Steve Reflects on How Donna & He Left New Construction; Turned Around a Struggling Company; Built It into a Fast-Growing, Highly Profitable Enterprise; & Ultimately Sold It to Their General Manager, Nick Martin.
This story is an approximate transcription of a “The Successful Contractor” podcast interview with Steve Huff. You can listen to this interview HERE. “The Successful Contractor” podcast, powered by Success Group International, is a show for residential contractors about residential contractors. It chronicles business journeys, shares insights, and celebrates successes in this wonderful industry of the trades and tradespeople.
There are certain people you just always expect to see at a Success Group International Expo. In fact, this particular couple has been with the organization long enough to remember when Expos were called Summits and occurred three times a year. They’ve remained members of SGI through two office relocations and three ownership changes. I’m referencing the incomparable Steve and Donna Huff, formerly of Steve Huff Plumbing in Kingsport, Tennessee.
Steve and Donna have never missed an SGI event. However, that ironman streak will likely be coming to an end soon—of course, they will always be invited. But this couple now has more pressing needs—like spending more time with family and taking even longer cross-country motorcycle rides. Steve and Donna’s priorities have shifted because they’ve sold their namesake after 40 years to their general manager, Nick Martin.
“One of the best trips we’ve taken has been to Maine. We rode up the coast to Maine, through the Green Mountains of Vermont. It is beautiful up there. And our next trip is to southern Utah. When we go on these long trips, we have a general direction that we’re going, and every night when we stop, we get out the paper map and just look and say, ‘Well, those look like good roads, we’ll go that way tomorrow.’ Our theory on motorcycle rides is that if you know where you are you’re on the wrong road,” Steve said and laughed.
Steve made a point to emphasize, while Donna and he may no longer be in the day-to-day operations of contracting business, they’re both available to help other members. “Most definitely. Members are always welcome to call us http://rusbankinfo.ru. We’re still available to go to Profit Days. Even though we’ve sold, it doesn’t mean we’ve broken ties with SGI. We’re still here for you,” he said sincerely.
When asked why Donna and he have been so giving of their time, he replied, “We’ve had so many members over the years help us be successful, and we just feel it’s our turn to pass on what we’ve learned. We want everyone to enjoy a profitable business so you can experience the wonderful things that come with it,” Steve said.
Read about Donna and Steve’s remarkable journey through contracting, including what they learned over their four decades in the industry.
Steve, how did you get into the trade?
Well when I was in high school, any time I was out of school, I was looking for work. I got a job during the summer and at Christmas break with a plumbing company. And during that period working for them, I found plumbing was something I really enjoyed doing, and I was really good at. So, when I graduated high school in 1970, I went to work for them the next day and worked for them for four and a half years. And then I got laid off because things got slow. I’m not one to sit around and do nothing, so I said, “Well, I’ll just go ahead and start my own company.” So, in April 1975, that was the official date of Steve Huff Plumbing.
What kind of work did you do?
Well originally, like most people do, we did new home construction. That’s all we did about the first 10 years. And then we transitioned over into commercial work, and everything from fast-food places to grocery stores. It was me out in the field and my wife, Donna, was in the office, and we had probably four guys on construction crew.
What led you to join SGI in 1999?
We had always struggled to make payroll and pay our bills. I could never figure out why we were in that position because I was working 80 hours a week. To me, I’m working 80 hours a week, how can I be struggling for money? So, we kept getting these postcards and faxes, to show you how far back this was. They were from this company called PSI. And I finally told Donna, I said, “We’ve got to do something because what we’re doing is not working.”
So, I went to a Profit Day™ in Atlanta—I think it was November of ’99 and heard the presentation and decided to join then. The reason was, I was an excellent plumber, still am, but I did not know how to run a business. And Donna came from a veterinary technician background, so she didn’t know how to run a business. And how we managed to stay in business the first 10 or 15 years, I have no idea.
When I went to Profit Day™ and listened to the presentation I said, “These people know what they’re talking about, and this is what we need to turn this thing around and be successful.” My biggest takeaway from Profit Day™ was I needed to get out of construction and get into service and repair. You’ll make a lot more money, which has been true.
How did you transition the business from construction to service and repair?
We had always done some service work—on the side—in addition to our construction work. We had two guys that did just service work. But I learned to say the hardest word there is to say in business, and that is, “No.” [Laughter]
I just knew that I had to get out of construction work because it was just too much trouble for what money we were making. It took about two years to finish up some stuff we had going. But I just had to learn to say no to people when they asked.
