Joel Bertsch started his business in new construction with a little residential replacement—but no service work. In 2014, even though revenues always increased each year, his profit margins were up and down. He was looking for a change and made a huge one. Today, JA Bertsch Heating & Cooling, in Coeur d’Alene, Id, is a residential service and replacement company first and foremost, and they’ve more than TRIPLED their revenues, at a healthy profit margin. Best of all, Joel is modest and down-to-earth regarding his success. There’s no doubt what he, his wife Kim, and their team have done in a short period of time is astounding.
Learn more about how Joel and later Kim, along with their remarkable team, made this incredibly transition by listening on The Successful Contractor Podcast, powered by Success Group International (SGI). It’s a show for residential contractors about residential contractors. We chronicle business journeys, share insights, and celebrate successes in this wonderful industry of the trades and tradespeople.
Joel Bertsch fondly recalled the first time his company and namesake topped one million dollars in sales. “I’m pretty sure it happened in 2014. I think we did it around October. I have a big wall calendar in my office. Every year, I always mark the date when we hit a million. It keeps getting earlier and earlier each year.”
“A couple years ago, we hit two million. That was really cool. And last year we hit three million about mid-December, and our budget was two and a half. Our budget for 2020 says three and a half, and at this time, we’re ahead of schedule.”
Joel’s company is JA Bertsch Heating & Cooling in Coeur d’Alene, Idaho. He owns it and operates it along with his wife, Kim, and a faithful, hardworking team of 23 individuals. All of them dedicated to providing the very best residential service in northern Idaho. In fact, JA Bertsch Heating & Cooling was named “The Best of 2020 Heating & A/C Company” by The Business Journal of North Idaho. This was their fourth victory in the last five years for this award—and in the year they didn’t win, they finished second.
If you would ask Joel if he ever imagined where he would be in life currently, his answer might be yes and no. He seemed predestined to be a contractor. However, all signs early in his life indicated he would always concentrate on new construction and remodel.
Joel’s father and grandfather owned a general contracting company together. The duo built and remodeled homes. Joel’s family was the type to do all the work themselves—very little was ever subcontracted. “My dad wanted me to join him, which I had been working with him ever since I was old enough to walk and pick up nails and garbage on construction sites. I worked a lot with him, and that was my very first job.”
By the mid-1980s, the economy stagnated and so did the family business. Joel would need to find work elsewhere. He found a job with a friend’s dad who owned an HVAC business. Within a year, Joel had picked up the trade and was running jobs. Before long, he ascended to foreman.
Joel left for another opportunity in 1997, actually working for a Contractor Success Group (CSG) business, the organization that predated Success Group International (SGI). Following a few years there, he was recruited to do big, heavy commercial jobs for another firm.
“I did that for three years and had a lot of fun doing it. But my dad passed in ’04, and he always pushed me to have my own company because it’s what he liked. I thought, I had been bouncing around for the last 20 years, and I didn’t know everything, but I might know enough to get started,” Joel explained. That’s how JA Bertsch Heating & Cooling started in 2005.
“It started while I was still doing commercial work. I was working on the side on nights and weekends doing new construction. My employer didn’t care, as long as I got their permission,” he continued. “I had a friend introduce me to a small builder here in town. We hit it off. So, I was doing all of his houses.”
Every year JA Bertsch Heating & Cooling made more money than it did the previous year. “But there were many years where we didn’t make any or very little profit,” Joel made sure to point out. After seven years of battling to grow with little financial reward, Joel grew frustrated.
“I had a friend who was a sales rep. He was always talking to me about this other contractor in Spokane who was so successful. I asked him, ‘What’s he doing that I’m not?’ He told me to talk to him, and so I did,” Joel explained.
The contractor Joel spoke to was Doc Holliday of Holliday Heating & Cooling, who has been a member since 2006. “Doc told me that the main thing I needed to do was join SGI. If I went to all of their Expos and followed their lead that I would be fine,” Joel recalled and then chuckled.
