Plumbing contractors achieve

double-digit profits despite slow economy

 

BY TAB HUNTER,

contributing writer

 

Business bankruptcy filings in the United States were up 54 percent in 2008, according to government sources. How many of those were plumbing contractors is undetermined, but a quick scan of filings in your community will probably reveal at least a handful of independent plumbers who closed up shop in the past year.

 

“A plumber doesn’t lose his business because he doesn’t know how to fix plumbing problems; he loses it because he doesn’t know how to fix business problems,” said Jim Abrams, ceo of Clockwork Home Services, the parent company of Benjamin Franklin Plumbing, which serves more than 240 territories nationwide with franchises and company-owned locations. “We give contractors the steps to building a profitable business. If they follow the steps, they will succeed.”

That’s the kind of help that plumbing contractors Dave Dahlquist in Venice, Florida and Bill McDaniel in Arlington, Texas needed. Dahlquist converted his independent residential plumbing service to a Benjamin Franklin franchise in 2008. McDaniel is a relative veteran of the franchise system, having converted his commercially-based business to residential service through Benjamin Franklin in 2004.

 

Today, both contractors are achieving double-digit profitability, despite the slow economy, and they credit the franchise system for much of their success. Their stories illustrate potential benefits of being part of a nationally branded franchise and highlight key factors that contractors should investigate when analyzing a franchise opportunity.

 

Contractor turns double-digit profits in rookie year

 

Dave Dahlquist had been in the business from age 15, when he served his father, a Master Plumber, as a helper. Dave entered the trade full time at 19 years old after deciding that college was not for him. He started his independent residential service business in 2005 shortly after moving to Florida to be near his parents, who had retired in the Venice area. Dahlquist gained some traction in the Venice community, but he was struggling with the business operations side.

“I was a plumber, not a businessman,” said the 41-year-old, who co-owns the business with his wife, Debbie. “I didn’t know how to create a budget, set prices or analyze profitability. I was really flying blind and never felt confident that I would still be in business the next year.”

 

Located within a 30-minute drive of the Clockwork Home Services headquarters in Sarasota, Dahlquist took the company up on an invitation to check out the Benjamin Franklin system. Dahlquist had worked with another national franchise brand before moving to Florida and was not impressed with the level of support that company provided to franchisees. He was a service technician at a corporate-owned business and general manager of a franchise.

 

“I spent seven months on due diligence looking at Benjamin Franklin,” Dahlquist said. “I took the information to my accountant and my lawyer. I prayed about it.”

 

In August 2008, the Dahlquists signed on as a Benjamin Franklin Plumbing franchisee. After approximately seven months of transition —learning the systems, wrapping his trucks in the new brand’s image, ordering uniforms, training employees and communicating with customers —Dahlquist was preparing for “Image Day,” when Clockwork representatives would sign off on the brand conversion.

 

“We already can see a change in our business numbers,” Dahlquist said. “Clockwork has advised us on so many things. They have the business model we follow: labor percentage, material costs and how we should price. It puts my mind at ease that I’ll be in business next year. Before, I didn’t know how to adjust and make changes to my business. Now, we send a daily management report to Clockwork, and they look at our numbers every day to see where we need to improve. Maybe a technician needs more training or better communication skills. Clockwork can identify those needs from the numbers, and we can work with each individual to improve. The value in that is huge.”

 

Dahlquist particularly likes having a dedicated Franchise Business Consultant assigned to his company by Clockwork. “I want the oversight,” he said. “I like the accountability. It helps me to focus on the priorities. There are so many details in this business; it’s easy to become overwhelmed if you don’t have a clear focus.”

 

The one-on-one consultation is a key value to Dahlquist, who considers that the fees he pays to the franchise system have paid off in increased profitability. He also points to the brand recognition, buying power, on-line and classroom training, and marketing support provided by Benjamin Franklin.