Back then, you also learned the importance of providing enhanced value, too, correct?
Yes. If you want to get a professional price for your work, you’ve got to look professionally and talk professionally. I did a radio commercial that said that we won’t show up at your house wearing torn blue jeans and a beer shirt that advertises our favorite beer charity. [Laughter] If you don’t look like you’re worth it, you won’t get it.
If I’m not mistaken, pricing was an issue for you, too?
Yes, it was. I think at the time, when we joined PSI in 1999, we were probably charging $65 an hour. And trying to get as many calls in a day as we could.
How nerve-racking was it for you to finally start charging a service fee?
Very! [Laughter] We batted that back-and-forth between Donna and me for a long time about charging a service fee. And we were scared to death to do it. So, we finally just said we’ve got to do this. And mostly, people had no problem with it. It’s amazing because in the early days, we had maybe 10 out of 100 say no because of the service fee. Now, it’s probably two out of 100.
Did club memberships happen right away?
That was a later addition. I don’t really know how many club memberships we have now. It’s probably a couple hundred. But if the owner does not believe in club memberships, his employees are not going to believe in it, and they’re not going to present it to the customer. Last time I looked at the numbers, we never went and did a club inspection without coming out with eight-, nine-hundred dollars.
When did you begin offering three options on every call? Did that happen right away?
That took some time because when we started this, we heard from our people, “We’re not salesmen, we’re plumbers.” And I explained to them, “You’re not a salesman. You’re going out there as a highly skilled, trained professional, to present options to people that are in their best interest. We let them decide what they want. You’re not trying to sell them anything—you’re just trying to make their life better.”
How did you answer the phones back then? Was it Donna’s responsibility?
Yes, she was the only one in the office at the time and she’d answer the phone. We may not get four calls a day. She’s doing a lot of sewing and just odds-and-ends stuff. But now we probably get, I don’t really know, it’s probably 30 or 40 calls a day now.
How long did it take you to really get a grasp of how to manage your financials?
The biggest thing we’ve done over the years is never miss a meeting. We’ve been to every Expo since we joined. And [SGI President] Rebecca Cassel used to do the financials presentation way back when. And of course, that was Donna’s responsibility, or her wheelhouse as far as the business went. And she said the more we went to the meetings, the more we knew, the more we understood what these numbers were, and more importantly, what they meant. And Rebecca did a class—I don’t know how long ago—that went over all this stuff, and Donna said just all of the sudden it clicked with her. She understood it. All that stuff we’d learned previous years came together in that one meeting.
That’s the amazing thing about training multiple times. You can hear the same message over and over, but for whatever reason, one day the information really clicks and you finally understand it.
Yes! And going to the meetings is the most important thing anybody could do that is in this organization, because not only do you learn a lot from the stage, you’ll learn as much or more talking to other members in the hallway and at lunchtime. Whatever problem you’re facing, somebody’s already faced it and solved it.
I read a quote last night that said, “You need to learn from the mistakes of others because you won’t live long enough to make them all yourself.” [Laughter]
Speaking of training, what did your internal training look like back then?
Well, we used to have a full staff meeting every Tuesday, and most of it was just going over invoices from the week before. Or if someone had an issue, we’d try and solve it. If it was a technical issue, we’d discuss it as a group to avoid that problem in the future. The hardest thing we ever did was get the guys to role-play. Or practice, as we prefer to call it.
You cannot really do that training in-house that well. You have to send them outside to do the training. I could stand up there and tell them all this stuff, and they just sort of roll their eyes. And we’ve taken a lot of our techs to Expos, sent them to outside training, and they’ll hear the exact same thing from someone else, and they’ll say, “Oh, yeah, that makes sense now.” They’ve got to hear it from a third party.
You’ve hired a lot of people over the years. What qualities do successful plumbers always seem to have?
Well, in Tennessee, everyone works under my license. So, we prefer to hire someone based on personality and people skills and teach them how to do plumbing. We don’t have to hire an experienced plumber because like we always say, “If you hire someone now that has never worked for a PSI company, has worked for Johnny Jackleg, you have to beat the stupid out of them before you get them on board.” [Laughter]
So, what kind of personalities did you look for when interviewing?