That’s what Joel did. He went to a Profit Day meeting weeks later in Salt Lake City, joined SGI, and set a course on a vastly different journey than the one he had been traveling. http://www.tbcredit.ru Joel recalled that JA Bertsch Heating & Cooling was only doing about $600,000 in revenue at the time—and it was a deep struggle to achieve that. More than six years later, the company’s revenues tripled at a very healthy profit margin. And that success would come while JA Bertsch also transitioned from new construction to residential service and replacement.
You didn’t have a service background when you joined. So, how did you address that?
You’re right. I had no background in service. I was an installer. I taught myself repair. We didn’t push maintenance whatsoever. So, we had no club-membership program. I had hired two guys. One I let go right away. The other, when I showed him StraightForward Pricing®, he said it wouldn’t work—the prices were too high. So, I struggled along with him for a while. But he was receptive to the uniforms.
Then, the fall of that year, I put an ad out looking for a service guy. I got a call one day from a guy, and he said, “Are you an SGI company?” I told him that I was. He said that he wanted to come and talk to me.
This guy walks in at six o’clock at night and we had an interview. He had worked for an AirTime member or a One Hour in California. Then, he went on to own a One Hour. But he wasn’t happy. He moved here to Idaho—we see a lot of people from California move here.
So, he was working for another outfit in town as a service guy. He was also a selling tech. He found out about us because a homeowner had shown him our bid, and it looked exactly like the one he had used when he was tied to SGI. But he sold that job away from us [laughter]! But he proceeded to look us up afterward. That’s how he found us.
He explained that he knew the SGI system well and that we needed to work together. I obviously needed a service guy, so I hired him. He said that he would do our service and sales—and he would help me get our StraightForward Pricing® in place. But the idea was going to be that once service was built up, he wanted me to hire another service guy so he could focus on sales. And he said, “By the way, I’ll take straight commission and nothing else.” That sounded good to me. He’s still with me—he’s our comfort advisor. That was a gigantic turning point.
How did you make clubs more of a priority to begin selling more of them?
We started selling them over the phone. We had a lady that worked here for a time in 2018, and she was on fire selling them. She moved along because she couldn’t get along with anyone. It took us a while to find the right replacement. But last September, I hired Lori who is here now and is our lead CSR. She worked at another company in town and had some call-center experience.
We were trying to sell the clubs on a monthly basis, not annual, and Lori struggled a bit at first with her wording. But then in October, I taped a $100 bill to the board in the breakroom. I said, “Whoever has the most new clubs sold this month gets it.” Sure enough, she figured out her wording [laughter]. Now she sells one to two clubs a day. She will consistently make another four to five dollars more an hour just from those commissions. We pay $15 a commission on those. Lori is on fire! I can hear her down the hall right now.
How long did it take you to figure out your financials and how to use the DMER (Daily Management Essentials Report)?
It took a long time. The original gal I had doing the books saw the DMER as a low priority. Then, one day she went to lunch and never came back. It left me in a scramble because it was payroll week. I hired a new bookkeeper that did okay, but I couldn’t get a daily report out of her either.
Then, in 2013, I got married to my wife, Kim. She and I were friends growing up. We had known each other our whole lives. We reconnected. We had a long-distance relationship for a couple of years, here to Seattle.
She has a background in bookkeeping and accounting. But we were reluctant to have her in the business at first, as we were still working to get profitable. We didn’t want all our eggs in one basket. A couple of years go by—I think it was 2017—and we started discussing her coming over. When I needed a new bookkeeper, we had grown to a couple-million-dollar company, and I told her I needed somebody I could trust. She finally said okay.
She got us way caught up. She organized everything. Got everything straightened out, got the year-end done, by January, I was getting daily reports by eight o’clock the next day. Kim has just done an incredible job. Of course, I was nervous about the perception of bringing my wife into the business, but she has earned everyone’s respect.
You are almost 100% residential service and replacement. That was a big transition. How did you find customers?
Lots of advertising. I mean we’re still a fairly small community—we’re about 45,000 now, about 100,000 in our county. So, yeah, we do a bunch of direct mail. I mean we’re a big retirement community, so there’s a lot of part-time residents and retired people. The newspaper actually still really works here. We do a fair bit in the newspaper and have kind of tweaked that around over the years on what works and what doesn’t.
In those early days, you didn’t have much money to advertise. What did you do to find business?
