rewarded and their futures will grow with it. They make their own future. But if they don’t have the mindset to do that, then they probably aren’t the right people to bring in.”