Well what we always did, and still do, the first two interviews are with one of the ladies in the office. And if they cannot talk to her and impress her and make her feel comfortable, we don’t hire him, because 90 percent of the people that our people deal with are women. And I’ve had situations where one of the ladies will do an interview and she would come back to me and I’d say, “What do you think?” And she said, “No.” I said, “Okay, that’s all I need to know.” [Laughter] That would be all I need to know. I don’t care if he’s the world’s best plumber—if he can’t talk to people and be sociable and nice to anybody and everybody, we don’t need him.
Would you do the final interview?
Well, we would extend an offer, and what we would do is we would put him in a room with all the other technicians. They could ask this person anything, and he had to answer honestly. And he could ask them anything, and they had to answer honestly. And they made the final decision whether we hired this person or not, because he was going to have to work with them, not me. If they didn’t feel like that person was a fit, we didn’t hire him. And what I always tell people, “You’re not here to impress me—you’re here to impress them.”
What is the onboarding process like?
We would run them from anywhere from six months to a year as an apprentice or a trainee. We don’t call them helpers. We call them trainees because that’s what we hire them for—to train them, not just be a helper.
Yeah, we would put them with our best technicians for a while, but they would circle through all of them at some point because everybody does something a little different. Their presentation’s a little different, the way they approach jobs is a little different, so they picked up the best habits of all of them.
How would you determine when a trainee was ready to graduate to a service technician?
Well, that was up to the technicians they worked with to determine whether they were going to make it or not. When you hire someone new that has the potential to be really good, older guys will not train him because they’re afraid he’ll take their job. I took the other approach. I would say to the experienced guys, “You’ve got to train this guy to be as good or better than you are, or you’re going to lose your job.” If we don’t keep growing and getting better, we’ll all eventually be out of jobs.
How do you incentivize your techs to ensure they’re doing their best every day?
We have a bonus program. Of course, they’ve got their daily goals, and if they exceed their goal, they get one percent. Say their goal for the month is $40,000, which is a low number. If they reach or exceed that goal, they would get say like $400. And if they reached $45,000, they’d get $450. And then we would present those checks to them in the meeting, so the other guys could see how much. That way they all start thinking, “I need to be doing what they’re doing.”
Did you always monitor every ticket? How would you handle if someone got a “service-fee” only call, for example?
Yes. What we would do, and we still do, if a guy goes out and gets two service-fee only first thing in the morning, he goes home for the day. Because he’s not on his game. Whatever the problem is, he’s going to cost you more money that day than he’s going to make.
Do you meet with that person to see what is going on with him?
We have a review every six months to go over their individual numbers, and see where they’re weak, see where they’re strong. We try to get them to bring up their weak numbers and keep their strong numbers strong. That’s when we’ll discuss any problems they might be having.
Let’s change topics. Donna and you sold Steve Huff Plumbing to Nick Martin, your general manager. Could you talk about Nick’s trajectory with the company?
He came to us right out of high school when he was 18 years old. And at that time, he was getting up at 4:30 or 5 in the morning, going and making biscuits at McDonalds, then going to Walmart, changing tires on cars. We knew he was a hustler and had a good work ethic. But we didn’t have a position for him at that time, so we kept his name and called him back when we did.
How long did it take you to figure out that Nick was going to be a really good plumber?
It was pretty quick, because he reminds me of myself at that age. He was very motivated, didn’t care if he worked long hours, did whatever it took to get the job done. I want to say he was a mini-me. [Laughter]
What was his next role at Steve Huff Plumbing?
He became team leader because he was motivated to do that and that’s something he just fell into on his own. He wasn’t really assigned that role. He took the initiative to help the other guys out to be better.
How long did it take him to earn that unofficial role as team leader?
I think he’s been with us now 13, 14 years, something like that, maybe 15, and it was probably five years in that he assumed that role on his own.
What was his next position in the company?
We elevated him to general manager.
That’s a huge transition from team lead to GM. How did you help Nick learn this much different side of the business?
He would sit with us. And we sent him to outside training. And he just grew into the role. The reason he came into the position was every year we would have the guys write down their three personal goals and three business goals for the year and the next five years. And one of his goals was to either own or run his own plumbing business by the time he turned 30. And I said, I can help you with that. [Laughter]
Did you believe Nick would be capable of being that type of leader?
I knew he would be a great leader. You can just tell by the way they talk, the way they act, the way they carry themselves. You just get this sixth sense about them that they’re going to be the one.
Did Nick take over training at that point?
Oh, he had been training. We sent him to the Train the Trainer class with Learning Alliance, and that was a great class for him. And that’s where he learned how to be a real trainer, how to approach training, and the best way to do training, how to motivate the guys with the training.