We did a little bit of networking. We set-up a Facebook™ page. I started changing our branding on the trucks, started wrapping them. We did that slowly with every new truck—when I could finally afford it. We’ve incorporated the waving flag and has red, white, and blue. What you find is it is really cheap advertising. We’d get a ton of calls from people just seeing the trucks. When you do that with some direct mail. We do some EDDM direct mail. It started to get the phones to ring.
Now, as you got more leads and added more techs, you need to obviously train them.
Yes, at this point, we pretty much send all our techs to SGI’s Service Essentials and beyond through Learning Alliance. I’ve had quite a few go to those classes.
Where have you been finding employees these days? It’s such a challenge for most.
A lot from online reviews and word of mouth. We’ve hired journeymen and completely green guys. Obviously, we would love to not have to hire green guys, but it’s kind of how it is. I mean, right now, there just is not many people wandering the streets that have experience but don’t have the work. But we have been blessed that we have really not lost hardly anybody to a competitor here in town.
Do you work hard to nurture relationships with your people? Is that why your turnover is so low?
Definitely. We have an open-door policy. If they need something, they are welcome to come in and talk. I always try and make it a point to ask how everyone is doing individually. I ask about their family. I’ve worked for understanding people and some not so understanding people. From day one, I wanted to have a business where the guys understood this is a family company. If you have family to take care of, go do that. The bigger we get, the more of that happens. And we work around it.
Your revenue continues to climb? Is it because you’re increasing prices? Selling more services?
Our Business Coach, Abigail from SGI, has been working with me on that. We just completed a big redo on our pricing to keep up with vendor increases. And we’re offering more packages now—basic, deluxe, premium options kind of deal. We’re emphasizing that more than we ever have. I want that squared away before our new comfort advisor starts.
What do the next 5 to 10 years look like for you and the company?
Well, we bought our own building in 2017, and I did a major remodel on it. I contracted it myself and did a whole bunch of work on it. Those six months about killed me, but the facility came out amazing— we’re super happy with it. We’re on probably the second busiest road in our county. About 12,000 to 15,000 cars go by it each day. So, the building is a good portion of my retirement plan, but I kind of designed the thing to be able to do about five million out of it. And that seemed like a distant dream at the time we were doing it [laughter]. Now, we’re not real far from being crowded in here already. So, I don’t know what we’re going to do [laughter].
To answer your question, I’ve always wanted to enjoy restrained growth—I never wanted to just grow as fast as I can just for the sake of growing. I’ve tried to do it responsibly. But even then, it’s kind of hard to hold back sometimes. I need to get our profitability a little bit better. It’s there, but it needs to be better. We are trying to get to $3.5 Million this year, and no doubt we will. I would love to get to $5 Million very soon—but do it very profitably. We’re at that eight- to nine-percent range right now. So, we definitely want to add to that.
But in five years, I would love to be able to get a GM in here that could get this to where I didn’t have to be here every day. That’s the dream.
How rewarding is it to look back at where you were not that long ago, struggling in construction, to now having a strong residential service and replacement business?
Very rewarding. It’s so enjoyable coming to work now. I mean, there’s always some kind of a weird problem. That will never go away. When I joined in 2012, it was just a constant crushing headache from all the stress every day. I would go home and collapse and do it again the next day. That was seven days a week. I didn’t take a day off for years. I come from a family where there’s nothing that hard work can’t fix. So that was my mentality. Well, working hard is just a part of it. You have to also be moving in the right direction. You have to do all the right things. That didn’t come until we met SGI, and I’m very thankful to be a part of the group.
Any advice you’d have for other new members just starting out?
Get into your pricing and figure out if you’re priced right or not. That never ends. You always need to be reviewing it. You have to be checking your jobs every day. I didn’t even get really good at that until a year or two ago. I still find myself falling behind on pricing because vendors are always trying to inch up. Also, don’t be afraid to cut out some cancer in your business. I would take it so personally when I’d have to let someone go. It’s gotten easier, but it’s still makes you feel horrible, even if I can’t stand the person [laughter]. If they’re standing between you and your success, you have to do it. You can’t have those bad influences in your business.