 

“BuyMax (Clockwork’s purchasing consortium) has been wonderful,” Dahlquist said. “We receive discounts and rebates I never would have had on my own. It’s a tremendous asset that’s going to add up to thousands of dollars in savings.” According to Abrams, BuyMax processed more than $1 billion in purchases in 2008 for Clockwork’s three franchise brands and other affiliated businesses.

 

Another benefit of being part of a national network of owners who are operating under the same brand is the peer counseling that has helped Dahlquist learn from others and avoid mistakes. Dahlquist has learned from Benjamin Franklin franchisees in Tampa, Ft. Myers and other Florida communities, and has even sent key employees for training at other, longer-established locations.

 

The Dahlquists’ plans are ambitious. They plan to increase revenues by 10 percent in 2009 and hope to add more territories to their franchise in the future. Dahlquist is convinced that being part of a recognized national brand will increase the value of his business if he decides to sell at some point. Clockwork also may buy out a successful franchise to add to its portfolio of retail locations.

 

Texas contractor builds $2.4 million business in four years

 

Bill McDaniel converted his Arlington, Texas business to a Benjamin Franklin Franchise in 2004. He had started the company in 1996 to serve the insurance industry by performing slab lead inspections and repairs. When the cost of covering mold issues caused insurance companies to curtail coverage, that once lucrative business dried up. McDaniel decided to turn to residential service, although his company had no brand recognition among homeowners since it had been focused on serving the insurance industry.

 

To learn the ropes of the residential service business, McDaniel joined Plumbers Success International, a professional development organization also owned by Clockwork Home Services. Through that group, McDaniel learned about the Benjamin Franklin Plumbing franchise and joined the system in 2004.

 

Within his first two years as a franchise, McDaniel’s annual revenues were $600,000. His revenues were $1.6 million in 2007 and $2.4 million in 2008. In 2008, Clockwork awarded McDaniel as the fastest growing Benjamin Franklin franchise in North America. Despite the recession, McDaniel reports that his revenues were up 30 percent this January, compared to January 2008, and February revenues were up 20 percent year-over-year.

 

“There is no way we would have grown this fast without being part of a national brand,” said McDaniel, who has been a plumber for 30 years. “The Benjamin Franklin systems and brand recognition propelled our business from zero consumer awareness and no customers to $2.4 million in sales and double-digit profitability.”

 

“The main reason we joined the franchise system was for the brand,” he said. “In our area, there are more than 1,500 plumbing contractors. You have to stand out so that people remember your name. Branding is the key. If the franchise doesn’t brand you, then you don’t gain anything out of it. We average a call a day from people remembering the name from seeing our trucks on the road.”

 

McDaniel credited a neighboring Benjamin Franklin franchise, owned by Keresa and J.R. Richardson, for helping his fledgling franchise get up to speed quickly. The Richardsons were the second franchisees in the system, and observing their operation was invaluable, he said.

 

McDaniel said he is still finding new value in being part of the franchise system. Clockwork’s purchasing power has achieved lower pricing than McDaniel could achieve independently, and he doesn’t have to search for vendors for various supplies or services. The BuyMax network has already checked out the companies and negotiated the best possible pricing, he said. This year, McDaniel began using a national call center service provided to Clockwork franchisees for a fee. In the first month using the call center to handle incoming service calls, rather than an in-house staff, his call closing rate increased from below 60 percent to 80 percent, and the goal is to achieve an 85 percent closing rate.

Abrams said the experiences of franchisees like McDaniel and Dahlquist prove the value in “branding together” under an established national brand.

 

“Regardless of whether an independent contractor looks at a franchise, he or she should realize there’s strength in numbers,” Abrams said. “At least seek out a professional development organization and take advantage of educational and peer counseling opportunities. This economic situation is no time to go it alone.”   

 

Tab Hunter is president of franchise operations for Clockwork Home Services. Before joining Clockwork he owned a Benjamin Franklin Plumbing franchise, as well as a One Hour Heating & Air Conditioning franchise. Information: www.BenjaminFranklinPlumbing.com.