Once you gave Nick the reigns as GM, how did you monitor his progress?
Well, we got our DMRs every day through email, so we knew the numbers every day from the day before so we could see if there was something going south that we could help him with. And he wasn’t shy about asking for help when he needed it.
Did you have regular meetings with him to see how you could help him, or did you just let him run with the position?
Well, I’ve actually been out of the business probably seven or eight years already. I did what most people need to do when they own a business—and that’s make themselves useless to the business. [Laughter]
That’s your main goal when you start a business: To make yourself useless to the business. So, I’d made myself useless because Nick had taken over so much of my responsibilities. But when we decided to make this transition and sell the business, Donna would continue to go in once a week on Tuesdays and spend it in the office to cover any issues they were having, and then that’s how he got the training to do what he does now.
You mentioned to me some time ago that you were ready retire. It was Donna who wanted to continue to work, correct?
I had wanted her to retire, too, for years and she just didn’t feel like it was time. She still had stuff to do, and she still enjoyed what she was doing. But we were on our way to Arkansas to go on a motorcycle ride through the Ozark Mountains—and we’ve got to go the full length of Tennessee through Memphis, which is eight hours from us, and we crossed that Mississippi River into Arkansas. That’s when she said it just hit her, I’m done.
What was the official process of selling like? Did you approach Nick that you both were ready?
No. We set everything up through an attorney, and we had the business evaluated. We’re a corporation, so we have stock. And most people make the mistake of selling the business as an asset sale where you just sell them the trucks and the tools and stuff, and that doesn’t really work out for the owner. So, it was a stock sale. And we set all this up through an attorney and an accountant and they handled all that.
The sale was really supposed to be a 10-year-transition period. And that’s the thing people don’t understand—you’re not going to decide to sell your business today and sell it tomorrow or in a year. For five years, we were there still helping Nick learn all he needs to know. And then after Donna had her epiphany crossing the Mississippi River on that motorcycle ride, she said, “I’m going to scoot this thing up, we’re going to do this now.”
So, the price had already been set for the company when we first initiated this transition, and Nick agreed to speed up the process because there’s still really three more years left on the agreement. And we closed in March of this year.
Had you given him shares in the business previously to kind of keep him locked in? Or were you and Donna the sole owners still before the sale?
Donna and I were 50/50 owners in the company.
So, he did not assume any ownership until you finally signed your names in March over to him.
How did you find your attorney? Any advice for members that are looking to sell?
Well this attorney, he was recommended to us by our accountant, and he’s a tax attorney. And he’s actually helped at least two or three other members that we know of sell their businesses. He’s very familiar with SGI’s organization, and he does work with several other SGI companies all over the country.
Any other advice for members looking to sell at some point?
Well, in order to sell a business, it has to be profitable. Nobody wants to buy a business that’s not making money, because the way you look at that is, “How am I going to pay for this business?” And you have to pay for it out of the profits of the company. So, if you’re going to buy a business, and it’s not making any profit, how are you going to make those payments? So, it has to be a well-run, well-organized, profitable business before anybody will even look at it.
So, you were definitely double-digit net profitable?
And you’d been able to show those returns for a number of years?
Correct. You need to show a double-digit profit for three or five years on the financials, something like that.
I’m assuming you sold the business at a multiplier of that profit?
Right. Just to give you an indication of how well Nick has done with the business, when I left five years ago, we were $1.3 million and maybe eight percent profitable. And in seven years, he’s grown it to $4 million almost and maybe 12 percent. And it’s gone from 9 employees to almost 20.
Steve, in closing, what are one or two great pieces of advice you could give to other members—information to help them achieve the success you’ve enjoyed?
To be successful, more than anything, talk to other members. And don’t be afraid to raise your prices and charge a service fee. And what will happen is, as in my case, this organization will take you from being a plumber who owns a plumbing business to a businessman who just happens to do plumbing. And when you hit that point, you’re on your way.
Anything you would say to new members?
Don’t miss a meeting. Don’t be afraid to walk up and talk to anybody, whether they’re a $100,000 company or a $10 million company, they’re going to talk to you. They’re going to tell you what you need to know to get successful. Don’t be shy when you’re at a meeting. And what I tell them to do is—they get overwhelmed at EP because they get fed so much information—I say, “Just take what they give you in the order that they tell you to do it and it will work.” Don’t try to jump three or four steps ahead. Just do what they give you. Take what they teach you and do it in the order they teach you, and you will be successful.
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